NISSEI ASB MACHINE (6284) FY2026 Q3 Earnings Report

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Executive Summary

The cumulative Q3 period can be characterized as a strong earnings period, with higher revenue and profit accompanied by a steady improvement in profit margins, indicating progress in strengthening the earnings structure. Revenue was ¥359.8B (+9.8% YoY), Operating Income was ¥101.7B (+20.2%), Ordinary Income was ¥104.0B (+20.3%), and Net Income attributable to owners of the parent was ¥72.4B (+19.5%), with all metrics recording double-digit growth in revenue and profit. The Operating Income margin improved by +2.5pt to 28.3% (25.8% in the previous year), primarily due to an increase in the gross profit margin to 50.5% (48.0% in the previous year). By region, East Asia served as the earnings pillar, generating Operating Income of ¥66.6B and a margin of 29.7%, while the Americas saw profit remain largely flat despite higher revenue, highlighting variations in profitability among regions.

Factors Affecting Earnings

【Revenue】Consolidated Revenue was ¥359.8B, an increase of +9.8% YoY. By region, Europe (+26.7%) and the Americas (+19.5%) were the main growth drivers, while South and West Asia (+5.2%) and East Asia (+3.8%) recorded relatively moderate growth. Contract liabilities (advance receipts) increased by +54.0% YoY to ¥73.4B, suggesting that order fulfillment is progressing ahead of revenue recognition and indicating a substantial future revenue-recognition pipeline.

【Profit and Loss】Operating Income increased by +20.2% YoY to ¥101.7B, exceeding the rate of revenue growth. The Operating Income margin improved by +2.5pt to 28.3% (25.8% in the previous year), primarily due to the increase in the gross profit margin to 50.5% (48.0% in the previous year). The SG&A expense ratio was largely unchanged at 22.3% (22.2% in the previous year), indicating that cost discipline was maintained. Ordinary Income was ¥104.0B (+20.3%), while non-operating income and expenses remained modest, including interest income of ¥2.1B and foreign exchange losses of ¥0.3B; consequently, the contribution above Operating Income was limited. Net Income attributable to owners of the parent was ¥72.4B (+19.5%), after deducting income taxes and other taxes of ¥31.5B (effective tax rate of approximately 30.3%). By segment, East Asia led overall growth with Operating Income of ¥66.6B and YoY growth of +31.8%, while the Americas recorded almost flat Operating Income (-0.3%) against revenue growth of +19.5%. In conclusion, the Company achieved higher revenue and profit.

Segment Analysis

Against total segment profit of ¥127.4B (South and West Asia: ¥28.2B, East Asia: ¥66.6B, Europe: ¥12.0B, and the Americas: ¥20.6B), consolidated Operating Income was ¥101.7B after deducting the adjustment for corporate expenses and other items of △¥25.7B. East Asia generated Revenue of ¥224.4B (+3.8%) and Operating Income of ¥66.6B (+31.8%), securing the highest profitability among all segments with a margin of 29.7% and playing a central role in profit growth. South and West Asia recorded Revenue of ¥205.8B (+5.2%) and Operating Income of ¥28.2B (+9.8%), with a balanced expansion reflected in its 13.7% margin. Europe recorded the highest growth rate, with Revenue increasing to ¥75.3B (+26.7%), while Operating Income rose to ¥12.0B (+15.7%), showing an improving margin of 16.0%. The Americas achieved significant Revenue growth of +19.5% to ¥135.0B, whereas Operating Income of ¥20.6B (-0.3%) remained almost flat. Its margin of 15.2% was relatively low compared with other regions, highlighting the segment’s difficulty in converting revenue growth into profit.

