Ubiteq,INC. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥386M
• Operating Income: ¥31M
• Net Income: ¥-77M
• EPS: ¥2.11

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Segment Information

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Ubitex Co., Ltd. (TSE: 66620) reported FY2026 Q1 consolidated results under JGAAP with strong top-line growth but pronounced margin compression. Revenue increased 51.9% year over year to ¥386.0 million, while operating income was flat at ¥31.0 million, indicating negative operating leverage in the quarter. Net income was also ¥31.0 million, implying a net margin of 8.03%, consistent with the reported DuPont inputs. Gross profit was ¥51.2 million, translating to a gross margin of 13.3%, notably low for a technology-oriented name and suggestive of adverse pricing/mix or project cost pressure. There is an apparent inconsistency between the disclosed cost of sales (¥202.9 million) and gross profit (¥51.2 million) relative to revenue, as these figures do not arithmetically reconcile; the gross margin and gross profit figures appear internally consistent with revenue, so the cost of sales line may be misclassified or partially disclosed. Ordinary income equaled operating income, pointing to limited non-operating items this quarter. Despite the margin compression, the balance sheet remains conservative: total assets were ¥1.75 billion and equity ¥1.546 billion, implying an equity ratio of approximately 88.3% (the reported 0.0% equity ratio appears undisclosed rather than literal). Leverage is minimal, with total liabilities of ¥186.3 million and a debt-to-equity ratio of 0.12x. Liquidity is very strong, with current assets of ¥1.668 billion versus current liabilities of ¥181.2 million, yielding a current ratio near 9.2x and sizable working capital of ¥1.487 billion. ROE, via DuPont, was 2.01% (margin 8.03%, asset turnover 0.221x, leverage 1.13x), reflecting modest profitability and low balance sheet gearing. The company reported EPS of ¥2.11, which, when combined with net income, implies roughly 14.7 million shares outstanding, though shares outstanding were not disclosed in the XBRL data. Cash flow statement items (operating, investing, financing) were not disclosed; therefore, cash conversion and free cash flow cannot be assessed this quarter. The company paid no dividend (DPS ¥0), consistent with a payout ratio of 0% and a capital preservation stance amid margin pressure. Tax expense was ¥1.09 million, implying a low effective rate of roughly 3–4% on ordinary income, potentially due to loss carryforwards or tax credits. Overall, the quarter showcased robust demand but at the expense of pricing and/or project economics, resulting in substantially lower margins and a subdued ROE despite a fortress-like balance sheet. Data gaps—especially cash flow—limit conclusions on earnings quality, but the balance sheet strength provides resilience as the company adjusts its cost structure and pricing discipline.

Profitability Analysis

ROE_decomposition: ROE 2.01% = Net margin 8.03% × Asset turnover 0.221 × Financial leverage 1.13. The subdued ROE is primarily constrained by low asset turnover and modest net margins, with minimal leverage amplification. margin_quality: Gross margin was 13.3% (GP ¥51.2m on revenue ¥386.0m), indicating high cost of sales intensity. Operating margin was 8.0% (OI ¥31.0m). The small gap between operating and net income suggests limited non-operating and extraordinary items. The low effective tax further supports net margin. Note: disclosed cost of sales (¥202.9m) does not reconcile with revenue and gross profit; the gross margin appears the more internally consistent metric this quarter. operating_leverage: Revenue rose 51.9% YoY while operating income was flat, implying significant negative operating leverage and margin compression. Back-solving prior-year revenue (¥254m) with prior OI of ¥31m implies prior OPM ~12.2% vs ~8.0% now.

Growth Assessment

revenue_sustainability: Top-line grew 51.9% YoY to ¥386.0m, likely driven by strong order intake and/or project deliveries. Sustainability depends on repeat orders and execution capacity; without segment detail, durability is uncertain. profit_quality: Ordinary income equals operating income, implying limited reliance on financial income. However, gross margin of 13.3% suggests pricing pressure or cost overruns. The low effective tax rate (≈3–4%) elevated net income relative to pre-tax, which may not be sustainable if tax losses are utilized. outlook: To restore operating leverage, management likely needs to improve mix, pricing discipline, and delivery efficiency. With a strong balance sheet and ample liquidity, the company is positioned to invest in margin improvement initiatives, but near-term profitability hinges on cost containment and project execution.

