ECOM Co., Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥393M
• Operating Income: ¥48M
• Net Income: ¥32M
• EPS: ¥17.91

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

For FY2026 Q1, 株式会社エコム reported a sharp top-line contraction with revenue of 3.93 (100M JPY), down 35.9% YoY, and operating income of 0.48 (100M JPY), down 45.0% YoY, indicating significant operating deleverage. Ordinary income declined 43.2% YoY to 0.50 (100M JPY), and net income fell 51.6% YoY to 0.32 (100M JPY), pushing the net margin to 8.1%. The company’s balance sheet remains very strong: total assets are 39.79 (100M JPY) against total liabilities of 7.71 (100M JPY), implying an equity ratio we calculate at roughly 81.8% despite the reported ratio being unavailable. Liquidity is ample with current assets of 27.80 (100M JPY), cash and deposits of 17.33 (100M JPY), and current liabilities of 5.49 (100M JPY), yielding a current ratio of 5.07x and quick ratio of 5.07x. Asset turnover is low at 0.099, consistent with project- or order-driven businesses and the soft quarter. DuPont analysis yields a low calculated ROE of 1.0%, primarily constrained by weak turnover and soft margins despite modest leverage of 1.22x. Gross profit margin is reported at 51.9%, but there are internal inconsistencies among the reported cost of sales, gross profit, SG&A, and operating income figures; we rely on the provided gross margin and operating income rather than reconstructing margins from contradictory line items. Interest burden appears minimal (interest coverage 277.46x), consistent with low leverage and ample cash. The effective tax rate is 23.5%, broadly in line with Japan’s corporate tax environment. Dividend-related disclosures are largely unreported; a calculated payout ratio of 192.0% suggests that, based on the current quarter’s earnings, distribution would not be covered by earnings, but quarterly seasonality and the lack of cash flow data limit conclusions. Operating, investing, and financing cash flow statements are unreported, constraining our assessment of earnings quality and free cash flow. Working capital is healthy at 22.32 (100M JPY), supporting near-term operations. Overall, the quarter reflects demand softness and negative operating leverage but a very robust financial position. Key near-term questions include the sustainability of margins, the timing of order intake and revenues, and whether earnings can recover sufficiently to align with dividend policy. Data limitations (notably OCF, capex, and dividend cash amounts) temper confidence in assessing cash coverage and underlying momentum.

Profitability Analysis

ROE_decomposition: - Net margin: 8.1%; Asset turnover: 0.099; Financial leverage: 1.22x; Calculated ROE: 1.0%. ROE is depressed by weak turnover and reduced profitability despite low leverage. margin_quality: - Reported gross margin is 51.9%, indicating solid pricing/value-add, but the cost of sales, gross profit, SG&A, and operating income figures show internal inconsistencies; we therefore reference the provided gross margin and the stated operating income of 0.48 (100M JPY) rather than deriving margins from the conflicting lines. - Operating income of 0.48 on revenue of 3.93 implies an indicative operating margin around 12% for the quarter, but treat this as approximate given data conflicts. - Net margin of 8.1% reflects additional drag below operating line and a 23.5% effective tax rate. operating_leverage: - YoY revenue fell 35.9% while operating income fell 45.0%, evidencing negative operating leverage as fixed costs were not fully flexed with lower volume. - SG&A reported at 1.16 (100M JPY) suggests cost controls, but given inconsistencies with operating income and gross profit, conclusions on cost elasticity should be cautious.

Growth Assessment

revenue_sustainability: - A 35.9% YoY decline signals weak demand, order timing issues, or project delays. - Low asset turnover (0.099) underscores a slow conversion of assets into sales, typical for engineered/project-based businesses but also consistent with a soft quarter. profit_quality: - Ordinary income (-43.2% YoY) and net income (-51.6% YoY) declined faster than revenue, indicating margin compression and/or deleverage. - Interest burden is immaterial; deterioration is largely operational. - Lack of OCF data prevents triangulation of earnings quality. outlook: - Recovery hinges on order intake, backlog conversion, and stabilization of gross margin. - With a strong balance sheet and cash, the company has capacity to bridge short-term softness, but visibility remains limited without backlog/OCF disclosures.