Key Financial Indicators

【Profitability】The Operating Income margin of 28.3% (25.8% in the previous year) and Net Income margin of 20.1% (18.5% in the previous year) both improved, driven by the increase in the gross profit margin to 50.5% (48.0% in the previous year). 【Cash Quality】Cash and deposits totaled ¥357.6B, accounting for 40.7% of total assets, indicating ample liquidity. However, accounts receivable increased to ¥114.8B (¥94.3B in the previous year, +21.7%), while inventories increased to approximately ¥195.0B in total, comprising raw materials of ¥82.1B, work in process of ¥79.5B, and finished goods of ¥33.3B (+10.1% YoY). This indicates that the accumulation of working capital is outpacing profit growth. 【Investment Efficiency】ROE was 11.1%, supported by a combination of a Net Income margin of 20.1%, total asset turnover of approximately 0.41x, and financial leverage of approximately 1.35x. While the improvement in the Net Income margin was the primary driver of the increase in ROE, total asset turnover has not improved sufficiently to match the pace of asset growth. 【Financial Soundness】The Equity Ratio was high at 73.9%, while long-term borrowings declined to ¥35.0B (¥46.2B in the previous year), indicating progress in reducing interest-bearing debt. Current assets of ¥688.3B compared with current liabilities of ¥155.2B provide a substantial liquidity buffer, and the financial foundation remains conservative.

Cash Flow Analysis

As individual figures from the statement of cash flows have not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits increased by ¥32.9B to ¥357.6B (¥324.7B in the previous year), confirming the accumulation of funds in line with profit growth. Meanwhile, accounts receivable increased to ¥114.8B (¥94.3B in the previous year, +21.7%), and total inventories increased to approximately ¥195.0B (¥177.1B in the previous year, +10.1%), suggesting that cash generation from operating activities may have increased at a slower pace than profit. Contract liabilities (advance receipts) rose substantially by +54.0% to ¥73.4B (¥47.6B in the previous year), providing support for cash management through the future pipeline of receipts and revenue recognition. Property, plant and equipment increased by +13.6% to ¥166.7B (¥146.7B in the previous year), indicating continued capital investment, while long-term borrowings declined to ¥35.0B (¥46.2B in the previous year), reflecting ongoing debt repayments. Against the backdrop of ample cash on hand and high financial soundness, as evidenced by an Equity Ratio of 73.9%, the Company appears to have secured funding for investment and shareholder returns.

Quality of Earnings

The increase in profit for the current period was supported by improvements in both the gross profit margin and Revenue at the operating level. Dependence on non-operating and extraordinary gains and losses was limited, and the overall quality of earnings was high. Non-operating income was ¥3.5B, including dividend income of ¥0.3B and other non-operating income of ¥1.1B, while non-operating expenses were ¥1.2B, including interest expenses of ¥0.2B and foreign exchange losses of ¥0.3B. Accordingly, net non-operating income and expenses remained within a recurring range of approximately +¥2.3B. Extraordinary gains and losses were negligible, consisting solely of a loss on disposal of fixed assets of ¥0.01B, with little evidence that temporary factors boosted profit. After deducting income taxes and other taxes of ¥31.5B (effective tax rate of approximately 30.3%) from Ordinary Income of ¥104.0B, Net Income was ¥72.4B. The tax burden ratio was largely unchanged from the previous year (effective tax rate of approximately 29.9%). Comprehensive income was ¥90.7B, exceeding Net Income of ¥72.4B by +¥18.3B. The primary factor was foreign currency translation adjustments of +¥15.8B, which reflect valuation effects from translating overseas subsidiaries into yen and should therefore be distinguished from the underlying earnings power of the core business.

Earnings Forecasts and Guidance

Progress against the full-year plan (Revenue of ¥500.0B, Operating Income of ¥130.0B, Ordinary Income of ¥131.0B, and Net Income of ¥91.0B) was 72.0% for Revenue, 78.2% for Operating Income, 79.4% for Ordinary Income, and 79.6% for Net Income. Compared with the simple nine-month progress benchmark of 75%, Revenue was slightly below the benchmark, while each profit level exceeded it, indicating steady progress toward the plan in terms of profitability. There were no revisions to either the full-year earnings forecast or the dividend forecast, and management maintained its initial plan.

