OKABE CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥51.25B
• Operating Income: ¥3.67B
• Net Income: ¥2.33B
• EPS: ¥60.59

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

Okabe Co., Ltd. (TSE: 5959) reported FY2025 Q3 (cumulative) results showing steady top-line growth and stronger operating leverage. Revenue rose 3.3% year over year to ¥51.25bn, while operating income increased 16.2% to ¥3.67bn, indicating margin expansion. Gross profit reached ¥15.65bn, translating to a gross margin of 30.5%, which underpins the improvement in operating profitability. Net income rose 19.0% to ¥2.78bn, with net margin at 5.42%, supported by modest non-operating gains and low interest expense. Ordinary income of ¥3.89bn exceeded operating income, suggesting positive non-operating contributions net of ¥42m in interest cost. DuPont-based ROE is 4.60%, derived from a 5.42% net margin, 0.601x asset turnover, and 1.41x financial leverage. On this basis, ROA is roughly 3.3%, highlighting stable but not high asset productivity. The balance sheet is conservative: equity of ¥60.33bn versus assets of ¥85.23bn implies an equity ratio around 70.8% (despite the reported equity ratio metric showing 0.0%, which is an undisclosed item). Liquidity appears strong with a current ratio of 266% and quick ratio of 208%, and working capital of approximately ¥30.50bn. Interest coverage is robust at 87.4x (operating income to interest), reflecting low leverage and manageable financing costs. The effective tax rate appears around 25–26% when using income tax expense of ¥1.0bn and ordinary income as a proxy for pre-tax income, although the “effective tax rate” metric shown as 0.0% is an undisclosed item. Operating cash flow and free cash flow are not disclosed for the period, limiting cash conversion analysis; the displayed zeros should not be interpreted as actual zeros. Dividend per share and payout ratio fields show 0.00, indicating non-disclosure in this dataset rather than a definitive zero distribution; EPS is reported at ¥60.59. Overall, results point to improved profitability on modest growth, backed by a strong balance sheet and high liquidity. The key unknown is cash flow performance (OCF/FCF) during the period, which is important for assessing earnings quality and dividend capacity. Inventory at ¥10.77bn is significant relative to current assets; without cash flow data or inventory movement details, working capital efficiency trends are unclear. Directionally, the company demonstrates positive operating leverage and strong financial resilience, with limited balance-sheet risk. Sustaining the margin gains while managing input costs and construction-cycle exposure will be central to the outlook.

Profitability Analysis

ROE_decomposition: ROE 4.60% = Net margin 5.42% × Asset turnover 0.601 × Financial leverage 1.41. Implied ROA ≈ 3.26%. margin_quality: Gross margin at 30.5% supports improved operating margin. Operating margin is ~7.2% (¥3.67bn / ¥51.25bn), and net margin is 5.42%. Ordinary income exceeds operating income, implying positive non-operating items net of ¥42m interest cost; quality is primarily operational with a modest tailwind from non-operating gains. operating_leverage: Operating income grew 16.2% on 3.3% revenue growth, indicating favorable operating leverage (incremental margins positive). This suggests cost discipline and/or mix improvements supporting profitability.

Growth Assessment

revenue_sustainability: Revenue growth of 3.3% YoY is modest and likely tied to stable demand in core markets; sustainability will depend on construction activity levels, infrastructure demand, and project timing. profit_quality: Net income growth of 19.0% outpaced sales on margin expansion. With interest expense minimal and ordinary income above operating income, non-operating contributions provided a small lift; core profitability remains the main driver. outlook: Maintaining the improved operating margin will be key. Cost inflation, project mix, and utilization of installed capacity will influence near-term growth. Absent disclosed cash flows, it is prudent to monitor whether higher earnings translate into cash conversion in subsequent quarters.

