Onamba Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥32.47B
• Operating Income: ¥1.74B
• Net Income: ¥1.99B
• EPS: ¥91.00

Income Statement

Balance Sheet

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

Verdict: Solid operating recovery despite softer sales, but bottom-line deteriorated sharply due to below-the-line factors, resulting in a mixed FY2025 Q3 (9M cumulative) print. Revenue declined 3.2% YoY to 324.66, while operating income rose 26.2% YoY to 17.44, and ordinary income increased 16.8% YoY to 15.62. Gross profit was 60.42 with a gross margin of 18.6%, and SG&A was 46.60, implying an SG&A-to-sales ratio of 14.35%. Operating margin improved to 5.37%, up an estimated 125 bps from roughly 4.12% a year ago (based on prior-period back-calculation). Net income fell 47.1% YoY to 11.08, compressing the net margin to 3.4%, down about 284 bps from roughly 6.25% in the prior year period. The operating-to-ordinary bridge shows limited non-operating support (non-operating income 1.46 vs non-operating expenses 1.89), yielding ordinary income of 15.62, but profit before tax was 29.80, implying sizable extraordinary items and/or other below-ordinary factors in the period. Despite that, the effective tax burden (33.2%) and other below-tax effects drove net income to 11.08, creating a significant divergence between operating improvement and net result. ROE stands at a modest 4.1% on DuPont metrics (net margin 3.4%, asset turnover 0.816x, leverage 1.48x). Liquidity is strong with a current ratio of 277.6% and quick ratio of 242.1%, backed by cash and deposits of 60.08 against short-term loans of 11.27. Leverage remains conservative with D/E of 0.48x and an equity ratio (calculated) of approximately 67.8% (269.51 equity / 397.87 assets). Interest coverage is robust at 23.75x, underscoring low financial risk. Cash flow quality cannot be assessed due to unreported OCF; this is a key limitation. The calculated payout ratio is elevated at 78.2%, raising questions on dividend sustainability absent visibility on OCF and FCF. Forward-looking, operating discipline and margin expansion are encouraging, but sustaining ROIC above the 7–8% target range remains a challenge with the reported 5.0% level. Focus should remain on stabilizing below-the-line items, preserving working capital discipline, and improving capital efficiency to lift ROE and ROIC.

Profitability Analysis

DuPont decomposition: ROE ≈ Net Profit Margin (3.4%) × Asset Turnover (0.816x) × Financial Leverage (1.48x) = 4.1%. The largest driver of the YoY swing in bottom-line profitability is the net profit margin, which compressed from an estimated 6.25% to 3.4% despite an improvement in operating margin. Business drivers: operating performance improved (OI +26.2% YoY) on better gross-to-SG&A spread (operating margin up ~125 bps to 5.37%), likely reflecting pricing/mix optimization and SG&A control (SG&A ratio ~14.35%). However, below-the-line items and higher effective tax burden compressed net margin; the gap between ordinary income (15.62) and profit before tax (29.80) suggests material extraordinary items, and the step-down to net income (11.08) implies additional headwinds (taxes/attributable interests/other special items). Sustainability: operating margin gains appear more sustainable than the depressed net margin, assuming no recurrence of extraordinary headwinds; nevertheless, net margin normalization depends on stabilizing non-operating/extraordinary items and tax effects. Concerning trends: net income fell 47.1% YoY despite strong operating growth, and the calculated ROIC is 5.0%—below the 7–8% management KPI benchmark—indicating capital efficiency remains suboptimal. Watch for SG&A growth versus revenue in upcoming quarters; with revenue -3.2% YoY, sustained OI growth will require continued cost discipline and/or mix/pricing benefits.

Growth Assessment

Top-line contracted 3.2% YoY to 324.66, suggesting softer demand or pricing pressure in certain end-markets (likely auto/industrial wiring). Operating income expanded 26.2% YoY to 17.44, evidencing operating leverage from improved gross profitability and controlled SG&A. Ordinary income improved 16.8% YoY to 15.62, while net income declined 47.1% YoY to 11.08 due to below-the-line effects. Operating margin rose to 5.37% from an estimated 4.12%, demonstrating better core execution. Non-operating income totaled 1.46 (dividends 0.46, interest 0.48), partially offset by non-operating expenses of 1.89; reliance on non-operating items remains modest. The large gap between ordinary income and profit before tax (29.80) indicates significant extraordinary components; this clouds earnings quality and growth visibility. Near-term outlook hinges on maintaining gross margin discipline and stabilizing one-off items; absent revenue recovery, sustaining OI growth will depend on continued efficiency and mix. ROIC at 5.0% suggests further optimization of invested capital is needed for durable growth in value creation.

