AIMECHATEC,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥3.26B
• Operating Income: ¥93M
• Net Income: ¥-614M
• EPS: ¥6.33

Income Statement

Balance Sheet

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

AI Mechatec (TSE: 6227) reported FY2026 Q1 consolidated results under JGAAP showing strong top-line momentum but thin profitability and limited visibility on cash flows due to unreported items. Revenue rose 118.3% YoY to ¥3.263bn, indicating robust demand or favorable delivery timing in the quarter. Operating income increased 19.7% YoY to ¥93m, implying substantial margin compression as growth failed to translate proportionally into operating profit. Net income improved to ¥39m (+368.7% YoY), driven in part by a reported negative tax figure, suggesting the presence of tax credits, loss carryforwards, or timing effects. The reported gross profit of ¥132m yields a gross margin of 4.0%, which is very low for capital equipment and suggests mix, pricing pressure, or cost absorption issues. Operating margin stands at 2.9% (¥93m/¥3,263m), while ordinary margin is 1.6% and net margin 1.2%; these reinforce the view of thin profitability despite the demand uptick. DuPont decomposition indicates ROE of 0.36%, driven by a low net margin (1.20%), modest asset turnover (0.114x on a quarterly basis), and leverage of 2.67x. The company maintains adequate liquidity with a current ratio of 184.7% and working capital of ¥10.845bn. Capital structure is moderate with debt-to-equity of 1.54x and an implied equity ratio of roughly 37.5% (Total equity ¥10.704bn / Total assets ¥28.538bn), despite an equity ratio line item shown as 0.0%. Interest coverage is reasonable at 6.6x, indicating manageable financial risk at current earnings levels. Cash flow statements are unreported (all zeros), limiting assessment of earnings-to-cash conversion and free cash flow dynamics for the quarter. No inventory balance is disclosed, which constrains interpretation of working capital quality and quick ratio accuracy; the stated quick ratio equals the current ratio because inventories are unreported. There is no dividend (DPS ¥0), consistent with preserving cash amid low margins and growth investments. EPS is ¥6.33, but share count data are unreported, limiting per-share context beyond EPS itself. Overall, the quarter reflects strong sales growth with constrained profitability and limited disclosure on cash flows, warranting close monitoring of margins, order quality, and working capital behavior. The sustainability of growth and the trajectory of gross margin recovery will be central to earnings quality in coming quarters.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 1.20% × Asset turnover 0.114 × Financial leverage 2.67 = ROE 0.36% (reported). Operating margin is approximately 2.9% (¥93m/¥3,263m), indicating limited operating leverage realization in the quarter despite significant revenue growth. Gross margin is 4.0% (¥132m/¥3,263m), unusually low for capital equipment; this suggests adverse mix, pricing concessions, startup/expediting costs, or under-absorption from ramp-up. The spread between gross margin (4.0%) and operating margin (2.9%) implies tight SG&A ratio (~1.1% of sales), but note the reported cost lines may reflect classification differences this quarter. Ordinary margin (1.6%) and net margin (1.2%) reflect financial costs (interest expense ¥14.0m) and a negative tax line that supported bottom-line results. Operating leverage appears muted: revenue +118.3% YoY vs operating income +19.7% YoY implies incremental margins were low, possibly due to low-margin projects, backlog clearing at compressed prices, or cost inflation timing. Interest coverage at 6.6x (¥93m/¥14.0m) is adequate but sensitive to margin fluctuations. Overall profitability is currently margin-constrained; improvement depends on mix normalization, cost pass-through, and utilization gains.

Growth Assessment

Revenue growth of +118.3% YoY to ¥3.263bn indicates strong demand or delivery timing of large projects typical in equipment businesses. However, profit growth lagged materially (operating income +19.7% YoY), signaling low incremental margins and potential quality concerns around the growth mix. Net income growth (+368.7% YoY to ¥39m) benefited from non-operating/tax effects rather than core margin expansion. Asset turnover of 0.114x (quarterly revenue vs total assets) is modest, consistent with a capital-intensive model and large working capital base. Sustainability of revenue depends on order backlog, book-to-bill, and exposure to end-markets such as semiconductors/electronics, where capex cycles can be volatile. Absent cash flow data, we cannot confirm whether growth is supported by customer advances or financed via working capital expansion. Near-term outlook hinges on margin recovery (gross margin normalization above 4%) and efficiency gains; if the quarter reflects project mix/timing, profitability could revert as higher-margin deliveries are recognized. Conversely, if competitive pricing or structural cost pressures persist, earnings quality may remain constrained despite top-line strength.

