TSUKISHIMA HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥56.64B
• Operating Income: ¥1.65B
• Net Income: ¥1.24B
• EPS: ¥278.37

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Tsukishima Holdings (6332) reported FY2026 Q2 consolidated results under JGAAP showing solid top-line momentum and a sharp improvement in operating profitability, alongside exceptionally strong bottom-line growth influenced by non-operating/extraordinary factors. Revenue rose 6.3% year over year to ¥56.6bn, while operating income increased 48.9% to ¥1.65bn, lifting the operating margin to 2.9%. Gross profit was ¥10.67bn, implying an 18.8% gross margin, consistent with project-based engineering economics and suggesting reasonable cost control in the period. Ordinary income reached ¥2.40bn (ordinary margin ~4.2%), benefitting from improved non-operating items. Net income surged to ¥11.78bn (+10.6% YoY), resulting in a 20.8% net margin that is far above operating margin and points to sizable extraordinary or non-recurring gains. DuPont analysis indicates ROE of 10.68%, decomposed into a 20.8% net margin, 0.304x asset turnover, and 1.69x financial leverage. The divergence between net and operating performance necessitates caution in extrapolating the net margin. Cash generation was strong, with operating cash flow of ¥19.64bn and an OCF/Net Income ratio of 1.67x, indicating good earnings-to-cash conversion in this period. The balance sheet appears robust with total assets of ¥186.5bn and total equity of ¥110.3bn, implying an equity ratio around the high-50% range despite the reported equity ratio datapoint being unreported. Liquidity is strong, with a current ratio of 232% and working capital of ¥63.59bn, underscoring a comfortable short-term funding profile. The debt-to-equity ratio is shown at 0.73x; however, in project businesses this can include sizable non-interest-bearing advances and payables. Financing cash flow was a net outflow of ¥17.11bn, likely reflecting debt repayments or shareholder returns, but detailed components are not disclosed. Dividend per share and share count metrics were not disclosed in the dataset, limiting payout analysis; EPS is reported at ¥278.37, providing a basis for per-share profitability. Overall, the quarter shows improving operating execution, strong cash flow, and conservative leverage, but bottom-line strength is likely inflated by one-off items. The sustainability of earnings will depend on backlog quality, order intake, and margin discipline amid input cost and project timing dynamics. Data limitations (notably zero-reported items and undisclosed investing cash flows, cash balance, and DPS) constrain certain assessments.

Profitability Analysis

ROE_decomposition: ROE 10.68% = Net margin 20.80% x Asset turnover 0.304 x Financial leverage 1.69. The very high net margin versus operating margin indicates material non-operating/extraordinary contribution; core ROE implied by operating income would be much lower. margin_quality: Gross margin 18.8% (¥10.67bn GP on ¥56.64bn revenue) is reasonable for an EPC/engineering-driven mix. Operating margin improved to 2.9% (¥1.65bn OI), up strongly YoY, indicating better project execution and/or mix. Ordinary margin is 4.2% (¥2.40bn), reflecting positive non-operating items. Net margin of 20.8% (¥11.78bn) is not reflective of core run-rate profitability and likely includes one-offs. operating_leverage: Revenue grew 6.3% YoY while operating income increased 48.9%, evidencing positive operating leverage. EBITDA was ¥3.36bn with a 5.9% margin, indicating incremental conversion of gross profit to EBITDA. Further leverage will depend on SG&A discipline and project margin realization.

Growth Assessment

revenue_sustainability: Top-line growth of 6.3% YoY suggests steady demand, likely supported by ongoing project executions; sustainability hinges on orders and backlog replenishment (not disclosed). profit_quality: Core profitability improved (OI +48.9% YoY), but the gap between operating and net income indicates non-recurring drivers at the bottom line. OCF/NI of 1.67x is strong, supporting earnings quality this period. outlook: Near-term outlook appears stable with improving operating trends and a solid liquidity base, but reported net profit likely overstates underlying earnings power. Key determinants will be order intake, backlog quality, input cost pass-through, and execution on large projects.

