PhoenixBio (6190) FY2026 Q3 Earnings Report

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Executive Summary

The key development this quarter was the turnaround from an operating loss in the same period of the previous year to operating profitability, driven by higher revenue and improvements in the earnings structure. Revenue was ¥12.0B (¥11.4B in the same period of the previous year, YoY +5.0%), Operating Income was ¥0.7B (¥-1.5B in the same period of the previous year), Ordinary Income was ¥1.0B (¥-1.5B in the same period of the previous year), and Net Income was ¥0.9B (¥-1.5B in the same period of the previous year). The primary factors behind the return to profitability were the improvement in the gross profit margin to 77.4% (69.3% in the previous year) and the decline in the SG&A ratio to 71.7% (82.7% in the previous year).

Factors Affecting Performance

【Revenue】Revenue was ¥12.0B, representing a 5.0% increase year on year. The Company operates as a single segment centered on the PXB mouse business and does not disclose a breakdown by business; however, the increase in consolidated revenue appears to reflect expanding demand for its core business. Progress against the full-year company plan of ¥16.4B was 73.2%, approximately in line with the standard Q3 progress rate of 75%.

【Profit and Loss】Operating Income was ¥0.7B, an improvement of ¥2.2B from the ¥1.5B operating loss in the same period of the previous year. The improvement was attributable to operating leverage resulting from the higher gross profit margin (+8.1pt) and a 9.0% reduction in SG&A expenses (¥9.46B→¥8.60B). Ordinary Income of ¥1.0B exceeded Operating Income, with the difference attributable to a foreign exchange gain of ¥0.2B; this should be distinguished from recurring earnings power. Net Income of ¥0.9B was also only marginally different from profit before tax, and extraordinary losses were immaterial. In conclusion, the Company achieved higher revenue and higher profit.

Segment Analysis

The Company operates as a single segment, the PXB mouse business, and does not disclose segment-level Revenue or Operating Income. Consolidated Revenue of ¥12.0B and Operating Income of ¥0.7B indicate the earnings trends for the business as a whole.

Key Financial Indicators

【Profitability】The Operating Income margin improved substantially to 5.7% from negative 13.4% in the same period of the previous year, although it remains below the 15% level generally considered strong. The Net Income margin also turned positive at 7.8%. 【Cash Quality】Annualized DIO was 323 days and annualized CCC was 348 days, both lengthy periods, making the accumulation of funds in inventory and working capital an area to monitor when assessing the sustainability of the margin improvement. Accounts receivable increased 15.9% year on year, outpacing the 5.0% revenue growth. 【Investment Efficiency】Annualized ROE was 8.2%, recovering as the Company returned to profitability but still below the 10% level generally considered favorable. Total asset turnover was 0.728x and financial leverage was a restrained 1.45x, indicating that the improvement in ROE was primarily supported by the recovery in profitability. 【Financial Soundness】The Equity Ratio was 69.0%, the current ratio was 422.3%, and the D/E ratio was 0.45x, indicating a strong financial base. Long-term borrowings declined 27.3% year on year to ¥1.6B, demonstrating progress in debt reduction.

Cash Flow Analysis

As cash flow statement figures have not been disclosed, the funding position is analyzed based on balance sheet trends. Cash and deposits were ¥10.5B, slightly lower than ¥11.5B in the same period of the previous year, but remained at 10.5 times current liabilities of ¥3.9B, providing ample short-term liquidity. Long-term borrowings declined from ¥2.2B to ¥1.6B, indicating an improving financial structure. On the other hand, the long annualized DIO of 323 days and annualized CCC of 348 days could contribute to increased funding requirements during a period of revenue growth. Accounts receivable increased 15.9% year on year, accumulating at a pace faster than the revenue growth rate, and the extent to which the earnings recovery is translating into cash-generating capacity remains an item for future review.

