Techno Medica Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.10B
• Operating Income: ¥266M
• Net Income: ¥203M
• EPS: ¥29.31

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

For FY2026 Q2 (single-entity, JGAAP), Technomedica posted revenue of ¥4,104m, essentially flat year over year (-0.3%), while operating income declined 12.6% to ¥266m and net income fell 8.4% to ¥203m. The deterioration in profit against near-flat sales indicates negative operating leverage, suggesting a relatively fixed cost base. Gross margin remained robust at approximately 50.7%, highlighting solid product economics and/or favorable mix, but the operating margin compressed to 6.5% as selling, general, and administrative costs did not flex down with sales. Ordinary income of ¥294m exceeded operating income, indicating positive non-operating contributions in the quarter. Net margin was 4.95%, consistent with the provided DuPont metrics. Liquidity is very strong with a current ratio of about 479% and sizable working capital of ¥12.4bn, implying ample short-term financial flexibility. The balance sheet appears conservative: total liabilities are ¥3.55bn against total equity of ¥14.15bn, implying an equity ratio of roughly 85.5% (the reported 0.0% equity ratio is an unreported placeholder). Financial leverage is modest at 1.17x, limiting ROE amplification. The provided DuPont ROE is 1.43%, reflecting low asset turnover (0.248x) and thin net margins, rather than leverage. Operating cash flow was strong at ¥1,427m, equating to an OCF/Net Income multiple of 7.0x, which suggests favorable working-capital movements and cash conversion this period. However, free cash flow cannot be reliably assessed because investing cash flow and cash balances are unreported in the dataset; the reported FCF of 0 is a placeholder, not an economic figure. Financing cash outflow of ¥470m indicates capital returns or liability reductions, but the absence of DPS and share data prevents attribution. Overall, the company shows resilient gross profitability, conservative capitalization, and strong near-term cash generation, offset by weak growth, operating deleverage, and low asset turnover. Data limitations (notably cash, investing CF, share counts, and equity ratio) temper the precision of this review. Outlook hinges on restoring operating leverage through revenue growth, maintaining margin discipline, and clarifying capital allocation priorities.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.95%
• asset_turnover: 0.248
• financial_leverage: 1.17
• calculated_ROE: 1.43%
• commentary: ROE is constrained primarily by low asset turnover and mid-single-digit net margins; leverage is modest and not a major contributor. margin_quality:
• gross_margin: ≈50.7% (2,078.5m / 4,104.0m)
• operating_margin: ≈6.5% (266.0m / 4,104.0m)
• ordinary_margin: ≈7.2% (294.0m / 4,104.0m)
• net_margin: 4.95% (203.0m / 4,104.0m)
• assessment: High gross margin suggests pricing power and/or favorable product mix; the drop from gross to operating margin indicates sizable fixed SG&A and limited cost flexibility in a flat-demand environment. operating_leverage: Revenue decreased 0.3% YoY while operating income decreased 12.6% YoY, evidencing negative operating leverage and a relatively fixed cost structure. Sustained top-line growth is needed to re-expand operating margin.

Growth Assessment

revenue_sustainability: Top line was essentially flat at ¥4.10bn (-0.3% YoY), implying stable demand but little momentum. Without mix improvement or new product uptake, growth may remain subdued near term. profit_quality: Ordinary income exceeded operating income by ¥28m, indicating positive non-operating items. Tax expense of ¥76.7m implies a normalized effective tax rate in the mid-20s to high-20s range. EBITDA margin around 7.7% is modest given the high gross margin, highlighting SG&A intensity. outlook: To restore earnings growth, the company must convert high gross margins into operating leverage via volume recovery, mix-enhancing products, or SG&A efficiency. Monitoring order trends and backlog (if disclosed) will be important for H2 trajectory.

