SAXA,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥19.68B
• Operating Income: ¥1.17B
• Net Income: ¥1.13B
• EPS: ¥141.90

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

Saxa Co., Ltd. (TSE:6675) reported FY2026 Q2 consolidated results under JGAAP with flat revenue at ¥19.68bn (+0.0% YoY), but profit compression at the bottom line. Gross profit was ¥6.02bn, yielding a gross margin of 30.6%, while operating income declined 5.7% YoY to ¥1.17bn, translating to an operating margin of 5.9%. Ordinary income came in at ¥1.23bn, and net income fell 27.1% YoY to ¥0.82bn, pushing net margin down to 4.18%. DuPont analysis shows a low ROE of 2.66%, driven by modest net margin (4.18%), low asset turnover (0.451x), and conservative leverage (financial leverage 1.41x). Operating cash flow was negative at ¥0.31bn despite positive earnings, implying weak cash conversion and likely working capital outflows in the half. Financing cash inflow of ¥2.05bn indicates reliance on external funding during the period, while investing cash flow was not disclosed in XBRL (shown as 0). The balance sheet remains solid: total assets are ¥43.68bn, liabilities ¥14.44bn, and equity ¥30.94bn, implying an equity ratio around 70.8% by calculation (the displayed 0.0% is an undisclosed placeholder, not an actual value). Liquidity is strong with a current ratio of 253.7% and quick ratio of 234.8%, backed by sizeable working capital of ¥17.86bn. Interest expense is very low at ¥13m and interest coverage is high at 89.8x, indicating minimal near-term refinancing risk. EBITDA was ¥1.38bn with a 7.0% margin, suggesting limited operating leverage at current scale. The sharp YoY drop in net income relative to a modest decline in operating income points to non-operating or tax-related effects; the “effective tax rate” shown as 0% is a placeholder—based on income tax of ¥163m versus pre-tax earnings, the effective rate is roughly in the low-teens for the interim. Dividend is not disclosed (DPS shown as 0), implying either a suspension or simply no interim disclosure; payout ratio is shown as 0% due to the same limitation. Overall, Saxa delivered stable top-line but weaker earnings quality in cash terms, strong balance sheet resilience, and cautious profitability trends, with the outlook hinging on H2 seasonality, product mix, and working capital normalization. Data limitations (several items shown as zero) constrain precision on cash and dividends, so conclusions focus on the disclosed non-zero items. Key watchpoints are cash conversion, operating margin trajectory, and the sustainability of order inflows to support a recovery in asset turnover and ROE. The company’s conservative leverage provides cushion, but negative OCF and declining net income indicate execution and demand risks. Absent visible capital returns, management seems to be prioritizing liquidity and operational stability. Near-term catalysts would include better mix/pricing, easing of component costs, and backlog monetization in H2. The overall financial profile is sound but returns remain subpar pending margin and cash flow improvement.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.18% (¥822m / ¥19,682m)
• asset_turnover: 0.451x
• financial_leverage: 1.41x
• calculated_ROE: 2.66% (matches reported)
• interpretation: Low ROE is primarily a function of modest margins and low asset turnover rather than leverage; capital structure is conservative. margin_quality:
• gross_margin: 30.6% (¥6,020m / ¥19,682m)
• operating_margin: 5.9% (¥1,167m / ¥19,682m), -5.7% YoY in absolute OP
• ordinary_margin: 6.2% (¥1,229m / ¥19,682m)
• net_margin: 4.18%
• EBITDA_margin: 7.0% (¥1,384m / ¥19,682m)
• commentary: Stable gross margin supports resilience, but operating margin compression indicates higher SG&A or less favorable mix. Net margin contracted more than operating margin, suggesting non-operating or tax effects. operating_leverage: With revenue flat and operating income down 5.7% YoY, incremental operating leverage was negative in the half; fixed-cost absorption and mix (likely lower software/services proportion or price competition) pressured OP. D&A is modest (¥217m), so margin shifts largely reflect operating cost dynamics rather than accounting amortization.