Shareholder Returns

The full-year dividend forecast remains ¥240, with no revisions. The Payout Ratio based on the Company’s forecast EPS of ¥607.03 is approximately 39.5%. As no dividend was paid in the first half, the annual dividend policy is centered on the year-end dividend. Given the financial foundation of cash and deposits of ¥357.6B and an Equity Ratio of 73.9%, together with the high earnings power represented by an Operating Income margin of 28.3%, no significant constraints on funding the planned dividend are apparent. No information regarding share buybacks has been disclosed, and shareholder returns appear to be centered on dividends.

Risk Factors

1. Changes in working capital efficiency: Accounts receivable increased to ¥114.8B (+21.7% YoY), while total inventories increased to approximately ¥195.0B (+10.1% YoY), creating a potential lag in cash conversion relative to the growth in Revenue and profit.

2. Profitability of the Americas segment: While Revenue continued to grow strongly to ¥135.0B (+19.5%), Operating Income of ¥20.6B (-0.3%) remained almost flat, indicating continued difficulty in converting higher Revenue into profit.

3. Impact of foreign exchange fluctuations: The primary cause of the +¥18.3B divergence between Comprehensive Income and Net Income was foreign currency translation adjustments of +¥15.8B. In addition, foreign exchange losses of ¥0.3B were recorded, indicating that fluctuations in the yen exchange rate affect both profit and loss and net asset valuation.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin were substantially above the industry median, placing the Company among the industry’s higher-profitability companies.

Growth and Capital Efficiency

The Revenue growth rate also exceeded the industry median, placing the Company among the industry’s leading group in both profitability and growth.

※Source: Compiled by the Company

Key Takeaways from the Results

1. The gross profit margin improved by +2.5pt to 50.5% (48.0% in the previous year), while the Operating Income margin also improved by +2.5pt to 28.3% (25.8% in the previous year), indicating strengthening earnings power from both pricing and cost perspectives. East Asia served as the earnings pillar, generating Operating Income of ¥66.6B and a margin of 29.7%.

2. Progress against the full-year plan was 72.0% for Revenue, compared with 78.2% for Operating Income, 79.4% for Ordinary Income, and 79.6% for Net Income. Profitability was therefore ahead of Revenue, progressing at a pace above the simple nine-month benchmark of 75%.

3. While contract liabilities (advance receipts) increased by +54.0% YoY, accounts receivable (+21.7%) and inventories (+10.1%) also increased. Developments in working capital during the expansionary phase of orders and production will therefore remain an ongoing point of focus in future earnings results.

Theoretical Stock Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using the residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market stock price or a recommendation of any specific investment action.

Sensitivity: ¥4,859–¥5,143 at ±1% for the cost of equity, and ¥4,982–¥5,021 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat on the high side.

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee the future stock price)

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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 available earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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AI Financial Analysis

Executive Summary

FY2026 Q3 earnings were strong, with revenue growth translating into faster operating and net-profit growth and a substantial profitability uplift. Cumulative revenue increased 9.8% YoY to ¥35.98bn. Operating income rose 20.2% to ¥10.17bn, outpacing sales by 10.4 percentage points. Net income increased 19.7% to ¥7.24bn, and EPS reached ¥483.01. The operating margin expanded to 28.3% from 25.8% a year earlier, a 250bp improvement. Gross margin also improved 250bp to 50.5%, indicating that the earnings gain was principally supported by stronger gross-profit conversion. SG&A expenses increased 10.4%, marginally faster than revenue growth, and the SG&A-to-sales ratio edged up by roughly 10bp to 22.3%. Nevertheless, the gross-margin gain more than offset this modest cost deleverage. Ordinary income rose 20.3% to ¥10.40bn and remained close to operating income, supporting the view that profitability was primarily operating in nature. Net income represented 69.6% of pre-tax income, equivalent to a 30.3% effective tax rate. Interest income of ¥0.21bn materially exceeded interest expense of ¥0.02bn, consistent with a cash-rich balance sheet. Comprehensive income rose 44.2% to ¥9.07bn, helped by foreign-currency translation and securities valuation movements in addition to earnings. The Americas and Europe led external-sales growth, while South and West Asia delivered both sales and segment-profit expansion. East Asia generated the largest reported segment profit at ¥6.66bn, but its result includes a substantial internal-sales base and should therefore be assessed alongside consolidated profitability rather than as a direct external-market margin measure. The main operational issue is working-capital intensity: reported annualized DSO was 87 days, DIO was 300 days, and the annualized cash conversion cycle was 362 days. Full-year guidance was maintained, and Q3 cumulative progress is broadly ahead of the standard 75% seasonal benchmark on operating profit, ordinary income, and net income. The implied Q4 operating margin under the maintained forecast is lower than the Q3 cumulative margin, suggesting the company retains a prudent assumption for year-end execution.

