Wintest Corp. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥270M
• Operating Income: ¥-623M
• Net Income: ¥-412M
• EPS: ¥-12.21

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

Verdict: FY2025 Q3 was very weak, with deep operating and net losses despite adequate liquidity on the balance sheet. Revenue was 2.70 (▲25.4% YoY), indicating a sharp top-line contraction. Gross profit reported was 1.46, implying a gross margin of 54.2%, but this positive gross spread was overwhelmed by SG&A of 5.51. Operating income was -6.23, translating to an operating margin of roughly -230.7% (about -23,070 bps). Ordinary income was -6.21 and profit before tax -4.10, implying the presence of net extraordinary gains around +2.1 that narrowed the loss at the pre-tax line. Net income deteriorated to -6.44, equating to a net margin of -238.5%. DuPont shows ROE at -88.7%, driven primarily by a severely negative net margin with modest asset turnover and moderate leverage. Interest coverage was deeply negative (-76x), signaling that current operating performance cannot service even modest interest costs of 0.08. Liquidity, however, appears solid: current assets 10.89 vs current liabilities 2.84 produce a current ratio of 383%. Total assets were 11.12 and total equity 7.26, implying financial leverage of 1.53x and a D/E of 0.53x, which remains conservative on paper. Retained earnings are significantly negative (-37.73), reflecting accumulated losses and highlighting capital efficiency challenges. There is a data inconsistency between reported cost of sales (2.16) and gross profit (1.46), but the provided gross margin (54.2%) aligns with the gross profit figure; analysis below relies on the gross profit and operating income figures. Cash flow statements were not disclosed, preventing an OCF vs NI quality check, and hindering visibility on working capital usage and capex. Forward-looking, the company must right-size SG&A relative to revenue, restore operating leverage, and improve order momentum to stabilize earnings and protect equity. Near-term priorities include arresting losses, preserving cash, and maintaining lender confidence given negative interest coverage despite currently ample liquidity.

Profitability Analysis

ROE decomposition (DuPont): ROE (-88.7%) = Net Profit Margin (-238.5%) × Asset Turnover (0.243) × Financial Leverage (1.53x). The dominant driver of the ROE collapse is the net profit margin, which is deeply negative due to operating losses. Asset turnover is low (0.243), reflecting subdued revenue versus the asset base, while financial leverage is moderate and not the core issue. Business reason: revenue fell 25.4% YoY while SG&A remained high at 5.51, producing severe negative operating leverage; even with a solid reported gross margin (54.2%), the cost base is misaligned with current sales scale. There also appears to be non-recurring items (implied extraordinary gains ~+2.1) that narrowed PBT but did not fix core profitability. Sustainability: the non-operating/extraordinary uplift is likely one-time; without structural SG&A cuts and revenue recovery, current margins are not sustainable. Concerning trends: SG&A materially exceeds gross profit (5.51 vs 1.46), indicating fixed cost pressure; revenue decline outpaced any visible cost reduction; interest coverage is negative, signaling operating cash deficits despite modest interest burden.

Growth Assessment

Revenue contracted 25.4% YoY to 2.70, suggesting weak demand and/or delayed customer spending. Current gross margin (54.2%) indicates product/service economics could be viable, but scale is insufficient to cover operating expenses. Operating loss (-6.23) shows negative operating leverage; without top-line recovery or SG&A rightsizing, growth will not translate to profit. Non-operating items modestly cushioned PBT, but this is not a growth driver. With asset turnover at 0.243, capacity is underutilized; improving order intake is essential for utilization and margin recovery. Near-term outlook hinges on end-market conditions (likely semiconductor test-related cycles), project timing, and cost actions. Absent disclosed backlog or guidance, we assume cautious recovery at best; management needs to target break-even scale by cutting fixed costs and accelerating bookings.

