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

Onamba Co., Ltd. (TSE:58160) reported FY2025 Q3 consolidated results under JGAAP with revenue of ¥32.47bn, down 3.2% year over year, indicating softer demand or pricing pressure, likely in core wire harness and related components. Despite top-line contraction, operating income rose 26.2% YoY to ¥1.74bn, lifting the operating margin to roughly 5.4%, reflecting effective cost control and/or improved mix. Gross profit of ¥6.04bn implies an 18.6% gross margin, which appears stable-to-improving given the operating outperformance versus revenue decline. Ordinary income was ¥1.56bn, and net income came in at ¥1.11bn (EPS ¥91), down 47.1% YoY, signaling sizeable below-operating line impacts such as higher taxes and/or non-operating/extraordinary losses. The tax expense disclosed (¥989m) is large relative to net income, contributing significantly to the YoY net income decline, although a precise effective tax rate cannot be reliably derived from the available line items. DuPont decomposition yields a net margin of 3.41%, asset turnover of 0.816x, and financial leverage of 1.48x, resulting in a calculated ROE of 4.11%, which is modest for the sector. Liquidity is strong with a current ratio of 273% and a quick ratio of 238%, underpinned by current assets of ¥28.12bn versus current liabilities of ¥10.30bn. The capital structure is conservative with total liabilities at ¥13.29bn and total equity at ¥26.95bn (debt-to-equity around 0.49x). While the reported equity ratio is listed as 0.0% (unreported), a simple computation suggests equity funds about 67.7% of total assets, indicating low balance sheet risk. Interest coverage of roughly 23.8x (operating income to interest expense) further underscores manageable financial risk. Inventory of ¥3.66bn is about 11.3% of revenue, and COGS-based turnover approximates 7.5x, though period alignment cautions apply. Cash flow statement items are unreported, limiting assessment of earnings-to-cash conversion and free cash flow durability. Dividends are shown as zero with a 0% payout ratio, which likely reflects nondisclosure rather than policy; dividend sustainability must therefore be inferred from balance sheet strength and earnings capacity rather than cash flow data. Overall, the quarter shows resilient operating execution in the face of revenue headwinds, but bottom-line volatility and limited disclosure on cash flows temper confidence in the durability of earnings quality. Our analysis relies on disclosed non-zero items and derived metrics; several key cash flow and per-share data points were not provided.

Profitability Analysis

ROE decomposition (DuPont): Net margin 3.41% × asset turnover 0.816 × financial leverage 1.48 = ROE 4.11% (matches reported). Operating margin improved to approximately 5.37% (¥1,744m / ¥32,466m), up meaningfully YoY despite revenue decline, suggesting improved cost discipline and/or pricing/mix gains. Gross margin stood at 18.6%, providing headroom to expand operating margin via SG&A leverage, which appears to have occurred in this period. Ordinary margin is c. 4.81% (¥1,562m / ¥32,466m). Net margin compressed to 3.41% due to factors below operating income (notably high tax expense and possibly non-operating items), creating a wedge between operating and net profitability. Interest burden is light with ¥73m of interest expense and coverage near 23.8x, implying minimal drag from financing costs. Operating leverage appears positive: with revenue down 3.2% and operating profit up 26.2%, fixed cost absorption and efficiency efforts likely contributed to margin expansion. However, bottom-line volatility indicates that one-off or non-operating factors can easily offset operating gains, keeping ROE at a modest 4.11%.

Growth Assessment

Revenue decreased 3.2% YoY to ¥32.47bn, implying softer demand or price pressure in end-markets (e.g., automotive, appliances, or industrial customers). Despite top-line contraction, operating income rose 26.2% YoY, indicating that cost optimization and/or product mix improvements are driving near-term profit growth. Ordinary income of ¥1.56bn trails operating income, suggesting some non-operating expenses or reduced non-operating gains versus prior periods. Net income fell 47.1% YoY to ¥1.11bn due to heavy tax expense and/or extraordinary items, indicating low visibility in translating operating performance to bottom-line results. With asset turnover at 0.816x, growth is not being driven by aggressive balance sheet expansion, which is prudent but limits ROE uplift absent margin improvements. Sustainability of operating gains will hinge on revenue stabilization and continued cost control, given sectoral exposure to cyclical end-markets and input cost variability. Outlook hinges on demand recovery in key customer segments and normalization of below-the-line items; absent that, ROE may remain subdued even if operating metrics improve.

