ABIST Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥10.63B
• Operating Income: ¥963M
• Net Income: ¥649M
• EPS: ¥163.24

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

Abist Co., Ltd. (6087) reported steady single-entity FY2025 Q4 (full-year) results under JGAAP, with revenue of ¥10.627bn (+6.2% YoY) and operating income of ¥963m (+6.7% YoY), indicating modest positive operating leverage. Net income was ¥649m (+6.3% YoY), and EPS reached ¥163.24, implying broadly stable margins year over year. Gross profit was ¥2.745bn, translating to a gross margin of 25.8% and an operating margin of 9.1%, consistent with a service-centric model with limited inventories. DuPont analysis shows ROE of 8.76%, driven by a net margin of 6.11%, asset turnover of 1.088x, and moderate financial leverage of 1.32x. Balance sheet strength is notable: total assets of ¥9.769bn against total equity of ¥7.405bn implies an equity ratio around 75.8% (the reported 0.0% appears undisclosed), and current assets of ¥6.139bn versus current liabilities of ¥1.709bn yields a current ratio of 359%. Interest expense is minimal (¥0.3m), and interest coverage is extraordinarily high at ~3,199x based on EBIT, underscoring negligible financial risk from debt. Operating cash flow was ¥445m (OCF/NI 0.69), reflecting some working capital absorption; after ¥343m investing outflows, free cash flow was positive at ¥102m. Financing cash outflows of ¥446m suggest meaningful shareholder returns and/or debt-related movements, though DPS and share data were not disclosed in this dataset. Tax cash expense of ¥323m implies an effective tax rate of about one-third, consistent with domestic taxation, despite an undisclosed effective tax figure in the summary metrics. With EBITDA of ¥1.097bn (10.3% margin) and modest D&A (¥134m), earnings quality appears supported by a largely asset-light profile. Liquidity and solvency metrics are strong, providing capacity to navigate demand cycles and invest selectively. Given the single-entity basis and several undisclosed line items (e.g., cash balance, equity ratio, DPS), interpretation relies on the provided non-zero figures and standard relationships. Overall, Abist demonstrates stable growth, sound profitability, strong balance sheet resilience, and positive albeit modest free cash generation, with the key watchpoint being cash conversion from earnings due to working capital movements.

Profitability Analysis

• ROE decomposition (DuPont): Net margin 6.11% × Asset turnover 1.088 × Financial leverage 1.32 = ROE 8.76% (matches reported). ROA approximates 6.6% (¥649m/¥9,769m), consistent with moderate leverage.
• Margin quality: Gross margin 25.8%, operating margin ~9.1% (¥963m/¥10,627m), ordinary margin ~9.2%, and net margin 6.11%. Ordinary income > operating income by ~¥14m, indicating small positive non-operating contributions. D&A of ¥134m (~1.3% of sales) underscores low capital intensity.
• Operating leverage: Revenue +6.2% YoY vs operating income +6.7% YoY indicates slight positive operating leverage, suggesting SG&A discipline. Implied SG&A ~¥1.782bn (~16.8% of sales), consistent with a controlled cost base.
• Taxation: Income tax of ¥323m with net income of ¥649m implies an effective tax rate near ~33%, typical for Japan; the 0.0% figure in summary metrics reflects non-disclosure rather than true zero.

Growth Assessment

• Revenue sustainability: Top-line growth of +6.2% YoY suggests steady demand in core service lines; asset-light profile supports scalability without heavy capex.
• Profit growth and quality: Operating income grew slightly faster than sales (+6.7%), preserving margin structure; EBITDA margin of 10.3% aligns with prior-year stability implied by modest YoY movements.
• Unit economics: Low inventory (¥43k) aligns with a human-capital intensive model; profitability depends on utilization and pricing rather than physical throughput.
• Outlook considerations: With strong liquidity and low leverage, the company appears positioned to maintain investment in headcount/skills. Near-term growth trajectory likely tied to client capex cycles and staffing utilization; watch bill rates, fill rates, and retention to gauge sustainability.

