EnBio Holdings,Inc FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.68B
• Operating Income: ¥656M
• Net Income: ¥408M
• EPS: ¥67.15

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

ENBIO Holdings (6092) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥5,683 million, down 4.6% YoY, indicating a softer top line. Gross profit was ¥1,643 million, translating to a gross margin of 28.9%, which supports healthy value-add despite revenue pressure. Operating income declined 15.0% YoY to ¥656 million, implying negative operating leverage as fixed costs weighed on profitability amid lower sales. Ordinary income came in at ¥598 million, reflecting net non-operating expense primarily from interest costs of ¥64 million, though interest coverage remains robust at 10.2x. Net income rose 30.8% YoY to ¥543 million, a notable divergence from the decline in operating income, suggesting a favorable comparison versus the prior year (likely tax or non-recurring impacts) despite limited detail. The DuPont breakdown shows a net margin of 9.55%, asset turnover of 0.255x, and financial leverage of 2.34x, yielding an ROE of 5.72% for the period. Asset efficiency is modest, consistent with project-based businesses where work-in-progress and receivables depress turnover. Liquidity is solid with a current ratio of 185.9% and a quick ratio of 124.6%, supported by sizeable working capital of ¥4,139 million. The balance sheet shows total assets of ¥22,244 million and total equity of ¥9,490 million, implying a debt-to-equity ratio of 1.26x, which is moderate for the business profile. Operating cash flow was negative at ¥-258 million, resulting in an OCF/Net Income ratio of -0.48, indicating weak cash conversion in the half-year—likely timing-related working capital investment given the inventory balance of ¥2,952 million. EBITDA was ¥886 million, with a 15.6% margin, underscoring decent underlying earnings capacity before depreciation and interest. The company reported DPS of ¥0.00 and a payout ratio of 0.0%, indicating no distributions during the period (or not disclosed), with FCF not determinable from the available data. Interest expense of ¥64 million is comfortably serviced by EBIT, reducing near-term financial strain. The equity ratio was not disclosed (displayed as 0.0%), and several cash flow items are unreported, which constrains a full assessment of solvency and cash generation trends. Overall, the quarter reflects resilient margins and steady leverage but highlights sensitivity to revenue fluctuations and near-term cash conversion challenges.

Profitability Analysis

ROE_decomposition: ROE 5.72% = Net margin 9.55% × Asset turnover 0.255 × Financial leverage 2.34. The primary driver is margin strength, while low turnover dampens overall returns; leverage provides a moderate boost. margin_quality: - Gross margin: 28.9% (¥1,643m/¥5,683m), healthy for the business mix. - Operating margin: 11.5% (¥656m/¥5,683m), down YoY given the 15.0% decline in operating income versus a 4.6% revenue decline. - Ordinary margin: 10.5%, reflecting net non-operating costs. - Net margin: 9.55%, aided by below-line items versus prior year. Margin structure suggests decent pricing and project execution, but higher fixed costs rendered margins sensitive to volume. operating_leverage: Revenue fell 4.6% YoY while operating income fell 15.0% YoY, indicating negative operating leverage, consistent with a fixed-cost base and/or cost inflation not fully offset by pricing.

Growth Assessment

revenue_sustainability: Top line contracted 4.6% YoY to ¥5,683m, signaling softer demand or project timing. Inventory of ¥2,952m suggests ongoing or upcoming project activity, but conversion to revenue will be key. profit_quality: Net income rose 30.8% YoY to ¥543m despite lower operating profit, implying favorable below-the-line items versus the prior year (e.g., taxes or one-off effects). Ordinary income (¥598m) trails operating income (¥656m) due to interest and other non-operating items, so the net growth likely reflects factors not fully observable in the provided detail. outlook: With EBITDA margin at 15.6% and healthy liquidity, the company appears positioned to execute backlog; however, lower revenue and negative operating leverage highlight sensitivity to activity levels. Near-term growth will depend on project starts and working capital turnover; monitoring backlog conversion and bidding pipeline is important. Limited disclosure on segment mix and order trends constrains forward visibility.

