GALILEI CO.LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥68.00B
• Operating Income: ¥8.03B
• Net Income: ¥5.19B
• EPS: ¥144.05

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

Galilei Co., Ltd. reported solid FY2026 Q2 (cumulative) results with revenue of ¥68.0bn, up 11.5% year over year, indicating healthy topline momentum. Gross profit reached ¥16.49bn, yielding a robust gross margin of 24.2%, which appears stable and supportive of operating profitability. Operating income rose to ¥8.03bn (+15.0% YoY), outpacing revenue growth and signaling positive operating leverage. Ordinary income of ¥8.41bn and net income of ¥5.77bn (+11.7% YoY) translate to a net margin of 8.49%, consistent with disciplined cost control and pricing execution. The DuPont decomposition (NPM 8.49% × asset turnover 0.467 × leverage 1.38) results in an ROE of 5.46%, matching the reported figure and underscoring the reliability of the provided profitability metrics. EBITDA was ¥8.75bn with a 12.9% margin, confirming that earnings quality is not solely dependent on non-cash add-backs. Cash generation was solid with operating cash flow (OCF) of ¥4.97bn, representing 0.86x of net income—respectable for a manufacturing/industrial profile at mid-year. The balance sheet is conservative: total assets are ¥145.54bn against liabilities of ¥38.36bn, giving a low debt-to-equity of 0.36x and ample equity of ¥105.77bn. Liquidity appears strong with a current ratio of 267% and quick ratio of 258%, supported by sizable current assets (¥96.32bn) relative to current liabilities (¥36.03bn). Working capital stands at ¥60.29bn, providing cushion for order intake and production cycles. While investing cash flow and cash/equivalents are unreported (shown as zero), the negative financing cash flow of ¥2.10bn suggests some shareholder distributions or debt reduction, but dividend data are not disclosed. The reported effective tax rate of 0.0% is clearly not meaningful given income tax expense of ¥2.11bn; an implied tax rate around 25% based on ordinary income appears more realistic. Inventory at ¥3.44bn is modest versus current assets, implying an asset-light or order-to-assembly tilt, though this could reflect classification differences. Asset turnover of 0.467x indicates moderate capital intensity; coupled with solid margins, this supports a steady, if not high, ROE profile. Overall, Galilei’s H1 performance shows balanced growth, margin resilience, healthy cash conversion, and a strong balance sheet, though several disclosures (equity ratio, cash, interest expense, dividends) are missing and limit completeness of analysis. Seasonality and project timing may affect second-half comparisons, so caution is warranted when annualizing H1 metrics.

Profitability Analysis

ROE of 5.46% is driven by: net profit margin 8.49%, asset turnover 0.467x, and financial leverage 1.38x. Operating margin is approximately 11.8% (¥8.03bn/¥68.00bn), indicating effective cost management and pricing discipline. Gross margin of 24.2% provides a solid buffer for SG&A and supports double-digit operating margin. EBITDA margin of 12.9% suggests reasonable operating efficiency and limited reliance on non-cash items (D&A ¥0.73bn). YoY operating income growth (+15%) exceeded revenue growth (+11.5%), evidencing positive operating leverage in H1. Ordinary income margin of ~12.4% remained slightly above operating margin; with interest expense unreported, we cannot evaluate financial income/expense impact. Net margin of 8.49% is healthy for the industry context and consistent with a normalized tax burden (implied ~25% vs reported 0.0% which is not meaningful). Margin quality appears supported by stable gross margin and controlled overhead; sustainability will depend on input costs and mix in H2.

Growth Assessment

Revenue growth of 11.5% YoY to ¥68.0bn reflects solid demand and/or improved execution. Profit growth is well-aligned: operating income +15.0% and net income +11.7% YoY, suggesting quality growth rather than one-off driven. The uplift in operating margin versus revenue points to operating leverage and possibly better mix or procurement discipline. Asset turnover at 0.467x is consistent with measured capacity utilization; sustaining revenue growth without significant balance sheet expansion would be positive for ROE. With OCF at ¥4.97bn (0.86x of net income), earnings are translating into cash, supporting the quality of growth. As this is a cumulative H1 print, seasonality and delivery timing could affect the second half; a focus on order backlog and pipeline would clarify sustainability. Absent investing CF disclosure, we cannot assess growth capex intensity or inorganic contributions; current growth appears primarily organic. Outlook hinges on maintaining gross margin resilience against cost inflation and preserving SG&A discipline while supporting growth initiatives.