Financial Health

Liquidity is solid: current ratio 184.7% (¥23.649bn / ¥12.804bn) and working capital of ¥10.845bn provide a buffer for project timing swings. The quick ratio equals the current ratio due to unreported inventories; true quick liquidity may be lower once inventories are included. Solvency is moderate: debt-to-equity 1.54x (total liabilities ¥16.512bn / equity ¥10.704bn). Equity ratio appears to be roughly 37.5% (¥10.704bn / ¥28.538bn), despite a reported 0.0% line item, supporting a balanced capital structure for a machinery business. Interest burden is manageable with interest coverage at 6.6x for the quarter, though this could tighten if margins compress further. Large current assets relative to total assets (¥23.649bn of ¥28.538bn) implies substantial working capital; absent inventory disclosure, liquidity composition (cash vs receivables vs inventory) cannot be verified.

Cash Flow Quality

Cash flow statement items are unreported (OCF, ICF, FCF all shown as zero), so earnings-to-cash conversion cannot be assessed. The OCF/Net Income ratio of 0.00x is not informative under these disclosure limitations. Free cash flow cannot be calculated without OCF and capex details; depreciation/amortization is also unreported, limiting EBITDA assessment. Working capital quality cannot be fully evaluated because inventories are unreported and receivable/payable details are unavailable; the large working capital balance suggests the business likely consumes cash during growth phases, typical for project-based equipment deliveries. Key to earnings quality will be the timing of collections, customer advances, and backlog conversion into cash.

Dividend Sustainability

The company reports no dividend (DPS ¥0) and a payout ratio of 0.0% for the period, consistent with reinvestment and/or caution amid low margins. With cash flows unreported, FCF coverage cannot be evaluated; the reported FCF coverage metric of 0.00x is not meaningful. Balance sheet capacity (equity ratio ~37.5% and interest coverage 6.6x) suggests some flexibility, but near-term dividend policy likely depends on stabilizing gross margins and demonstrating positive OCF through the cycle. Until consistent cash generation and margin improvement are evident, a conservative dividend stance appears prudent.

Risk Assessment

Business Risks:

• Cyclical exposure to semiconductor/electronics capex and order timing volatility
• Low reported gross margin (4.0%), indicating pricing/mix or cost overrun risk
• Project execution and acceptance timing affecting revenue and profit recognition
• Customer concentration risk typical of specialized equipment suppliers
• Supply chain and component availability impacting cost and delivery schedules
• FX exposure on imports/exports affecting margins

Financial Risks:

• Operating leverage to margins; thin margins can quickly erode coverage
• Working capital intensity potentially consuming cash during growth
• Moderate leverage (D/E 1.54x) amplifies earnings volatility
• Limited visibility due to unreported cash flow and inventory data
• Reliance on tax effects in the quarter (negative tax) to support net income

Key Concerns:

• Sustainability of revenue growth without margin recovery
• Gross margin at 4.0% suggests structural or temporary pressure
• Absence of cash flow disclosure prevents assessment of earnings quality
• Negative tax figure and low net margin complicate quality of earnings evaluation

Investment Implications

Key Takeaways:

• Strong top-line growth (+118% YoY) but limited operating profit growth (+20% YoY)
• Very low gross margin (4.0%) and thin operating margin (~2.9%) despite scale
• ROE remains low at 0.36%, constrained by low margins and modest asset turnover
• Adequate liquidity (current ratio 185%) and manageable interest coverage (6.6x)
• Cash flow data unreported; earnings quality and FCF sustainability not verifiable
• Capital structure moderate with implied equity ratio ~37.5% and D/E 1.54x

Metrics to Watch:

• Order backlog, book-to-bill, and revenue visibility
• Gross margin trajectory and project mix normalization
• SG&A ratio and operating leverage realization
• Operating cash flow, free cash flow, and working capital turns
• Inventory levels and days (when disclosed) to assess absorption
• Interest coverage and debt metrics under different margin scenarios

Relative Positioning: Versus domestic industrial machinery peers, AI Mechatec shows stronger near-term revenue growth but materially lower reported margins and ROE; balance sheet strength is adequate, yet earnings quality and cash conversion disclosure lag peers with fuller CF reporting.

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