JX Advanced Metals Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥396.39B
• Operating Income: ¥70.03B
• Net Income: ¥51.48B
• EPS: ¥46.32

Income Statement

Balance Sheet

Cash Flow Statement

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

For FY2026 Q2 (IFRS, consolidated), JX Metals (50160) delivered solid top-line growth with revenue of 3,963.91 (100M JPY), up 17.6% YoY, translating into net income of 429.41 (100M JPY), up 16.9% YoY. Gross profit was 747.24 (100M JPY), implying an 18.9% gross margin, while SG&A expenses were 465.01 (100M JPY), or 11.7% of revenue. Reported operating income printed at 700.34 (100M JPY), up 2.8% YoY, resulting in an implied operating margin of 17.7%, which notably exceeds the gross margin; this indicates substantial “other operating income” and/or equity-method contributions recognized within operating profit under IFRS presentation. Profit before tax was 678.57 (100M JPY), below operating income, suggesting a net adverse impact from finance/other non-operating items of roughly 21.8 (100M JPY). The effective tax rate was 32.1%, consistent with income tax expense of 218.02 (100M JPY) on PBT. DuPont analysis shows a net profit margin of 10.8%, asset turnover of 0.301x, and financial leverage of 1.79x, yielding an ROE of 5.8% (in line with the reported figure). The equity-method income contribution is sizable at 295.63 (100M JPY), accounting for approximately 44% of PBT, underscoring reliance on affiliates for earnings. On the balance sheet, total assets were 13,170.38 (100M JPY) and equity was 7,337.32 (100M JPY), implying a 47.8% equity ratio and a debt-to-equity ratio of 0.78x, a moderate leverage profile for a nonferrous metals company. Current assets were 4,942.35 (100M JPY), with inventories high at 2,731.87 (100M JPY) and accounts receivable at 1,382.59 (100M JPY), while cash and deposits detail was not disclosed; cash and equivalents at period-end stood at 583.16 (100M JPY). Short-term loans were 1,207.17 (100M JPY) and long-term loans 1,805.42 (100M JPY), pointing to total loans of roughly 3,012.59 (100M JPY). Dividend disclosure is limited; reported Q3 DPS was 91.55 JPY, and the calculated payout ratio is 51.9% versus basic EPS of 46.32 JPY, suggesting a moderate distribution policy. Liquidity ratios (current, quick) and cash flow statements were not reported, limiting precision on short-term funding risk and free cash flow. The mismatch between gross margin and operating margin points to income classification effects under IFRS (e.g., equity-method gains and other operating income), which complicates assessment of core operating profitability. Overall, growth is healthy but operating leverage appears muted when adjusting for affiliate contributions, and earnings quality is partially dependent on non-cash or less controllable sources. With inventories large and short-term loans exceeding cash, working capital management and funding costs warrant monitoring. Data limitations, particularly unreported cash flows, interest expense, and current liabilities, constrain deeper conclusions on cash conversion and coverage metrics.

Profitability Analysis

roe_decomposition: ROE 5.8% = Net margin 10.8% × Asset turnover 0.301 × Financial leverage 1.79x. The ROE is primarily driven by respectable net margins and modest leverage, with low asset turnover reflecting a capital-intensive business. margin_quality: Gross margin at 18.9% (747.24/3,963.91) is consistent with smelting/refining and materials businesses but the reported operating margin of 17.7% (700.34/3,963.91) exceeding gross margin indicates sizable other operating income and/or equity-method gains included within operating profit under IFRS. Equity-method income of 295.63 (100M JPY) is material (~44% of PBT), elevating reported operating profitability versus core manufacturing margin. Net margin of 10.8% is supported by the above and a 32.1% effective tax rate. operating_leverage: Revenue rose 17.6% YoY while operating income rose only 2.8% YoY, implying limited operating leverage in the period. Adjusting conceptually for equity-method and other operating items, core operating leverage likely underperformed, suggesting cost pressures (raw materials/energy), pricing mix, and/or lower processing spreads. Absent segment detail, precise attribution is constrained.

Growth Assessment

revenue_sustainability: Top-line growth of 17.6% YoY is strong, likely aided by metal price/FX tailwinds and higher volumes in materials and recycling. However, inventory levels are high (2,731.87), implying exposure to price swings and potential normalization as markets rebalance. profit_quality: Net income grew 16.9% YoY, but a significant share of earnings stems from equity-method income (295.63) and other operating items. The divergence between gross margin and reported operating margin signals that core manufacturing profitability may be weaker than headline operating income suggests. outlook: Sustained performance will depend on metal price trends (notably copper), treatment/refining charges, FX (JPY/USD), and stability of affiliate earnings. With leverage moderate and equity ratio at 47.8%, the company has capacity to navigate cyclical volatility, but persistence of affiliate-driven earnings and working capital intensity could temper earnings visibility.

