S Science Company,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥359M
• Operating Income: ¥-162M
• Net Income: ¥-267M
• EPS: ¥-1.86

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

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

For FY2026 Q2 (JGAAP, non-consolidated), S Science Co., Ltd. reported revenue of ¥359 million, flat year-on-year per disclosure, with a gross profit of ¥87.7 million (gross margin 24.4%). Despite a positive gross margin, operating income was a loss of ¥162 million, indicating substantial fixed costs in SG&A and limited operating scale. Ordinary loss widened to ¥265 million and net loss to ¥267 million (EPS -¥1.86), underscoring weak core and non-operating performance. DuPont decomposition points to a deeply negative net margin (-74.4%), very low asset turnover (0.047x), and moderate leverage (assets/equity 1.74x), yielding a reported and calculated ROE of -6.08%. The balance sheet shows total assets of ¥7.632 billion and total equity of ¥4.39 billion; based on these figures, an indicative equity ratio is about 57.5%, although the reported equity ratio field shows 0.0% and should be treated as undisclosed rather than zero. Current assets are ¥2.913 billion against current liabilities of ¥33 million, implying a very high current ratio (~87.5x), but operating cash flow was a large outflow (¥-3.182 billion), signaling liquidity quality concerns despite headline coverage metrics. Financing cash inflow of ¥4.800 billion funded the period’s cash needs, indicating a reliance on external funding while investing cash flows were not disclosed. Cash and equivalents are shown as 0 (undisclosed), limiting visibility on immediate liquidity. The company paid no dividend (DPS ¥0), consistent with losses and negative operating cash flow. EBITDA appears undisclosed (displayed as 0), but the operating loss implies negative EBITDA. Interest expense is undisclosed, and the interest coverage metric cannot be interpreted. Working capital is sizable at ¥2.879 billion, but the cash conversion remains unfavorable given the OCF shortfall. Overall, the company remains sub-scale with negative profitability and heavy dependence on financing cash flows, and near-term improvement would require either meaningful revenue growth, material cost restructuring, or asset monetization. Data are non-consolidated and include several undisclosed line items, which constrains depth of analysis; conclusions are therefore indicative and based strictly on available non-zero data.

Profitability Analysis

ROE_decomposition: Net profit margin -74.37% x asset turnover 0.047 x financial leverage 1.74 = ROE -6.08% (reported and calculated). The negative margin is the dominant driver; asset turnover is also very low, while leverage is moderate and not a material offset. margin_quality: Gross margin of 24.4% suggests some pricing power or favorable mix on a small base, but the translation to operating loss (¥-162 million) indicates SG&A and fixed costs outweigh gross profits at current volumes. Ordinary loss (¥-265 million) expands the deficit, implying adverse non-operating items or low financial income. operating_leverage: The gap between gross profit (¥87.7 million) and operating loss (¥-162 million) points to high operating leverage and insufficient scale. Small revenue fluctuations could materially swing operating profit, but the current level is far below break-even.

Growth Assessment

revenue_sustainability: Revenue was ¥359 million and disclosed as flat YoY (+0.0%). The low base and negative operating result suggest limited scale and potential volatility. No segment or driver details are provided to assess durability. profit_quality: Losses at operating, ordinary, and net levels indicate weak earnings quality. The negative OCF (¥-3.182 billion) versus net loss (¥-267 million) suggests additional cash drains beyond accounting losses (e.g., working capital movements or other operating outflows). outlook: Without disclosure of order backlog, pipeline, or cost restructuring plans, near-term profit recovery appears dependent on either significant revenue acceleration or cost base reductions. The dependence on financing inflows to offset operating outflows heightens execution risk.

Financial Health

liquidity: Current assets ¥2,912.6 million vs. current liabilities ¥33.3 million imply a headline current ratio ~87.5x and strong working capital of ¥2,879.3 million. However, operating cash flow is deeply negative, and cash balances are undisclosed, tempering the apparent strength. solvency: Total assets ¥7,632.0 million and equity ¥4,390.0 million imply an indicative equity ratio ~57.5% and financial leverage 1.74x. Debt-to-equity is reported at 0.03x, suggesting low interest-bearing debt, but interest expense is undisclosed. capital_structure: Liabilities are modest at ¥135.6 million versus equity of ¥4,390.0 million. The company appears equity-heavy, with recent cash needs funded primarily via financing inflows (¥4.800 billion), implying potential reliance on equity or other financing sources.

Cash Flow Quality

earnings_quality: OCF of ¥-3,181.8 million far exceeds the net loss of ¥-267.0 million in magnitude (OCF/NI ratio shown as 11.92 on an absolute basis), indicating poor cash conversion and likely significant adverse working capital or other operating outflows. FCF_analysis: Investing CF is undisclosed (shown as 0), so reported FCF is not meaningful. Using available data, OCF alone implies FCF is likely deeply negative for the period. working_capital: Current assets are large relative to current liabilities, but inventories are undisclosed and the large negative OCF suggests either increases in receivables/other current assets or decreases in payables/advances. The cash cycle appears unfavorable in the period.

Dividend Sustainability

payout_ratio_assessment: No dividend (DPS ¥0; payout ratio 0%) is consistent with losses (EPS -¥1.86) and negative operating cash flow. FCF_coverage: With OCF deeply negative and investing CF undisclosed, sustainable dividend capacity is not evident. policy_outlook: Absent a return to positive earnings and cash generation, reinstating dividends appears unlikely in the near term; policy visibility is limited due to non-disclosure of detailed cash and capex plans.

Risk Assessment

Business Risks:

• Sub-scale revenue base (¥359 million) leading to operating losses and high operating leverage
• Dependence on non-operating items and financing flows to sustain operations
• Potential revenue volatility due to limited diversification (details not disclosed)
• Execution risk in achieving break-even through growth or cost restructuring
• Limited disclosure granularity (segment drivers, capex, cash balance)

Financial Risks:

• Large negative operating cash flow (¥-3.182 billion) despite modest accounting loss
• Reliance on financing inflows (¥4.800 billion) to fund operations
• Unclear immediate liquidity due to undisclosed cash and equivalents
• Potential dilution or refinancing risk if external funding remains necessary
• Low asset turnover (0.047x) constraining returns

Key Concerns:

• Sustained negative profitability at all levels (operating, ordinary, net)
• Cash burn far exceeding accounting losses
• High working capital intensity or unfavorable movement implied by OCF
• Disclosure gaps (cash, investing flows, inventories, interest expense) limiting visibility

Investment Implications

Key Takeaways:

• ROE -6.08% driven primarily by severe margin weakness and low asset turnover
• Gross margin positive (24.4%) but insufficient to cover fixed costs; high operating leverage
• OCF markedly negative (¥-3.182 billion), financed by ¥4.800 billion inflows
• Balance sheet appears equity-heavy with moderate leverage (assets/equity 1.74x)
• Headline liquidity strong by ratios, but cash conversion weak and cash balance undisclosed
• Dividend suspended (DPS ¥0) and unlikely to resume without cash recovery

Metrics to Watch:

• Quarterly OCF and working capital movements (receivables, advances, payables)
• Revenue trajectory and gross margin sustainability
• SG&A run-rate and cost restructuring progress toward break-even
• Composition and terms of financing inflows; potential dilution or leverage changes
• Cash and equivalents disclosure; investing CF/capex plans

Relative Positioning: Relative to TSE peers, the company appears sub-scale with weaker profitability, significantly lower asset turnover, and heavier reliance on financing to support operations; balance sheet leverage is moderate, but cash conversion is substantially weaker.

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