Brangista Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥5.20B
• Operating Income: ¥1.15B
• Net Income: ¥168M
• EPS: ¥49.80

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

Verdict: Solid Q4 finish with healthy top-line growth and stronger operating leverage, translating into double-digit ROE and robust liquidity. Revenue rose to 51.96 (+7.8% YoY), with operating income up 21.1% to 11.51 and net income up 8.3% to 6.56. Gross profit reached 37.63, implying a high gross margin of 72.4%, showcasing a strong value-add model. Operating margin improved to 22.2% (11.51/51.96), up roughly 243 bps YoY, as revenue growth outpaced operating cost growth. Ordinary income grew 18.6% to 11.20 despite net non-operating expenses (0.35) outweighing non-operating income (0.03), with interest expense small at 0.05. Net margin was 12.6%, roughly flat YoY on our estimates (+~5 bps), reflecting a higher effective tax rate of 33.0%. ROE calculated at 10.8% (NPM 12.6% × ATO 0.591 × leverage 1.44x) is healthy for the business mix and above a typical 8–10% cost of equity range. OCF of 6.02 compares well to NI of 6.56 (OCF/NI 0.92x), indicating decent earnings quality with limited working capital drag. Free cash flow was positive at 5.42, comfortably funding capital returns including 4.79 in share repurchases. The balance sheet is conservative: current ratio 322%, D/E 0.44x, and cash/deposits 17.68 against minimal short-term loans (1.00). Investment securities are large at 47.59 (over half of total assets), driving comprehensive income to 29.39 and highlighting valuation gain sensitivity. ROIC is strong at 15.9%, consistent with disciplined capital deployment and high-margin operations. Forward-looking, the company’s ability to sustain SG&A discipline while growing revenue will be key to maintaining operating margin gains. Monitoring the contribution and volatility from investment securities is essential, given their outsized balance sheet weight. Overall, the quarter underscores improving operating efficiency and sound cash generation, with manageable financial risk and capacity for continued shareholder returns.

Profitability Analysis

ROE decomposition (DuPont): ROE 10.8% = Net Profit Margin 12.6% × Asset Turnover 0.591 × Financial Leverage 1.44x. Operating margin expanded to ~22.2%, up ~243 bps YoY (prior implied ~19.7%), while net margin stayed roughly flat due to a higher effective tax rate and modest non-operating expense drag. The biggest driver of ROE this period was the operating margin improvement (operating leverage from revenue growth vs relatively contained SG&A), rather than leverage (stable at low 1.44x) or asset turnover (modest at 0.591). Business reason: revenue expanded while SG&A grew slower than gross profit, reflecting cost discipline and scale benefits in core operations. Non-operating items had a minor negative effect (net -0.32), and interest burden remains de minimis (interest coverage ~224x). Sustainability: margin gains appear primarily from operating leverage and cost control, which can be sustained if growth continues; however, net margin is capped by a normalized ~33% tax rate. Watch for SG&A growth outpacing revenue in subsequent periods; at present, evidence suggests positive operating leverage, not cost underinvestment. Gross margin is high (72.4%), consistent with a content/marketing-services model; absent mix shifts, it should remain resilient. Concerning trends: none acute, but note that net margin did not expand in tandem with operating margin due to taxes and non-operating expenses; sustained improvement requires tighter non-operating costs or tax optimization.

Growth Assessment

Revenue grew 7.8% YoY to 51.96, a healthy pace for the business. Operating income grew 21.1%, indicating positive operating leverage as costs scaled sub-linearly. Ordinary income rose 18.6%, slightly below operating income growth due to higher net non-operating expenses. Net income grew 8.3%, broadly in line with sales growth, constrained by a 33% effective tax rate. The operating margin expanded by ~243 bps YoY to ~22.2%, confirming improved efficiency. Growth quality is supported by OCF/NI at 0.92x and positive FCF of 5.42, implying cash-backed earnings. Outlook hinges on sustaining revenue momentum and SG&A discipline; given a high gross margin structure, even modest growth can drive further operating leverage. Non-operating volatility (valuation, FX, or securities-related items) could introduce earnings variability, though core operations appear stronger. The large investment securities balance suggests potential equity-method or fair value impacts on comprehensive income and possibly future P/L if realized. Near-term, expect stable to slightly improving core margins, with net margin tracking tax and non-operating noise.

