SHINPO CO.,LTD. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.66B
• Operating Income: ¥208M
• Net Income: ¥98M
• EPS: ¥25.14

Income Statement

Balance Sheet

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

Shinpo Co., Ltd. (TSE: 59030) reported FY2026 Q1 consolidated results under JGAAP with modest top-line growth and meaningful margin expansion. Revenue was ¥1,658 million (+2.4% YoY), while operating income rose to ¥208 million (+22.4% YoY), indicating improved operating leverage and cost discipline. Gross profit of ¥580 million implies a gross margin of about 35.0%, supportive of the stronger operating margin (≈12.5%). Ordinary income was ¥209 million, and net income increased to ¥138 million (+41.2% YoY), pushing the net margin to 8.32%. The DuPont framework provided shows net margin at 8.32%, asset turnover at 0.191x, and financial leverage at 1.27x, yielding a calculated and reported ROE of 2.02% for the period. The balance sheet is conservative, with total assets of ¥8,667 million and total equity of ¥6,848 million, implying an equity ratio of about 79% based on the disclosed balances. Liquidity is ample with current assets of ¥3,664 million, current liabilities of ¥1,030 million, a current ratio of 355.8%, and working capital of ¥2,634 million. Leverage is low, as total liabilities/ equity stands at 0.26x, and interest coverage is exceptionally high (~2,364x), reflecting minimal interest burden. The sizable YoY uplift in operating and net income against modest revenue growth suggests a mix of gross margin resilience and SG&A efficiency. Inventories are small at ¥55 million, implying a business model with limited stockholding or rapid inventory turnover, which helps working capital efficiency. The reported effective tax rate metric is listed as 0.0%, but based on the disclosed income tax of ¥54.6 million and ordinary income of ¥209 million, the implied tax rate is roughly the mid‑20%s. Cash flow items (OCF, investing, financing) are not disclosed in this quarter’s dataset, so free cash flow and payout coverage cannot be assessed from the provided figures. Dividend data (DPS) are also not disclosed; thus, no inference on dividend policy for the quarter can be made. Overall, the company enters FY2026 with a strong balance sheet, solid liquidity, and widening margins, but visibility on cash generation, capex, and payout policy is limited from the available Q1 disclosure. Investors should focus on the durability of margin gains, order trends, and subsequent quarters’ cash flows to gauge sustainability.

Profitability Analysis

ROE_decomposition: ROE ≈ 2.02% for the period, driven by Net Profit Margin 8.32% × Asset Turnover 0.191 × Financial Leverage 1.27. The dominant contributor this quarter is the improved net margin; leverage is modest and asset turnover is typical for Q1 and may be seasonally depressed. margin_quality: Gross margin ≈ 35.0% and operating margin ≈ 12.5% (¥208m/¥1,658m). Ordinary margin ≈ 12.6%. Net margin at 8.32% benefited from low interest expense (¥0.088m). The implied effective tax rate is ~26% (¥54.6m/¥209m), consistent with statutory levels, indicating no unusual tax effects. operating_leverage: Revenue grew +2.4% YoY while operating income grew +22.4% YoY, indicating positive operating leverage via improved gross profit capture and/or SG&A efficiency. The scale of profit growth relative to sales suggests cost structure benefits and pricing/mix tailwinds.

Growth Assessment

revenue_sustainability: Top-line growth of +2.4% YoY is modest. Sustainability will depend on installation/project timing, replacement cycles, and customer capex appetite, particularly in foodservice-related end-markets. profit_quality: Earnings growth outpaced sales, driven by margin expansion. With negligible interest burden and a standard tax load, quality appears solid at the operating level. Confirmation via OCF is pending due to undisclosed cash flow data. outlook: If gross margin resilience and SG&A discipline persist, margin-led profit growth could continue even on modest sales growth. Subsequent quarters should clarify whether Q1 reflects structural improvements (pricing, cost pass-through, product mix) or timing effects.

