KIMURA KOHKI Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥8.02B
• Operating Income: ¥2.07B
• Net Income: ¥1.41B
• EPS: ¥396.76

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

For FY2026 Q2 (JGAAP, non-consolidated), the company delivered strong top-line and outsized profit growth, with revenue at ¥8,019m (+14.2% YoY) and operating income at ¥2,073m (+48.6% YoY), indicating meaningful operating leverage. Gross profit reached ¥3,144.9m, yielding a robust gross margin of 39.2%, while the operating margin expanded to 25.8%, highlighting disciplined cost control and favorable mix/pricing. Ordinary income of ¥2,059m was slightly below operating income, implying minor net non-operating expense despite low interest burden. Net income was ¥1,413m (+52.0% YoY), translating to a net margin of 17.62% and EPS of ¥396.76. DuPont analysis indicates ROE of 11.08%, driven by healthy margins (NPM 17.62%), modest asset turnover (0.345x), and moderate financial leverage (1.82x). Liquidity appears strong with a current ratio of 267% and working capital of ¥6,686m, suggesting comfortable short-term coverage. Solvency is solid with liabilities-to-equity of 0.82x and high interest coverage of 89x, indicating low financial risk from interest costs. Operating cash flow (OCF) was ¥1,162.7m, at 0.82x of net income, pointing to some working capital drag consistent with growth. EBITDA was ¥2,363.2m, with an EBITDA margin of 29.5%, supporting the view of resilient core profitability. Free cash flow (FCF) cannot be assessed due to unreported investing cash flows; as such, FCF and dividend sustainability conclusions are necessarily tentative. Several items are unreported in the XBRL (inventories, cash & equivalents, investing CF, equity ratio, DPS, share counts), so certain ratios (e.g., quick ratio, FCF coverage, per-share balance metrics) may not reflect the underlying reality. Recomputing an indicative effective tax rate using net income and income tax suggests roughly 23% (¥423.5m tax on ~¥1,836m pre-tax), differing from the automated 0.0% metric, which appears non-applicable. Overall, the earnings quality is good, with strong profitability and moderate leverage, but cash conversion should be monitored given the OCF/EBITDA profile and the growth-driven working capital needs. With several key balance sheet and cash-related disclosures unreported, monitoring upcoming filings for inventories, cash balances, capex, and dividend policy clarity will be important. The company’s Q2 trajectory implies favorable full-year momentum if pricing discipline and cost controls persist, but execution on working capital and capex discipline will be critical.

Profitability Analysis

ROE is 11.08%, decomposed as Net Profit Margin 17.62% × Asset Turnover 0.345 × Financial Leverage 1.82. Net margin strength is underpinned by a high gross margin of 39.2% and an operating margin of 25.8%, signaling effective cost management and/or favorable pricing/mix. Operating income growth (+48.6% YoY) far outpaced revenue growth (+14.2% YoY), evidencing strong operating leverage in the period. EBITDA of ¥2,363.2m implies a 29.5% margin, consistent with durable core profitability and indicating limited D&A intensity (D&A ~¥290.2m). Ordinary income (¥2,059m) slightly trails operating income due to modest non-operating net costs; interest expense is low at ¥23.3m, with EBIT/interest coverage of ~89x, minimizing interest drag. Tax burden appears normalizing; using net income and tax expense, the indicative effective tax rate is ~23% for the period (automated 0% metric is not reflective). Overall, profitability quality is high with favorable margins across the P&L and minimal financial friction costs.

Growth Assessment

Revenue grew 14.2% YoY to ¥8,019m, supported by margin expansion, as operating profit rose 48.6% YoY to ¥2,073m. The widening spread between revenue and operating income growth implies significant operating leverage, likely from scale benefits, product mix improvement, and/or disciplined SG&A. Net income increased 52.0% YoY to ¥1,413m, outpacing operating income due to a manageable non-operating burden and a reasonable tax charge. Sustainability hinges on the persistence of pricing power, order intake, and backlog conversion; the current quarter’s gross and operating margins suggest favorable cost pass-through or product mix. However, OCF trailing net income (0.82x) indicates working capital consumption consistent with growth, which may temper near-term cash yield until growth stabilizes. Without investing cash flow data, capex intensity and growth reinvestment requirements cannot be fully assessed; this constrains medium-term free cash flow visibility. Looking ahead, if current demand conditions and cost controls persist, the trajectory supports further profit growth, but working capital management will be key to sustaining cash conversion.

