Bunka Shutter Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥105.28B
• Operating Income: ¥3.86B
• Net Income: ¥2.21B
• EPS: ¥38.78

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

Bunka Shutter (59300) reported FY2026 Q2 (cumulative) consolidated results under JGAAP with steady top-line growth but modest margin pressure at the operating level. Revenue rose 2.9% YoY to ¥105.3bn, while operating income declined slightly by 0.7% YoY to ¥3.86bn, indicating limited operating leverage in the period. Gross profit reached ¥27.36bn, translating to a gross margin of 26.0%, consistent with a materials- and installation-heavy business mix. Operating margin stood at 3.7% (¥3.863bn/¥105.276bn), down slightly year on year despite positive sales growth, suggesting input cost or mix headwinds. Ordinary income of ¥4.32bn exceeded operating income by about ¥0.45bn, pointing to net non-operating gains (e.g., financial income or equity-method gains) partially offsetting operating softness. Net income increased 24.3% YoY to ¥2.75bn, implying that below-the-line items (non-operating and/or taxes) were favorable compared to the prior year. DuPont metrics show a net margin of 2.61%, asset turnover of 0.525x, and financial leverage of 1.82x, yielding an ROE of 2.49% for the period basis. Liquidity is strong with a current ratio of 211% and quick ratio of 193%, supported by working capital of ¥61.8bn, which provides resilience against project timing variability. The balance sheet is conservative: total liabilities/total equity is 0.83x (¥91.5bn/¥110.4bn), implying moderate leverage and ample equity buffer. Interest coverage is a comfortable 16.2x (operating income/interest expense), reflecting low financial risk and manageable financing costs. Operating cash flow was solid at ¥6.71bn, equating to an OCF/Net Income ratio of 2.44x, a positive indicator of earnings quality and cash conversion in the period. Free cash flow is shown as 0 due to undisclosed investing cash flows (zeros reflect non-disclosure rather than true zeros), so full FCF assessment requires caution. Reported equity ratio is listed as 0%, but based on available totals, equity/asset is approximately 55% (¥110.4bn/¥200.7bn), underscoring balance sheet strength. Dividend fields currently show DPS and payout ratio as zero; given the interim nature and data limitations, dividend policy inference should be restrained until full-year disclosures. Overall, the company exhibits solid revenue momentum and strong cash conversion, offset by modest operating margin compression and the seasonal/intra-year nature of the results. Data gaps (e.g., investing CF, cash balance, equity ratio, DPS) limit completeness, but available metrics suggest a financially sound position with room to improve operating efficiency.

Profitability Analysis

DuPont: ROE 2.49% for the period is driven by a modest net margin of 2.61%, asset turnover of 0.525x, and financial leverage of 1.82x. Operating margin is 3.7% (¥3.863bn/¥105.276bn), with ordinary margin at 4.1% (¥4.316bn/¥105.276bn), indicating a helpful non-operating contribution. Gross margin at 26.0% suggests reasonable pricing and cost control given a materials-heavy cost base, but the slight YoY drop in operating income vs. rising sales indicates some squeeze at the SG&A or production cost level. EBITDA of ¥6.43bn implies an EBITDA margin of 6.1%, modest for the sector and leaving limited buffer against cost inflation. Interest expense of ¥239m is well covered (16.2x), so financing costs do not burden profitability. The YoY divergence—revenue up 2.9%, operating income down 0.7%, net income up 24.3%—implies below-the-line relief (non-operating gains and/or tax timing effects) drove bottom-line improvement more than core operations. Without detailed segment or price/mix data, the quality of margin improvement is cautious; the core margin trend is essentially flat-to-slightly weaker. Operating leverage appears muted: incremental margins on the 2.9% revenue growth were negative at the operating level, suggesting fixed-cost absorption was insufficient or cost inflation outpaced pricing in H1. Continued focus on procurement, pricing pass-through, and mix shift toward higher-margin products/services would be key to restore operating leverage.

Growth Assessment

Revenue growth of 2.9% YoY to ¥105.3bn is steady, likely underpinned by resilient demand in non-residential construction and maintenance/retrofit activity. Operating profit softness (-0.7% YoY) suggests that revenue expansion did not fully translate into profit growth, pointing to either input cost pressures (e.g., steel/aluminum), wage inflation, or project mix. Net income growth of 24.3% YoY indicates support from non-operating factors and/or tax effects rather than purely operational improvement. With ordinary income exceeding operating income by ¥453m, non-operating gains contributed meaningfully; sustainability of these gains is less certain than core margin gains. Absent disclosed orders/backlog, we cannot assess revenue visibility directly; however, strong liquidity and working capital position support ongoing execution. Medium-term growth outlook will depend on pricing discipline, backlog quality, and pass-through of material costs; maintenance and replacement demand should provide a stabilizing base. Near-term growth risk is that cost inflation or project delays could cap operating leverage. If cost normalization continues and price discipline holds, modest margin expansion is plausible, but evidence is not yet clear in the half-year numbers.

