NIPPON SHINDO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥13.82B
• Operating Income: ¥733M
• Net Income: ¥299M
• EPS: ¥140.11

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

Nihon Shindo (57530) reported FY2026 Q2 (single-entity, JGAAP) results showing resilient topline but pressured profitability. Revenue rose 7.7% YoY to ¥13.823bn, yet operating income fell 31.0% YoY to ¥733m, indicating notable margin compression. Gross profit was ¥1.492bn, implying a gross margin of 10.8%, while the operating margin declined to 5.3%. Ordinary income of ¥436m fell below operating income, pointing to sizable non-operating losses or expenses of roughly ¥297m in the period. Net income was ¥299m, down 44.9% YoY, with an estimated effective tax burden around the mid-40% range when inferred from tax expense of ¥247m, though pre-tax income is not disclosed. EBITDA was ¥790m and the EBITDA margin 5.7%, only modestly above the operating margin due to low depreciation of ¥57m, suggesting a relatively light recent capital intensity. DuPont metrics show a net margin of 2.16%, asset turnover of 0.818x, and financial leverage of 1.38x, yielding an ROE of 2.44% for the period. Liquidity is strong: current ratio 326.2%, quick ratio 295.1%, and working capital of ¥9.266bn. The balance sheet remains conservative with D/E at 0.37x and total equity of ¥12.232bn against total assets of ¥16.897bn. Operating cash flow was ¥316m, slightly exceeding net income (OCF/NI = 1.06), indicating broadly aligned earnings and cash generation for the half. Inventory of ¥1.276bn versus COGS of ¥11.342bn implies robust inventory turns for a metals processor in this period. The reported effective tax rate of 0.0% in the calculated metrics is not relied upon due to data limitations; actual tax expense is material. Dividend and share data (DPS, shares outstanding, cash and equivalents, investing CF) are not disclosed in the provided XBRL line items, limiting assessment of distributions and cash balances. Overall, the company exhibits solid liquidity and low leverage but faces profit headwinds likely tied to input-price dynamics, pricing lags, and non-operating items. Near-term focus should be on restoring operating and ordinary margins while maintaining working capital discipline.

Profitability Analysis

ROE_decomposition: ROE 2.44% = Net margin 2.16% × Asset turnover 0.818 × Financial leverage 1.38. The key drag is lower net margin despite reasonable asset efficiency and modest leverage. margin_quality: Gross margin 10.8% and operating margin 5.3% indicate compression versus prior year as operating income fell 31% despite +7.7% revenue growth. Ordinary margin is 3.15% (¥436m/¥13,823m), suggesting meaningful non-operating losses/expenses (e.g., hedging, FX, valuation). Estimated effective tax burden is material given tax expense of ¥247m; reported 0.0% ETR is not usable. operating_leverage: Negative operating leverage evident: revenue +7.7% YoY but operating income -31.0% YoY, implying higher input costs, weaker spreads, adverse mix, or limited pass-through. EBITDA margin (5.7%) is only slightly above operating margin due to low D&A, so margin headwinds are primarily at the gross/operating level rather than depreciation.

Growth Assessment

revenue_sustainability: Topline reached ¥13.823bn (+7.7% YoY), supported likely by volume recovery and/or metal price pass-through. Asset turnover of 0.818x for the half (annualized ~1.6x) suggests healthy utilization. profit_quality: Net margin 2.16% and the gap between operating and ordinary income indicate profit sensitivity to non-operating factors. OCF/NI of 1.06 supports the quality of reported earnings for the period. outlook: Near-term growth depends on stability of copper/brass spreads, the effectiveness and timing of price pass-through clauses, and normalization of non-operating items. With strong liquidity and low leverage, the company has capacity to navigate volatility, but restoring operating and ordinary margins is key for earnings growth.

Financial Health

liquidity: Current assets ¥13.362bn vs current liabilities ¥4.096bn yields a current ratio of 326.2% and quick ratio 295.1% (inventory ¥1.276bn). Working capital stands at ¥9.266bn, indicating ample short-term coverage. solvency: Total liabilities ¥4.565bn vs equity ¥12.232bn (D/E 0.37x) reflect a conservative capital structure. Interest expense is only ¥2m with interest coverage ~366x, implying minimal financial risk from borrowing costs. capital_structure: Assets ¥16.897bn financed predominantly by equity (leverage 1.38x). Capacity exists to deploy more leverage if needed, though current profitability softness argues for caution.

Cash Flow Quality

earnings_quality: Operating CF of ¥316m slightly exceeds net income of ¥299m (OCF/NI 1.06), signaling limited accrual buildup in the period. FCF_analysis: Investing CF and capex are undisclosed, and reported FCF is shown as 0 due to lack of data, not true zero. Given low D&A (¥57m), maintenance capex is likely modest, but actual FCF cannot be determined. working_capital: Inventory ¥1.276bn vs COGS ¥11.342bn implies strong turns for the half. Receivables/payables data are not disclosed, limiting deeper WC diagnostics, but positive OCF suggests working capital management did not materially detract from cash generation.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥140.11, but DPS and payout ratio are reported as 0.00 due to non-disclosure in the dataset. Therefore, payout cannot be assessed from the provided figures. FCF_coverage: FCF coverage shown as 0.00x is not meaningful because investing cash flows are not disclosed. True dividend coverage by FCF cannot be evaluated. policy_outlook: With low leverage and strong liquidity, the balance sheet could support distributions, but margin pressure and lack of disclosed DPS suggest a cautious stance until profitability normalizes and capex needs are clarified.

Risk Assessment

Business Risks:

• Commodity price and spread volatility for copper/brass products
• Pricing lag risk between input costs and customer pass-through
• Demand cyclicality in electronics, automotive, electrical equipment, and construction end-markets
• Energy and logistics cost inflation impacting conversion margins
• Product mix shifts reducing value-added margin
• Operational downtime or yield losses affecting throughput

Financial Risks:

• Non-operating losses (e.g., hedge valuation, FX) depressing ordinary income
• Inventory valuation risk amid metal price swings
• Potential working capital swings tied to metal prices and volumes
• Tax rate volatility given lack of detailed disclosure

Key Concerns:

• Operating income down 31% YoY despite +7.7% revenue implies margin compression
• Ordinary income significantly below operating income (¥436m vs ¥733m)
• Limited disclosure on investing cash flows, cash balances, and dividends constrains FCF and payout analysis

Investment Implications

Key Takeaways:

• Topline growth (+7.7% YoY) but pronounced margin pressure; operating margin 5.3%
• Ordinary margin 3.15% highlights non-operating headwinds
• ROE 2.44% driven by thin net margin despite reasonable asset turnover and low leverage
• Strong liquidity (current ratio 326%) and conservative D/E 0.37x reduce balance-sheet risk
• OCF broadly in line with earnings (OCF/NI 1.06), but FCF indeterminable due to missing capex data

Metrics to Watch:

• Operating and ordinary margin spread
• Gross margin and conversion spread vs input costs
• OCF/NI and working capital turns (especially inventory)
• Investing cash flows and capex trend vs D&A
• Non-operating items (hedging/FX) and effective tax rate
• Asset turnover and order trends

Relative Positioning: Versus domestic nonferrous processors, the company exhibits stronger liquidity and lower leverage but currently weaker profitability momentum, with earnings more exposed to spread compression and non-operating items.

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