Financial Health

Liquidity is strong: current ratio 277.6% and quick ratio 242.1%, comfortably above benchmarks. No warning triggers: current ratio well above 1.0 and D/E at 0.48x below the 1.5x threshold. Working capital is ample with 174.88 of surplus; current assets (273.34) comfortably exceed current liabilities (98.46). Cash and deposits of 60.08 exceed short-term loans of 11.27, limiting refinancing risk. Long-term loans are 11.58; overall interest-bearing debt is modest relative to equity (total equity 269.51). Calculated equity ratio is ~67.8% (269.51/397.87), indicating a strong balance sheet. Maturity mismatch risk appears low given abundant liquidity and moderate debt. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

Operating cash flow was unreported, so OCF/Net Income and FCF cannot be calculated—this is a key limitation for earnings quality assessment. Without OCF, we cannot confirm whether the earnings uplift at the operating level is translating into cash. Working capital indicators look reasonable: accounts receivable of 103.99 against 9M revenue implies DSO broadly in a normal industrial range, and inventories at 34.97 versus 9M cost of sales suggest manageable inventory days; no clear signs of aggressive working capital behavior are evident from the static balance sheet. Interest coverage is strong at 23.75x, supporting low cash interest burden. Given elevated payout ratio (78.2%) and unknown FCF, conservatism is warranted when judging cash coverage of dividends and capex.

Dividend Sustainability

The calculated payout ratio is 78.2%, above the <60% benchmark, implying a potentially stretched dividend relative to current earnings. With OCF and FCF unreported, FCF coverage cannot be assessed, introducing uncertainty about dividend sustainability, especially if one-off headwinds depress net income. Balance sheet strength (cash 60.08, low net debt) provides a buffer, but sustaining a high payout amid ROE of 4.1% and ROIC of 5.0% may constrain reinvestment capacity. Policy outlook likely hinges on normalizing below-the-line items and restoring net margin; prudent stance would favor balancing shareholder returns with investments to lift ROIC.

Risk Assessment

Business Risks:

• End-market cyclicality in automotive and industrial wiring leading to volume and pricing pressure (revenue -3.2% YoY).
• Commodity cost volatility (e.g., copper) impacting gross margins despite partial pass-through mechanisms.
• Customer concentration risk typical in harness/cable supply chains (not disclosed but common to the industry).
• Execution risk in sustaining SG&A discipline as sales soften.

Financial Risks:

• Dividend sustainability risk with a 78.2% payout ratio and unreported OCF/FCF.
• Earnings quality risk from sizable extraordinary items implied by PBT (29.80) vs ordinary income (15.62).
• Capital efficiency risk with ROIC at 5.0%, below the 7–8% target range.
• FX exposure (e.g., JPY volatility) affecting import costs and overseas operations (if any).

Key Concerns:

• Net income down 47.1% YoY despite operating improvement, highlighting below-the-line volatility.
• Limited visibility on cash generation due to unreported cash flow statement.
• Potential variance in effective tax and special items impacting net margin sustainability.

Investment Implications

Key Takeaways:

• Core operations strengthened: operating margin up ~125 bps to 5.37% despite a 3.2% sales decline.
• Bottom-line weakness (-47.1% YoY) driven by non-operating/extraordinary and tax effects; net margin compressed ~284 bps.
• Balance sheet is robust (equity ratio ~67.8%, current ratio 277.6%, D/E 0.48x) with ample liquidity.
• ROE (4.1%) and ROIC (5.0%) remain below value-creation benchmarks, signaling room for capital efficiency improvement.
• Dividend payout appears high at 78.2%; sustainability hinges on cash generation that is presently unverified.

Metrics to Watch:

• OCF/Net Income and FCF once disclosed to gauge earnings quality and dividend coverage.
• Gross margin trajectory vs copper price trends and pricing pass-through.
• SG&A-to-sales ratio to confirm sustained cost discipline amid soft sales.
• Extraordinary gains/losses and tax rate normalization to stabilize net margin.
• ROIC progression toward the 7–8% target range and ROE uplift.

Relative Positioning: Within Japanese industrial component suppliers, the company exhibits stronger-than-average balance sheet resilience and improving operating margins, but lags peers on capital efficiency (ROE/ROIC) and currently faces higher uncertainty at the bottom line due to extraordinary item volatility and limited cash flow disclosure.

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