Altech Corporation FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥38.19B
• Operating Income: ¥3.92B
• Net Income: ¥2.37B
• EPS: ¥136.62

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Alps Giken (4641) reported FY2025 Q3 consolidated results under JGAAP showing steady top-line and stronger bottom-line momentum. Revenue was ¥38.19bn (+6.2% YoY), with gross profit of ¥8.30bn, implying a gross margin of 21.7%. Operating income increased to ¥3.924bn (+9.4% YoY), lifting the operating margin to roughly 10.3%, indicating positive operating leverage. Ordinary income reached ¥4.065bn and net income was ¥2.683bn (+13.6% YoY), translating to a net margin of 7.03%. DuPont metrics point to an ROE of 14.11%, built on a 7.03% net margin, 1.332x asset turnover, and modest financial leverage of 1.51x. The balance sheet is strong with total assets of ¥28.665bn and equity of ¥19.01bn, implying an equity ratio around 66% (recalculated from provided balances). Liquidity is ample, with current assets of ¥21.64bn versus current liabilities of ¥8.94bn, resulting in a current ratio of 242% and sizable working capital of ¥12.71bn. Interest expense is de minimis at ¥1.56m, yielding an interest coverage of ~2,517x, underscoring minimal financial risk from leverage. Tax expense of ¥1.325bn is consistent with an implied effective tax rate in the low 30% range based on ordinary income and net income, despite the “0.0%” metric shown. Cash flow and depreciation data were not disclosed in the XBRL feed (zeros indicate undisclosed), limiting assessment of earnings-to-cash conversion and non-cash cost structure. Dividend information (DPS and payout) was also undisclosed; EPS was reported at ¥136.62, but share count and BVPS were not provided. Despite these disclosures limits, profitability and balance sheet indicators are solid and point to a resilient engineering staffing model with disciplined cost control. Positive operating leverage is evident as operating income growth outpaced revenue growth. Moderate leverage (D/E ~0.49x) and abundant liquidity enhance financial flexibility into 4Q and the next fiscal year. Key near-term variables include utilization rates, wage inflation versus billing rate increases, and client demand in core manufacturing and technology end-markets. Overall, the company exhibits healthy fundamental momentum and robust solvency, with the main analytical gaps in cash flow and dividend disclosures.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.03%
• asset_turnover: 1.332
• financial_leverage: 1.51
• calculated_ROE: 14.11%
• commentary: ROE of 14.1% is primarily driven by a solid net margin and healthy asset turnover, with only modest leverage contribution. margin_quality:
• gross_margin: 21.7%
• operating_margin: 10.3%
• ordinary_margin: 10.6%
• net_margin: 7.03%
• tax_implied: Approximately low-30% effective tax rate inferred from ordinary and net income.
• notes: Margin expansion YoY is implied by operating income growth (+9.4%) outpacing revenue growth (+6.2%), suggesting mix and/or cost efficiencies. operating_leverage: Positive. Operating income growth (+9.4% YoY) exceeded revenue growth (+6.2% YoY), indicating improving cost absorption and/or pricing. Minimal interest burden suggests operating, not financial, leverage is the primary driver.

Growth Assessment

revenue_sustainability: Revenue rose 6.2% YoY to ¥38.19bn, consistent with steady demand across engineering staffing/dispatch. Low inventories (¥9.36m) align with a human-capital-intensive model rather than product cycles. profit_quality: Net income growth (+13.6% YoY) surpassed sales growth, supported by margin expansion. The interest burden is negligible, so earnings improvements largely reflect core operations rather than financial engineering. outlook: With robust liquidity and low leverage, the company appears positioned to sustain headcount and client delivery. Watch utilization, wage inflation vs. bill rate increases, and client activity in manufacturing/tech. Sustained double-digit operating margins would underpin continued ROE around the mid-teens.

