Amatei Incorporated FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.71B
• Operating Income: ¥137M
• Net Income: ¥64M
• EPS: ¥7.29

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

Amatei Co., Ltd. (TSE:5952) reported FY2026 Q2 (cumulative) results showing modest top-line softness but solid bottom-line leverage. Revenue declined 1.3% year over year to ¥2,707 million, while operating income increased 26.8% to ¥137 million, indicating effective cost control and/or improved mix. Gross profit was ¥504.6 million, yielding an 18.6% gross margin, and operating margin improved to approximately 5.1%. Ordinary income was ¥129 million, and net income rose 34.4% to ¥86 million, resulting in a 3.18% net margin. DuPont decomposition indicates ROE of 5.69%, driven by a 3.18% net margin, 0.537x asset turnover, and 3.34x financial leverage. The company maintains positive liquidity with a current ratio of 125.3% and a quick ratio of 95.6%, supported by ¥680 million of working capital. Capital structure is relatively leveraged for a small-cap metal products manufacturer, with liabilities of ¥3,747 million and equity of ¥1,511 million, implying a debt-to-equity of 2.48x; the computed equity ratio is approximately 29.9% (equity/total assets), despite the reported 0.0% placeholder. Interest coverage is comfortable at 17.7x (operating income/interest expense), providing a cushion against moderate rate or earnings volatility. Inventory stands at ¥799 million (about 23.7% of current assets), which is significant for a materials- and construction-linked business and a key working capital lever. The improvement in profits despite lower sales suggests better procurement terms, easing input costs (e.g., steel), pricing discipline, or product mix shift. Reported tax expense of ¥33.36 million against net income of ¥86 million implies an effective tax rate in the high-20% range on an ordinary/pre-tax basis. Cash flow statements are not disclosed in this dataset (zeros indicate unreported), limiting assessment of earnings-to-cash conversion and free cash flow. Dividend metrics (DPS and payout) are also undisclosed here, so distribution policy cannot be inferred from this extract. Overall, profitability momentum is positive, balance sheet resilience is adequate, and financial leverage is manageable given coverage, but sustainability hinges on input price trends, housing/construction demand, and working capital discipline. The analysis is based solely on available non-zero data and computed relationships; several key cash flow and per-share items are undisclosed in this dataset.

Profitability Analysis

ROE of 5.69% decomposes into a 3.18% net margin, 0.537x asset turnover (¥2,707m revenue on ¥5,045m assets), and 3.34x financial leverage (assets/equity). Gross margin is 18.6% (¥504.6m/¥2,707m), and operating margin is approximately 5.1% (¥137m/¥2,707m). The year-over-year operating income growth of 26.8% on a 1.3% sales decline highlights operating leverage from cost optimization and/or improved mix. Ordinary income at ¥129m trails operating income modestly due to ¥7.7m interest expense, consistent with low financing costs and strong coverage (17.7x). Net income margin of 3.18% reflects a plausible tax burden in the high-20% range given reported tax expense, indicating normalized taxation rather than one-offs in this period. The spread between gross and operating margins suggests fixed cost absorption improved versus last year; cost of sales intensity remains high, so incremental margin gains are sensitive to raw material pricing and utilization. EBITDA is undisclosed in this dataset (depreciation unreported), but the OI improvement with flat-to-down sales indicates positive incremental margins. Profit quality at the operating level appears to have improved, but confirmation requires cash flow data.

Growth Assessment

Top-line declined 1.3% YoY to ¥2,707m, consistent with softer demand in construction-adjacent markets or pricing normalization after prior inflation. Operating income grew 26.8% to ¥137m, indicating growth driven by margin expansion rather than volume. Net income rose 34.4% to ¥86m, benefiting from operating improvements and manageable financing costs. Sustainability will depend on maintaining procurement advantages and pricing discipline amid steel and logistics cost dynamics. With inventory at ¥799m, the company has scope to support sales but must avoid overstocking if demand slows. The asset turnover of 0.537x for the half year is reasonable for a materials manufacturer and suggests stable utilization; further improvements would require either stronger sales or asset lightening. Near-term outlook hinges on domestic housing starts and renovation demand, as well as input cost trends; stabilization or decline in steel prices would support margins, while a rebound could compress them without pricing power. Absent cash flow disclosures, we cannot corroborate whether earnings growth is translating into operating cash flow. Overall, growth quality appears margin-led and could persist if cost discipline is maintained, but is sensitive to macro and commodity variables.