Financial Health

Liquidity is strong: current ratio 211.2%, quick ratio 193.4%, and working capital of ¥61.79bn indicate ample short-term coverage. Total assets are ¥200.71bn with total equity of ¥110.44bn; equity/asset is about 55%, despite the reported equity ratio field showing 0% (undisclosed). Total liabilities/total equity is 0.83x, reflecting moderate leverage and conservative capital structure. Interest burden is light with interest expense at ¥239m and interest coverage of 16.2x. The company appears well positioned to weather project timing fluctuations and cyclical softness, supported by sizable current assets (¥117.34bn) and relatively low inventories (¥9.92bn), which may reflect a build-to-order profile. Solvency metrics imply low default risk under normal conditions. No cash balance is disclosed (0 indicates unreported), so we cannot parse net cash/debt precisely; nonetheless, balance sheet strength is evident from the equity base and liabilities profile.

Cash Flow Quality

Operating cash flow of ¥6.71bn versus net income of ¥2.75bn yields an OCF/NI ratio of 2.44x, indicating strong cash conversion and limited accrual risk in the period. Depreciation and amortization of ¥2.57bn supports EBITDA-to-cash bridge consistency. Free cash flow is shown as 0 only due to undisclosed investing cash flows (not an actual zero); thus, we cannot conclude on FCF sufficiency or capex intensity. Working capital appears well managed given the strong OCF; details on receivables/payables are not provided, but the cash conversion ratio suggests favorable collections or milestone payments. Financing CF of -¥3.58bn indicates outflows (e.g., debt repayment, lease liabilities, or dividends), but DPS is undisclosed at this point; thus, we cannot apportion the financing outflow. Overall, earnings quality appears good for the half year, but full assessment requires investing CF and cash balance visibility.

Dividend Sustainability

Dividend data show DPS and payout ratio as 0, which we treat as undisclosed rather than actual zero. Without confirmed DPS and investing cash flows, FCF coverage of dividends cannot be determined (reported 0.00x is not indicative). On fundamentals, the company’s strong operating cash flow (¥6.71bn) and conservative balance sheet (equity/asset ~55%, liabilities/equity 0.83x) suggest capacity to fund dividends, subject to capex needs and policy. Historically, companies in this segment often target stable dividends with potential for incremental increases aligned with earnings; however, we cannot infer current policy changes from the provided data. Sustainability hinges on maintaining core operating margins and cash conversion; if operating leverage improves in H2 and capex remains disciplined, dividend capacity should be adequate. We await full-year guidance and official DPS announcements to reassess payout safety and trajectory.

Risk Assessment

Business Risks:

• Cyclical exposure to construction activity (new build and non-residential projects).
• Raw material price volatility (steel, aluminum) impacting gross margins and pricing.
• Labor shortages and subcontractor availability potentially pressuring project costs and schedules.
• Project execution risk and timing of revenue recognition affecting quarterly volatility.
• Competitive pricing pressure in shutters, doors, and building products markets.
• Regulatory and building code changes affecting product specifications and costs.
• Supply chain disruptions causing lead-time extension and cost increases.

Financial Risks:

• Operating leverage currently muted; margin compression could reduce cash generation.
• Limited visibility into investing cash flows and capex may mask underlying FCF needs.
• Potential interest rate increases could raise financing costs, though coverage is currently strong.
• Working capital intensity exposes cash flow to receivables collection timing.

Key Concerns:

• Operating income down 0.7% YoY despite 2.9% sales growth, indicating pressure on core margins.
• Reliance on non-operating items for net income growth may not be repeatable.
• Incomplete disclosure on investing CF and DPS limits assessment of FCF and payout sustainability.

Investment Implications

Key Takeaways:

• Top-line growth is intact (+2.9% YoY), but operating leverage is limited in H1 FY2026.
• Net income growth (+24.3% YoY) was driven by non-operating/tax effects more than core margin expansion.
• Balance sheet strength is evident (equity/asset ~55%, liabilities/equity 0.83x) with strong liquidity.
• Cash conversion is robust (OCF/NI 2.44x), supporting financial flexibility.
• Visibility on capex and dividends is insufficient; wait for full-year disclosures to evaluate FCF and payout.

Metrics to Watch:

• Gross and operating margin trajectory (26.0% GP margin; ~3.7% OP margin) and price pass-through.
• Order intake and backlog (not disclosed here) to gauge revenue sustainability.
• Working capital metrics and OCF/NI ratio to confirm cash conversion durability.
• Investing cash flows and capex commitments to refine FCF outlook.
• Ordinary income drivers (non-operating gains/expenses) for repeatability.
• Interest coverage and leverage as rates and credit conditions evolve.

Relative Positioning: Within Japanese building products and shutter/door peers, Bunka Shutter demonstrates conservative leverage, strong liquidity, and solid cash conversion, but current-period operating leverage lags modest revenue growth; sustained margin management and clearer FCF/dividend disclosure will be key to strengthen relative standing.

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