Financial Health

liquidity: Current assets ¥1,668.4m vs current liabilities ¥181.2m yields a current ratio ~9.21x and large working capital of ¥1,487.2m. Inventories are undisclosed (reported 0), so the quick ratio approximation equals the current ratio by disclosure; true quick ratio may be slightly lower if inventories exist. solvency: Total liabilities ¥186.3m against equity ¥1,546.0m implies low leverage (D/E 0.12x). Computed equity ratio is ~88.3% (= ¥1,546.0m / ¥1,750.0m), indicating high solvency; the reported equity ratio of 0.0% reflects non-disclosure, not economic reality. capital_structure: Minimal debt and ample equity base (financial leverage 1.13x) limit ROE upside but provide resilience. Interest expense is undisclosed; interest coverage metrics are not meaningful this quarter.

Cash Flow Quality

earnings_quality: Cash flow statements (OCF, ICF, FCF) were not disclosed; therefore, cash conversion and accruals cannot be evaluated. With ordinary income ≈ operating income, earnings appear operationally derived, but gross margin weakness tempers quality. FCF_analysis: Free cash flow was not reported. Given strong working capital and low leverage, the company likely has capacity to fund operations; however, without OCF and capex data, FCF durability cannot be assessed. working_capital: Working capital is sizable at ¥1,487.2m, offering a buffer for project timing variations. The magnitude of current assets vs revenue suggests a balance-sheet-heavy model; monitoring receivables collection and project advances is key.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 with a payout ratio of 0%. Given low ROE and margin compression, a conservative payout is consistent with preserving cash for operations and potential improvement initiatives. FCF_coverage: Not assessable due to undisclosed OCF and FCF. In the absence of cash flow data, we cannot evaluate coverage ratios. policy_outlook: With strong balance sheet but modest profitability, policy likely remains conservative until margins recover and cash generation is evidenced. Resumption of dividends would depend on sustained OCF and improved ROE.

Risk Assessment

Business Risks:

• Margin pressure from pricing, input costs, or project execution (gross margin at 13.3%).
• Negative operating leverage as revenue growth did not translate to higher operating profit.
• Customer concentration or project lumpiness (implied by large working capital vs quarterly revenue).
• Supply chain or component cost volatility affecting cost of sales.
• Potential reliance on low effective tax rate (3–4%) that may normalize upward.

Financial Risks:

• Cash flow visibility is limited due to undisclosed OCF/ICF/FCF.
• Receivables and contract asset risks given high current assets relative to sales.
• Limited leverage reduces flexibility to enhance ROE, though it lowers insolvency risk.
• Potential reclassification or data inconsistencies (e.g., cost of sales vs gross profit) complicate analysis.

Key Concerns:

• Gross margin compression and flat operating income despite 51.9% sales growth.
• Inconsistency between disclosed cost of sales and gross profit figures.
• Lack of cash flow disclosure hindering assessment of earnings quality and dividend capacity.

Investment Implications

Key Takeaways:

• Top-line growth was strong (+51.9% YoY), but profitability did not scale.
• ROE is modest at 2.01% due to low margins, low asset turnover, and minimal leverage.
• Balance sheet strength (equity ratio ~88%) provides resilience for margin recovery efforts.
• Cash flow insights are unavailable; monitoring future OCF disclosures is essential.
• EPS ¥2.11 implies ~14.7 million shares outstanding, though shares data were not disclosed.

Metrics to Watch:

• Gross margin trajectory and project-level profitability.
• Operating margin and operating leverage as revenue scales.
• Receivables days and working capital intensity once cash flow details are available.
• Order backlog/book-to-bill (if disclosed) to gauge revenue sustainability.
• Effective tax rate normalization and impact on net margin.

Relative Positioning: Financially conservative with strong liquidity and low leverage compared with typical small-cap peers, but currently weaker on margin resilience and ROE. Near-term performance hinges on restoring pricing power and cost efficiency while maintaining revenue momentum.

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