SiriusVision CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.41B
• Operating Income: ¥-151M
• Net Income: ¥-56M
• EPS: ¥-132.08

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

Verdict: FY2025 Q3 was weak, with a topline contraction and operating loss driven by SG&A exceeding gross profit, culminating in a deep net loss and negative ROE. Revenue was 14.09 (100M JPY), down 18.5% YoY, indicating a sharp demand slowdown or project timing delays. Gross profit was 8.47, implying a healthy gross margin of 60.1%, but SG&A of 9.29 exceeded gross profit, resulting in operating income of -1.51 and an operating margin of -10.7%. Non-operating income was modest at 0.20 (mainly dividends of 0.06), insufficient to offset operating weakness. Despite a pretax loss (-0.17), income tax expense of 0.39 led to a net loss of -6.13 (net margin -43.5%), suggesting tax effects such as valuation allowance changes or non-deductible items. ROE deteriorated to -32.2%, driven by the negative net margin, with asset turnover at 0.532 and financial leverage at 1.39x. Liquidity is strong: current assets of 21.02 versus current liabilities of 5.78 yield a current ratio of 364%, and cash of 9.02 comfortably exceeds total borrowings of 2.55 (net cash ~6.47). Balance sheet solidity is underpinned by total equity of 19.04, albeit with retained earnings at -0.34, reflecting cumulative losses. Operating leverage turned adverse this quarter as SG&A outpaced revenue, and the revenue decline implies under-absorption of fixed costs. Margin comparison vs prior periods in basis points is not possible due to lack of disclosed historical margins this quarter; however, the return profile clearly compressed into negative territory. Earnings quality cannot be assessed from cash flows because OCF is unreported; this is a key data gap. The reported interest coverage ratio of -313.93x is mechanically negative due to operating loss and negligible interest expense; it does not indicate a near-term debt-servicing risk given net cash. Forward-looking, the company must realign SG&A with revenue and rebuild order intake to restore operating margin to breakeven. ROIC at -12.0% is well below the 7–8% target range, highlighting the need for improved asset utilization and margin recovery. With dividends unreported and retained earnings negative, capital return visibility is low until profitability stabilizes. Overall, the quarter’s results underscore demand softness and cost rigidity, but liquidity provides a runway for restructuring and recovery efforts.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-43.5%) × 0.532 × 1.39 = approximately -32.2%. The dominant driver is the deeply negative net profit margin, as operating losses and tax expense despite a pretax loss pulled net income down. Asset turnover at 0.532 is subdued for a machinery/inspection business and suggests a low revenue run-rate relative to the asset base, likely due to softer orders or project timing. Financial leverage is modest at 1.39x, providing limited amplification of returns (negative in this case). Business reasons: SG&A (9.29) exceeded gross profit (8.47), indicating under-absorption of fixed costs amid an 18.5% YoY revenue decline; non-operating income (0.20) was insufficient to offset this. The negative effective tax rate (-236%) implies valuation allowance movements or permanent differences, worsening net margin. Sustainability: The gross margin (60.1%) remains healthy, suggesting product-level pricing/value-add is intact; if volumes normalize and SG&A is managed, net margin could recover. However, absent visibility on order backlog or cost actions, current negative net margin is not yet demonstrably one-time. Watch for concerning trends: SG&A growth relative to revenue cannot be quantified YoY with provided data, but SG&A currently exceeds gross profit, a red flag for operating leverage until revenue recovers or costs are reduced.

Growth Assessment

Topline contracted 18.5% YoY to 14.09, pointing to weaker demand or delivery timing slippage. Gross margin of 60.1% indicates mix/pricing resilience, but volume pressure is evident. Operating profit turned negative (-1.51) as SG&A (9.29) outpaced gross profit (8.47), evidencing unfavorable operating leverage. Ordinary income (-1.51) and pretax loss (-0.17) show minimal cushioning from non-operating items (0.20). Net loss widened to -6.13 due to tax effects despite pretax loss, which depresses earnings quality optics. Without order/backlog data, revenue sustainability is uncertain; the large YoY decline suggests cyclical or customer capex-related headwinds. Profit quality is currently low given losses and reliance on gross margin resilience; recurring profitability hinges on cost containment and volume recovery. Outlook: If demand normalizes and SG&A is trimmed, operating breakeven is plausible given the high gross margin; absent that, losses may persist. Key leading indicators needed: order intake, backlog, and book-to-bill; absent these, visibility is limited.

