Topre Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥177.75B
• Operating Income: ¥10.47B
• Net Income: ¥2.81B
• EPS: ¥145.26

Income Statement

Balance Sheet

Cash Flow Statement

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

Topre Co., Ltd. (5975) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability amid flat topline. Revenue was ¥177.8bn, down 0.5% YoY, while operating income rose 4.4% YoY to ¥10.5bn, evidencing effective cost control and favorable mix. Gross profit was ¥19.4bn, implying a gross margin of 10.9%, and operating margin expanded to roughly 5.9%. Ordinary income reached ¥11.0bn, modestly above operating income, indicating small non-operating gains and a negligible interest burden. Net income surged 163.5% YoY to ¥7.22bn, lifting the net margin to 4.06%, likely reflecting the absence of prior-year one-offs and normalization in taxes or extraordinary items (details not disclosed). EBITDA was ¥23.6bn (13.3% margin), highlighting a capital-intensive profile with ¥13.1bn of D&A in the half. DuPont decomposition yields a calculated ROE of 3.15% based on a 4.06% net margin, 0.484x asset turnover, and 1.60x financial leverage; ROA is approximately 1.96%. Liquidity is solid with a current ratio of 160% and quick ratio of 130%, supported by ¥173.9bn in current assets versus ¥108.4bn in current liabilities. The balance sheet is conservative: total equity is ¥229.5bn against total assets of ¥367.4bn, implying an equity ratio of about 62.5% (the reported equity ratio field is unreported). Interest coverage is very strong at 374x given minimal interest expense of ¥28m. Cash generation was robust, with operating cash flow of ¥24.6bn and OCF/Net income of 3.41x, underscoring high earnings quality; however, investing cash flow and cash & equivalents are not disclosed, limiting free cash flow analysis. Working capital stands at ¥65.5bn and inventories are ¥32.5bn, providing operational flexibility but requiring continued monitoring of turnover. Dividend details (DPS, payout, FCF coverage) are not disclosed in this dataset; EPS was ¥145.26, implying roughly 49–50 million shares outstanding by back-calculation. Overall, despite slight revenue softness, margin resilience, strong cash conversion, and a high equity buffer point to stable fundamentals, though data gaps on investing cash flows, cash balances, and dividend policy temper visibility.

Profitability Analysis

ROE (DuPont): 3.15% = 4.06% net margin × 0.484x asset turnover × 1.60x financial leverage. ROA approximates 1.96% (net margin × asset turnover). Gross margin is 10.9% (¥19.4bn GP on ¥177.8bn revenue); operating margin is ~5.9% (¥10.47bn OI); ordinary margin is ~6.2% (¥10.99bn). EBITDA margin of 13.3% reflects significant non-cash D&A (¥13.09bn), consistent with a tooling- and equipment-intensive business. Operating leverage is positive: revenue declined 0.5% YoY while operating income rose 4.4% YoY, implying cost discipline and/or improved mix and pass-through. Net margin at 4.06% improved sharply YoY, aided by limited interest costs (¥28m) and likely normalization of taxes/one-offs; precise drivers cannot be fully parsed due to limited disclosure on extraordinary items. Ordinary income exceeding operating income by ~¥0.52bn indicates small non-operating gains (e.g., forex/interest/other), improving overall profitability. Interest burden is de minimis (interest coverage 374x), ensuring that operating performance flows through to pre-tax earnings. Asset turnover of 0.484x is modest, consistent with a large asset base; improving utilization would be a lever for ROE. Overall margin quality appears sound, with EBITDA cushion supporting investment needs and downturn resilience.

Growth Assessment

Revenue declined 0.5% YoY to ¥177.8bn, suggesting a flat demand environment with possible pricing and mix offsets. Despite the slight topline contraction, operating income increased 4.4% YoY to ¥10.5bn, signaling effective cost control, procurement management, and/or improved product/customer mix. Ordinary income of ¥11.0bn benefited from minor non-operating gains; interest expense remains negligible. Net income rose 163.5% YoY to ¥7.22bn, implying the prior-year base was depressed by factors not repeated (e.g., special losses or higher tax); exact drivers are not disclosed. EBITDA of ¥23.6bn provides investment capacity for growth initiatives, though investing cash flows and capex levels are not disclosed, limiting assessment of growth reinvestment. Asset turnover of 0.484x suggests capacity headroom; incremental volume recovery could translate into operating leverage. Revenue sustainability hinges on automotive demand cycles, raw material pass-through, and export/FX exposure; near-term margin resilience provides a buffer even if volume is subdued. Profit quality is supported by strong OCF/NI of 3.41x, indicating earnings are cash-backed this period; durability depends on working capital normalization and maintenance of gross spreads. Outlook: with stable margins and high equity capitalization, the company is positioned to navigate a flat to mildly improving demand scenario, but visibility is constrained by absent disclosures on backlog, capex, and end-market splits.