Financial Health

Liquidity: very strong on paper with current assets 10.89 vs current liabilities 2.84 (current ratio 383%, quick ratio 344%). Solvency: D/E 0.53x and financial leverage 1.53x are conservative; equity remains positive at 7.26 despite accumulated deficits. Maturity profile: short-term loans 1.00 are well-covered by cash and deposits 1.89 and other current assets; no immediate maturity mismatch evident. Interest-bearing debt totals at least 1.80 (short 1.00 + long 0.80), manageable if losses narrow; however, persistent negative EBIT threatens debt service capacity. Off-balance sheet: no disclosures provided; cannot assess guarantees or leases beyond recognized liabilities. Warnings: none on current ratio (<1.0) or D/E (>2.0), but the negative interest coverage is a red flag for ongoing losses.

Cash Flow Quality

OCF/Net Income cannot be assessed due to non-disclosure; earnings quality versus cash is therefore unclear. Free cash flow is unreported; dividend and capex coverage cannot be evaluated. Working capital: inventory (1.12) and receivables (1.18) are sizeable relative to revenue (2.70), implying long cash conversion and potential buildup amid weak sales; accounts payable (1.47) exceeds receivables, suggesting vendor financing is supporting liquidity. No explicit signs of working capital manipulation can be concluded without cash flow data, but the scale mismatch vs revenue warrants monitoring. Sustainability: Without positive OCF, continued losses will erode cash; the current cash balance (1.89) and ample current assets provide a buffer, but burn rate is the key unknown.

Dividend Sustainability

Dividends are unreported; payout ratios and FCF coverage are not calculable. With net loss (-6.44) and large negative retained earnings (-37.73), distributable capacity appears constrained under JGAAP/Companies Act norms. Absent positive OCF and profits, sustaining any dividend would be difficult; policy likely prioritizes stabilization over distribution. Outlook: until profitability and cash generation recover, dividend resumption/maintenance has low visibility.

Risk Assessment

Business Risks:

• Demand cyclicality in semiconductor/testing markets leading to revenue volatility (revenue -25.4% YoY).
• Operating leverage risk: SG&A 5.51 far exceeds gross profit 1.46, causing large losses when volumes dip.
• Execution risk in securing and delivering new orders to utilize capacity (asset turnover 0.243).
• Product mix/price pressure risk despite currently strong reported gross margin.
• Potential customer concentration typical for niche test equipment suppliers (not disclosed).

Financial Risks:

• Negative interest coverage (-76x) despite modest interest expense, raising going-concern sensitivity if losses persist.
• Accumulated deficit (retained earnings -37.73) limits financial flexibility for distributions and may constrain equity markets’ perception.
• Refinancing risk if lenders tighten terms due to sustained losses, despite currently low D/E (0.53x).
• Working capital strain risk if receivables collection slows or inventory turns lengthen amid weak sales.
• Potential covenant risk (not disclosed) tied to profitability/coverage metrics.

Key Concerns:

• Core profitability deterioration (operating margin ~-231%).
• Dependence on extraordinary or non-operating items to narrow PBT, which are non-recurring.
• Data gaps in cash flows limit visibility into burn rate and true earnings quality.
• Large gap between gross profit and SG&A necessitating swift cost actions.
• Data inconsistency between cost of sales and gross profit figures introduces uncertainty in margin analysis.

Investment Implications

Key Takeaways:

• Top-line contraction (-25.4% YoY) combined with high fixed costs drove a severe operating loss (-6.23).
• ROE is deeply negative (-88.7%), driven by net margin collapse; leverage is not the primary issue.
• Liquidity is ample (current ratio 383%), but operating performance cannot service interest (coverage -76x).
• Extraordinary gains appear to have supported PBT but do not resolve structural losses.
• Capital efficiency is very weak (ROIC -86.8%), signaling urgency for restructuring and utilization improvement.

Metrics to Watch:

• Order intake/backlog and revenue run-rate to gauge capacity utilization.
• SG&A trajectory versus revenue for evidence of cost alignment.
• Operating cash flow and working capital turns (DSO/DIO/DPO) once disclosed.
• Gross margin stability versus product mix and pricing.
• Interest coverage and net debt/EBITDA as losses normalize.

Relative Positioning: Relative to domestic semiconductor test equipment peers, profitability and capital efficiency are materially weaker, though the balance sheet liquidity is comparatively comfortable; recovery hinges on demand normalization and cost discipline.

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