S&J Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.10B
• Operating Income: ¥278M
• Net Income: ¥193M
• EPS: ¥34.87

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

S&J Co., Ltd. (single-entity, JGAAP) delivered a strong FY2026 Q2 (first half) performance with topline growth translating into outsized profit expansion, indicating meaningful operating leverage. Revenue rose 21.5% YoY to ¥1,104m, while operating income increased 47.8% YoY to ¥278m and net income climbed 48.9% YoY to ¥193m. Operating margin expanded to 25.2%, supported by a solid gross margin of 39.5% and disciplined operating cost control. Ordinary income (¥280m) was essentially in line with operating income, suggesting minimal non-operating gains or losses and a clean earnings profile. The effective tax burden appears around 21.2% (¥59.4m tax on approximately ¥280m pre-tax), which is reasonable for a domestic single-entity filer. DuPont analysis indicates a calculated ROE of 8.91%, driven by a net margin of 17.5%, asset turnover of 0.365x, and moderate financial leverage of 1.40x; given this is a half-year snapshot, full-year ROE could differ depending on back-half seasonality. Liquidity is strong with a current ratio of 319% and working capital of ¥1,541m, reflecting ample short-term financial flexibility. The balance sheet shows total liabilities entirely current at ¥702m and total equity of ¥2,165m, implying a liabilities-to-equity ratio of ~0.32x and modest leverage. Operating cash flow was ¥148m, equivalent to 0.77x of net income, indicating some working capital investment or timing effects despite robust profitability. EBITDA of ¥296m (26.8% margin) underscores healthy cash earnings potential, with limited D&A (¥18m) reinforcing the asset-light nature of the model. With inventories not disclosed and gross margin near 40%, the business likely skews to services and intellectual capital rather than heavy asset intensity. Dividend information is not disclosed for the period; EPS was ¥34.87, implying roughly 5.5 million weighted-average shares outstanding. Several datapoints (cash and equivalents, investing cash flows, equity ratio, interest expense, dividends, share count) are flagged as zero in the raw feed but should be treated as undisclosed, not actual zeros. Overall, the company demonstrates strong execution in H1 with improving margins and leverage to growth, backed by a conservative balance sheet; the key watchpoint is converting earnings to cash as growth scales. Outlook hinges on sustaining demand momentum and preserving pricing and utilization while managing receivables and headcount-related costs.

Profitability Analysis

ROE_decomposition_DuPont:

• net_profit_margin: 17.48%
• asset_turnover: 0.365x
• financial_leverage: 1.40x (Assets/Equity ≈ ¥3,028m/¥2,165m)
• calculated_ROE: 8.91% (half-year snapshot; not annualized) margin_quality:
• gross_margin: 39.5% (¥435.6m/¥1,104m)
• operating_margin: 25.2% (¥278m/¥1,104m), up materially YoY given OI +47.8% vs revenue +21.5%
• ordinary_income_margin: 25.4%
• net_margin: 17.5%
• EBITDA_margin: 26.8% with modest D&A of ¥18.3m (asset-light profile) operating_leverage:
• growth_vs_margin_expansion: Revenue +21.5% YoY vs operating income +47.8% YoY suggests strong operating leverage.
• implied_prior_op_margin: Approx. 20.7% last year H1 (back-solved), expanding to 25.2% (+~4.5pp).
• drivers: Cost discipline and scale benefits in SG&A; non-operating items minimal so margin gains are operational.

Growth Assessment

revenue_sustainability: 21.5% YoY growth indicates robust demand; sustainability will depend on pipeline/backlog, customer retention, and pricing. profit_quality: Ordinary ≈ operating income signals clean core earnings; tax rate ≈21% is in a normal range. outlook: If demand and pricing hold, H2 could maintain elevated margins given operating leverage; key sensitivities include utilization, hiring pace, and receivables collection impacting OCF.

Financial Health

liquidity:

• current_ratio: 319.5% (¥2,242.5m/¥701.8m)
• quick_ratio: 319.5% (no inventories disclosed)
• working_capital: ¥1,540.7m solvency_and_capital_structure:
• total_assets: ¥3,028m
• total_liabilities: ¥701.8m (all current)
• total_equity: ¥2,165m
• debt_to_equity: 0.32x (using total liabilities as proxy; no interest expense disclosed)
• notes: Interest expense not disclosed; long-term debt not disclosed; equity ratio figure in raw feed (0.0%) should be treated as undisclosed.

Cash Flow Quality

earnings_quality:

• OCF_to_Net_Income: 0.77x (¥147.7m/¥193.0m) — below 1.0 suggests working capital investment or timing of collections.
• tax_cash_alignment: Tax expense ~¥59.4m implies ~21% rate; cash taxes not disclosed. FCF_analysis:
• operating_CF: ¥147.7m
• investing_CF: Not disclosed (raw feed shows 0; treat as missing), so FCF cannot be reliably computed.
• capex_proxy: D&A was ¥18.3m; actual capex not disclosed. Asset-light model implies modest capex but confirmation needed. working_capital_dynamics: No inventories; receivables and payables breakdown not disclosed. Given OCF < NI, likely growth-driven receivables build or reduced advances; monitor collection cycles closely.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio not disclosed for the period; EPS was ¥34.87 for H1. FCF_coverage: Not assessable due to undisclosed investing cash flows and capex; OCF is positive but below net income. policy_outlook: With modest leverage and strong profitability, capacity exists for future distributions, but management’s policy and cash conversion track record are key; current period provides insufficient disclosure to infer policy changes.

Risk Assessment

Business Risks:

• Demand cyclicality or budget timing in customers that could slow project starts and affect H2 conversion.
• Pricing pressure and competition potentially compressing gross margins.
• Talent acquisition and retention in a likely services/knowledge-intensive model, with wage inflation risk.
• Customer concentration risk (not disclosed) that could amplify volatility.
• Execution risk in scaling delivery while maintaining utilization and quality.

Financial Risks:

• Cash conversion risk: OCF at 0.77x of net income indicates working capital sensitivity.
• Short-term liability profile: all liabilities current, requiring consistent liquidity management.
• Disclosure gaps: lack of visibility on cash, investing flows, and debt terms impedes assessment of refinancing or covenant risks.
• Tax rate variability around ~21% affecting net margin if incentives or deductions change.

Key Concerns:

• Undisclosed cash and equivalents and investing cash flows hinder FCF and dividend capacity analysis.
• Sustaining operating margin gains while continuing to invest in growth.
• Receivables collection timing and potential buildup in a growing revenue base.

Investment Implications

Key Takeaways:

• Strong H1 operating leverage: revenue +21.5% YoY, operating income +47.8% YoY; operating margin expanded to ~25%.
• Clean earnings mix with ordinary ≈ operating income; effective tax rate ~21%.
• Robust liquidity with current ratio ~3.2x and working capital ~¥1.54bn; modest leverage (~0.32x liabilities/equity).
• Cash conversion lagging earnings (OCF/NI 0.77x), likely from working capital investment.
• FCF and capex not disclosed; EPS ¥34.87 implies ~5.5m shares on a weighted-average basis.

Metrics to Watch:

• OCF/Net income ratio and receivables days to gauge cash conversion.
• Operating margin trajectory and SG&A as a percent of sales to test operating leverage durability.
• Backlog/ARR/pipeline and churn/retention (if applicable) to validate revenue sustainability.
• Headcount growth, utilization, and wage inflation to monitor cost discipline.
• Customer concentration and new logo wins to diversify revenue base.
• Capex and investing cash flows to assess FCF and capital intensity.

Relative Positioning: Within asset-light, services-oriented models, S&J shows above-average margin expansion and conservative leverage; disclosure gaps on cash and capex limit comparability on FCF and dividend capacity.

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