SEMBA CORPORATION FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥22.56B
• Operating Income: ¥1.40B
• Net Income: ¥933M
• EPS: ¥87.39

Income Statement

Balance Sheet

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

Semba Co., Ltd. (TSE: 6540) delivered solid topline and operating performance in FY2025 Q3 YTD under JGAAP, with revenue of ¥22,559 million (+16.7% YoY) and operating income of ¥1,403 million (+18.2% YoY). Ordinary income was ¥1,364 million, only slightly below operating income, indicating limited non-operating drag. Net income was ¥931 million, essentially flat (-0.1% YoY), suggesting below-the-line pressures (e.g., taxes or minor non-operating/extraordinary items) offset operating gains. Gross profit of ¥3,725 million implies a gross margin of 16.5%, and operating margin stands at 6.2%, both consistent with improved operating leverage on higher volumes. DuPont analysis indicates ROE of 6.70% driven by a 4.13% net margin, 1.159x asset turnover, and 1.40x financial leverage—an efficiency-led return profile supported by moderate leverage. Liquidity metrics are strong with a current ratio of 221.5% and working capital of ¥11,503 million, reflecting a sizable current asset base relative to current liabilities. The reported equity ratio is listed as 0.0%, but this appears to be an unreported placeholder; implied equity ratio from leverage approximates 71% (Assets/Equity ~1.40x). Debt-to-equity is 0.70x based on provided totals, indicating modest balance sheet leverage versus equity. Cash flow figures (OCF/ICF/FCF) are unreported, preventing direct assessment of earnings-to-cash conversion; similarly, D&A and interest expense are unreported. The effective tax rate shown as 0.0% is clearly a placeholder; using ordinary income as a proxy for pretax, the implied tax rate is about 31% (¥428.8 million tax on ~¥1,364 million pretax). Dividend data indicate no disclosed DPS for the period; payout and FCF coverage are thus not informative at this stage. Operationally, the pattern of rising revenue and operating income suggests healthy demand and execution in core projects, though the flat net income indicates caution on non-operating and tax effects. Asset turnover at 1.159x is respectable for a project-based model, underpinning ROE despite only mid-single-digit margins. Inventory of ¥948 million appears manageable relative to the scale of revenue, implying efficient project procurement and limited balance sheet risk from stock. There are internal inconsistencies in the balance sheet (current assets exceeding total assets), underscoring data limitations for precise solvency analysis. Overall, the quarter presents as fundamentally sound with strengthened operating performance, robust liquidity, and moderate leverage, but cash flow and dividend visibility remain constrained by undisclosed items.

Profitability Analysis

roe_decomposition: ROE 6.70% = Net margin 4.13% x Asset turnover 1.159x x Financial leverage 1.40x. The ROE is primarily driven by efficient asset utilization and moderate leverage rather than high margins. margin_quality: Gross margin 16.5% and operating margin ~6.2% (¥1,403m/¥22,559m) indicate healthy project execution and SG&A control. Ordinary income (¥1,364m) is slightly below operating, implying small net non-operating expenses. Net income was flat YoY despite stronger operating profit, pointing to higher taxes and/or minor below-the-line items as the primary offsets. operating_leverage: Operating income grew slightly faster than revenue (+18.2% vs +16.7%), indicating positive operating leverage. This suggests better fixed cost absorption and/or improved mix. Sustainability will depend on backlog quality, input cost stability, and SG&A discipline.

Growth Assessment

revenue_sustainability: Revenue grew 16.7% YoY to ¥22,559m, likely reflecting robust order intake and execution in core fit-out/space creation projects. Sustainability hinges on client capex trends, retail/office refurbishment cycles, and conversion of backlog to revenue. profit_quality: Operating income rose 18.2% to ¥1,403m, outpacing sales growth, indicative of margin enhancement and scale benefits. Ordinary income closely tracks operating, signaling limited non-operating noise. Net income stagnation (-0.1% YoY) highlights sensitivity to taxation or non-operating items. outlook: With asset turnover at 1.159x and moderate leverage, the company has a solid base to compound earnings if demand holds. Key to the outlook will be order backlog, book-to-bill, gross margin maintenance amid material and subcontractor cost dynamics, and the cadence of client investment decisions.