Financial Health

liquidity: Current ratio 266.4% and quick ratio 207.6% indicate ample short-term liquidity. Working capital stands at ~¥30.50bn. Cash and equivalents are not disclosed in this dataset. solvency: Total liabilities/total equity ≈ 0.46x, reflecting low leverage. Interest coverage is strong at 87.4x, suggesting minimal refinancing or interest-rate risk under current structure. capital_structure: Equity of ¥60.33bn vs assets of ¥85.23bn implies an equity ratio around 70.8%. Conservative leverage provides flexibility to navigate cyclical swings and fund capex or selective growth investments.

Cash Flow Quality

earnings_quality: Operating cash flow is undisclosed; the reported OCF/Net Income ratio of 0.00 should not be interpreted as zero cash generation. As such, we cannot directly assess accrual intensity or cash conversion for the period. FCF_analysis: Investing and financing cash flows are undisclosed; free cash flow cannot be derived. Capex and D&A are not provided (D&A shown as 0 indicates non-disclosure). working_capital: Inventories at ¥10.77bn are meaningful within current assets (¥48.82bn). Without opening/average balances or OCF, we cannot quantify turnover or release/absorption; inventory and receivables management remain key swing factors for cash conversion.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥60.59. Dividend data for the period is undisclosed (DPS and payout ratio fields show 0.00 by convention). Without DPS, a payout ratio cannot be assessed. FCF_coverage: OCF and FCF are not disclosed; therefore, cash coverage of any dividends cannot be evaluated for this period. policy_outlook: With a strong balance sheet and low leverage, capacity for distributions appears supported structurally; however, sustainability depends on actual cash generation and capital allocation priorities, which are not observable from the current cash flow disclosures.

Risk Assessment

Business Risks:

• Exposure to construction and infrastructure activity cycles affecting order volumes and pricing.
• Input cost volatility (steel and other materials) impacting gross margin if not fully passed through.
• Project timing and mix risk influencing quarterly margins and working capital needs.
• Supply chain constraints and labor availability potentially delaying deliveries.
• Competition in core segments, pressuring pricing and utilization.
• Potential FX exposure on imported materials or overseas operations (if any).

Financial Risks:

• Working capital swings (inventory and receivables) could pressure OCF in periods of soft demand.
• Limited visibility on capex and D&A complicates assessment of maintenance vs. growth investment needs.
• Non-operating income sensitivity (e.g., investment income) may introduce earnings variability.

Key Concerns:

• Lack of disclosed operating and free cash flow impedes assessment of earnings quality.
• Dependence on construction cycle for sustaining recent margin gains.
• Inventory level management without visibility into turnover metrics.

Investment Implications

Key Takeaways:

• Modest top-line growth (+3.3% YoY) with disproportionately higher operating profit growth (+16.2%) signals positive operating leverage.
• Gross margin of 30.5% and operating margin of ~7.2% indicate improved profitability.
• Net margin at 5.42% and ROE at 4.60% reflect sound but moderate returns with a conservative balance sheet.
• Liquidity is strong (current ratio 266%, quick ratio 208%), and leverage is low (D/E ~0.46x).
• Interest coverage at 87.4x underscores low financial risk.
• Cash flow metrics (OCF/FCF) are undisclosed; monitoring subsequent filings is important.
• Effective tax rate appears ~25–26% based on available figures, despite the 0.0% placeholder in the metrics.

Metrics to Watch:

• Operating cash flow and free cash flow conversion relative to net income.
• Gross and operating margin sustainability amid input cost changes.
• Inventory and receivables turnover trends and their impact on working capital.
• Order backlog or book-to-bill (if disclosed) as a demand indicator.
• Capex levels and D&A to gauge maintenance vs. growth investment.
• Non-operating income components affecting ordinary income.

Relative Positioning: Within Japanese construction-related and engineered products peers, Okabe exhibits conservative leverage and strong liquidity with moderate profitability and improving margins; near-term positioning benefits from operating leverage, while cash conversion evidence is still pending due to undisclosed cash flow data.

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