Mipox Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.69B
• Operating Income: ¥235M
• Net Income: ¥458M
• EPS: ¥18.96

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

Mipox Co., Ltd. (5381) posted modest topline growth in FY2026 Q2 with revenue of ¥5,693 million (+1.1% YoY), but profitability deteriorated materially as operating income fell 63.1% YoY to ¥235 million. Gross profit was ¥2,232 million, implying a resilient gross margin of 39.2%, yet the operating margin compressed to 4.1%, indicating pronounced pressure from higher SG&A or adverse mix. Ordinary income of ¥194 million suggests incremental non-operating costs (including ¥35 million interest expense) weighed on results. Net income was ¥265 million (-42.0% YoY), exceeding ordinary income due to a tax benefit (income tax expense of -¥15 million) and potentially other below-the-line factors under JGAAP. DuPont metrics indicate ROE at 3.14%, driven by a 4.65% net margin, 0.329x asset turnover, and 2.05x financial leverage, underscoring weak profitability as the primary constraint. Despite earnings pressure, operating cash flow was solid at ¥848 million, delivering an OCF/Net Income ratio of 3.20, which points to good earnings-to-cash conversion. The balance sheet shows total assets of ¥17,285 million and total equity of ¥8,442 million, with a debt-to-equity ratio of 0.88x and current ratio of 155.6%, indicating acceptable solvency and liquidity. Working capital of ¥3,027 million and a quick ratio of 141.6% further support near-term balance sheet resilience. Interest coverage stands at 6.7x, adequate for current leverage but with less buffer if operating income remains depressed. EBITDA was ¥537 million (9.4% margin), highlighting limited operating leverage in the period given revenue growth failed to translate to EBITDA expansion. The reported equity ratio is shown as 0.0% in the data extract, but this appears to be an undisclosed item rather than zero (equity exists), so we rely on balance sheet figures for solvency analysis. Dividend distribution remains suspended (DPS ¥0, payout 0%), and financing cash outflows of ¥622 million likely reflect debt service or other balance sheet actions rather than shareholder returns. Several data points are undisclosed (e.g., cash balance, investing cash flows), which constrains full assessment of free cash flow and liquidity buffers. Overall, the quarter reflects resilient gross profitability but significant operating margin compression, satisfactory liquidity, moderate leverage, and strong cash conversion—against a backdrop of cyclical end-markets where management likely prioritized investment and cost to protect medium-term competitiveness.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.65%
• asset_turnover: 0.329x
• financial_leverage: 2.05x
• calculated_ROE: 3.14%
• commentary: ROE is primarily constrained by low net margin; leverage is moderate and asset turns are modest for a specialty materials/industrial niche. margin_quality:
• gross_margin: 39.2%
• operating_margin: 4.1%
• ordinary_margin: 3.4%
• net_margin: 4.65%
• observations: - Operating margin fell sharply versus prior year despite stable gross margin, implying SG&A inflation, higher R&D, or unfavorable product/regional mix. - Net margin exceeded ordinary margin due to a tax benefit and/or below-the-line gains under JGAAP. operating_leverage: Negative operating leverage in the period: revenue +1.1% YoY but operating income -63.1% YoY, indicating fixed cost dilution and/or reinvestment outweighing modest sales growth.

Growth Assessment

revenue_sustainability: Topline grew 1.1% YoY to ¥5.69bn, indicating stable but tepid demand. For an abrasives/polishing materials supplier, this likely reflects mixed trends across semiconductors, HDD/optics, and industrial customers. profit_quality: Profitability was supported by a robust gross margin but offset by higher operating costs; ordinary income trailed operating income due to non-operating expenses (including interest), while net income benefited from a tax credit. outlook: Near-term recovery hinges on end-market normalization (notably semiconductor-related orders), cost control, and mix improvement. With EBITDA margin at 9.4% and interest coverage 6.7x, incremental volume recovery could quickly lift margins, but if revenue stays flat, SG&A burden will cap earnings.