Financial Health

Liquidity is strong: current ratio 321.9% and quick ratio 321.9% (ample cash of 17.68 vs short-term loans 1.00). No warning triggers: Current Ratio well above 1.0, and D/E at 0.44x is conservative (<1.5 benchmark). Interest-bearing debt is modest (short-term 1.00, long-term 4.26), and interest coverage is very high at ~224x, indicating minimal solvency risk. Maturity mismatch risk is low: current assets 37.56 far exceed current liabilities 11.67, and cash alone covers short-term borrowings multiple times. Off-balance sheet obligations: not disclosed in provided data. Asset composition: investment securities at 47.59 (over half of assets) raise valuation volatility risk for equity and OCI, though this does not impair near-term liquidity. Equity is sizable at 60.99, providing cushion for shocks.

Cash Flow Quality

OCF of 6.02 vs NI of 6.56 yields OCF/NI of 0.92x, above the 0.8 threshold—earnings are largely cash-backed with modest working capital movements. Free cash flow was positive at 5.42 (OCF + Investing CF), comfortably funding shareholder returns including 4.79 in share repurchases and financing outflows of -1.60. Capex needs are light (-0.09), consistent with an asset-light model; sustaining FCF appears feasible if operating performance holds. No clear signs of working capital manipulation from the disclosed aggregates; however, absence of A/R and inventory detail limits deeper diagnostics. Given a stable leverage profile and cash cushion, FCF sustainability for routine capex and modest capital returns is good.

Dividend Sustainability

Dividend details are unreported; payout ratio cannot be calculated from disclosed data. Capital return activity focused on share repurchases of 4.79, which were covered by FCF of 5.42, leaving residual capacity. With NI at 6.56 and conservative leverage, the company appears capable of sustaining modest dividends if policy supports it. DOE is reported at 0.0% and payout ratio at 0.2% in XBRL fields, but these tags appear inconsistent with operating metrics; treat as not indicative. Given positive FCF, light capex, and strong liquidity, dividend capacity is adequate, though formal policy visibility is limited in this dataset.

Risk Assessment

Business Risks:

• Revenue concentration and client churn risk typical for digital marketing/content businesses (not disclosed but industry-relevant).
• Execution risk in sustaining SG&A efficiency; reacceleration of costs could compress operating margin after recent expansion.
• Dependence on high gross margins (72.4%); adverse mix shift or pricing pressure could erode profitability.
• Potential cyclicality tied to advertising/EC spending trends.

Financial Risks:

• Large investment securities balance (47.59) introduces valuation volatility; impacts OCI substantially and could affect P/L upon realization.
• Non-operating expense drag (0.35 > non-operating income 0.03) modestly offsets operating gains; could widen in risk-off markets.
• Tax rate variability risk (current effective tax 33%) affecting net margins.
• Market liquidity risk if monetizing securities during downturns.

Key Concerns:

• Comprehensive income (29.39) far exceeds net income (6.56), implying material unrealized gains; future reversals would hit equity.
• Asset turnover is modest (0.591), limiting ROE upside without further margin gains.
• Limited disclosure on SG&A breakdown, depreciation, and dividend policy reduces visibility on cost structure and capital return commitments.

Investment Implications

Key Takeaways:

• Core operations strengthened: operating margin ~22.2% (+~243 bps YoY) and operating income +21.1% on +7.8% revenue.
• ROE at 10.8% with strong ROIC of 15.9% indicates efficient capital deployment.
• Cash generation solid (OCF/NI 0.92x; FCF 5.42), supporting buybacks (4.79) with liquidity to spare.
• Balance sheet conservative (current ratio 322%, D/E 0.44x), low refinancing risk.
• High exposure to investment securities drives OCI and equity volatility; monitor for market-driven swings.

Metrics to Watch:

• Operating margin trend and SG&A-to-sales ratio.
• OCF/Net Income ratio sustainability (>1.0 desired).
• Movement in investment securities and comprehensive income volatility.
• Asset turnover progression as revenue scales.
• Effective tax rate and non-operating gains/losses.

Relative Positioning: Within small-cap digital/content-oriented peers, the company stands out for high gross margins, improving operating leverage, and a conservative balance sheet; however, its elevated exposure to investment securities introduces above-average equity/OCI volatility relative to operationally focused 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