Profitability Analysis

Reported annualized ROE was 14.8%, decomposed into a 20.1% net profit margin, 0.546x asset turnover, and 1.35x financial leverage. The return profile is therefore driven predominantly by exceptional profit conversion rather than balance-sheet leverage. Financial leverage is conservative and provides limited artificial enhancement to shareholder returns. The most important YoY operating change was margin expansion: gross margin increased by 250bp to 50.5% and operating margin increased by 250bp to 28.3%. This indicates that the incremental ¥3.22bn of revenue generated disproportionately high gross profit, with gross profit rising 15.7% to ¥18.18bn. SG&A rose 10.4% to ¥8.01bn, slightly above the 9.8% revenue increase; as a result, SG&A was not the source of margin expansion and remains a point to monitor if growth moderates. The 5-factor structure is healthy: the tax burden was 0.696, interest burden was 1.022, and EBIT margin was 28.3%. Interest burden above 1.0 reflects net non-operating financial income, principally ¥0.21bn of interest income against ¥0.02bn of interest expense. Segment results show a mixed regional margin picture. Americas external revenue rose 18.8% to ¥13.28bn, while segment income was essentially flat at ¥2.06bn, reducing its segment margin to 15.5% from 18.5%. Europe revenue rose 26.9% to ¥7.44bn and segment income increased 15.7% to ¥1.20bn, with margin moderating to 16.2% from 17.8%. South and West Asia revenue increased 6.6% to ¥10.22bn and segment income rose 9.8% to ¥2.82bn, lifting margin to 27.6% from 26.8%. East Asia was the core business by reported segment-income contribution, with segment profit up 31.9% to ¥6.66bn, although its sizable intersegment sales require caution when interpreting its reported profitability. Consolidated margin sustainability will depend on maintaining gross-profit discipline while preventing SG&A growth from persistently exceeding revenue growth.

Growth Assessment

Growth was broad-based in external markets, with consolidated revenue up 9.8% YoY. The Americas added ¥2.10bn of external revenue and Europe added ¥1.58bn, together accounting for most consolidated top-line growth. South and West Asia added ¥0.64bn of revenue and improved segment profitability, providing a favorable mix contribution. East Asia external revenue declined 17.8% to ¥5.04bn, despite a large increase in internal sales, highlighting a regional demand or shipment-mix risk within the consolidated growth profile. Operating profit growth of 20.2% exceeded revenue growth, and net income growth of 19.7% was similarly robust, indicating good current-period operating leverage. The small ¥0.01bn loss on disposal of fixed assets was immaterial relative to net income and does not affect the recurring nature of reported earnings. Full-year revenue guidance is ¥50.00bn, implying Q3 cumulative progress of 72.0%, 3.0 percentage points below the standard 75% progress rate. Full-year operating-income guidance is ¥13.00bn, implying 78.2% progress, 3.2 percentage points above the standard rate. Ordinary-income progress is 79.4%, and net-income progress is 79.6%, each 4.4 to 4.6 percentage points above the seasonal benchmark. The forecast implies Q4 revenue of ¥14.02bn, operating income of ¥2.83bn, and net income of ¥1.86bn. The implied Q4 operating margin is about 20.2%, below the 28.3% Q3 cumulative margin, leaving room for forecast delivery if current revenue and gross-margin conditions persist. Revenue sustainability should be evaluated against the elevated production and working-capital cycle, particularly the high reported inventory days and WIP concentration.

