Isamu Paint Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.09B
• Operating Income: ¥380M
• Net Income: ¥258M
• EPS: ¥168.30

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Isamu Paint Co., Ltd. (TSE: 46240) delivered solid profitability improvements in FY2026 Q2 on modest top-line growth. Revenue rose 1.2% YoY to ¥4.086bn, while operating income increased 30.5% to ¥380m, indicating meaningful margin expansion. Gross profit of ¥1.209bn implies a gross margin of 29.6%, supportive of improved cost control and/or favorable mix. The operating margin reached approximately 9.3%, with ordinary income of ¥461m suggesting beneficial non-operating contributions and negligible interest burden. Net income grew 29.6% to ¥321m, yielding a net margin of 7.86% for the half-year. DuPont metrics show a low financial leverage of 1.19x, an asset turnover of 0.192x (half-year basis), and a reported ROE of 1.79%, which reflects half-year earnings relative to period-end equity; on a simple annualized basis ROE would approximate ~3.6%, still modest. Liquidity remains very strong, with a current ratio of 386.7% and quick ratio of 337.6%, supported by working capital of ¥6.222bn. The capital structure is conservative: total liabilities of ¥3.247bn versus total equity of ¥17.979bn imply an equity ratio of roughly 84% (the reported 0.0% is an unreported placeholder). Interest expense was only ¥0.067m and interest coverage an extremely high 5,671.6x, underscoring low financial risk. Operating cash flow was ¥246m, at 0.77x of net income, suggesting some working capital absorption in the period. Depreciation was ¥96.9m, consistent with a light capital intensity profile for a coatings maker of this scale. Investing cash flow was shown as 0 (unreported), preventing a reliable free cash flow assessment; the provided FCF of 0 should be treated as a placeholder. Financing cash outflow of ¥54m likely reflects dividends, debt amortization, or other capital transactions, but dividends per share were reported as 0 (unreported). Balance sheet scale remains sizable at ¥21.325bn in assets, with inventories of ¥1.066bn (about 26% of H1 revenue), a level that warrants monitoring in a soft macro environment. The effective tax rate shown as 0.0% is not meaningful given ¥98.4m of income tax expense; a rough effective tax rate based on net income and tax suggests ~23–24%. Overall, the company exhibits improving margins, robust liquidity, low leverage, and moderate earnings quality due to working capital dynamics. Data limitations (notably cash, equity ratio, share count, and dividends) constrain precision, but the trend in operating performance is favorable.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.86% (H1)
• asset_turnover: 0.192x (H1; simple annualized ~0.38x)
• financial_leverage: 1.19x
• calculated_ROE: 1.79% (H1 basis; simple annualized ~3.6%)
• commentary: ROE remains modest primarily due to low leverage and subdued asset turnover; margin improvement is the key current driver. margin_quality: Gross margin at 29.6% indicates improved pricing and/or input cost relief versus prior year (OI +30.5% on +1.2% sales suggests mix/SG&A discipline). Operating margin of ~9.3% and ordinary margin of ~11.3% reflect operating leverage and small non-operating tailwinds. Net margin at 7.86% is healthy for H1, aided by negligible interest burden. operating_leverage: Positive operating leverage evident: operating income growth (+30.5% YoY) far outpaced revenue growth (+1.2%), implying SG&A ratio improvements and/or scale benefits. Sustainability will depend on volume recovery and maintaining pricing versus raw materials.

Growth Assessment

revenue_sustainability: Top-line growth of +1.2% YoY is modest, suggesting stable demand but no strong volume uplift. The inventory level (~¥1.066bn) relative to H1 sales warrants monitoring for demand normalization. profit_quality: Operating income growth outpacing sales indicates improved cost discipline and pricing power. Ordinary income exceeding operating income suggests non-operating gains or financial income, but reliance appears limited given tiny interest costs. outlook: Assuming stable construction/industrial coatings demand and steady raw material prices, margin gains could be maintained into H2. However, growth remains dependent on macro-sensitive end markets; any raw material inflation or weaker construction activity could compress margins.

