MIYAIRI VALVE MFG.CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.21B
• Operating Income: ¥45M
• Net Income: ¥20M
• EPS: ¥0.42

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

Miyairi Valve Mfg. Co., Ltd. reported FY2026 Q2 (single-entity, JGAAP) results with flat revenue at ¥3,214 million year over year, while delivering a sharp rebound in operating income to ¥45 million (+226.5% YoY), indicating improved cost control and operating leverage. Gross profit was ¥514.8 million, translating to a 16.0% gross margin, which, combined with restrained SG&A, produced an operating margin of approximately 1.4%. Ordinary income was ¥39 million and net income ¥20 million (flat YoY), implying that non-operating items and taxes largely offset the operating recovery. EBITDA was ¥183.9 million (5.7% margin), supported by ¥138.9 million in depreciation and amortization, suggesting a capital-intensive asset base. The DuPont breakdown shows low ROE at 0.51%, driven by a slim net margin (0.62%) and modest asset turnover (0.364), partially offset by financial leverage of 2.25x. Operating cash flow was ¥90.5 million, 4.5x net income, indicating earnings were supported by non-cash charges but moderated by working capital needs. Liquidity is adequate with a current ratio of 125.7% and quick ratio of 87.9%, while leverage appears moderate with debt-to-equity of 1.25x and interest coverage (operating income basis) at 5.8x. Inventories stand at ¥1,057.9 million, a meaningful component of current assets and a key driver of working capital dynamics for a manufacturing business. Equity was ¥3,927 million against total assets of ¥8,840 million, implying tangible balance sheet support, although the reported equity ratio of 0.0% is not reflective of reality and should be treated as undisclosed. Cash and equivalents, investing cash flow, and several share-related metrics show as zero, indicating non-disclosure rather than true zeros; this constrains certain cash and per-share analyses. Dividend DPS is zero and payout ratio is 0.0%, consistent with prioritizing reinvestment or balance sheet prudence during a low-ROE phase. The cost base appears better aligned to current demand, but the very low net margin underscores sensitivity to mix and volume. With revenue flat, the improvement in operating income stems from expense discipline rather than top-line growth, leaving sustainability contingent on demand normalization and procurement cost stability. The overall picture is of a capital-intensive industrial manufacturer with improving operating execution, still-low profitability, and reasonable liquidity, but with incomplete disclosure on some items that limits granularity of analysis. Monitoring order trends, inventory turns, and capex is critical to assess whether operating momentum can translate into durable ROE expansion.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.62% (Net income ¥20m / Revenue ¥3,214m)
• asset_turnover: 0.364x (Revenue ¥3,214m / Assets ¥8,840m)
• financial_leverage: 2.25x (Assets ¥8,840m / Equity ¥3,927m)
• calculated_ROE: 0.51% (matches reported 0.51%) margin_quality: Gross margin is 16.0% (¥514.8m GP), with SG&A implied at ~¥469.8m (≈14.6% of sales), yielding an operating margin of ~1.4%. EBITDA margin is 5.7%, supported by ¥138.9m D&A (indicative of capital intensity). Net margin is 0.62%, compressed by non-operating items and taxes. The step-up in operating income versus flat revenue suggests improved cost discipline and possibly a better product mix, though margin remains thin and vulnerable to cost inflation or pricing pressure. operating_leverage: Revenue was flat YoY (+0.0%), yet operating income rose +226.5% to ¥45m, evidencing positive operating leverage from a lower fixed-cost run-rate or mix improvements. Given D&A of ¥138.9m, fixed costs are material; incremental volume could disproportionately enhance operating profit, but the reverse also holds in downturns.

Growth Assessment

revenue_sustainability: Top line was unchanged YoY at ¥3,214m, pointing to stable but not expanding demand. Sustainability depends on order intake and backlog health (not disclosed), and on end-market trends for industrial valves (LPG/LNG and industrial applications). profit_quality: Operating profit recovery was driven by cost controls rather than sales growth; EBITDA of ¥183.9m versus operating income ¥45m indicates heavy non-cash charges, which can support cash generation but necessitate ongoing capex to maintain assets. Net profit remains low, reflecting thin margins and limited non-operating tailwinds. outlook: With a leaner cost base, incremental revenue could lift margins, but the low net margin (0.62%) and modest asset turnover (0.364x) cap near-term ROE. Key to outlook are input cost trends (steel and components), pricing power on bespoke products, and normalized production efficiency. Absent disclosed backlog or guidance, growth visibility is limited.