Financial Health

Financial health is very strong. Current assets of ¥68.83bn covered current liabilities of ¥15.52bn, producing a current ratio of 443.4% and a quick ratio of 421.9%. Working capital was ¥53.31bn, providing substantial liquidity for production, customer commitments, and capital needs. Cash and deposits were ¥35.76bn, equivalent to 40.7% of total assets and 23.95x short-term loans. Interest-bearing debt was ¥5.00bn, comprising ¥1.49bn of short-term loans and ¥3.50bn of long-term loans. Debt-to-equity was a conservative 0.35x, debt-to-capital was 7.1%, and interest coverage was exceptionally strong at 442.13x. There is no maturity mismatch concern because current assets substantially exceed current liabilities and cash alone exceeds short-term debt by a wide margin. Total equity increased ¥6.07bn YoY to ¥65.02bn, while liabilities represented only 26.1% of total assets. Contract liabilities increased ¥2.57bn YoY to ¥7.34bn, which provides customer-funded working capital but also represents an execution obligation requiring timely production and delivery. Receivables increased 21.7% YoY to ¥11.48bn, consistent with revenue growth but requiring collection monitoring in view of the 87-day annualized DSO. Inventories on the balance sheet increased 26.0% YoY to ¥3.33bn. Investment securities increased 42.3% YoY to ¥1.10bn, although they remain modest at 1.3% of total assets. Foreign-currency translation adjustments increased equity and contributed to comprehensive income, creating some sensitivity of book value to exchange-rate movements.

Notable B/S Changes

Total assets: +¥9.55bn (+12.2%) to ¥87.94bn - growth was led by cash, receivables, production-related assets, and OCI-related equity expansion. Total equity: +¥6.07bn (+10.3%) to ¥65.02bn - retained earnings growth and positive translation/securities valuation effects strengthened the capital base. Contract liabilities: +¥2.57bn (+54.0%) to ¥7.34bn - indicates higher customer advances or unfulfilled contractual performance obligations; supports liquidity but elevates delivery-execution importance. Investment securities: +¥0.33bn (+42.3%) to ¥1.10bn - a significant percentage increase from a low base, though still only 1.3% of total assets. Inventories: +¥0.69bn (+26.0%) to ¥3.33bn - requires monitoring alongside the elevated annualized DIO and long cash conversion cycle. Accounts receivable: +¥2.05bn (+21.7%) to ¥11.48bn - broadly accompanies revenue growth but is notable given the 87-day annualized DSO. Current liabilities: +¥2.63bn (+20.4%) to ¥15.52bn - primarily consistent with higher operating activity and customer contract liabilities; liquidity coverage remains exceptionally strong. Long-term loans: -¥1.12bn (-24.2%) to ¥3.50bn - debt reduction further improved the already conservative capital structure.

Cash Flow Quality

Dividend Sustainability

The maintained full-year dividend forecast is ¥240 per share. Against forecast EPS of ¥607.03, the prospective dividend payout ratio is approximately 39.5%, below the 60% sustainability benchmark. Retained earnings were ¥550.97bn? No, retained earnings were ¥55.10bn, providing a substantial accumulated earnings base relative to the proposed distribution. The company has a strong liquidity position, with ¥35.76bn of cash and deposits, and modest interest-bearing debt of ¥5.00bn. The conservative balance-sheet structure supports the capacity to maintain the forecast dividend under normal operating conditions. The principal factor to monitor is the cash absorbed by the long production and collection cycle, as elevated receivable and inventory days can reduce near-term cash availability despite strong accounting profits. No share buyback is indicated by the 50 treasury shares outstanding, so the dividend payout ratio is the relevant shareholder-return measure.

