COTA CO.,LTD. FY2026 FY Earnings Report

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Executive Summary

The Company ended the period with higher revenue and earnings. In particular, improved SG&A efficiency enabled Operating Income and Ordinary Income to improve at rates exceeding revenue growth. Revenue was ¥9.60B (+2.4% YoY), Operating Income was ¥1.99B (+8.9%), Ordinary Income was ¥2.06B (+12.6%), and Net Income was ¥1.43B (+10.1%). The Operating Margin improved to 20.8% from 19.5% in the previous year, a +1.3pt improvement, primarily due to the decline in the SG&A ratio (48.6% versus 50.0% in the previous year). Although the Company forecasts higher revenue (+5.5%) for the next fiscal year, it expects lower Operating Income (-8.3%); therefore, the sustainability of the current period’s margin improvement will be a key focus going forward.

Factors Affecting Financial Performance

【Revenue】Revenue was ¥9.60B, representing moderate growth of +2.4% YoY. Although segment-level disclosure is not available and detailed information regarding volume and unit prices on a company-wide basis cannot be confirmed, the growth rate has slowed somewhat from the previous year.

【Profit and Loss】Operating Income increased 8.9% to ¥1.99B, exceeding the revenue growth rate. While the cost of sales ratio was broadly flat (gross margin of 69.4% versus 69.6% in the previous year), the SG&A ratio declined by -1.4pt to 48.6% from 50.0%, with improved fixed-cost absorption serving as the primary driver of the margin expansion. Ordinary Income increased 12.6% to ¥2.06B, with the increase in non-operating income—comprising dividend income of ¥0.03B, interest income of ¥0.02B, and other items totaling ¥0.08B—providing an additional contribution. Extraordinary losses, including losses on retirement of fixed assets, were limited to ¥0.03B, or approximately 2% of Net Income, indicating only a minor impact from one-time factors. Net Income was ¥1.43B, up 10.1%; overall, the Company achieved higher revenue and earnings.

Key Financial Indicators

【Profitability】The Operating Margin improved to 20.8% from 19.5% in the previous year, a +1.3pt improvement, while the Net Profit Margin also improved to 14.9% from 13.9%, a +1.0pt improvement. ROE rose slightly to 11.9% from 11.7%, as the improvement in the Net Profit Margin more than offset the decline in the Total Asset Turnover Ratio (0.61x versus 0.63x in the previous year). 【Cash Flow Quality】Operating Cash Flow (OCF) was 1.24x Net Income (¥1.78B/¥1.43B), indicating good quality; however, OCF/EBITDA remained at 0.77x, with the increase in working capital somewhat restraining cash conversion. 【Investment Efficiency】The Total Asset Turnover Ratio declined slightly YoY to 0.61x. Capital expenditures of ¥0.11B compared with depreciation and amortization of ¥0.31B resulted in CapEx/depreciation and amortization of 0.34x, indicating a restrained level of investment. 【Financial Soundness】The Equity Ratio improved to 76.3% from 75.3% in the previous year, while the Current Ratio was 402% and the Debt-to-Equity Ratio was 0.31x. The financial base remains conservative, with no concerns regarding short-term payment capacity.

Cash Flow Analysis

Operating Cash Flow increased substantially by +78.8% YoY to ¥1.78B, reaching 1.24x Net Income of ¥1.43B. Investing Cash Flow was -¥0.84B, primarily comprising deposits into time deposits (-¥0.30B) and capital expenditures (-¥0.11B). Financing Cash Flow was -¥0.56B, mainly reflecting dividend payments (-¥0.55B), while share repurchases remained negligible (-¥0.00B). Free Cash Flow, calculated as the sum of Operating Cash Flow and Investing Cash Flow, was positive at ¥0.94B, providing ample coverage of total dividends of ¥0.55B. Cash and deposits stood at a substantial ¥6.05B, and there are no concerns regarding short-term liquidity.

