MRT Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.26B
• Operating Income: ¥127M
• Net Income: ¥81M
• EPS: ¥13.51

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

MRT Co., Ltd. (6034) reported FY2025 Q3 consolidated IFRS results with revenue of 32.64 (100M JPY), up 3.5% YoY, indicating modest top-line growth. Gross profit was 20.63 with a high gross margin of 63.2%, reflecting a relatively asset-light/service-oriented model. SG&A of 21.10 exceeded gross profit, yet operating income was positive at 1.27, implying the presence of other operating income under IFRS that offset the negative GP–SG&A gap. Operating margin is approximately 3.9%, indicating thin profitability and limited pricing power or efficiency at this stage. EBITDA was 3.18 and D&A 1.91, suggesting operating income is largely supported by non-cash charges. Profit before tax was 1.31 and net income 0.76, with an effective tax rate of 24.6%, broadly in line with Japan’s statutory range after adjustments. ROE is low at 1.7% based on DuPont: net margin 2.3%, asset turnover 0.516, and financial leverage 1.40x. Cash generation was robust relative to earnings: operating cash flow (OCF) of 4.26 equates to 5.6x net income, and free cash flow (FCF) was a solid 3.03 after CapEx of 0.35. The balance sheet is conservatively positioned with total assets of 63.24 and equity of 45.29, giving an equity ratio of 69.8% and liabilities-to-equity near 0.47x. Reported loans total 5.53 (short-term 3.70, long-term 1.83), while cash and equivalents were 26.05, implying a strong net cash position. Comprehensive income was slightly negative at -0.03, indicating OCI losses of roughly -0.79, likely from market-related valuation effects given the equity-method loss reported (-0.19) and the absence of other disclosed OCI details. Working capital is ample at 33.18, but current liabilities were not disclosed, limiting visibility on near-term liquidity ratios. Shareholder returns leaned toward buybacks with 0.94 outflow for repurchases; dividend disclosures were absent and dividends paid were effectively unreported in cash flows. The profitability structure relies on high gross margins offset by heavy SG&A, requiring better operating leverage to lift returns. With modest growth, positive cash generation, and a strong balance sheet, the company has room to invest for efficiency improvements or selective growth initiatives. Data gaps in non-operating items, current liabilities, and dividend policy temper the precision of the assessment, but the overall picture suggests stable operations with underwhelming returns and healthy liquidity.

Profitability Analysis

ROE_decomposition: ROE 1.7% = Net margin 2.3% x Asset turnover 0.516 x Financial leverage 1.40x. The main drag is low net margin, not leverage or turnover. margin_quality: Gross margin at 63.2% is strong, but SG&A of 21.10 slightly exceeds gross profit of 20.63. Positive operating income of 1.27 indicates material other operating income. Operating margin is about 3.9%, highlighting thin core profitability and reliance on non-core/other operating items to reach positive EBIT. operating_leverage: Incremental revenue growth of 3.5% YoY produced modest operating profit, suggesting limited operating leverage so far. With EBITDA at 3.18 against D&A of 1.91, fixed cost absorption remains a challenge; normalization of other operating income could pressure EBIT unless SG&A efficiency improves.

Growth Assessment

revenue_sustainability: Top-line growth of 3.5% is steady but not high; sustainability appears moderate, consistent with a mature or competitive segment. No segment/mix disclosure provided to assess recurring vs. non-recurring contributions. profit_quality: PBT 1.31 vs. EBIT 1.27 implies minimal net non-operating impact; however, equity-method income was -0.19, indicating some associates drag. Negative OCI driving comprehensive income to -0.03 raises questions on market-sensitive items. Core earnings quality is acceptable but partially dependent on other operating income. outlook: Assuming continued single-digit revenue growth, profit trajectory hinges on SG&A discipline and monetization of high gross margin. If cost controls tighten, operating leverage could improve; otherwise, ROE likely remains subdued.

