A-ONE SEIMITSU INC. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥383M
• Operating Income: ¥37M
• Net Income: ¥30M
• EPS: ¥6.05

Income Statement

Balance Sheet

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

Verdict: Despite a slight revenue decline, FY2026 Q1 delivered a sharp earnings rebound with material operating and net profit improvement. Revenue was 3.83 (−3.1% YoY), while operating income rose to 0.37 (+160.9% YoY), ordinary income to 0.44 (+103.2% YoY), and net income to 0.30 (+101.4% YoY). Net margin printed at 7.8%, operating margin at roughly 9.7% (calc.), and gross margin at 24.5% (as provided). Operating margin expanded by about 607 bps YoY (from ~3.6% to ~9.7%), and net margin expanded by about 406 bps (from ~3.8% to ~7.8%). The improvement came despite a small top-line contraction, indicating strong operating leverage and/or mix/price effects. Non-operating income contributed 0.08, equating to a non-operating income ratio of about 27% of operating income, modestly augmenting ordinary profit. Balance sheet strength is exceptional: cash and deposits of 46.76 against current liabilities of 1.08 drive a current ratio of roughly 49.6x and a quick ratio of the same magnitude. Equity stood at 70.55 with total assets of 77.00, implying low financial leverage (Assets/Equity ~1.09x) and a conservative capital structure (D/E ~0.08x). ROE calculated via DuPont is ~0.4% for the quarter (not annualized), low due to a combination of modest margins, very low asset turnover (0.05x), and limited leverage. ROIC is flagged at 1.1%, below the 5% warning threshold, underscoring capital efficiency challenges. Earnings quality assessment is constrained because operating cash flow (OCF) is unreported; hence, OCF/Net Income cannot be evaluated this quarter. There are arithmetic inconsistencies among cost of sales, gross profit, SG&A, and operating income lines, but the reported margins and operating income growth direction are clear and positive. Liquidity is ample, solvency is strong, and maturity mismatches are minimal given the large cash balance relative to short-term obligations. The reported payout ratio of 1766.7% is likely not comparable on a quarterly EPS basis and should not be interpreted as an ongoing policy without full-year context. Looking forward, sustaining margin gains with a shrinking revenue base will require continued mix/price discipline and cost control; monitoring demand trends and order intake will be key. With capital efficiency currently weak, incremental utilization, inventory turns (unreported), and revenue recovery would be necessary to lift ROIC/ROE to healthier levels.

Profitability Analysis

ROE decomposition (DuPont): ROE ≈ Net Profit Margin (7.8%) × Asset Turnover (0.050) × Financial Leverage (1.09x) ≈ 0.4% for the quarter. The component that changed most YoY appears to be net profit margin, which expanded by roughly 406 bps, driving the bulk of ROE improvement despite flat leverage and structurally low asset turnover. Business drivers likely include better pricing/mix and tighter expense control (operating margin +607 bps YoY) and a small tailwind from non-operating income (0.08). Given revenue declined 3.1% YoY, the positive operating leverage suggests material internal efficiency gains and/or normalization from a weak base last year (prior OI ~0.14). Sustainability: part of the expansion may be cyclical or one-off normalization; absent a pickup in revenue or asset utilization, sustaining high margins may be challenging. Watch for any reversal if input costs, wage inflation, or FX move adversely. Red flags: the apparent SG&A figure (0.79) does not reconcile to GP (0.94) and OI (0.37), indicating reclassifications or data capture quirks in XBRL; however, directionally margins improved. No evidence of SG&A growth outpacing revenue is visible this quarter; rather, profitability improved markedly versus a small revenue contraction.

