| Indicator | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥139.4B | ¥148.2B | -6.0% |
| Operating Income | ¥5.7B | ¥6.2B | -8.3% |
| Ordinary Income | ¥6.6B | ¥6.7B | -0.5% |
| Net Income | ¥1.5B | ¥4.0B | -61.8% |
| ROE | 1.2% | 3.0% | - |
FY2026 Q3 results came in with Revenue of ¥139.4B (YoY -¥8.9B, -6.0%), Operating Income of ¥5.7B (YoY -¥0.5B, -8.3%), Ordinary Income of ¥6.6B (YoY -¥0.0B, -0.5%), and Net Income of ¥1.5B (YoY -¥2.5B, -61.8%), marking declines in both revenue and earnings. In addition to lower revenue, an abnormally high effective tax rate of approximately 70% significantly compressed net income. The Operating Margin remained low at 4.1% (down 0.1pt from 4.2% a year ago). While maintaining a Gross Margin of 30.8%, SG&A of ¥37.2B continued to weigh on profits. Full-year guidance calls for Revenue of ¥192.0B (YoY -7.5%), Operating Income of ¥5.4B (YoY -45.1%), and Net Income of ¥0.6B (YoY -94.5%), implying a sharp profit decline.
[Profitability] ROE 1.1% (deteriorated from 3.2% last year), Net Margin 1.1% (well below the industry median of 5.4%), Operating Margin 4.1% (below the industry median of 7.3%), Return on Assets 0.6% (well below the industry median of 3.3%). Although the Gross Margin of 30.8% is maintained, the burden of a 26.7% SG&A ratio keeps the Operating Margin low. An effective tax rate of approximately 70% compresses net income, significantly lowering the after-tax margin. DuPont analysis yields ROE of 1.1% = Net Margin 1.1% × Asset Turnover 0.577 × Financial Leverage 1.83, highlighting that the low net margin is the primary driver of poor return on equity. [Cash Quality] Cash and Deposits of ¥69.0B with short-term liability coverage of 2.24x ensure liquidity. Interest Coverage is approximately 11.7x, indicating ample debt-servicing capacity. [Investment Efficiency] Asset Turnover 0.577x. [Financial Soundness] Equity Ratio 54.7% (slightly below the industry median of 63.9%), Current Ratio 261.5%, Debt-to-Equity ratio 0.83x. Interest-bearing debt of ¥59.1B reflects a conservative capital structure; however, a short-term debt ratio of 52.1% implies high reliance on short-term borrowings and embedded refinancing risk.
Cash and Deposits increased by ¥2.6B YoY to ¥69.0B, preserving on-hand liquidity despite higher tax burdens. In working capital efficiency, accounts payable increased by ¥2.6B YoY, and inventories decreased by ¥0.8B, indicating improved capital efficiency through working capital compression. Cash coverage of short-term liabilities stands at 2.24x, indicating sufficient liquidity. Meanwhile, interest-bearing debt decreased by ¥3.4B YoY, suggesting a policy of restraining borrowings and preserving cash on the financial side. The company plans an annual dividend of ¥41.0 (Payout Ratio approximately 196%). With Net Income of ¥1.5B, an estimated dividend outlay of approximately ¥3.0B implies continued shareholder returns funded by on-hand cash or retained earnings. The coexistence of cash accumulation and a high dividend policy suggests healthy cash generation where Operating Cash Flow (OCF) exceeds net income; however, confirming the sustainability of dividends requires verification of the OCF level.
Against Ordinary Income of ¥6.6B and Operating Income of ¥5.7B, non-operating net gain is approximately ¥0.9B. The breakdown mainly includes Dividend Income of ¥0.17B, Interest Income of ¥0.22B, and Foreign Exchange Gains of ¥0.65B. After deducting items such as Interest Expense of ¥0.49B from total non-operating income of ¥1.4B, the balance contributes positively. Non-operating income accounts for roughly 1.0% of revenue, indicating that core operating profit is the backbone of earnings. The Operating Margin of 4.1% remains low, leaving ample room to improve SG&A efficiency. With Profit Before Tax of ¥5.2B and a tax burden of ¥3.7B, the abnormal effective tax rate of approximately 70% is presumed to stem from temporary reversal of deferred tax assets and tax adjustments; however, the lack of disclosure leaves concerns regarding the quality of earnings. Since OCF figures are undisclosed, it is difficult to assess the gap between profit and cash; that said, the uptrend in Cash and Deposits suggests profit is at least partially underpinned by cash.
[Position within the Industry] (Reference information - Our research) Profitability: Operating Margin of 4.1% is below the industry median of 7.3% (IQR 4.6%–12.0%), placing the company in the lower tier. Net Margin of 1.1% is also well below the industry median of 5.4% (IQR 3.5%–8.9%). ROE of 1.1% is significantly lower than the industry median of 4.9% (IQR 2.8%–8.2%), highlighting issues in capital efficiency. Return on Assets of 0.6% is far below the industry median of 3.3% (IQR 1.8%–5.1%), indicating substantial room to improve asset utilization. Soundness: The Equity Ratio of 54.7% is slightly below the industry median of 63.9% (IQR 51.5%–72.3%) but broadly at a healthy level. The Current Ratio of 261.5% is roughly in line with the industry median equivalent of 267%, ensuring short-term liquidity. The Net Debt/EBITDA multiple is negative (net cash), consistent with the industry median of -1.11, and financial soundness is maintained. Efficiency: Revenue growth of -6.0% is well below the industry median of +2.8% (IQR -0.9%–+7.9%), lagging peers in growth. Low Operating Margin combined with declining revenue indicates relatively weak competitiveness within the industry. Industry: Manufacturing (N=65 companies), Comparison universe: FY2025 Q3 results data, Source: Our aggregation
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our firm based on publicly available financial statements. Investment decisions are your sole responsibility; consult with a professional as necessary before making any investment.