Financial Health

liquidity: Cash and equivalents 26.05 vs. reported loans of 5.53 indicate substantial net cash. Working capital is 33.18. Current liabilities were not disclosed, so current and quick ratios are not calculable. solvency: Equity ratio 69.8% reflects a strong capital base. Liabilities-to-equity approximates 0.47x. Interest coverage is not calculable due to unreported interest expense, but low leverage and net cash suggest comfortable coverage. capital_structure: Debt comprises short-term 3.70 and long-term 1.83. With cash 26.05, the company maintains flexibility for investment or buybacks while preserving balance sheet strength.

Cash Flow Quality

earnings_quality: OCF of 4.26 equals 5.6x net income (0.76), indicating strong cash conversion and conservative accruals this period. FCF_analysis: FCF 3.03 after CapEx of 0.35 demonstrates ample internal funding capacity relative to earnings and size. Investing CF was -1.22, suggesting additional investments beyond CapEx (details unreported). working_capital: Receivables 4.34 and payables 4.04 are broadly balanced; inventories are small at 0.38, consistent with a service-heavy model. Specific DSO/DPO cannot be derived without revenue timing or cost breakdowns.

Dividend Sustainability

payout_ratio_assessment: Dividend data are unreported; payout ratio is not calculable. EPS is 13.51 JPY, but DPS is N/A. FCF_coverage: Given FCF of 3.03 and strong net cash, potential dividend capacity exists; however, actual distributions are not disclosed. Cash flow could cover modest dividends if instituted or continued. policy_outlook: Shareholder returns currently appear skewed to buybacks (0.94 outflow). Without a stated dividend policy, expect flexibility, with returns likely balanced against investment needs and profitability stabilization.

Risk Assessment

Business Risks:

• Low operating margin (~3.9%) and heavy SG&A burden limit earnings resilience.
• Modest revenue growth (+3.5% YoY) in potentially competitive markets.
• Dependence on other operating income to sustain positive EBIT under IFRS.
• Negative equity-method income (-0.19) indicates associate/affiliate performance risk.
• OCI volatility leading to negative comprehensive income (-0.03).

Financial Risks:

• Interest coverage not disclosed; though net cash mitigates, opaque financing costs are a data gap.
• Limited disclosure on current liabilities constrains near-term liquidity analysis.
• Potential valuation losses in securities or derivatives (implied by negative OCI) could impact equity.

Key Concerns:

• Sustained SG&A control needed to translate high gross margin into higher EBIT.
• Visibility on non-operating drivers (other income, OCI components) is limited.
• ROE at 1.7% lags cost of equity expectations, requiring improvement in margins or asset efficiency.

Investment Implications

Key Takeaways:

• Solid gross margin (63.2%) but thin operating margin (~3.9%) highlights execution gap.
• ROE is low at 1.7%, constrained primarily by net margin.
• Cash generation strong: OCF 4.26 and FCF 3.03 with modest CapEx (0.35).
• Balance sheet strength with equity ratio 69.8% and sizable net cash (~20.5).
• Comprehensive income negative due to OCI, warranting monitoring of market-sensitive exposures.
• Shareholder returns currently via buybacks (0.94), dividends unreported.

Metrics to Watch:

• SG&A-to-sales ratio and trajectory of other operating income under IFRS.
• Operating margin and EBITDA margin progression.
• OCF/NI conversion and working capital movements (receivables/payables).
• Equity-method results and any impairments or valuation changes hitting OCI.
• Revenue growth rate and client/segment mix if disclosed.
• Net cash position and allocation to buybacks/dividends vs. growth investments.

Relative Positioning: Within Japan small-cap services/healthcare-staffing/IT-enabled platforms (industry context inferred), MRT exhibits stronger balance sheet resilience and cash conversion than peers with similar scale but trails on operating margin and ROE, leaving performance leverage primarily in cost discipline and operating efficiency.

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
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