Earnings Quality

Non-operating income was ¥0.08B—including dividend income of ¥0.03B and interest income of ¥0.02B—and remained below 1% of revenue, indicating a low level of dependence on non-core earnings. Extraordinary losses, including losses on retirement of fixed assets, were ¥0.03B, or approximately 2% of Net Income, and were minor. The gap between Ordinary Income and Net Income was primarily attributable to the recognition of income taxes and other taxes, with an effective tax rate of approximately 29.6%; no significant distortion was identified. The accrual ratio (the difference between Net Income and Operating Cash Flow divided by total assets) was -2.2%, indicating a favorable level at which Operating Cash Flow exceeded Net Income. Meanwhile, increases in inventories (+8.5%) and trade receivables (+5.3%) placed pressure on working capital, and the fact that OCF/EBITDA remained at 0.77x is a monitoring point from the perspective of the speed of earnings conversion into cash.

Earnings Forecasts and Guidance

For the next fiscal year, the Company forecasts Revenue of ¥10.13B (+5.5% versus the current period), Operating Income of ¥1.83B (-8.3%), Ordinary Income of ¥1.93B (-6.5%), and Net Income of ¥1.29B (-9.9%), representing a plan for higher revenue but lower earnings. The forecast appears to incorporate the possibility that the improvement in the SG&A ratio and the contribution from higher non-operating income observed in the current period will partially reverse in the next fiscal year. Forecast EPS is ¥44.38, down -9.9% from actual EPS of ¥49.27 in the current period. The dividend forecast is ¥0.00, but the Company plans a stock split effective April 1, 2026, at a ratio of 1.05 shares of common stock for each existing share. Accordingly, the post-split dividend level appears to be undetermined as of the date of this report.

Shareholder Returns

The dividend for the current period was ¥20 at fiscal year-end, with no interim dividend, resulting in an annual dividend of ¥20. The Payout Ratio declined to 38.7% from 42.7% in the previous year. Share repurchases were negligible at -¥0.00B, and the Total Return Ratio was therefore approximately at the same level as the Payout Ratio. Against Free Cash Flow of ¥0.94B, total dividends were ¥0.55B, representing sufficient FCF coverage of approximately 1.7x. In light of the substantial cash on hand of ¥6.05B, there are no concerns regarding the sustainability of the current period’s dividend level. Although the dividend forecast for the next fiscal year is ¥0.00, this reflects an undetermined figure ahead of the stock split scheduled for April 2026 and does not indicate a policy of paying no dividend.

Risk Factors

1. Inventory accumulation: Inventories increased 8.5% YoY to ¥1.56B. Inventory days (inventories ÷ cost of sales × 365) were approximately 193 days, requiring attention to the risk of valuation losses and discounting in the event of demand fluctuations.

2. Lengthening of trade receivables collection period: Trade receivables increased 5.3% YoY to ¥1.66B. Trade receivables days (trade receivables ÷ revenue × 365) were approximately 63 days, and any lengthening of collection terms should be monitored for its impact on liquidity.

3. Restrained capital expenditures: Capital expenditures of ¥0.11B were below depreciation and amortization of ¥0.31B, leaving CapEx/depreciation and amortization at 0.34x. If restrained replacement investment continues, its impact on medium-term production capacity and efficiency could become an issue.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Profitability substantially exceeded the industry median for both the Operating Margin and Net Profit Margin, placing the Company in the upper tier even among manufacturing companies.

Growth and Capital Efficiency

The Revenue Growth Rate was slightly below the industry median, indicating that growth has been relatively moderate compared with the Company’s high level of profitability.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The Operating Margin of 20.8% versus 19.5% in the previous year improved as a result of the decline in the SG&A ratio (-1.4pt). Whether the efficiency of the cost structure has become established will be a key focus going forward.

2. The pace of increase in inventories and trade receivables (+8.5% and +5.3%, respectively) exceeded the Revenue Growth Rate (+2.4%). The evolution of the working-capital burden, reflected in OCF/EBITDA of 0.77x, will be an observation point for assessing cash-generation capacity.

3. Although the forecast for the next fiscal year calls for higher revenue, it anticipates an -8.3% decline in Operating Income. This will help determine whether the profitability level achieved in the current period represents temporary or structural improvement.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation to take any specific investment action.

Sensitivity: ¥425–¥452 at Cost of Equity ±1%, and ¥438–¥439 at ω±0.1.

(Calculation model: residual income model / Interest rate reference month: 2026-06 / This value does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility and, where necessary, after consulting with a professional advisor.

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