Financial Health

liquidity: Current ratio 232.1% and quick ratio 231.8% indicate ample short-term liquidity. Working capital is ¥63.59bn (CA ¥111.72bn minus CL ¥48.13bn). Inventories are modest at ¥0.18bn, consistent with an engineering/services mix. solvency: Total equity is ¥110.31bn vs total assets ¥186.52bn, implying an equity ratio near ~59% despite the reported figure being unreported. Interest coverage is strong at 21.7x, reflecting low interest burden (¥76m). capital_structure: Debt-to-equity ratio is presented as 0.73x; in this business model, reported liabilities may include large non-interest-bearing advances and payables. Overall leverage appears moderate with significant equity buffer.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥19.64bn against net income of ¥11.78bn (OCF/NI 1.67x) indicates strong conversion, likely aided by working capital inflows (e.g., collections/advances). Net income is inflated by non-operating/extraordinary effects; cash flows suggest underlying health but may be timing-sensitive. FCF_analysis: Investing cash flow is undisclosed in this dataset (shown as 0), so free cash flow cannot be reliably calculated; the reported FCF value of 0 should be treated as unreported. Without capex details, structural FCF run-rate is indeterminate. working_capital: Large positive working capital (¥63.59bn) and strong liquidity ratios suggest headroom; however, project businesses can exhibit volatile working capital due to milestone billings. Monitoring receivables, advances from customers, and payables turnover is important (not disclosed here).

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are not disclosed (0 indicates unreported). EPS is ¥278.37, but without DPS we cannot compute payout. Based on earnings and cash generation, capacity for dividends appears present, but lack of disclosed policy and DPS prevents assessment. FCF_coverage: Free cash flow is not determinable due to undisclosed investing cash flows; FCF coverage of dividends cannot be assessed. policy_outlook: No dividend policy details provided. Given variability in net income due to non-recurring items, a policy anchored to stable operating cash flows would be prudent; however, no conclusions can be drawn without disclosed DPS/history.

Risk Assessment

Business Risks:

• Project execution risk and cost overruns affecting margins.
• Order intake and backlog timing volatility impacting revenue recognition.
• Input cost inflation and supply chain constraints pressuring gross margins.
• Mix shifts between EPC, O&M, and service work affecting profitability.
• Potential reliance on large projects leading to lumpiness.
• Regulatory and environmental compliance requirements for process equipment and plants.
• FX exposure and overseas project risk if applicable (not disclosed).

Financial Risks:

• Working capital swings tied to milestone billing and advances.
• Counterparty credit risk on receivables from large industrial clients.
• Misinterpretation of leverage where liabilities include non-interest-bearing items.
• Earnings volatility from non-operating/extraordinary gains and losses.
• Interest rate risk is limited currently given low interest expense, but refinancing terms could change.

Key Concerns:

• Sustainability of elevated net income given net margin (20.8%) far exceeds operating margin (2.9%).
• Limited disclosure on investing cash flows and cash balance constrains FCF and liquidity analysis.
• Dependence on project timing and backlog health, which are not disclosed in this dataset.

Investment Implications

Key Takeaways:

• Revenue up 6.3% YoY to ¥56.6bn with improving operating margin to 2.9%.
• Net income of ¥11.78bn (20.8% margin) boosted by non-operating/extraordinary factors.
• ROE at 10.68% chiefly driven by unusually high net margin; core ROE is lower.
• Strong liquidity: current ratio 232%, working capital ¥63.59bn.
• Interest coverage robust at 21.7x; leverage moderate with substantial equity base.
• OCF of ¥19.64bn (1.67x NI) indicates strong cash conversion this period.
• FCF and DPS not assessable due to undisclosed investing CF and dividend data.

Metrics to Watch:

• Order intake and backlog levels/margins.
• Operating margin trajectory and SG&A leverage.
• Breakdown of non-operating and extraordinary gains impacting net income.
• Working capital components (receivables, advances, payables) and OCF sustainability.
• Capex and investing cash flows to gauge structural FCF.
• Net debt and cash balances (not disclosed here).
• Dividend policy and actual DPS announcements.

Relative Positioning: Within Japan’s plant engineering/process equipment universe, the company exhibits strong liquidity and moderate leverage with improving operating margins, but reported bottom-line profitability appears less comparable due to sizable non-operating or extraordinary gains this period; core profitability should be assessed on operating and ordinary income metrics.

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