Financial Health

liquidity:

• current_ratio: 155.6%
• quick_ratio: 141.6%
• working_capital: ¥3,026,558,000
• commentary: Liquidity appears adequate with strong coverage of current liabilities and relatively low inventories (¥764m) versus current assets. solvency:
• debt_to_equity: 0.88x
• interest_coverage: 6.7x
• equity_ratio_note: Reported equity ratio shows 0.0% due to non-disclosure in the extract; based on totals, equity is ¥8.44bn vs. assets ¥17.29bn, implying a solid capital base. capital_structure: Moderate leverage with capacity to absorb cyclical volatility; however, a prolonged earnings downturn could pressure coverage ratios.

Cash Flow Quality

earnings_quality: OCF/Net Income at 3.20x indicates high cash realization of earnings, aided by working capital inflows and non-cash D&A of ¥302m. FCF_analysis: Free cash flow cannot be reliably computed as investing cash flows are undisclosed in the extract (reported as 0 to indicate not reported). OCF was strong at ¥848m; net financing outflow of ¥622m suggests balance sheet management (debt reduction or lease/service of obligations). working_capital: Current assets ¥8.47bn vs. current liabilities ¥5.44bn; inventory is modest relative to current assets, implying manageable obsolescence risk and decent turns, though detailed turnover metrics are not disclosed.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is 0.0% with DPS at ¥0, consistent with a conservative stance amid profit compression. FCF_coverage: FCF coverage cannot be assessed due to unreported investing cash flows; however, strong OCF suggests capacity to resume dividends when profitability normalizes. policy_outlook: Given margin pressure and ongoing reinvestment needs in cyclical tech end-markets, a cautious dividend stance is reasonable until earnings visibility improves.

Risk Assessment

Business Risks:

• Cyclical demand in semiconductors, HDD/optics, and precision manufacturing end-markets
• Product mix shifts affecting gross margin (e.g., shift to lower-margin segments)
• Customer concentration and pricing pressure from key OEMs
• Raw material cost volatility (petrochemical derivatives, specialty films, abrasives)
• Supply chain disruptions impacting lead times and costs
• Technology transition risk requiring sustained R&D (e.g., next-gen polishing/media)
• FX exposure from exports and overseas subsidiaries (USD/JPY, CNY/JPY)

Financial Risks:

• Margin compression reducing interest coverage from the current 6.7x
• Moderate leverage (0.88x D/E) amplifying earnings volatility
• Working capital swings that could dampen OCF in downcycles
• Potential covenant constraints if profitability weakens further
• Limited visibility on cash and investing flows due to disclosure gaps

Key Concerns:

• Sharp YoY decline in operating income (-63.1%) despite stable gross margin
• Reliance on tax benefits and below-the-line items to support net income
• Undisclosed cash and investing CF limit clarity on true liquidity and FCF

Investment Implications

Key Takeaways:

• Topline steady (+1.1% YoY) but operating margin compressed to 4.1%
• ROE at 3.14% reflects low profitability rather than excessive leverage
• Strong OCF (¥848m) underscores good cash conversion amid weaker earnings
• Liquidity sound (current ratio 156%, quick ratio 142%) with moderate leverage (D/E 0.88x)
• Interest coverage at 6.7x is adequate but sensitive to earnings trajectory

Metrics to Watch:

• Gross and operating margin trend (cost control and mix)
• Order momentum in semiconductor-related segments
• OCF sustainability and movements in inventories/receivables
• Capex and investing cash flows once disclosed (to assess FCF)
• Leverage and interest coverage as financing cash flows continue
• FX impacts on revenue and margins

Relative Positioning: Within Japan’s specialty materials/abrasives space, the company exhibits balanced liquidity and moderate leverage but currently trails on profitability metrics, leaving upside leverage to any cyclical demand recovery and mix improvement.

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