SEIWA ELECTRIC MFG. CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥18.15B
• Operating Income: ¥1.18B
• Net Income: ¥659M
• EPS: ¥64.16

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Seiwa Electric Mfg. Co., Ltd. (6748) reported FY2025 Q3 consolidated results under JGAAP with solid top-line growth and pronounced operating leverage. Revenue was ¥18.15bn, up 5.2% YoY, while operating income rose 43.3% YoY to ¥1.18bn, indicating meaningful margin expansion. Gross profit was ¥3.98bn, implying a gross margin of 21.9%, and operating margin reached approximately 6.5%, up strongly versus last year (exact prior margin not disclosed). Ordinary income was ¥1.23bn, and net income was ¥0.83bn, for a net margin of 4.58%. DuPont analysis yields ROE of 4.63%, driven by a 4.58% net margin, 0.651x asset turnover, and 1.55x financial leverage, consistent with a relatively conservative balance sheet. Balance sheet strength is notable: total assets were ¥27.88bn, equity ¥17.95bn, and liabilities ¥13.11bn, translating to an equity ratio of roughly 64.4% based on the non-zero line items provided. Liquidity appears strong with a current ratio of 201.7% and quick ratio of 188.5%, supported by working capital of ¥10.54bn. Interest expense remains low at ¥27.0m, and interest coverage is a robust 43.6x. Inventory of ¥1.37bn appears modest relative to sales, supporting working capital efficiency. Reported cash flow items show as zero (unreported), limiting direct cash conversion analysis for the period. Dividend data are also shown as zero (unreported), so payout actions cannot be verified from this dataset. Despite limited cash flow disclosures, profitability trends and the balance sheet suggest improving earnings power with financial flexibility. The effective tax shown as 0.0% is not reflective of the disclosed income tax expense of ¥275m; the underlying effective tax rate appears closer to mid-20%s when benchmarked to pre-tax earnings, but exact pre-tax income is not provided. Overall, the company exhibits improving margins, solid solvency, and ample liquidity, albeit with limited transparency on cash flows and capital allocation for the period. Data limitations around D&A, EBITDA, and cash flows warrant cautious interpretation of cash-based metrics.

Profitability Analysis

ROE_decomposition: ROE 4.63% = Net margin 4.58% × Asset turnover 0.651 × Financial leverage 1.55. Net income ¥831m on revenue ¥18,149m drives margin; asset turnover indicates moderate capital intensity; leverage is conservative given equity ≈¥17.95bn vs assets ≈¥27.88bn. margin_quality: Gross margin 21.9% (GP ¥3,977m) and operating margin ~6.5% (OP ¥1,177m) reflect improved cost discipline and mix tailwinds; ordinary income exceeding operating income suggests some non-operating gains or financial income offsetting modest interest costs. Net margin of 4.58% is healthy for the industry and improved YoY given OP growth outpacing sales. operating_leverage: Revenue +5.2% YoY with operating income +43.3% YoY indicates strong operating leverage from SG&A efficiency and/or scale benefits. Interest expense is minimal (¥27m), so incremental profit largely flows from operations.

Growth Assessment

revenue_sustainability: Top-line grew 5.2% YoY to ¥18.15bn. Without order/backlog disclosure, sustainability hinges on end-market demand in lighting/electrical equipment and pricing discipline. Inventory levels (¥1.37bn) do not indicate overbuild relative to sales. profit_quality: Ordinary income (¥1.23bn) slightly above operating income suggests minor support from non-operating items; however, the bulk of profit expansion appears operating in nature. Tax expense of ¥275m implies a normalizing tax burden, supporting underlying earnings quality. outlook: Assuming stable domestic capex and infrastructure demand, mid-single-digit sales growth with ongoing cost control could sustain margins. Watch input costs and FX on imports, as well as project timing, which can influence quarterly volatility.

Financial Health

liquidity: Current assets ¥20.91bn vs current liabilities ¥10.37bn yield a current ratio of 201.7% and quick ratio of 188.5%, indicating strong short-term coverage. Working capital stands at ¥10.54bn. solvency: Total liabilities ¥13.11bn vs equity ¥17.95bn correspond to a liabilities-to-equity ratio of ~0.73x and an equity ratio of ~64.4% (computed from non-zero items), indicating a conservative capital structure. capital_structure: Leverage (assets/equity) at ~1.55x is modest. Interest burden is light (¥27m), with interest coverage at 43.6x, leaving ample headroom for financial flexibility.

Cash Flow Quality

earnings_quality: Operating cash flow is not disclosed (shown as zero), preventing direct cash conversion analysis. Net income quality appears supported by operating margin expansion and modest non-operating contributions. FCF_analysis: Investing and financing cash flows are undisclosed (shown as zero), so free cash flow cannot be derived. Capex intensity and D&A are also undisclosed, limiting EBITDA/FCF triangulation. working_capital: Inventories ¥1.37bn are modest versus sales in the period, and strong liquidity metrics suggest no acute working capital stress. However, detailed AR/AP movements are not available.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are shown as zero (unreported). Therefore, payout behavior cannot be confirmed from this dataset. FCF_coverage: With OCF and capex unreported, FCF coverage of dividends cannot be assessed. Based on earnings alone (NI ¥831m) and low interest burden, capacity exists, but verification requires cash flow disclosure. policy_outlook: Absent disclosure, infer that future distributions will depend on profit stability, capital expenditure plans, and balance sheet conservatism; current leverage suggests optionality if the company elects to distribute.

Risk Assessment

Business Risks:

• End-market cyclicality in construction, infrastructure, and industrial demand impacting lighting/electrical equipment sales
• Raw material price volatility (metals, components) affecting gross margin
• Project timing and mix shifts causing quarterly margin variability
• Competition and pricing pressure in domestic and overseas markets
• Supply chain disruptions and lead-time fluctuations for key components

Financial Risks:

• Limited visibility on cash flows and capex due to undisclosed OCF/ICF/FCF
• Potential working capital swings not captured without AR/AP cash detail
• FX exposure on imported materials or exports impacting ordinary income
• Tax rate variability given lack of pre-tax income disclosure

Key Concerns:

• Cash flow data unreported, inhibiting assessment of cash conversion and FCF
• D&A and EBITDA unreported, limiting view on non-cash earnings and maintenance capex needs
• Dividend policy and payout not disclosed for the period

Investment Implications

Key Takeaways:

• Revenue grew 5.2% YoY to ¥18.15bn with strong operating leverage (+43.3% YoY OP)
• Margins improved: gross 21.9%, operating ~6.5%, net 4.58%
• ROE 4.63% driven by conservative leverage (1.55x) and stable asset turnover (0.651x)
• Balance sheet strength with equity ≈64% of assets and interest coverage 43.6x
• Liquidity robust: current ratio 201.7%, quick ratio 188.5%, working capital ¥10.54bn
• Cash flow, D&A, and dividend data are not disclosed, limiting capital allocation analysis

Metrics to Watch:

• Order intake/backlog and book-to-bill to gauge revenue visibility
• Gross margin trend versus input cost movements
• SG&A ratio and operating margin sustainability
• OCF/NI conversion, capex, and free cash flow once disclosed
• Inventory turns and AR days to monitor working capital efficiency
• Tax rate normalization relative to ordinary income

Relative Positioning: Within Japanese electrical equipment/lighting peers, Seiwa shows conservative leverage, strong liquidity, and improving operating margins, though disclosure gaps on cash flows and capital allocation reduce visibility versus best-in-class reporters.

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