Earnings Quality

Operating Income, which reflects the profitability of the core business, was ¥0.7B, with the return to profitability from an operating loss in the same period of the previous year representing the most significant qualitative change. Non-operating income of ¥0.3B amounted to only 2.8% of Revenue, but included a foreign exchange gain of ¥0.2B, equivalent to 32.8% of Operating Income; therefore, it warrants attention as a factor affecting Ordinary Income. Interest income of ¥0.1B exceeded interest expense of ¥0.04B, resulting in positive net financial income. Extraordinary losses were immaterial, and the difference between profit before tax of ¥0.99B and Net Income of ¥0.93B was small at approximately 5%. Comprehensive income of ¥1.4B exceeded Net Income by ¥0.5B, primarily due to an increase in foreign currency translation adjustments; this should be distinguished from the earnings power of the underlying business.

Earnings Forecast and Guidance

Progress for cumulative Q3 against the full-year company plan was 73.2% for Revenue (¥12.0B／¥16.4B), 62.4% for Operating Income (¥0.7B／¥1.1B), 84.5% for Ordinary Income (¥1.0B／¥1.2B), and 84.5% for Net Income (¥0.9B／¥1.1B). Revenue progress was close to the standard 75%, while Operating Income progress was 12.6 percentage points below the standard level. To achieve the full-year Operating Income plan, Q4 will require Operating Income of ¥0.4B and an Operating Income margin of 9.3%, above the 5.7% recorded for cumulative Q3. The higher progress rates for Ordinary Income and Net Income than for Operating Income reflect the boost from non-operating income, including the foreign exchange gain; accordingly, the degree of recovery on a core business basis, excluding this factor, will be the focus going forward.

Shareholder Returns

The Q2 dividend was ¥0 per share, and the full-year company forecast for the annual dividend is also ¥0. The Payout Ratio is 0%. The no-dividend policy is consistent with the Company’s capital structure, which includes retained earnings of negative ¥19.4B, as well as the fact that its earnings base remains in the process of recovery. Although the Company has financial capacity in the form of cash and deposits of ¥10.5B and low interest-bearing debt, its capital allocation priorities for the time being appear to be stabilizing profitability and reducing accumulated losses.

Risk Factors

1. Business concentration risk: As the Company operates as a single segment focused on the PXB mouse business, changes in research and development investment trends and the ordering schedules of major customers can directly affect Revenue and profit.

2. Working capital efficiency risk: Annualized CCC was 348 days and annualized DIO was 323 days, both indicating a high level of funds tied up in working capital. Accounts receivable increased +15.9% year on year, faster than the revenue growth rate, requiring ongoing monitoring of collections.

3. Foreign exchange dependency risk: The foreign exchange gain of ¥0.2B, which boosted Ordinary Income, was equivalent to 32.8% of Operating Income. A reversal in foreign exchange trends could therefore cause volatility in Ordinary Income.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (it_telecom)

Profitability and Returns

The Operating Income margin is below the industry median, while the Net Income margin exceeds the industry median partly due to the contribution from non-operating income (foreign exchange gain).

Growth and Capital Efficiency

The Revenue growth rate is below the industry median, indicating that the pace of revenue expansion within the single-business structure is relatively moderate.

※Source: Company analysis

Key Takeaways from the Results

1. The turnaround from an operating loss of ¥1.5B in the same period of the previous year to Operating Income of ¥0.7B indicates an improved earnings structure driven by a higher gross profit margin and reduced SG&A expenses. ROE recovered to 8.2%, but remains below the 10% level generally considered favorable; whether the sustained improvement in profitability becomes established as a structural change will be a key point of focus.

2. The 323-day annualized DIO and 348-day annualized CCC indicate a working capital funding constraint and an issue with capital efficiency during a period of revenue growth. Together with accounts receivable, which is increasing faster than Revenue, whether profit growth is accompanied by improved capital efficiency will require further monitoring.

3. Progress against the full-year Operating Income plan was only 62.4%, requiring an Operating Income margin of 9.3% in Q4. The high progress rates for Ordinary Income and Net Income are attributable to the contribution from foreign exchange gains; it is therefore appropriate to assess the sustainability of the recovery primarily on the basis of Operating Income.

Theoretical Share Price (Reference Value)

Sensitivity: ¥330〜¥349 at Cost of Equity ±1%; ¥338〜¥340 at ω±0.1.

Notes:

• As forecast ROE is below the Cost of Equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated at a somewhat higher level.

（Calculation model: Residual income model (Ohlson-type・explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices）

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

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