Financial Health

• Liquidity: Current assets ¥6,139m vs current liabilities ¥1,709m yield a current ratio of ~359% and quick ratio ~359% given negligible inventories. Working capital stands at ~¥4,429m, indicating substantial short-term cushion.
• Solvency: Equity ¥7,405m vs assets ¥9,769m implies an equity ratio near ~75.8% (reported 0.0% is undisclosed) and financial leverage 1.32x. Interest expense is only ¥0.3m, supporting an interest coverage ratio of ~3,199x on EBIT.
• Capital structure: Debt-to-equity of 0.34x (based on provided metric; likely uses total liabilities) indicates conservative leverage. Ordinary income exceeding operating income suggests minimal non-operating drag.

Cash Flow Quality

• Earnings-to-cash conversion: OCF ¥445m vs net income ¥649m (OCF/NI 0.69) signals working capital absorption during the year. OCF/EBITDA ~41% indicates cash conversion below earnings, a watchpoint for a services model where receivables timing can be meaningful.
• Free cash flow: FCF of ¥102m (OCF ¥445m less investing CF ¥343m) is positive but modest (FCF margin ~1.0%). Investing outflows likely reflect maintenance and selective growth investments; capex intensity appears low relative to sales.
• Working capital dynamics: Negligible inventories support low operational friction; the gap between NI and OCF points to receivable/payable movements or tax timing. Monitoring DSO and payables terms is key to improving cash conversion.

Dividend Sustainability

• Reported dividends: DPS and payout ratio are shown as 0.00/0.0% in the dataset; per the disclosure note, zeros indicate non-disclosure rather than actual zero. Thus, dividend amounts are not available here.
• Capacity assessment: Financing cash outflows of ¥446m suggest shareholder returns and/or debt-related cash flows during the year. With NI of ¥649m and FCF of ¥102m, recurring dividend capacity should be assessed against both earnings and free cash generation. Coverage by FCF looks tight in this period (given ¥102m FCF), but balance sheet strength (equity ratio ~75.8%, low leverage) provides supplemental capacity if needed.
• Policy outlook: Without disclosed DPS, infer dividend sustainability from profitability stability, low leverage, and liquidity buffer. Future sustainability will hinge on improving OCF/NI, maintaining margins, and managing working capital to align cash generation with any shareholder return commitments.

Risk Assessment

Business Risks:

• Demand cyclicality tied to client capex and development schedules, affecting utilization rates
• Wage inflation and talent retention pressures compressing gross margin
• Pricing pressure in engineer dispatch/design services impacting unit economics
• Regulatory changes in labor practices and overtime rules affecting cost structure
• Client concentration risks typical of B2B services if large accounts dominate revenue
• Recruitment pipeline constraints limiting growth despite demand

Financial Risks:

• Working capital absorption leading to weaker cash conversion despite stable earnings
• Potential mismatch between financing outflows (dividends/buybacks) and free cash flow
• Exposure to interest rate changes is low currently but could rise if leverage increases
• Tax payments timing causing volatility between NI and OCF

Key Concerns:

• OCF/NI at 0.69 indicates below-trend cash conversion
• Free cash flow of ¥102m provides limited coverage for large shareholder distributions
• Dependence on maintaining high utilization to protect operating margin near 9%

Investment Implications

Key Takeaways:

• Stable topline and operating profit growth (~+6% YoY) with preserved margin structure
• ROE of 8.76% underpinned by modest leverage and solid asset turnover
• Very strong liquidity (current ratio ~359%) and low effective financial risk (interest coverage ~3,199x)
• Positive but modest FCF (¥102m); cash conversion is the principal watchpoint
• Financing outflows (¥446m) suggest active capital returns or structure changes despite tight FCF

Metrics to Watch:

• OCF/Net income and OCF/EBITDA as indicators of cash conversion
• Days sales outstanding and receivables turnover (not disclosed here)
• Utilization rate, headcount growth, and average billing rate
• Operating margin trajectory vs wage inflation
• Capex and investing CF to gauge growth vs maintenance spend
• Dividend disclosures (DPS, payout) and financing CF composition

Relative Positioning: Within Japan’s engineer dispatch/design services space, Abist exhibits moderate ROE, robust balance sheet strength, and disciplined cost structure, placing it as a conservatively financed, margin-stable operator with cash conversion variability as the key differentiator versus peers.

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