Growth Assessment

revenue_sustainability: Revenue held at ¥19.68bn (+0.0% YoY), implying stable demand but limited growth momentum. For a communications/IT solutions supplier, order timing and project phasing can flatten interim sales; H2 seasonality typically lifts deliveries. profit_quality: Operating income decline (-5.7% YoY) against flat sales suggests mix deterioration or higher operating costs. Net income dropped 27.1% YoY, pointing to additional drag from non-operating items or taxes. Cash conversion was weak (OCF/NI = -0.38), reducing the quality of earnings in the period. outlook: Key drivers for H2 include backlog execution, component cost normalization, price pass-through, and services mix. A recovery in asset turnover and modest margin expansion are needed to lift ROE above current 2.66%. Absent acceleration in orders or improved mix, growth likely remains muted near term.

Financial Health

liquidity:

• current_ratio: 253.7%
• quick_ratio: 234.8%
• working_capital: ¥17,859m
• assessment: Very strong near-term liquidity, ample buffer for operations and seasonality. solvency:
• debt_to_equity: 0.47x (based on total liabilities to equity)
• interest_coverage: 89.8x (¥1,167m OP / ¥13m interest)
• equity_ratio_note: Displayed 0.0% reflects undisclosed data; computed equity ratio is approximately 70.8% (¥30,937m / ¥43,681m), indicating high capitalization. capital_structure: Conservative balance sheet with low financial risk; capacity available to fund working capital swings without stressing leverage.

Cash Flow Quality

earnings_quality: OCF of -¥309m versus net income of ¥822m yields OCF/NI of -0.38, signaling poor interim cash conversion. Likely drivers are working capital outflows (receivables build on shipments and/or inventory positioning). free_cash_flow: FCF shown as 0 due to undisclosed investing CF; underlying FCF directionally negative given negative OCF and the expectation of some capex. The true capex level is not available. working_capital: Inventories at ¥2,199m are modest versus sales, but lack of prior-period comparatives limits interpretation. The negative OCF suggests a receivables increase and/or lower payables. Monitoring DSO/DIO/DPO is critical as orders convert in H2.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0 due to non-disclosure; therefore, we cannot infer a policy change solely from this dataset. With net income positive and leverage low, there is theoretical capacity, but interim negative OCF argues for prudence. FCF_coverage: FCF coverage is shown as 0.00x because FCF is undisclosed. Given negative OCF, FCF coverage would likely be subpar if dividends were paid. policy_outlook: Absent disclosed DPS, management appears to be prioritizing balance sheet strength and funding of operations. A stable or modest dividend could resume if H2 cash conversion normalizes; visibility is currently limited.

Risk Assessment

Business Risks:

• Project timing and H2 seasonality risk affecting revenue recognition and margins
• Product mix shifts (hardware vs. services) impacting gross and operating margins
• Pricing pressure in enterprise communication/network equipment
• Component cost volatility and supply chain lead times
• Customer capex/investment cycles in corporate and public sectors
• Technological shifts (cloud/UCaaS adoption) challenging legacy systems

Financial Risks:

• Negative OCF despite positive earnings implying working capital management risk
• Potential reliance on external financing in periods of cash shortfall (¥2.05bn financing inflow)
• Limited visibility on capex/investing cash flows due to undisclosure
• Interim tax variability affecting net income volatility

Key Concerns:

• Low ROE at 2.66% with weak asset turnover of 0.451x
• Operating income decline on flat sales indicating negative operating leverage
• Poor cash conversion (OCF/NI -0.38) and uncertain FCF

Investment Implications

Key Takeaways:

• Top-line stable but profitability under pressure; operating margin at 5.9% and net income down 27.1% YoY
• Balance sheet robust with an implied ~70.8% equity ratio and low leverage (D/E 0.47x)
• Cash flow quality weak in the half; negative OCF raises scrutiny on working capital
• ROE depressed at 2.66%; improvement depends on margin and asset turnover recovery
• Financing inflow (¥2.05bn) supports liquidity but underscores cash shortfall during the period

Metrics to Watch:

• Order backlog and book-to-bill ratio
• OCF/Net income and working capital days (DSO, DIO, DPO)
• Gross and operating margin progression (pricing, mix, cost pass-through)
• Asset turnover and inventory turns
• Non-operating gains/losses and effective tax rate normalization
• Capex and investing cash flows once disclosed

Relative Positioning: Compared with domestic communications/IT equipment peers, Saxa exhibits stronger balance sheet resilience but weaker cash conversion and subpar ROE; competitive outcomes will hinge on mix shift toward higher-margin solutions and execution on backlog in H2.

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