DAISAN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.31B
• Operating Income: ¥122M
• Net Income: ¥137M
• EPS: ¥25.29

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

For FY2026 Q2 (consolidated, JGAAP), 株式会社ダイサン posted revenue of ¥5,313mn (-0.5% YoY) with operating income of ¥122mn (-26.9% YoY), indicating margin compression despite broadly flat topline. Gross profit was ¥1,557.8mn, yielding a 29.3% gross margin, but the operating margin fell to 2.3%, implying higher SG&A or adverse mix. Ordinary income of ¥152mn exceeded operating income, suggesting positive non-operating contributions that more than offset interest expense of ¥24.0mn. Net income rose 18.4% YoY to ¥162mn despite weaker operating profit, implying tailwinds from non-operating/extraordinary gains and/or a lighter tax burden. DuPont analysis shows ROE at 2.86%, driven by a 3.05% net margin, asset turnover of 0.553x, and financial leverage of 1.70x—overall a modest equity return. Operating cash flow was strong at ¥548.1mn, 3.38x net income, indicating high cash conversion in the period. The balance sheet is conservative: current ratio 160%, quick ratio 137%, and debt-to-equity 0.82x, with working capital of ¥2,418.6mn. Using reported totals, equity/asset ratio is approximately 58.9% (derived from ¥5,655mn equity and ¥9,605mn assets), though the disclosed “equity ratio” item is unreported. Interest coverage of 5.1x indicates manageable financial risk. EBITDA of ¥247.0mn (4.6% margin) points to limited operating leverage, with the majority of profitability residing above the EBITDA line. Financing cash outflows of ¥506.0mn likely reflect debt service and/or shareholder returns, though dividends are shown as unreported in XBRL for this period. Free cash flow cannot be precisely assessed because investing cash flows and capex are not disclosed; the reported FCF of 0 reflects missing data, not zero cash investment. Dividend data (DPS, payout) are also unreported; thus dividend capacity must be assessed via earnings and cash flow proxies rather than stated distributions. Overall, fundamentals show resilient cash generation and a strong balance sheet, offset by weaker operating profitability and reliance on non-operating items to sustain bottom-line growth. Data limitations (zeros indicating unreported) constrain certain conclusions, especially around capex, cash balances, and dividends.

Profitability Analysis

ROE of 2.86% is modest, decomposed into a 3.05% net margin, 0.553x asset turnover, and 1.70x financial leverage. The decline in operating income (-26.9% YoY) against a nearly flat revenue base (-0.5% YoY) indicates margin pressure from SG&A inflation, cost mix, or pricing. Gross margin at 29.3% is healthy, but the operating margin at 2.3% suggests elevated overheads or weaker utilization. EBITDA margin of 4.6% remains thin, suggesting limited operating leverage and a cost structure that does not scale strongly at current volumes. Ordinary income (¥152mn) exceeding operating income (¥122mn) implies net non-operating gains (e.g., investment income, subsidies, FX or equity-method gains) offsetting interest expense of ¥24.0mn. Net income grew 18.4% YoY to ¥162mn, diverging from operating profit trends; this points to a heavier reliance on below-OP items and/or one-offs. Interest coverage at 5.1x is adequate, reflecting the still-positive EBIT base relative to financing costs. Overall, profitability quality is mixed: core operations softened, while bottom-line resilience relied on non-operating factors.

Growth Assessment

Topline contraction was marginal (-0.5% YoY), suggesting stable demand but no clear growth catalyst in the period. The sharp drop in operating income (-26.9% YoY) indicates weaker operating efficiency or less favorable product/service mix, which may persist if cost pressures (labor, materials, subcontracting) continue. The divergence between operating income and net income (+18.4% YoY) is unlikely to be sustainable without recurring non-operating gains; thus, earnings quality from a growth perspective is cautious. Asset turnover at 0.553x indicates moderate utilization; without stronger revenue momentum or asset base optimization, ROE uplift via efficiency may be limited. Outlook depends on cost normalization, pricing, and mix improvements; recovering operating margins would be the primary driver of profit growth. In the absence of disclosed backlog/orders or segment detail, the sustainability of revenue is uncertain; the current period suggests stability rather than expansion.