Financial Health

Total assets are ¥367.4bn and total equity is ¥229.5bn, implying an equity ratio of roughly 62.5% (calculated; reported field is unreported). Total liabilities are ¥147.8bn, for a liabilities-to-equity ratio of 0.64x, indicating conservative leverage. Current assets of ¥173.9bn versus current liabilities of ¥108.4bn yield a current ratio of 160.4% and a quick ratio of 130.4%, both solid for near-term obligations. Working capital is ¥65.5bn, providing operational flexibility to support production and inventories (¥32.5bn). Interest expense is minimal at ¥28m and interest coverage is 374x, pointing to very low financial risk from debt service. Financial leverage in DuPont terms is 1.60x (assets/equity), consistent with the high equity buffer. Cash and cash equivalents are not disclosed in this dataset, which limits a precise liquidity runway assessment. Composition of liabilities (interest-bearing vs. non-interest-bearing) is not provided; the reported debt-to-equity ratio of 0.64x appears to reference total liabilities rather than net debt, so true gearing could be lower. Overall solvency is strong with ample equity and liquidity metrics.

Cash Flow Quality

Operating cash flow was ¥24.63bn, versus net income of ¥7.22bn, producing an OCF/NI ratio of 3.41x, which is robust and indicates strong earnings quality this period. The high conversion likely reflects sizable non-cash D&A (¥13.09bn) and potentially favorable working capital movements; detailed working capital components are not disclosed. OCF margin is approximately 13.9% of revenue, supportive of self-funding capacity. Investing cash flow is not disclosed (shown as zero in the dataset), so free cash flow cannot be calculated; by convention, FCF = OCF − capex, and capex is not provided. Financing cash flow is an inflow of ¥4.58bn, suggesting net borrowing and/or other financing movements; share issuance/buyback cannot be assessed due to lack of share count movement details. Cash and equivalents are unreported, preventing end-period liquidity reconciliation. Given these limitations, qualitative assessment points to strong cash generation from operations, but the sustainability of FCF depends on the cadence of capex relative to D&A in upcoming periods.

Dividend Sustainability

Dividend per share, payout ratio, and FCF coverage are not disclosed in this dataset (zeros indicate unreported items). EPS is ¥145.26; by back-calculation, implied average shares outstanding are roughly 49–50 million, but share-based cash outflows (dividends or buybacks) are unknown. With OCF of ¥24.63bn and strong liquidity, the company appears to have capacity to support shareholder returns; however, the absence of investing cash flow and capex data prevents assessing FCF coverage. Policy considerations (target payout ratio, stability vs. flexibility) are not provided. Consequently, dividend sustainability cannot be conclusively evaluated; more disclosure on capex, historical DPS, and policy is needed.

Risk Assessment

Business Risks:

• Cyclical demand in core automotive end-markets; production schedule volatility at OEM customers
• Raw material cost fluctuations (steel, resins) and timing of pass-through
• FX exposure affecting export competitiveness and translation of overseas operations
• EV transition and model mix shifts requiring ongoing tooling and capex
• Supply chain disruptions (logistics, semiconductors, components) impacting delivery and costs
• Energy and labor cost inflation pressuring margins
• Concentration risk with major OEM customers

Financial Risks:

• Visibility on cash balance is limited due to undisclosed cash & equivalents
• Free cash flow uncertainty given lack of investing cash flow and capex disclosure
• Working capital swings (notably inventories and receivables) could affect cash conversion
• Potential currency translation impacts on equity and earnings
• Asset intensity (high D&A) implies ongoing reinvestment needs

Key Concerns:

• Data gaps on investing cash flow, cash balance, and dividends hamper capital allocation analysis
• Low asset turnover (0.484x) constrains ROE despite solid margins and low interest burden
• Slight revenue contraction (-0.5% YoY) highlights demand softness; sustainability of margin resilience needs monitoring

Investment Implications

Key Takeaways:

• Topline nearly flat (-0.5% YoY) but OP grew +4.4% YoY, evidencing cost/mix resilience
• Net income up +163.5% YoY; likely normalization from prior-year one-offs or tax effects
• EBITDA margin 13.3% with high D&A (¥13.1bn) underscores capital intensity
• Strong liquidity (current ratio 160%, quick ratio 130%) and high equity buffer (~62.5% equity ratio, calculated)
• Minimal interest burden (interest expense ¥28m; coverage 374x) limits financial risk
• Robust cash conversion (OCF/NI 3.41x), but FCF not assessable due to missing investing CF
• ROE 3.15% constrained by modest net margin and low asset turnover; improving utilization is a lever

Metrics to Watch:

• Capex and investing cash flows versus D&A (capex-to-D&A ratio and FCF)
• Gross and operating margins, especially raw material pass-through timing
• Asset turnover and inventory turnover (inventory levels: ¥32.5bn)
• Order trends and production schedules from key OEM customers
• FX rates and their impact on ordinary income
• Working capital movements (OCF/NI and OCF margin)
• Dividend policy disclosure (DPS, payout ratio) and any buyback activity

Relative Positioning: Financially conservative with strong liquidity and equity capitalization, enabling resilience versus peers in a flat demand environment; profitability metrics are solid but ROE trails asset-light peers due to lower asset turnover and capital intensity.

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