Financial Health

liquidity:

• current_ratio: ≈479% (15,678.3m / 3,275.2m)
• quick_ratio: 412.1% (provided)
• working_capital: ¥12,403.1m
• assessment: Very strong short-term liquidity with substantial current asset coverage. Composition of current assets (cash vs. receivables vs. inventories) is not fully disclosed, but inventories are ¥2,182.1m. solvency_capital_structure:
• total_assets: ¥16,558.0m
• total_liabilities: ¥3,549.6m
• total_equity: ¥14,149.0m
• debt_to_equity: 0.25x (note: uses total liabilities as proxy for debt due to unreported debt breakdown)
• equity_ratio_implied: ≈85.5% (14,149.0m / 16,558.0m); reported 0.0% is unreported placeholder
• interest_coverage: N/A (interest expense reported as 0; effectively no interest burden)
• assessment: Balance sheet appears conservative with low leverage and high equity buffer, supporting resilience through cycles.

Cash Flow Quality

earnings_quality: OCF of ¥1,426.8m vs. net income of ¥203.0m yields an OCF/NI of 7.0x, indicating strong cash conversion this period, likely aided by favorable working capital movements. D&A is modest at ¥49.1m. free_cash_flow: Not assessable from provided data; investing cash flow is unreported (shown as 0). The displayed FCF of 0 should not be interpreted as actual zero. working_capital: Inventories stand at ¥2,182.1m. Given the large working capital balance (¥12.4bn), changes in receivables, payables, and inventory likely drove OCF; sustainability is uncertain without disaggregated flows.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0, which indicates non-disclosure in this dataset rather than actual zero; EPS for the period is ¥29.31. Hence, payout sustainability cannot be derived from the provided figures. FCF_coverage: Not determinable; FCF cannot be computed reliably due to unreported investing cash flows. policy_outlook: Capital return stance is unclear. Financing cash outflow of ¥469.6m suggests potential dividends or buybacks or liability reduction, but absent DPS/share data, no firm conclusion can be drawn.

Risk Assessment

Business Risks:

• Revenue stagnation leading to negative operating leverage and margin pressure
• Dependence on hospital and clinic capital spending cycles affecting equipment orders
• Potential pricing pressure from procurement entities and competitive offerings
• Product lifecycle and innovation risk in medical devices/diagnostics
• Regulatory and quality compliance requirements in healthcare markets
• Supply chain constraints for specialized components and electronics

Financial Risks:

• Low asset turnover dampening ROE despite high equity base
• High working capital intensity exposing cash flow to receivables and inventory swings
• Limited visibility on investing cash flows and capex, complicating FCF assessment
• Concentration risk from single-entity reporting (no consolidated diversification)

Key Concerns:

• Operating income declined sharply on flat sales, underscoring fixed cost exposure
• Inability to verify free cash flow and capital allocation due to unreported investing CF and share data
• Sustained low asset turnover (0.248x) constrains returns absent growth

Investment Implications

Key Takeaways:

• Stable top line but weaker operating profits indicate negative operating leverage
• High gross margin provides a cushion, but SG&A efficiency is crucial to lift operating margin
• Very strong liquidity and conservative balance sheet reduce solvency risk
• OCF was robust versus earnings, though sustainability depends on working capital behavior
• ROE is low due to thin margins and low asset turnover; leverage is not a driver
• Data gaps (cash, investing CF, DPS, equity ratio) limit precision in FCF and payout analysis

Metrics to Watch:

• Order intake/backlog and H2 revenue trajectory
• Operating margin progression and SG&A ratio
• Inventory turns and receivables days to validate cash conversion
• Capex and investing cash flows to gauge true FCF
• Non-operating items affecting ordinary income
• Capital allocation (dividends/buybacks vs. balance sheet build)

Relative Positioning: Appears financially conservative with strong gross margins versus typical medtech peers, but exhibits lower operating leverage realization and asset turnover, resulting in subdued ROE; near-term positioning hinges on restoring growth and improving cost efficiency.

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