Financial Health

liquidity: Current ratio 386.7% and quick ratio 337.6% demonstrate ample near-term liquidity. Working capital stands at ¥6.222bn, providing a substantial buffer. solvency: Debt-to-equity ratio of 0.18x and negligible interest expense (¥0.067m) indicate low balance sheet risk. Implied equity ratio is ~84% (¥17.979bn/¥21.325bn), despite the reported 0.0% placeholder. capital_structure: Low leverage with substantial equity base affords capacity for strategic investment or shareholder returns, subject to capital allocation policy.

Cash Flow Quality

earnings_quality: OCF/Net income at 0.77 indicates earnings not fully converting to cash in H1, likely due to working capital build (inventories/receivables). Depreciation of ¥96.9m supports non-cash add-backs but did not offset WC drag. FCF_analysis: Investing cash flow is shown as 0 (unreported). As a result, the displayed Free Cash Flow of 0 is a placeholder; true FCF cannot be determined without capex data. On a directional basis, positive OCF suggests potential positive FCF if capex needs are moderate. working_capital: Inventories at ~26% of H1 sales suggest prudent but material stock levels; WC efficiency should be monitored via inventory days and receivables collection as H2 unfolds.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0% with DPS 0.00, which appears to be unreported rather than an explicit zero. Without DPS and share count, a payout assessment versus earnings is not possible. FCF_coverage: FCF is reported as 0 due to unreported investing cash flows; thus FCF coverage of dividends cannot be evaluated. policy_outlook: Given low leverage and strong liquidity, the balance sheet could support dividends, but actual policy and cadence are not disclosed in the dataset. Clarity on dividend policy and timing would improve visibility.

Risk Assessment

Business Risks:

• Demand cyclicality in construction and industrial end markets
• Raw material price volatility (resins, solvents, pigments) impacting gross margin
• Competitive pricing pressure from domestic and global coatings players
• Environmental and regulatory compliance costs
• Product mix shifts or customer concentration risks (not disclosed)
• Supply chain disruptions affecting lead times and inventory levels
• Natural disaster risk in Japan impacting operations and logistics

Financial Risks:

• Working capital absorption reducing cash conversion in weaker demand periods
• Potential inventory valuation risks if demand softens
• Currency exposure on imported raw materials (FX pass-through risk)
• Limited visibility on capex and cash balances due to unreported items

Key Concerns:

• OCF trailing net income (0.77x) indicating near-term cash conversion pressure
• Modest top-line growth (+1.2% YoY) limiting operating leverage upside
• Data gaps (cash, equity ratio, dividend, share count) constrain precision in valuation and payout analysis

Investment Implications

Key Takeaways:

• Strong margin expansion: operating income +30.5% on +1.2% sales
• Healthy profitability: gross margin 29.6%, net margin 7.86%
• Very conservative balance sheet: D/E 0.18x; implied equity ratio ~84%
• Excellent liquidity: current ratio 387%, quick ratio 338%
• Earnings quality mixed: OCF/NI at 0.77 suggests WC drag
• Interest burden negligible: coverage >5,600x
• ROE modest due to low leverage and asset turnover; annualized still ~3–4%

Metrics to Watch:

• Gross margin and raw material price indices (resins/solvents/pigments)
• SG&A ratio and operating margin sustainability
• OCF/Net income, inventory days, and receivables days
• Capex and investing cash flows (to derive true FCF)
• Equity ratio and net cash position (once cash disclosed)
• Order trends in construction/industrial end markets
• FX (USD/JPY) pass-through to input costs

Relative Positioning: Within the Japanese coatings sector, the company appears smaller-scale with a very strong equity base and low leverage, translating to lower financial risk but also a modest ROE versus larger peers; margin improvement is a positive differentiator, while top-line growth remains subdued.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
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