Financial Health

Liquidity is solid: current ratio 159.9%, quick ratio 137.3%, and working capital of ¥2,418.6mn support near-term obligations. Solvency appears sound with debt-to-equity at 0.82x. While the reported equity ratio item is unreported (0 in the feed), a derived equity-to-asset ratio is approximately 58.9% (¥5,655mn / ¥9,605mn), indicating a strong capital base. Interest coverage of 5.1x suggests manageable debt service. Total assets stand at ¥9,605mn with current assets of ¥6,456.8mn, including inventories of ¥913.5mn, implying a comfortable liquidity buffer even after inventory. The capital structure is conservative to moderate leverage, providing flexibility should operating conditions remain soft.

Cash Flow Quality

Operating cash flow of ¥548.1mn is 3.38x net income (¥162mn), signaling strong cash conversion and low accrual intensity in the period. EBITDA of ¥247.0mn is below OCF, implying favorable working capital movements and/or non-cash charges supporting cash generation. Investing cash flows are unreported (shown as 0), so capex and investment intensity cannot be assessed; consequently, reported FCF of 0 reflects data gaps rather than economic reality. Financing cash flow was an outflow of ¥506.0mn, likely debt repayment and/or shareholder returns; absent cash and dividend disclosures, we cannot decompose further. Working capital appears well-managed given strong OCF despite flat revenue; however, without AR/AP detail, the durability of this cash performance is uncertain. Overall, earnings quality is good from a cash standpoint in this period, but sustainability depends on maintaining operating margins and disciplined working capital.

Dividend Sustainability

Dividend data (DPS, payout ratio, and FCF coverage) are shown as 0 in the feed, indicating not disclosed rather than zero distributions. With net income at ¥162mn and strong OCF, internal capacity to fund dividends appears present, but the absence of capex data prevents a robust FCF coverage assessment. Financing cash outflows of ¥506.0mn suggest some capital allocation to debt service and/or shareholder returns, but specifics are unavailable. Policy outlook cannot be inferred without historical DPS or stated payout policies. On a purely earnings basis, a modest payout could be covered; on a cash basis, coverage looks favorable in this period given OCF strength, subject to unknown capex requirements.

Risk Assessment

Business Risks:

• Operating margin pressure from labor, material, and subcontracting cost inflation
• Potential adverse sales mix or pricing competition limiting operating leverage
• Dependence on non-operating or extraordinary gains to support net income
• Demand cyclicality in core end-markets (exact industry mix not disclosed here)
• Execution risk on cost control and SG&A efficiency

Financial Risks:

• Exposure to interest rate changes, though interest coverage is currently adequate at 5.1x
• Potential working capital volatility impacting cash conversion
• Uncertain capex needs due to unreported investing CF, affecting future FCF
• Reliance on financing cash flows (-¥506mn) without clarity on components

Key Concerns:

• Sustained decline in operating profit despite stable revenue
• Net income growth driven by non-operating items, potentially non-recurring
• Lack of disclosure on investing cash flows and cash balance, limiting FCF visibility

Investment Implications

Key Takeaways:

• Core profitability weakened: operating income -26.9% YoY with operating margin at 2.3%
• Net income +18.4% YoY supported by non-operating factors; sustainability uncertain
• Cash generation strong in-period: OCF ¥548mn (OCF/NI 3.38x)
• Balance sheet conservative: derived equity ratio ~58.9%, D/E 0.82x, current ratio ~160%
• Limited operating leverage: EBITDA margin 4.6% and asset turnover 0.553x restrain ROE (2.86%)

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio trend
• Composition of non-operating income and any extraordinary items
• Capex and investing cash flows to establish true FCF
• Working capital metrics (DSO, DIO, DPO) and OCF/NI sustainability
• Interest coverage and net debt movement
• Revenue growth drivers (pricing, mix, order/backlog if disclosed)

Relative Positioning: Versus typical TSE small/mid-cap peers, the company exhibits a strong balance sheet and solid in-period cash generation but delivers below-average ROE due to thin operating margins and modest asset turnover; improving core margins is the key lever for competitive positioning.

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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