Financial Health

liquidity: Current assets ¥8,957m vs current liabilities ¥4,818m yield a current ratio of 185.9% and quick ratio of 124.6%, indicating strong near-term liquidity. Working capital stands at ¥4,139m. solvency: Total liabilities ¥11,964m vs equity ¥9,490m; debt-to-equity 1.26x (aggregate leverage moderate). Interest coverage is solid at ~10.2x (EBIT/interest), suggesting manageable debt service. capital_structure: Financial leverage of 2.34x (Assets/Equity) supports ROE but should be monitored if operating volatility persists. Equity ratio is undisclosed in the dataset.

Cash Flow Quality

earnings_quality: OCF/Net Income is -0.48 (¥-258m / ¥543m), indicating weak cash conversion in the half-year, likely due to working capital build typical of project cycles. FCF_analysis: Investing cash flow is unreported (shown as 0). Capex is not disclosed; therefore, true free cash flow cannot be determined from available data. EBITDA of ¥886m suggests underlying capacity to fund capex, but quarter timing matters. working_capital: Inventories are ¥2,952m, a large component of current assets, potentially tying up cash. Receivables and payables are not disclosed; OCF negativity likely reflects inventory and/or receivable builds outpacing payables. Subsequent conversion will be key to normalizing cash flow.

Dividend Sustainability

payout_ratio_assessment: Reported DPS is ¥0.00 with a payout ratio of 0.0%. Based on the period’s earnings, the company is not distributing cash (or not disclosed). FCF_coverage: With OCF negative and capex undisclosed, FCF-based coverage cannot be assessed. Absent positive and stable FCF, sustained dividends would be constrained. policy_outlook: Given moderate leverage, healthy liquidity, but volatile cash conversion, a conservative distribution stance appears consistent with preserving balance sheet flexibility until working capital normalizes. Formal dividend policy is not provided in the data.

Risk Assessment

Business Risks:

• Project timing and backlog conversion risk affecting revenue and margins
• Cost inflation and subcontracting costs pressuring gross and operating margins
• Customer concentration and bidding risk typical of remediation/engineering projects
• Regulatory and environmental compliance changes impacting remediation demand and costs
• Execution risk on complex remediation projects affecting profitability and cash

Financial Risks:

• Negative OCF in the period pointing to working capital absorption
• Leverage at 1.26x D/E increases sensitivity to earnings volatility
• Interest rate exposure on floating-rate debt could weaken interest coverage
• Asset turnover at 0.255x implies capital intensity and slower cash cycles
• Limited disclosure of cash and capex reduces visibility on FCF resilience

Key Concerns:

• Negative cash conversion (OCF/NI -0.48) despite positive earnings
• Operating income decline (-15% YoY) on a modest sales decline (-4.6% YoY), indicating negative operating leverage
• Dependence on working capital releases (inventory/receivables) to support liquidity and potential distributions

Investment Implications

Key Takeaways:

• Margins remain healthy (gross 28.9%, operating 11.5%, EBITDA 15.6%) despite revenue softness
• ROE of 5.72% is primarily margin-driven; low asset turnover constrains returns
• Interest coverage (~10x) indicates manageable debt service with moderate leverage (D/E 1.26x)
• Cash conversion is weak in the period; normalization hinges on working capital release
• Data gaps (equity ratio, cash balance detail, capex) limit full FCF and solvency assessment

Metrics to Watch:

• Backlog/order intake and revenue run-rate in 2H
• Working capital days (inventory and receivable turnover) and OCF recovery
• Gross and operating margin trajectory versus input cost trends
• Net debt and interest coverage as rates evolve
• Capex and investing cash flows to gauge true FCF

Relative Positioning: Compared with domestic project-based peers, ENBIO exhibits solid margins and liquidity but lower asset turnover and currently weaker cash conversion; leverage is moderate and coverage sound, placing it in a middle-of-the-pack financial risk position contingent on working capital normalization.

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
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