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

WinTest Co., Ltd. (TSE:6721) reported FY2025 Q3 consolidated results under JGAAP showing a sharp revenue contraction and deep operating losses. Revenue was ¥270.0 million (-25.4% YoY), and gross profit was ¥146.3 million, implying a solid gross margin of 54.2% even amid lower volumes. However, operating income was a loss of ¥623.0 million (flat YoY per disclosure), signaling heavy fixed-cost burden or one-off charges that overwhelmed gross profitability. Ordinary loss was ¥621.0 million, roughly in line with operating loss despite ¥8.16 million in interest expense, implying the presence of non-operating income. Net loss was ¥644.0 million (EPS -¥12.21). The DuPont bridge shows a net margin of -238.5%, asset turnover of 0.243x, and financial leverage of 1.53x, resulting in ROE of -88.7%. Liquidity indicators look strong on paper: current ratio 311% and quick ratio 302%, with working capital of ¥794.8 million. Capital structure appears conservative with debt-to-equity of 0.68x and total liabilities of ¥495.4 million versus equity of ¥726.0 million. That said, cash flow data were not disclosed (OCF/FCF reported as 0 indicates unreported items), limiting earnings quality assessment and liquidity validation. There is a material internal inconsistency between reported cost of sales (¥216.1 million) and gross profit (¥146.3 million on ¥270.0 million of revenue), which would imply COGS closer to ~¥123.7 million; we rely on the provided gross profit and margin for analysis. Balance sheet subtotals also show current assets (¥1,171.4 million) exceeding total assets (¥1,112.0 million), suggesting classification or timing differences in disclosures; we use total assets for leverage and turnover. Equity ratio was listed as 0.0% (likely undisclosed); based on totals, indicative equity ratio is roughly 65%. Interest burden (¥8.16 million) is small relative to the operating loss, implying that restoring operating efficiency—not refinancing—is the critical path to profitability. With DPS at zero and persistent losses, capital allocation is focused on stabilization over distributions. Overall, the quarter reflects resilient unit margins but insufficient scale and/or elevated fixed costs, producing severe negative operating leverage. Near-term outlook hinges on order recovery, cost actions, and visibility into operating cash flows, none of which can be confirmed from the current dataset.

Profitability Analysis

ROE decomposition (DuPont): Net margin -238.52% × asset turnover 0.243 × financial leverage 1.53 = ROE -88.71%. The severely negative net margin is the dominant driver. Gross margin of 54.2% indicates viable pricing and product margin structure; the issue lies below gross profit. The implied SG&A and other operating costs exceed gross profit by ~¥769 million (operating loss ¥623 million vs. gross profit ¥146 million), highlighting heavy fixed costs, downturn in utilization, or one-offs. Interest expense of ¥8.16 million is modest; interest coverage is -76.3x because EBIT is negative, underscoring that operating performance, not financing cost, is the bottleneck. Operating leverage is high: the combination of a decent gross margin with large operating losses suggests that modest revenue recovery or cost reductions could produce outsized changes in operating income. Ordinary loss is slightly smaller than operating loss, implying some non-operating gains that partially offset interest. Effective tax rate is effectively zero due to losses.

Growth Assessment

Revenue declined 25.4% YoY to ¥270.0 million, indicating weak demand or shipment timing in the period. Despite the top-line fall, the 54.2% gross margin suggests underlying product or service margins remain intact, implying the decline is volume-driven rather than pricing-driven. Profit quality is low given the deep operating losses; any profit rebound would require either a material recovery in volumes or significant cost base adjustments. Without cash flow data, we cannot validate the earnings-to-cash conversion or the sustainability of gross margins through the cycle. Outlook near term is cautious: if WinTest operates in cyclical test/measurement markets, order visibility and capex cycles of customers will drive recovery timing. A return to breakeven likely requires a combination of revenue normalization and cost actions; sensitivity is high given the operating leverage evident this quarter.

Financial Health

Liquidity: Current ratio 311% and quick ratio 302% appear strong, with working capital of ¥794.8 million. However, absence of cash and cash equivalents disclosure limits assessment of immediate liquidity. Solvency: Total liabilities ¥495.4 million vs. equity ¥726.0 million suggests a conservative balance sheet; debt-to-equity 0.68x. Using total assets of ¥1,112.0 million and equity ¥726.0 million implies an indicative equity ratio around 65%, despite the reported 0.0% (likely undisclosed). Capital structure: Interest expense ¥8.16 million is modest; refinancing risk appears secondary to operating turnaround risk. Noted data inconsistencies (current assets > total assets) suggest caution when interpreting subtotals.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed (zeros are placeholders), so OCF/Net Income and FCF metrics cannot be assessed. Earnings quality is therefore indeterminate from a cash perspective this quarter. Working capital: Inventories are ¥33.5 million, relatively small; changes in receivables/payables are unknown. Given the large operating loss, positive OCF would be unlikely absent sizable non-cash charges or working capital releases, neither of which are observable. Depreciation/amortization is undisclosed; EBITDA-based assessments are not possible from provided data.

Dividend Sustainability

DPS is ¥0.00 with a payout ratio of 0% and FCF coverage not assessable due to undisclosed cash flows. With net losses of ¥644 million and no reported positive OCF or FCF, distributions are understandably suspended. Sustainability of future dividends would depend on restoring operating profitability and demonstrable positive free cash flow; current policy posture appears preservation of cash and balance sheet strength over payouts.

Risk Assessment

Business Risks:

• Cyclical demand in test/measurement or related capital equipment markets leading to revenue volatility
• High operating leverage amplifying profit sensitivity to volume changes
• Potential customer concentration and order timing risk
• Execution risk on cost reductions and turnaround initiatives
• Product competitiveness and technology obsolescence in fast-evolving end markets
• Supply chain and component availability affecting delivery schedules

Financial Risks:

• Sustained operating losses eroding equity if not reversed
• Limited visibility on cash balances and OCF due to undisclosed cash flow statements
• Potential liquidity strain if losses persist and working capital turns adverse
• Covenant or refinancing risk if any interest-bearing debt has maintenance conditions (not disclosed)
• Risk of impairment or one-off charges further pressuring equity

Key Concerns:

• Severe negative net margin (-238.5%) and ROE (-88.7%)
• Material operating loss (¥623 million) despite 54.2% gross margin
• Data inconsistencies (COGS vs. gross profit; current assets exceeding total assets) complicate precision
• Cash flow data absent, limiting validation of liquidity and earnings quality

Investment Implications

Key Takeaways:

• Top-line contracted 25.4% YoY to ¥270 million; volume-driven weakness likely
• Gross margin resilient at 54.2%, but fixed costs dominate, yielding a ¥623 million operating loss
• ROE deeply negative (-88.7%) driven by margin collapse, not leverage
• Balance sheet appears equity-heavy (indicative equity ratio ~65%) with modest interest burden
• Liquidity ratios look strong, but absence of cash flow data tempers confidence

Metrics to Watch:

• Order intake/backlog and quarterly revenue run-rate recovery
• Operating expense trajectory and cost reduction progress
• Disclosure of operating cash flow and capex to assess FCF inflection
• Gross margin stability amid volume changes
• Interest-bearing debt levels and any covenant disclosures

Relative Positioning: Relative to TSE small-cap industrial/tech peers, WinTest exhibits weaker profitability (deep operating losses, negative ROE), comparable or better apparent balance sheet solvency (moderate leverage, high indicative equity ratio), and higher operating leverage sensitivity. Visibility is lower than peers due to absent cash flow disclosure.

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