Financial Health

liquidity:

• current_ratio: 242.1%
• quick_ratio: ≈242.0% (inventories are minimal at ¥9.36m)
• working_capital: ¥12.71bn
• commentary: Strong short-term solvency with ample liquid assets relative to obligations. solvency_capital_structure:
• total_assets: ¥28.665bn
• total_liabilities: ¥9.334bn
• total_equity: ¥19.010bn
• debt_to_equity: 0.49x
• equity_ratio_recalculated: ≈66.3% (equity/assets)
• interest_coverage: ≈2,517x
• commentary: Conservative balance sheet with limited leverage and excellent interest coverage; financial risk is low.

Cash Flow Quality

earnings_quality: Unable to assess OCF conversion due to undisclosed cash flow data (reported as 0). Accrual intensity cannot be measured without OCF and working capital detail by line item. FCF_analysis: Free cash flow not disclosed. Capex and D&A were not reported; thus, maintenance vs. growth capex split and FCF durability cannot be evaluated. working_capital: Working capital is sizable at ¥12.71bn, consistent with receivables-heavy staffing models. Without cash flow details, turnover metrics (DSO/DPO) and cash conversion cycle cannot be quantified.

Dividend Sustainability

payout_ratio_assessment: EPS was ¥136.62, but DPS was undisclosed (0 indicates not reported). Therefore, payout ratio cannot be assessed from the period data. FCF_coverage: Not assessable due to undisclosed OCF and FCF. policy_outlook: No conclusion on dividend policy can be drawn from the period disclosure. If profitability and liquidity remain strong, capacity for shareholder returns exists, but timing and policy remain unknown.

Risk Assessment

Business Risks:

• Demand cyclicality in core client industries (automotive, electronics, machinery) affecting utilization and billable hours.
• Wage inflation and recruitment costs potentially compressing gross margin if not matched by billing rate increases.
• Client concentration risk typical in engineering dispatch, potentially impacting revenue if a large client reduces projects.
• Regulatory compliance risk under Japanese labor and dispatch laws (Worker Dispatch Act) affecting flexibility and costs.
• Talent acquisition and retention challenges, including training and bench costs during demand dips.

Financial Risks:

• Receivables concentration and collection risk inherent to staffing models; potential elongation of DSO in downturns.
• Working capital swings due to payroll timing versus client collections, affecting intra-quarter liquidity.
• Limited visibility on cash flows and capex due to undisclosed CF statements and D&A, constraining assessment of cash generation.
• Potential sensitivity to macro shocks even with low leverage; revenue declines would flow through to margins via fixed costs.

Key Concerns:

• Lack of disclosed operating, investing, and financing cash flows restricts earnings quality analysis.
• Undisclosed dividend data prevents assessment of capital return policy and sustainability.
• Monitoring wage/billing spread and utilization is critical to sustaining double-digit operating margins.

Investment Implications

Key Takeaways:

• Solid topline growth (+6.2% YoY) with stronger operating profit growth (+9.4% YoY) indicates positive operating leverage.
• Healthy profitability: operating margin ~10.3%, net margin 7.0%, ROE 14.1%.
• Conservative balance sheet with recalculated equity ratio ~66% and D/E 0.49x; interest coverage ~2,517x.
• Liquidity is strong: current ratio 242% and working capital ¥12.71bn.
• Cash flow and dividend disclosures are missing, limiting assessment of earnings-to-cash conversion and payout policy.

Metrics to Watch:

• Utilization rate and billable hours per engineer.
• Billing rate increases versus wage inflation and recruitment costs (gross margin spread).
• SG&A ratio and operating margin trajectory.
• Receivables days (DSO) and cash conversion cycle.
• Client concentration metrics and order/backlog visibility.
• Headcount growth, retention, and bench ratio.

Relative Positioning: Within domestic engineering staffing peers, Alps Giken’s mid-teens ROE, double-digit operating margin, and conservative leverage profile suggest above-average profitability and financial resilience; the primary analytical gap versus best-in-class peers is current lack of disclosed cash flow and dividend data for this period.

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
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis