Powdertech Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.55B
• Operating Income: ¥189M
• Net Income: ¥99M
• EPS: ¥43.41

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

Powdertech Co., Ltd. (consolidated, JGAAP) delivered steady top-line growth and notable margin improvement in FY2026 Q2 (cumulative), with revenue of ¥4,551m (+1.3% YoY). Operating income rose to ¥189m (+21.8% YoY), outpacing sales growth and indicating positive operating leverage. Ordinary income was ¥215m and net income ¥126m (+27.9% YoY), translating to a net margin of 2.77%. Gross profit was ¥1,100.6m, implying a gross margin of 24.2%, while operating margin reached 4.2% and ordinary margin 4.7%. EBITDA was ¥522.7m (11.5% margin), supported by sizeable depreciation and amortization of ¥333.7m, suggesting a relatively capital-intensive asset base. On a DuPont basis, the reported ROE is 1.0%, decomposing into a 2.77% net margin, 0.29x asset turnover, and 1.24x financial leverage; note that interim-period ROE is typically understated versus full-year outcomes if earnings are not annualized. Liquidity appears strong with a current ratio of 435.6% and quick ratio of 370.2%, reflecting ample current assets (¥8,740m) against current liabilities (¥2,006m). The balance sheet is conservative, with total liabilities of ¥3,034m versus equity of ¥12,624m; equity-to-asset ratio is approximately 80.4% (calculated), despite an undisclosed reported equity ratio. Operating cash flow was robust at ¥565.3m, about 4.5x net income, underpinned by non-cash charges and likely working-capital tailwinds. Interest expense was minimal at ¥0.052m, yielding an extraordinarily high interest coverage of roughly 3,635x, consistent with low leverage. Effective tax rate, inferred from income taxes of ¥52.9m versus ordinary income of ¥215m, is approximately 24–25%, aligned with domestic statutory norms. Inventories stood at ¥1,313m, a manageable 15% of current assets, not indicating excessive build. Financing cash outflow of ¥262.6m suggests repayments or shareholder returns, though dividend data were not disclosed; free cash flow cannot be determined due to the absence of investing cash flow and capex details. Overall, the company combines modest growth with improving profitability, strong liquidity, and conservative solvency, with high-quality cash conversion in the period. Key data gaps (equity ratio, cash balance, investing cash flows, dividend per share, and share count) limit precision in some metrics; analysis focuses on disclosed, non-zero items.

Profitability Analysis

ROE (DuPont): 1.0% = Net margin (2.77%) × Asset turnover (0.29x) × Financial leverage (1.24x). Net margin of 2.77% reflects improvement as operating income rose 21.8% on 1.3% revenue growth, indicating operating leverage and potentially better product mix or cost control. Gross margin at 24.2% provides adequate contribution to cover SG&A; operating margin of ~4.2% suggests room for efficiency gains. EBITDA margin of 11.5% demonstrates healthy cash earnings capacity relative to sales, with D&A (¥333.7m) a large bridge item from EBITDA to EBIT, highlighting capital intensity. Ordinary margin at 4.7% benefits slightly from negligible interest cost (¥0.052m). The uptick in operating income versus modest sales growth signals positive fixed-cost absorption; incremental margins appear strong in the half. Financial leverage is low (assets/equity ~1.24x), so ROE is primarily driven by margins and asset efficiency rather than leverage. Asset turnover of 0.29x (interim, using period-end assets) is typical for asset-heavy industrials and may rise on a full-year basis; any acceleration in shipments could lift this component. Overall profitability quality appears solid, with expanding operating profit on modest sales growth and minimal financing drag.

Growth Assessment

Revenue grew 1.3% YoY to ¥4,551m, indicating stable demand but not a strong cycle upswing. Operating income grew 21.8% YoY to ¥189m and net income 27.9% to ¥126m, implying margin expansion and good cost control. Ordinary income of ¥215m further reflects limited financial expense headwinds. With EBITDA at ¥522.7m, underlying cash earnings outpaced reported EBIT due to significant D&A, a sign of prior-period investments supporting the current run-rate. The quality of growth looks favorable: OCF of ¥565.3m exceeds net income by 4.5x, suggesting earnings are well-supported by cash. The sustainability of revenue growth will depend on order intake, backlog conversion, and end-market conditions; the narrow top-line increase calls for monitoring of pipeline visibility. Given the interim nature of data, seasonality may affect the growth profile; H2 performance will be pivotal for full-year assessment. Mix improvement or procurement savings likely contributed to operating leverage; retention of these gains will determine durability of profit growth. Outlook hinges on maintaining gross margin discipline and controlling SG&A while converting backlog to revenue. Absent capex disclosure, it is unclear whether capacity additions are planned that could support future growth.

Financial Health

Liquidity is strong: current assets ¥8,740m vs current liabilities ¥2,006m produce a current ratio of 435.6% and quick ratio of 370.2%. Working capital is ample at ¥6,733.9m; inventories are ¥1,313.1m, suggesting manageable stock relative to sales and current assets. Solvency is conservative: total liabilities ¥3,034m against equity ¥12,624m, implying a calculated equity ratio of ~80.4% and a liabilities-to-equity (proxy for D/E) of ~0.24x. Interest burden is negligible (¥0.052m), and interest coverage is extremely high (~3,635x), indicating minimal refinancing risk. The capital structure is equity-heavy, affording resilience against cyclical downturns. Cash and equivalents were not disclosed (reported as zero), but given strong OCF and low financial outflows, near-term liquidity risk appears low. No detail on long-term debt composition or maturities was provided; however, the low interest expense implies limited interest-bearing debt.

Cash Flow Quality

Operating cash flow of ¥565.3m versus net income of ¥126.0m yields an OCF/NI ratio of 4.49, indicating strong cash conversion and likely working-capital release plus non-cash D&A add-backs. EBITDA of ¥522.7m aligns closely with OCF, reinforcing earnings quality in the period. Investing cash flows were not disclosed (reported as zero), preventing an assessment of capex intensity and, therefore, true free cash flow; the provided FCF figure of zero should be treated as undisclosed rather than actual. Financing cash outflows of ¥262.6m likely reflect debt repayments and/or shareholder distributions, but dividends and buybacks were not disclosed. Working capital appears well managed given strong OCF alongside modest inventory levels; however, without details on receivables/payables, the specific drivers (collection vs. payables timing) cannot be isolated. Overall, cash flow quality in the half is high, but sustainability needs confirmation once capex and working-capital seasonality are known.

Dividend Sustainability

Dividend per share and payout ratio were not disclosed (reported as zero), so we cannot assess actual distributions. Cash generation capacity looks sufficient for a modest payout: interim net income was ¥126m and OCF ¥565m, suggesting headroom for dividends while maintaining reinvestment. The balance sheet is under-levered with a calculated equity ratio of ~80%, supporting flexibility for returns. However, true FCF coverage cannot be evaluated without capex data; if maintenance and growth capex are substantial (implied by high D&A), coverage could be tighter than OCF suggests. Financing cash outflow of ¥262.6m could include dividends, but the split is unknown. Policy outlook cannot be inferred from available data; any guidance or historical payout trends are not provided. Conclusion: capacity to sustain dividends appears available given current cash generation and balance sheet strength, but confirmation depends on capex disclosure and explicit dividend policy.

Risk Assessment

Business Risks:

• Modest top-line growth (+1.3% YoY) increases reliance on margin management; any input cost inflation could pressure profitability.
• Exposure to industrial demand cycles; delays in customer capex or production could slow orders and shipments.
• Potential raw material and energy cost volatility affecting gross margin.
• Execution risk on operating leverage if volume weakens in H2.
• Supply chain disruptions potentially impacting lead times and inventory levels.
• Customer concentration risk if sales are skewed to a few large accounts (not disclosed).
• FX fluctuations if procurement or sales are denominated in foreign currencies (not disclosed).

Financial Risks:

• Limited disclosure of cash balance and investing cash flows reduces visibility into true liquidity and FCF.
• Potentially high maintenance capex requirements given large D&A (¥333.7m), which could constrain free cash flow.
• Interim-period ratios (e.g., ROE, asset turnover) may not represent full-year performance due to seasonality.
• Unknown debt maturity profile, though interest burden currently negligible.

Key Concerns:

• Lack of capex and cash data prevents robust free cash flow assessment.
• Sustainability of operating margin gains amid only modest revenue growth.
• Dependence on H2 to meet full-year targets given interim nature of results.

Investment Implications

Key Takeaways:

• Operating leverage evident: operating income +21.8% on sales +1.3%.
• Margins improving: gross margin 24.2%, operating margin ~4.2%, ordinary margin ~4.7%.
• Strong cash conversion: OCF/NI 4.49x, supported by D&A and likely working-capital tailwinds.
• Very strong balance sheet: calculated equity ratio ~80% and interest coverage ~3,635x.
• Capex and cash disclosures are insufficient to compute free cash flow and dividend coverage.
• Asset intensity is meaningful (D&A ¥333.7m), which may require ongoing investment.

Metrics to Watch:

• Order backlog and book-to-bill to gauge revenue trajectory beyond +1.3% YoY.
• Gross margin and operating margin sustainability in H2.
• Capex (maintenance vs. growth) and full cash flow statement to derive FCF.
• Inventory turns and receivables days to confirm working-capital health.
• EBITDA to OCF conversion and OCF stability absent working-capital windfalls.
• Dividend policy disclosures and any financing outflow breakdown.
• Asset turnover improvement as shipments normalize.

Relative Positioning: Within industrials with similar capital intensity, the company appears conservatively financed with superior liquidity and minimal interest burden, translating to lower financial risk; profitability is moderate but improving, with cash conversion currently strong, though near-term growth remains modest.

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