Financial Health

Liquidity is strong: current assets 21.02 vs current liabilities 5.78 yield a current ratio of 363.7% and a quick ratio of 347.2%, well above benchmarks. There is no warning on Current Ratio (<1.0) or D/E (>2.0); D/E is 0.39x, conservative. Cash and deposits of 9.02 exceed total interest-bearing debt (short-term loans 2.00 + long-term loans 0.55 = 2.55), resulting in net cash of ~6.47. Maturity mismatch risk appears low: short-term debt (2.00) is small relative to cash (9.02) and current assets (21.02). Total equity of 19.04 is solid, though retained earnings are negative (-0.34), limiting distributable reserves until profitability improves. No off-balance sheet obligations are reported in the data provided. The reported interest coverage metric is negative due to operating loss; in practice, cash resources mitigate near-term debt service risk.

Cash Flow Quality

Operating cash flow is unreported, so OCF/Net Income cannot be assessed and no judgment on accrual intensity is possible. Free cash flow is also unreported; therefore, sustainability of investment and potential dividends cannot be evaluated from cash data. Working capital snapshot suggests a conservative posture (cash 9.02, AR 3.05, inventories 0.95 vs AP 1.29), but without period flow data we cannot identify working capital-driven earnings management. With net cash and modest leverage, short-term liquidity is adequate even amid operating losses; however, persistent negative OCF would erode this cushion over time.

Dividend Sustainability

Dividends are unreported for the period, and the calculated payout ratio (-9.3%) is not meaningful with negative net income. Retained earnings are negative (-0.34), which may constrain dividend capacity under JGAAP equity constraints until earnings recover. With FCF unreported, coverage analysis is not possible. Policy outlook is uncertain; in practice, restoration of profitability and positive retained earnings will be prerequisites for sustainable distributions.

Risk Assessment

Business Risks:

• Demand softness or delay in customer capex leading to an 18.5% YoY revenue decline.
• Operating leverage risk: SG&A (9.29) exceeding gross profit (8.47) drives operating losses.
• Product/project concentration risk typical for inspection/machinery businesses (lumpy orders).
• Pricing/mix risk despite currently resilient gross margin (60.1%).
• Potential tax volatility, evidenced by tax expense despite pretax loss.

Financial Risks:

• Earnings erosion of equity base: net loss (-6.13) and retained earnings deficit (-0.34).
• Sustained negative OCF risk (OCF unreported), which could consume net cash over time.
• Covenant or refinancing risk is low currently given net cash (~6.47), but prolonged losses could change this.
• Interest coverage reported as negative, highlighting sensitivity to ongoing operating losses (though cash mitigates near-term risk).

Key Concerns:

• ROIC at -12.0% is far below the 7–8% target range.
• ROE at -32.2% driven by net margin -43.5%, indicating severe profitability stress.
• Visibility is low due to lack of order/backlog and cash flow disclosures.
• Retention of talent and R&D continuity under cost-cutting pressure could impact medium-term competitiveness.

Investment Implications

Key Takeaways:

• Topline down 18.5% YoY to 14.09 with operating margin -10.7% and net margin -43.5%.
• Gross margin remains strong at 60.1%, indicating product value-add, but volume shortfall is acute.
• SG&A exceeds gross profit, necessitating either cost realignment or revenue recovery.
• Net cash position (~6.47) provides liquidity runway despite losses.
• ROE (-32.2%) and ROIC (-12.0%) underscore urgent need for profitability turnaround.
• Tax expense in a loss-making quarter exacerbated the bottom line, likely from valuation allowance or non-deductible items.

Metrics to Watch:

• Order intake, backlog, and book-to-bill ratio.
• Quarterly operating margin progression (bps) and SG&A run-rate discipline.
• Operating cash flow and free cash flow trends.
• Inventory turns and days sales outstanding (AR 3.05 vs revenue run-rate).
• ROIC trajectory and asset turnover recovery.
• Any disclosure on cost restructuring or headcount changes.

Relative Positioning: Versus small-cap Japanese machinery/inspection peers, Sirius Vision exhibits stronger liquidity (high current ratio, net cash) but weaker current profitability (operating loss, negative ROE/ROIC) and lower asset turnover, leaving it more dependent on order recovery and cost actions to close the gap.

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