Risk Assessment

Business risks include Working-capital execution risk is high: annualized DSO of 87 days exceeds the 60-day warning threshold. The root cause is slower customer cash collection relative to manufacturing benchmarks; this can be more common in capital-equipment projects with milestone billing, but it raises the risk that revenue growth does not promptly translate into cash generation. The impact is greater funding needs and potential pressure on cash conversion if collections deteriorate., Inventory-cycle risk is high: annualized DIO of 300 days exceeds the 90-day warning threshold. The root cause is a long manufacturing and delivery cycle, which may be structurally associated with customized stretch-blow molding equipment, but the elevated level exposes the company to order deferrals, production-plan changes, and inventory valuation risk. The impact is potentially significant cash absorption and a greater requirement for order execution discipline., Production bottleneck risk is elevated: work in process was ¥7.95bn, or 40.8% of reported manufacturing inventory composition, above the 40% warning threshold. The root cause is a large amount of capital tied up in partly completed equipment; this can reflect a healthy order pipeline, but it can also signal elongated production, commissioning, or customer-acceptance cycles. The impact is heightened sensitivity of sales recognition and working capital to delivery timing., The annualized cash conversion cycle of 362 days exceeds the 120-day warning threshold. The root cause combines the high DSO and high DIO, only partly offset by supplier credit. The impact is that reported profitability is more exposed to project timing and cash-conversion volatility than the operating margin alone suggests., Regional mix risk remains material: East Asia external revenue declined 17.8% YoY, while growth was concentrated in the Americas and Europe. A slowdown, customer concentration issue, or delayed equipment delivery in a major region could affect consolidated shipments and margins., As an export-oriented machinery manufacturer, the company faces foreign-exchange and cross-border demand risk. Foreign-exchange losses were limited to ¥0.04bn in the period, but foreign-currency translation adjustments contributed ¥1.58bn to OCI, showing that exchange rates can materially affect equity and comprehensive income..

Financial risks include There is no immediate leverage stress: D/E is 0.35x, debt-to-capital is 7.1%, cash/short-term debt is 23.95x, and interest coverage is 442.13x. The principal financial risk is therefore working-capital conversion rather than refinancing capacity., Contract liabilities of ¥7.34bn rose 54.0% YoY. These balances support liquidity in advance, but they create delivery, acceptance, and potential refund or deferral exposure if project execution weakens., The effective tax rate was 30.3%, leaving a tax burden of 0.696. This is broadly normal but slightly below the 0.70 reference point, so future net-income conversion remains somewhat sensitive to jurisdictional income mix and tax effects..

Key concerns include Monitor whether receivable collection improves from the 87-day annualized DSO as full-year deliveries are completed., Monitor whether the 300-day annualized DIO and 40.8% WIP ratio normalize following shipment and customer acceptance., Monitor Americas and Europe segment-margin trends, where sales grew strongly but segment margins declined year on year., Monitor East Asia external-market recovery, given the 17.8% YoY external-sales decline., Monitor the gap between Q3 cumulative operating margin of 28.3% and the implied Q4 margin of about 20.2% embedded in maintained guidance..

Investment Implications

Key takeaways include Revenue increased 9.8% YoY, while operating income and net income rose 20.2% and 19.7%, respectively., Operating margin expanded 250bp to 28.3% and gross margin expanded 250bp to 50.5%, demonstrating strong incremental profitability., The balance sheet is highly liquid and conservatively financed, with ¥35.76bn cash, 443.4% current ratio, and 0.35x D/E., The main analytical offset to strong profitability is the extended annualized working-capital cycle: 87-day DSO, 300-day DIO, and 362-day CCC., Full-year operating-income progress of 78.2% is ahead of the standard 75% Q3 pace, while sales progress of 72.0% suggests a meaningful Q4 shipment requirement..

Metrics to watch include Q4 revenue delivery versus the ¥14.02bn implied by full-year guidance, Q4 operating margin versus the approximately 20.2% implied by full-year guidance, Annualized DSO, DIO, cash conversion cycle, and WIP ratio, Americas and Europe segment margins, East Asia external revenue trend, Contract-liability conversion into delivered revenue, Dividend payout ratio relative to forecast EPS.

Regarding relative positioning, The company exhibits profitability above typical manufacturing benchmarks, with a 28.3% operating margin, 20.1% net margin, and 14.8% annualized ROE supported by margins rather than leverage. Its liquidity and debt metrics are materially stronger than conventional manufacturing solvency thresholds. Relative to this financial strength, the long production-to-cash cycle is the principal differentiating risk and makes working-capital execution especially important.