Financial Health

liquidity: Current assets are 4,942.35 (100M JPY); current liabilities are unreported, so current and quick ratios are not calculable. Cash and equivalents are 583.16 versus short-term loans of 1,207.17, indicating reliance on short-term funding to bridge working capital. Receivables (1,382.59) and inventories (2,731.87) dominate current assets. solvency: Total liabilities are 5,712.48 against equity of 7,337.32 (equity ratio 47.8%), with a debt-to-equity ratio of 0.78x. Loans total approximately 3,012.59 (short-term 1,207.17; long-term 1,805.42). With PBT of 678.57, leverage appears manageable, but interest expense is unreported; interest coverage cannot be assessed. capital_structure: The mix skews to equity with moderate use of debt. Short-term borrowings are meaningful relative to cash, consistent with a working-capital-intensive model. Absence of disclosed interest-bearing debt total and current liabilities limits further breakdown.

Cash Flow Quality

earnings_quality: Cash flow statements (OCF/ICF/FCF) are unreported, preventing direct assessment of cash conversion. The sizable equity-method income (295.63) suggests a notable portion of earnings may be non-cash or outside the parent’s immediate cash control. fcf_analysis: Free cash flow cannot be calculated due to missing OCF and capex data. Given high inventories and receivables, working capital swings likely impact OCF intra-year; short-term loans exceeding cash indicate potential seasonal funding needs. working_capital: Inventories of 2,731.87 and receivables of 1,382.59 versus payables of 928.26 point to a net working capital investment, typical for the sector. With current liabilities unreported, full cycle dynamics are unclear; monitoring inventory turnover and receivables collection is key.

Dividend Sustainability

payout_ratio_assessment: The calculated payout ratio is 51.9% versus basic EPS of 46.32 JPY, implying a moderate policy within typical Japanese capital return norms. Annual DPS details are otherwise unreported aside from a Q3 DPS of 91.55 JPY. fcf_coverage: FCF coverage is not calculable due to absent OCF/capex data. Given reliance on working capital and equity-method earnings, dividend cover should be evaluated against multi-year cash generation once data are available. policy_outlook: With an equity ratio of 47.8% and moderate leverage, the balance sheet can support a mid-range payout in normal conditions. However, sustainability hinges on cash conversion from core operations rather than affiliate income; absent cash flow disclosure, prudence is warranted.

Risk Assessment

Business Risks:

• Commodity price volatility (notably copper) affecting revenues, margins, and inventory valuation
• Treatment/refining charge fluctuations impacting smelting/refining profitability
• FX risk (JPY/USD) influencing both pricing and translated earnings
• Dependence on equity-method affiliates for a significant share of earnings
• Energy cost variability affecting processing margins
• Supply chain and concentrate availability risks
• Potential environmental/regulatory tightening for smelting, recycling, and advanced materials

Financial Risks:

• Short-term funding reliance with short-term loans (1,207.17) exceeding cash and equivalents (583.16)
• Working capital intensity and potential cash flow volatility due to large inventories and receivables
• Interest rate risk on variable-rate borrowings (interest expense unreported)
• Earnings quality risk from non-cash or less controllable affiliate income

Key Concerns:

• Operating margin above gross margin indicates heavy contribution from non-core operating items and equity-method gains
• Limited transparency due to unreported OCF, capex, current liabilities, and interest expense
• High inventory balance increases exposure to commodity price swings and potential write-down risk if prices fall

Investment Implications

Key Takeaways:

• Strong revenue growth (+17.6% YoY) but modest operating income growth (+2.8% YoY) suggests subdued core operating leverage
• Reported operating margin (17.7%) exceeds gross margin (18.9% gross vs 17.7% operating) dynamics indicating significant other operating/affiliate contributions
• ROE of 5.8% is modest, driven more by margin and moderate leverage than asset efficiency (asset turnover 0.301x)
• Balance sheet is sound with a 47.8% equity ratio, but short-term loans exceed cash, highlighting working capital funding needs
• Earnings quality is mixed due to large equity-method income (295.63), requiring careful cash flow verification

Metrics to Watch:

• Equity-method income proportion of operating income and PBT
• OCF and FCF once disclosed; OCF/NI conversion and capex intensity
• Inventory and receivables turnover; working capital as a % of sales
• Net debt trend and interest coverage (once interest expense is disclosed)
• Copper price, TC/RCs, and JPY/USD rate sensitivity
• Segment margin trends in core operations vs other operating income

Relative Positioning: Within the Japanese nonferrous metals peer set, JX Metals exhibits solid balance sheet strength (equity ratio ~48%) and robust scale, but its FY2026 Q2 profitability appears more reliant on affiliates and other operating items than pure smelting/materials spreads, leaving it comparatively more exposed to earnings quality scrutiny than peers with higher core operating contribution.

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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