Financial Health

liquidity: Current assets ¥3,663.9m vs current liabilities ¥1,029.9m; current ratio 3.56x and quick ratio 3.50x indicate robust short-term solvency. Working capital is ¥2,634.1m. solvency: Total liabilities ¥1,777.6m vs equity ¥6,848.0m; debt-to-equity 0.26x implies low leverage. Interest coverage is ~2,363.6x (¥208m/¥0.088m), indicating minimal financial risk from interest. capital_structure: Assets ¥8,667m funded ~79% by equity and ~21% by liabilities (based on disclosed balances), consistent with a conservative balance sheet affording resilience and strategic flexibility.

Cash Flow Quality

earnings_quality: Operating income growth and standard tax burden signal underlying earnings quality, but confirmation via cash conversion cannot be made as OCF is not disclosed for the period. FCF_analysis: Free cash flow is not derivable due to undisclosed operating and investing cash flows and D&A. EBITDA is not meaningful here because D&A is undisclosed. working_capital: Inventories are modest at ¥55.5m, suggesting low inventory intensity or fast turns. Receivables and payables are not individually disclosed, but the strong current ratio indicates ample liquidity headroom.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are not disclosed in the provided dataset; therefore, payout sustainability cannot be assessed from this quarter’s information. FCF_coverage: Free cash flow is not available; thus, coverage of dividends by FCF cannot be evaluated. policy_outlook: With low leverage and strong liquidity, the balance sheet could support distributions, but future dividend trajectory depends on cash generation, capex needs, and formal policy guidance.

Risk Assessment

Business Risks:

• Demand cyclicality tied to foodservice and commercial facility capex cycles
• Project and order timing risk affecting quarterly revenue recognition
• Raw material price volatility (e.g., stainless steel) impacting gross margins
• Supply chain and procurement risks for components and materials
• Customer concentration risk if large accounts drive a significant share of orders
• Regulatory and building code changes impacting product requirements and costs
• Labor availability and wage inflation affecting installation and service capacity
• Competitive pricing pressure in equipment and systems markets

Financial Risks:

• Limited visibility on operating cash flow and capex near term
• Potential working capital swings from receivables and project milestones
• Small-company scale leading to earnings volatility
• FX exposure on imported components (if applicable) despite low interest burden

Key Concerns:

• Sustainability of margin expansion with only modest revenue growth
• Absence of disclosed cash flow and dividend data this quarter
• Quarterly seasonality and order timing possibly distorting ROE and turnover metrics

Investment Implications

Key Takeaways:

• Revenue +2.4% YoY with operating income +22.4% and net income +41.2% indicates strong operating leverage.
• Gross margin ~35% and operating margin ~12.5% underscore improved cost control and/or pricing/mix.
• Balance sheet is robust with equity ≈ ¥6.85bn and low leverage (D/E ≈ 0.26x).
• Interest burden is de minimis (interest expense ¥0.088m; coverage ~2,364x).
• ROE for the period is ~2.0% based on DuPont inputs; leverage contribution is limited.
• Liquidity is strong (current ratio ~3.56x; working capital ¥2.63bn).
• Cash flow, capex, and DPS are not disclosed; FCF and payout sustainability cannot be assessed from Q1.
• Inventories are low, suggesting efficient working capital or a low-stock business model.

Metrics to Watch:

• Order intake/book-to-bill and backlog to gauge revenue visibility
• Gross margin trajectory vs. raw material costs and pricing
• SG&A ratio and operating margin sustainability
• Operating cash flow, capex, and free cash flow conversion
• Receivable days and inventory turns as leading indicators of cash conversion
• Any guidance on dividend policy and capital allocation
• Asset turnover normalization across quarters (seasonality effects)

Relative Positioning: Within small-cap industrials related to equipment for foodservice/commercial applications, Shinpo appears conservatively capitalized with improving margins, but with near-term information gaps on cash flow and distributions that warrant monitoring.

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