Financial Health

liquidity: Current ratio 125.7% and quick ratio 87.9% indicate adequate near-term liquidity. Working capital is ¥719.4m. Cash & equivalents are shown as 0 due to non-disclosure; thus, immediate cash coverage cannot be assessed directly. solvency: Debt-to-equity is 1.25x, consistent with moderate leverage for a manufacturing entity. Interest coverage of 5.8x (operating income basis) suggests manageable interest burden, albeit with limited buffer if operating profit weakens. capital_structure: Total assets ¥8,840m; equity ¥3,927m; liabilities ¥4,922m. The reported equity ratio of 0.0% is an undisclosed item; the implied equity ratio would be approximately 44% if calculated (¥3,927m/¥8,840m), indicating a balanced structure, but we refrain from substituting undisclosed metrics in formal reporting.

Cash Flow Quality

earnings_quality: OCF of ¥90.5m is 4.52x net income, aided by non-cash D&A (¥138.9m). However, OCF is below NI + D&A, implying a working capital outflow or other non-cash adjustments within OCF. FCF_analysis: Investing cash flow is undisclosed (reported as 0), so Free Cash Flow cannot be reliably computed beyond noting OCF was positive. Capex levels are not available; maintenance capex needs are likely meaningful given D&A magnitude. working_capital: Inventories at ¥1,057.9m are sizable within current assets (¥3,522.6m). Without receivables/payables detail, we cannot derive DIO/DSO/DPO or cash conversion cycle, but inventory management will be pivotal for sustaining OCF.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is 0.00 with a payout ratio of 0.0%, appropriate given low ROE (0.51%) and thin net margin (0.62%). FCF_coverage: FCF coverage cannot be assessed due to undisclosed investing cash flows; OCF was positive at ¥90.5m, but capex needs are unknown. policy_outlook: Given current profitability and leverage, preserving cash to support operations and potential capex appears prudent. Any future resumption of dividends would likely depend on sustained margin expansion and clearer FCF generation.

Risk Assessment

Business Risks:

• End-market cyclicality in industrial and energy-related demand for valves.
• Raw material price volatility (e.g., steel) impacting gross margin.
• Project/mix variability leading to lumpy margins and operating leverage risk.
• Supply chain disruptions affecting lead times and inventory levels.
• Customer concentration or order timing risk (not disclosed, but typical for niche manufacturers).
• Competitive pricing pressure from domestic and overseas manufacturers.

Financial Risks:

• Thin net margin (0.62%) leaves limited buffer against cost or volume shocks.
• Moderate leverage (D/E 1.25x) with reliance on maintaining interest coverage (~5.8x).
• Working capital intensity with large inventories (¥1,057.9m), potentially consuming cash in downturns.
• Incomplete disclosure on cash balances and investing cash flows hampers liquidity and FCF assessment.
• Refinancing and interest rate risks if debt reprices higher.

Key Concerns:

• Low ROE (0.51%) despite operating recovery.
• Sustainability of cost improvements without top-line growth.
• Lack of visibility on capex and cash reserves due to undisclosed items.
• Inventory management and conversion to cash.

Investment Implications

Key Takeaways:

• Revenue flat YoY at ¥3,214m, but operating income up +226.5% to ¥45m, evidencing improved operating leverage.
• Margins remain thin: gross margin 16.0%, operating margin ~1.4%, net margin 0.62%.
• ROE is low at 0.51% due to slim margins and modest asset turnover (0.364x).
• OCF of ¥90.5m supports earnings quality, but FCF unassessable without capex data.
• Liquidity adequate (current ratio 125.7%, quick 87.9%); leverage moderate (D/E 1.25x, interest coverage 5.8x).
• Dividend suspended (DPS 0), consistent with reinvestment and balance sheet prudence.

Metrics to Watch:

• Order intake and backlog/book-to-bill (not disclosed).
• Inventory turns and overall working capital movement.
• Gross margin trajectory versus input costs and pricing.
• Capex versus D&A to gauge asset reinvestment and future capacity.
• Operating income and EBITDA progression for operating leverage validation.
• Interest coverage and debt levels amid rate environment.

Relative Positioning: Within Japanese industrial components/valve manufacturers, the company exhibits improving operating execution but lags on profitability (low ROE and thin net margin). Balance sheet appears reasonable on an implied basis, yet incomplete disclosures on cash and capex limit comparative FCF visibility.

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