Growth Assessment

Top-line contracted 3.1% YoY to 3.83, but profits surged (OI +160.9%, NI +101.4%), implying efficiency and mix drove earnings rather than volume growth. The net and operating margin expansions (+406 bps and +607 bps respectively) show strong operational execution off a weak prior-year base. Non-operating income (0.08) modestly boosted ordinary income, but core operating recovery was the main driver. With asset turnover at 0.05x, capital intensity and/or underutilized capacity are constraining capital efficiency; a sustained recovery likely requires volume normalization or better asset productivity. Outlook: absent order/backlog disclosure, visibility is limited; earnings trajectory will hinge on demand in precision tooling and factory automation end-markets, as well as FX (export pricing). Near term, the strong balance sheet affords flexibility to navigate softer demand while preserving margins. Medium term, margin sustainability without revenue growth is uncertain; watch book-to-bill and utilization to gauge durability.

Financial Health

Liquidity is exceptionally strong: current assets 53.47 vs current liabilities 1.08 yields a current ratio of ~49.6x and a quick ratio of the same order, with cash and deposits alone at 46.76. Solvency is conservative: total liabilities are 5.73 against equity of 70.55, resulting in D/E around 0.08x. No warning triggers (Current Ratio < 1.0 or D/E > 2.0) are present. Maturity mismatch risk is minimal; near-term obligations are tiny relative to cash and receivables (AR 2.78). Noncurrent liabilities are 4.65, but interest-bearing debt detail is unreported; these could include retirement benefit obligations or lease liabilities. Off-balance sheet obligations are not disclosed in the provided data.

Cash Flow Quality

OCF, capex, and FCF are unreported; therefore OCF/Net Income and FCF coverage cannot be assessed this quarter. As such, we cannot validate accrual quality, working capital behavior, or cash conversion. Receivables (2.78) versus quarterly revenue (3.83) suggest typical credit terms, but inventory data is unreported, limiting working capital analysis. No signs of working capital manipulation can be inferred from available items, but data gaps are material.

Dividend Sustainability

Dividend data (DPS, total dividends, FCF coverage) are unreported, and OCF/FCF are unavailable. The calculated payout ratio of 1766.7% appears to be based on comparing a likely full-year dividend with a single-quarter EPS (6.05 JPY), which is not a meaningful measure of sustainability. With limited information, we cannot conclude on dividend affordability this quarter. Structurally, the balance sheet’s large cash position provides a buffer for distributions, but sustainable payouts should be evaluated against full-year earnings and FCF once disclosed.

Risk Assessment

Business Risks:

• Demand softness in precision tooling/factory automation end-markets (revenue −3.1% YoY)
• Margin sustainability risk if mix/price tailwinds fade
• Supply chain/input cost volatility affecting gross margins
• FX sensitivity impacting export pricing and imported components

Financial Risks:

• Low capital efficiency: ROIC 1.1% flagged (<5%)
• Very low asset turnover (0.05x) restrains ROE even with margin gains
• Non-operating income reliance (0.08; ~27% of operating income) adds some volatility
• Data gaps on interest-bearing debt, capex, and OCF limit credit and cash assessment

Key Concerns:

• Arithmetic inconsistencies among cost of sales, gross profit, SG&A, and operating income in the dataset
• Unreported cash flow statements impede earnings quality checks
• Dividend sustainability cannot be assessed due to missing DPS and FCF data
• Inventory levels and turns are unreported, masking working capital risks

Investment Implications

Key Takeaways:

• Earnings rebound is strong with significant margin expansion despite slight revenue decline
• Balance sheet is exceptionally liquid and conservatively leveraged
• Capital efficiency remains weak (ROIC 1.1%, AT 0.05x), capping ROE
• Non-operating income provides a modest tailwind but is not the primary driver
• Data inconsistencies and cash flow omissions warrant caution in interpreting margin structure

Metrics to Watch:

• Order intake/backlog and book-to-bill
• Gross and operating margin trends vs input costs and FX
• Operating cash flow and free cash flow once disclosed
• Capex plans and asset utilization to improve asset turnover
• Dividend policy announcements and payout guidance

Relative Positioning: Within Japanese precision machinery/small-cap industrial peers, A-One Seimitsu exhibits superior liquidity and conservative leverage, but trails on capital efficiency (low ROIC/ROE). Short-term profitability momentum is favorable, yet sustained improvement likely depends on demand recovery and better asset utilization.

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