Financial Health

Total assets are ¥39.79bn, total liabilities ¥13.29bn, and total equity ¥26.95bn, resulting in a conservative balance sheet (liabilities-to-equity ~0.49x). Liquidity is strong: current assets ¥28.12bn versus current liabilities ¥10.30bn yields a current ratio of 273% and quick ratio of 238%, with working capital of ¥17.82bn. While the equity ratio is listed as 0.0% (unreported), a simple calculation indicates equity funds roughly 67.7% of total assets, supporting solvency. Interest expense is modest at ¥73m, and operating coverage of ~23.8x suggests low refinancing risk. High current asset share (≈71% of total assets) provides flexibility, though cash and equivalents are unreported, obscuring net cash/net debt assessment. No maturity profile is provided, but the low leverage and ample working capital indicate comfortable covenant and liquidity buffers.

Cash Flow Quality

Cash flow statement items (operating, investing, financing) are unreported, preventing direct assessment of earnings-to-cash conversion or free cash flow generation. Depreciation and amortization are also unreported, so EBITDA and non-cash expense mix cannot be evaluated, and accrual intensity cannot be quantified. The displayed OCF/Net Income ratio of 0.00 and FCF of 0 merely reflect nondisclosure; they should not be interpreted as actual zero cash generation. Working capital dynamics cannot be fully assessed without receivables/payables details; however, inventories of ¥3.66bn versus COGS of ¥27.49bn imply an indicative turnover around 7.5x, acknowledging period alignment limitations. Given the solid operating margin and low interest burden, underlying cash generation is likely positive, but this cannot be validated from the provided data. Overall cash flow quality assessment is constrained and remains indeterminate.

Dividend Sustainability

Dividend per share and payout ratio are shown as zero, which indicates nondisclosure rather than actual zero payouts. Without operating and free cash flow disclosure, FCF coverage of dividends cannot be assessed. From an earnings capacity perspective, EPS is ¥91 for the period, and the balance sheet is conservatively levered, suggesting capacity to sustain modest shareholder returns in principle. However, the sharp YoY decline in net income and the apparent volatility in below-the-line items introduce uncertainty in distributable profit stability. Absent explicit policy guidance and cash flow data, dividend sustainability and trajectory cannot be concluded; the outlook should be revisited once full-year results and the cash flow statement are disclosed.

Risk Assessment

Business Risks:

• End-market cyclicality (automotive, appliances, industrial) driving volume and pricing variability
• Input cost fluctuations (metals, resins) potentially compressing margins
• Customer concentration risk typical of harness/component suppliers
• FX exposure affecting import costs and overseas revenues
• Supply chain disruptions impacting delivery schedules and inventory

Financial Risks:

• Earnings-to-cash conversion uncertainty due to unreported cash flow data
• Bottom-line volatility from non-operating/extraordinary items and tax effects
• Potential working capital swings given high current asset base
• Limited visibility on net cash/net debt due to unreported cash balances

Key Concerns:

• Net income fell 47.1% YoY despite strong operating profit growth, implying below-the-line pressure
• Cash flow statements and D&A are unreported, impeding assessment of sustainable FCF and EBITDA
• ROE at 4.11% is modest and below typical sector cost of equity, limiting value creation without further margin or asset-turn improvements

Investment Implications

Key Takeaways:

• Resilient operating execution: operating income +26.2% YoY on revenue -3.2% implies effective cost control/mix
• Bottom-line volatility: net income -47.1% YoY due to heavy tax/non-operating impacts
• Solid balance sheet and liquidity: current ratio 273%, debt-to-equity ~0.49x, implied equity ratio ~67.7%
• ROE of 4.11% remains subdued; further margin expansion or higher asset turnover needed
• Cash flow quality indeterminate due to unreported OCF/FCF and D&A

Metrics to Watch:

• Revenue trajectory and order trends in core end-markets
• Operating margin sustainability and SG&A efficiency
• Non-operating items and effective tax rate normalization
• Working capital intensity (receivables, inventories, payables days) once disclosed
• Cash flow from operations and free cash flow at full-year disclosure
• Capex levels and depreciation (to gauge maintenance vs. growth investment)

Relative Positioning: Within Japanese electrical component/wire harness peers, Onamba exhibits strong liquidity and conservative leverage but generates mid-single-digit operating margins and a modest 4% ROE; improving operating execution is evident, yet cash flow transparency and bottom-line stability lag best-in-class peers.

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