Financial Health

Liquidity is strong: current assets ¥10,689m vs current liabilities ¥4,003m yield a current ratio of 267% and working capital of ¥6,686m. The quick ratio is shown as 267%, but inventories are unreported; the true quick ratio may be lower if inventories are material. Solvency appears solid with total liabilities of ¥10,426m against equity of ¥12,755m, implying liabilities-to-equity of 0.82x and assets-to-equity (leverage) of ~1.82x. Interest expense is modest at ¥23.3m, and EBIT/interest coverage is ~89x, indicating low refinancing or interest-rate sensitivity in the period. The reported equity ratio of 0.0% is unreported rather than an actual zero; based on available totals, the implied equity ratio would be approximately 54.8% (¥12,755m / ¥23,260m). Cash and equivalents are unreported, so precise liquidity headroom beyond working capital cannot be determined. Overall balance sheet strength is adequate with moderate leverage and strong near-term coverage, subject to inventory and cash disclosure gaps.

Cash Flow Quality

OCF of ¥1,162.7m is 0.82x net income (¥1,413m), indicating moderate cash conversion and a likely working capital build during a growth phase. EBITDA of ¥2,363.2m versus OCF suggests a working capital drag (OCF/EBITDA ~0.49), potentially from higher receivables and/or inventory (inventory data is unreported) aligned with revenue growth. Capex is not disclosed (investing CF is unreported), so free cash flow cannot be reliably computed; the reported FCF of 0 is an artifact of missing data rather than actual zero. Depreciation is modest (¥290.2m), implying limited non-cash boosting of earnings; earnings quality appears good with profits supported by operational cash generation, albeit with timing differences. Key watchpoints are receivables collection cycles, inventory turns (once disclosed), and capex plans, which will determine normalized FCF.

Dividend Sustainability

Annual DPS and payout ratio are shown as 0.00, indicating unreported rather than actual zero distributions. EPS is ¥396.76, and net income is strong; however, without DPS, share count, cash balances, and capex data, the sustainability and coverage of dividends cannot be directly assessed. FCF coverage is not meaningful due to unreported investing cash flows; OCF is positive and sizable, which supports potential distributions in principle if capex needs are moderate. The balance sheet shows moderate leverage and strong working capital, which are supportive of payout capacity. Policy outlook is unclear from current data; further disclosure on dividend policy, target payout, and capital allocation priorities is required for a definitive view.

Risk Assessment

Business Risks:

• Demand cyclicality affecting order intake and backlog conversion
• Potential margin pressure from input cost inflation and pricing competition
• Execution risk in scaling operations given high operating leverage
• Supply chain and lead-time disruptions impacting deliveries and working capital
• Customer concentration or project timing risks (if applicable to business model)

Financial Risks:

• Working capital expansion during growth phases dampening cash conversion
• Limited visibility on cash and capex due to unreported items
• Interest rate and refinancing risk are currently low but could rise if leverage increases
• Tax rate normalization volatility vs. period-specific effective rate

Key Concerns:

• OCF trailing net income (0.82x) and OCF/EBITDA of ~0.49 indicating WC drag
• Unreported inventories and cash balances obscuring true liquidity and quick ratio
• Unreported investing cash flows preventing FCF assessment and dividend coverage analysis
• Sustainability of exceptional operating leverage as growth normalizes

Investment Implications

Key Takeaways:

• Strong revenue growth (+14.2% YoY) with disproportionate operating profit growth (+48.6% YoY)
• High margins: gross 39.2%, operating 25.8%, EBITDA 29.5%
• ROE of 11.08% driven by strong NPM and moderate leverage
• Robust interest coverage (~89x) and moderate liabilities-to-equity (0.82x)
• OCF at 0.82x of net income signals working capital consumption
• FCF and dividend capacity cannot be confirmed due to unreported investing CF and DPS
• Liquidity appears solid (current ratio 267%), but quick liquidity uncertain without inventory data

Metrics to Watch:

• Order intake, backlog, and book-to-bill to gauge revenue sustainability
• Working capital metrics: receivable days, payable days, inventory turns (upon disclosure)
• Price-cost spread and gross margin trajectory
• Capex and investing cash flows to establish FCF profile
• Tax rate normalization versus implied ~23% this period
• Cash and equivalents, net cash/debt position, and any changes in leverage

Relative Positioning: Within Japanese industrials/manufacturing peers, the company currently demonstrates above-average profitability and operating leverage, moderate balance-sheet leverage, and strong interest coverage, with the main relative gap being lower disclosed cash conversion due to working capital needs and limited transparency on capex/FCF.

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