Financial Health

liquidity: Current ratio 221.5% and quick ratio 211.5% reflect strong short-term liquidity. Working capital stands at ¥11,503m (¥20,973m current assets – ¥9,469m current liabilities). Cash balance was unreported; however, liquidity appears ample based on ratios. solvency: Debt-to-equity is 0.70x based on provided totals (liabilities ¥9,696m; equity ¥13,893m). Implied equity ratio is around 71% (from leverage 1.40x), pointing to a conservative capital base. Note: Reported equity ratio of 0.0% is an unreported placeholder, and BS subtotals show inconsistencies. capital_structure: Moderate leverage with substantial equity cushion supports resilience through cycles. Interest expense is undisclosed, but ordinary income proximity to operating income suggests limited financial burden.

Cash Flow Quality

earnings_quality: OCF is unreported; thus, OCF/NI and accrual intensity cannot be assessed. Given project-based revenue recognition, timing differences between earnings and cash can be material; monitoring receivables and advances is important. fcf_analysis: Investing and financing cash flows are unreported; FCF cannot be computed. Capex and D&A are also unreported, preventing an EBITDA or maintenance capex proxy. working_capital: Inventory of ¥948m appears modest relative to revenue, suggesting limited stock risk. The large working capital position implies significant current assets (likely receivables and WIP) supporting ongoing projects; collection discipline will be key for cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are undisclosed for the period. With net income of ¥931m and an implied equity ratio ~71%, capacity may exist, but policy and cash generation evidence are needed. fcf_coverage: FCF is unreported; therefore, coverage of dividends cannot be evaluated. Absent OCF data, we cannot confirm cash backing for any distributions. policy_outlook: Without disclosed dividend guidance, we assume a disciplined approach tied to earnings stability and cash conversion. Visibility should improve with full-year disclosures and cash flow detail.

Risk Assessment

Business Risks:

• Cyclicality of client capex in retail, office, and commercial interiors
• Project execution risk (cost overruns, schedule delays)
• Input cost volatility for materials and subcontractor labor
• Order intake and backlog conversion uncertainty
• Competitive pricing pressure in fit-out/general contracting
• Customer concentration risk on large projects
• Macroeconomic slowdown impacting refurbishment demand

Financial Risks:

• Potential elongation of receivable collection cycles affecting OCF
• Working capital swings tied to project milestones and advances
• Limited visibility on interest expense and debt terms due to undisclosed items
• Tax rate variability impacting net income
• Balance sheet data inconsistencies complicating ratio analysis

Key Concerns:

• Unreported cash flow data (OCF/FCF) obscures earnings-to-cash conversion
• Balance sheet inconsistencies (current assets exceed total assets) reduce analytical precision
• Flat net income despite stronger operating profit raises questions on below-the-line impacts

Investment Implications

Key Takeaways:

• Strong topline (+16.7% YoY) and operating profit (+18.2% YoY) momentum
• ROE of 6.70% supported by solid asset turnover (1.159x) and moderate leverage (1.40x)
• Healthy liquidity with current ratio 221.5% and working capital of ¥11.5bn
• Net income flat YoY due to tax/non-operating effects despite operational improvement
• Cash flow, D&A, and dividend details are undisclosed, limiting full assessment

Metrics to Watch:

• Order backlog and book-to-bill
• Gross margin and SG&A ratio sustainability
• Receivables days, WIP balances, and advance receipts
• Operating cash flow and free cash flow conversion
• Effective tax rate and non-operating income/expense
• Leverage (net debt/EBITDA once EBITDA is disclosed) and interest coverage
• Dividend policy announcements and payout guidance

Relative Positioning: Within Japan’s interiors/fit-out and space creation peer set, Semba shows competitive operating momentum and a conservative balance sheet posture, translating to mid-single-digit ROE underpinned by asset efficiency rather than high leverage; fuller cash flow disclosure would clarify how it stacks up on earnings quality and capital returns.

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