Financial Health

Total assets are ¥5,045m and total equity is ¥1,511m, implying a computed equity ratio near 29.9% and financial leverage of 3.34x. Liabilities total ¥3,747m, yielding a debt-to-equity of 2.48x; while elevated for a small manufacturer, coverage and liquidity mitigate immediate concerns. Current assets of ¥3,371m versus current liabilities of ¥2,692m produce a current ratio of 125.3% and quick ratio of 95.6%, indicating adequate short-term liquidity even excluding inventories. Working capital stands at ¥679.6m, providing a buffer for seasonal needs. Interest expense is ¥7.7m against operating income of ¥137m, resulting in 17.7x coverage, which is healthy. Inventory of ¥799m represents about 23.7% of current assets; inventory management is a key determinant of liquidity and cost of sales stability. The reported Equity Ratio of 0.0% is an undisclosed placeholder; using available figures gives a more meaningful 29.9%. Overall solvency appears acceptable with manageable leverage and solid coverage.

Cash Flow Quality

Operating, investing, and financing cash flows are undisclosed in this dataset (zeros reflect non-disclosure rather than actual zero). As a result, OCF/Net Income and free cash flow cannot be meaningfully assessed from the provided figures. Earnings quality inference must rely on accrual-based indicators: improving operating margin with flat sales suggests underlying cost control rather than transitory non-operating gains. Inventory at ¥799m warrants monitoring for potential working capital release or build; changes here would materially influence OCF. Without depreciation disclosure, we cannot separate cash and non-cash components of operating income. Pending actual cash flow statements, we assume neutral cash conversion typical of inventory-heavy manufacturers but highlight this as a key uncertainty.

Dividend Sustainability

Dividend per share (DPS), payout ratio, and free cash flow coverage are not disclosed in this dataset (zeros are placeholders). EPS for the period is ¥7.29, but without DPS or cash flow data, payout capacity cannot be quantified. Balance sheet metrics (current ratio 125% and interest coverage 17.7x) suggest room for distributions if policy permits, but leverage (D/E 2.48x) could constrain aggressive payouts. Historically, small-cap industrials target stable or opportunistic dividends aligned with earnings volatility; absent policy disclosure, we assume a conservative stance. Confirmation requires full-year guidance and cash flow statements.

Risk Assessment

Business Risks:

• Exposure to domestic housing starts and construction demand cycles affecting nail/fastener volumes
• Raw material cost volatility (steel wire rod) impacting gross margins
• Pricing power limitations in commoditized product segments
• Inventory obsolescence and valuation risk amid demand fluctuations
• Supply chain and logistics cost variability
• Customer concentration risk typical in building materials distribution

Financial Risks:

• Leverage of 2.48x liabilities-to-equity increases sensitivity to earnings downturns
• Working capital intensity (¥799m inventory) can consume cash in downcycles
• Interest rate risk on floating-rate borrowings, though coverage is currently strong (17.7x)
• Limited visibility on cash generation due to undisclosed cash flow statements
• Potential covenant constraints if profitability weakens

Key Concerns:

• Sustainability of margin gains with declining revenue
• Lack of disclosed operating cash flow to validate earnings quality
• Commodity input price rebound risk compressing margins
• Inventory management effectiveness amid moderating demand

Investment Implications

Key Takeaways:

• Revenue down 1.3% YoY to ¥2,707m, but operating income up 26.8% to ¥137m on better margins
• Net margin 3.18% and ROE 5.69% supported by 3.34x leverage and 0.537x asset turnover
• Liquidity adequate (current ratio 125%, quick ratio 96%); interest coverage robust at 17.7x
• Computed equity ratio ~29.9% indicates moderate solvency despite reported placeholder
• Cash flow and dividend data are undisclosed; assessment of cash conversion and payout not possible from provided figures

Metrics to Watch:

• Gross and operating margins (18.6% and ~5.1% this period)
• Operating cash flow and OCF/NI once disclosed
• Inventory levels and turnover; working capital changes
• Steel input prices and ability to pass through costs
• Interest coverage and debt metrics (D/E, equity ratio)
• Domestic housing starts and construction indicators

Relative Positioning: Within Japan’s small-cap metal products/building materials space, Amatei exhibits low-to-mid single-digit operating margins with improving trajectory, moderate leverage offset by solid coverage, and typical working-capital intensity; sustained outperformance will require maintaining procurement/pricing discipline and converting earnings to cash.

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