Financial Health

liquidity: - Current assets: 27.80 vs current liabilities: 5.49 (100M JPY) → current ratio 5.07x, quick ratio 5.07x, supported by cash of 17.33. - Working capital: 22.32 (100M JPY), providing a robust liquidity buffer. solvency: - Total liabilities: 7.71 vs total equity: 32.53 (100M JPY). - Calculated equity ratio ≈ 81.8% (32.53/39.79), indicating very low leverage. - Interest coverage of 277.46x suggests minimal financial risk, though interest expense details are unreported. capital_structure: - Financial leverage (A/E) is 1.22x. - Interest-bearing debt is unreported; given cash levels and low liabilities, net cash is likely, but cannot be confirmed without debt detail.

Cash Flow Quality

earnings_quality: - Operating cash flow is unreported, preventing assessment of OCF-to-net-income conversion and working-capital drag. - The sizable cash balance mitigates near-term liquidity risk but does not substitute for recurring cash generation. FCF_analysis: - Capex is unreported; hence free cash flow cannot be estimated. - Without OCF and capex, coverage of dividends and growth investments cannot be evaluated. working_capital: - Accounts receivable: 9.21 (100M JPY) vs current liabilities: 5.49 suggests collection and payables cycles are manageable; inventories are unreported. - Working capital of 22.32 (100M JPY) provides cushion but turnover efficiency cannot be assessed without OCF and inventory data.

Dividend Sustainability

payout_ratio_assessment: - The calculated payout ratio is 192.0%, which, if based on quarterly earnings, implies dividends are not covered by current-period earnings. - However, DPS and dividend cash amounts are unreported, and seasonal/quarterly volatility may distort the ratio; caution is warranted. FCF_coverage: - Unknown due to unreported OCF and capex. - Balance sheet strength (cash 17.33, low leverage) provides short-term headroom but is not a substitute for sustainable earnings/FCF coverage. policy_outlook: - Without explicit dividend policy disclosure and with earnings under pressure, visibility on future payout levels is low. Monitoring full-year guidance and DPS announcements is essential.

Risk Assessment

Business Risks:

• Order timing and backlog conversion risk leading to quarterly revenue volatility
• Project execution risk affecting gross margin realization
• Customer concentration risk (not disclosed, but typical for niche industrials)
• Input cost inflation and supplier constraints impacting COGS
• Labor/talent cost pressures elevating SG&A
• Macroeconomic slowdown dampening capital investment by customers
• Seasonality or lumpiness in revenue recognition

Financial Risks:

• Limited earnings cushion as negative operating leverage emerges on volume declines
• Dividend coverage risk if payouts are maintained despite weaker earnings
• Working capital swing risk absent inventory and OCF visibility
• Data gaps on interest-bearing debt and cash flows, obscuring true leverage/coverage

Key Concerns:

• Significant YoY declines in revenue (-35.9%) and net income (-51.6%)
• Inconsistencies among cost of sales, gross profit, SG&A, and operating income lines
• Unreported cash flow statements limiting assessment of earnings quality and FCF
• High calculated payout ratio (192.0%) relative to subdued earnings

Investment Implications

Key Takeaways:

• Demand softness and operating deleverage materially pressured profitability in Q1 FY2026
• Balance sheet and liquidity are very strong (equity ratio ~82%, current ratio ~5x)
• Low financial leverage and high interest coverage reduce solvency risk
• Earnings quality and FCF cannot be assessed due to unreported cash flow data
• Dividend sustainability is uncertain given the high calculated payout ratio versus current earnings

Metrics to Watch:

• Order intake, backlog, and book-to-bill ratio
• Gross margin trajectory and project mix
• SG&A ratio and cost flexibility
• Operating cash flow and working capital movements (AR, inventory, AP)
• Capex and maintenance vs. growth investments
• DPS announcements and payout framework vs. earnings outlook

Relative Positioning: Appears to be a low-leverage, cash-rich small-cap industrial with lumpy, order-driven revenue and currently weak turnover; financial risk is low, but earnings visibility trails peers with steadier backlogs and fuller disclosure.

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