Financial Health

Liquidity is strong: current ratio 267.3% and quick ratio 257.8% point to ample short-term coverage. Working capital of ¥60.29bn provides significant operational flexibility. Solvency is conservative with total liabilities of ¥38.36bn against equity of ¥105.77bn, yielding debt-to-equity of 0.36x. Financial leverage (assets/equity) is 1.38x, modest and supportive of balance sheet resilience. Equity ratio is reported as 0.0% but appears unreported; based on totals, equity/asset ratio would be roughly 72.7%, indicating a strong capital base. Interest expense is shown as zero (likely undisclosed), so we cannot compute a meaningful interest coverage; however, operating income and ordinary income levels suggest ample coverage if any debt exists. Cash and equivalents are unreported, limiting precision on immediate liquidity buffers.

Cash Flow Quality

OCF of ¥4.97bn equates to 0.86x net income (¥5.77bn), an acceptable conversion for the first half given working capital dynamics. EBITDA of ¥8.75bn provides additional comfort that earnings are supported by cash-generative operations. Free cash flow cannot be accurately determined because investing CF is unreported (shown as zero), and cash balance is also unreported. Working capital position is strong at ¥60.29bn; the low reported inventory relative to current assets suggests receivables and/or cash dominate, but classification uncertainty remains. With negative financing CF of ¥2.10bn, there may have been dividends or debt repayment; without dividend disclosure, we cannot tie this to shareholder returns. Overall, earnings quality appears reasonable based on OCF alignment and margin stability, but full assessment is constrained by missing investing and cash data.

Dividend Sustainability

Dividend per share (DPS) and payout ratio are reported as zero but should be treated as undisclosed. Financing cash outflow of ¥2.10bn could indicate distributions or debt service; however, absent DPS and share count data, we cannot confirm. If a dividend were paid, coverage would likely be supported by net income and OCF (0.86x NI in H1), but confirmation requires actual DPS and total dividend amounts. Free cash flow coverage cannot be evaluated given unreported investing CF. Policy outlook cannot be inferred without management guidance; historical payout behavior is not provided. In sum, dividend sustainability cannot be assessed from the current dataset; additional disclosures on DPS, total dividends, and capex are necessary.

Risk Assessment

Business Risks:

• Input cost volatility potentially pressuring gross margin in H2
• Demand cyclicality and order timing concentration affecting revenue visibility
• Supply chain constraints impacting delivery schedules and working capital
• Competition and pricing pressure eroding operating margins
• Project execution risk leading to cost overruns or margin slippage

Financial Risks:

• Limited visibility on cash and equivalents due to non-disclosure
• Unreported interest expense and cash interest coverage obscuring debt service capacity assessment
• Investing cash flows undisclosed, hampering capex and FCF evaluation
• Potential FX exposure if procurement or sales are cross-border (not disclosed)
• Concentration risk in receivables if current assets are skewed to AR (composition not disclosed)

Key Concerns:

• Multiple key financial items are unreported (cash, equity ratio detail, interest, investing CF, dividends)
• Seasonality could distort H1 margins and cash conversion versus full-year
• ROE at 5.46% is moderate; sustaining growth and asset efficiency is necessary for improvement

Investment Implications

Key Takeaways:

• Topline growth of 11.5% YoY with operating income up 15.0% indicates positive operating leverage
• Healthy profitability: GM 24.2%, OM ~11.8%, NPM 8.49%, EBITDA margin 12.9%
• Solid cash conversion with OCF at 0.86x NI supports earnings quality
• Strong balance sheet: D/E 0.36x, current ratio 267%, substantial working capital
• ROE of 5.46% is steady but not high; improvement hinges on asset turnover and margin retention
• Data gaps (cash, investing CF, dividends, interest) limit full valuation of cash flow durability and returns

Metrics to Watch:

• Gross and operating margin trends in H2 amid cost and pricing dynamics
• Order backlog and book-to-bill to assess revenue sustainability
• OCF/NI and working capital movements (receivables and inventory turns)
• Capex and investing CF to establish true FCF profile
• Actual effective tax rate versus implied ~25% from reported taxes
• Any disclosure on DPS, total dividends, and share count to evaluate capital return policy

Relative Positioning: Financially conservative with strong liquidity and low leverage; profitability is solid for a mid-cap industrial, but ROE is moderate relative to higher-ROE peers, leaving room for improvement via asset efficiency and sustained margins.

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