YOKOWO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥42.67B
• Operating Income: ¥1.51B
• Net Income: ¥581M
• EPS: ¥57.18

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 (consolidated, JGAAP), Yokowo reported revenue of ¥42.675 billion (+4.6% YoY), indicating modest top-line growth despite a challenging margin backdrop. Gross profit was ¥7.791 billion, yielding an 18.3% gross margin, while operating income declined 28.4% YoY to ¥1.507 billion, compressing operating margin to roughly 3.5%. Ordinary income came in at ¥1.301 billion, lower than operating income due to net non-operating costs, signaling limited non-operating support. Net income was ¥1.332 billion (+131.7% YoY), implying a large improvement at the bottom line despite weaker operating profit, likely aided by tax effects and/or prior-period one-offs; detailed drivers are not disclosed in the provided data. DuPont analysis shows a net margin of 3.12%, asset turnover of 0.532x, and financial leverage of 1.50x, resulting in a reported ROE of 2.49%, which is subdued for a manufacturing/EMS-adjacent name. EBITDA was ¥3.481 billion (8.2% margin), and interest coverage is healthy at 15.7x, reflecting conservative leverage and adequate operating earnings headroom over interest costs. Liquidity appears strong with a current ratio of 249% and a quick ratio of 208%, supported by working capital of ¥28.456 billion. The balance sheet is conservative with total liabilities of ¥24.248 billion versus total equity of ¥53.509 billion, and an indicated debt-to-equity ratio of 0.45x. Operating cash flow was robust at ¥3.933 billion, approximately 2.95x net income, indicating strong earnings-to-cash conversion in the period. Investing cash flow and cash & equivalents are shown as zero in the dataset, which should be interpreted as undisclosed rather than actual zero; hence free cash flow and net cash position cannot be reliably assessed. The effective tax rate shown as 0.0% conflicts with reported income tax of ¥0.243 billion and net income, suggesting data limitations in the calculated metric; a rough implied tax rate appears closer to mid-teens based on available figures. Inventory of ¥7.794 billion versus cost of sales suggests reasonable inventory intensity for the business mix, though average balances are not disclosed. Overall, the quarter reflects stable revenue growth offset by margin pressure at the operating level, but improved bottom-line due to non-operating/tax factors, with strong liquidity and ample interest coverage. The principal analytical caveat is the absence of disclosed investing cash flows and cash balances, as well as dividend/share data, which constrains full free cash flow and per-share analysis.

Profitability Analysis

ROE of 2.49% decomposes into a net profit margin of 3.12%, asset turnover of 0.532x, and financial leverage of 1.50x, indicating that low profitability (margin) and modest asset utilization are the primary constraints on equity returns. Gross margin is 18.3%, while operating margin is about 3.5%, highlighting a sizeable SG&A and/or R&D burden and/or pricing/mix pressure. The 28.4% YoY decline in operating income despite 4.6% revenue growth implies negative operating leverage in the period, likely from cost inflation (materials, logistics, labor), product mix shifts, or timing of cost pass-through. EBITDA margin of 8.2% provides headroom above operating margin, and the 15.7x interest coverage (EBIT/interest; ¥1.507b/¥0.096b) is solid, underscoring low financial strain. Ordinary income below operating income suggests net non-operating expenses, so core profitability remains the key driver. Net income growth (+131.7% YoY) contrasts with operating income decline, pointing to non-recurring or tax-related tailwinds rather than improved core margins; sustainability is uncertain without further disclosure. Overall, margin quality is mixed: gross margin is acceptable for the sector, but operating margin compression and reliance on below-the-line items temper quality.

Growth Assessment

Top-line growth of +4.6% YoY to ¥42.675 billion suggests steady demand across key end-markets. However, operating income fell 28.4% YoY, indicating that growth was not profit-accretive in the period due to cost pressure, adverse mix, or lag in pricing pass-through. Ordinary income at ¥1.301 billion and net income at ¥1.332 billion show that bottom-line growth was driven by non-operating/tax factors rather than operating leverage. The sustainability of revenue growth appears reasonable near term, but earnings quality is constrained by margin compression; a return to positive operating leverage depends on cost normalization and/or improved pricing/mix. Given the modest asset turnover (0.532x), growth efficiency hinges on better utilization of existing assets and disciplined capex; investing CF is undisclosed, limiting visibility into capacity additions. The outlook depends on order momentum in automotive/communications-related components, currency effects, and the company’s ability to offset input costs. Without guidance and backlog details, a cautious stance on margin recovery is warranted until evidence of stabilized gross/operating margins emerges.

Financial Health

Total assets are ¥80.153 billion against total liabilities of ¥24.248 billion and total equity of ¥53.509 billion, indicating a conservative balance sheet. Liquidity is strong with current assets of ¥47.556 billion and current liabilities of ¥19.100 billion, yielding a current ratio of 249% and a quick ratio of 208%. Working capital stands at ¥28.456 billion, providing ample cushion for operations and seasonal swings. Debt-to-equity of 0.45x and interest expense of ¥96 million suggest moderate leverage and low interest burden. Equity ratio is shown as 0.0% in the dataset, which should be treated as undisclosed rather than an actual figure; based on totals, the implied equity ratio is robust. Ordinary income below operating income points to small net non-operating costs, but not enough to challenge solvency. Overall solvency and liquidity profiles are healthy, with significant headroom to absorb shocks.

Cash Flow Quality

Operating cash flow of ¥3.933 billion is strong relative to net income of ¥1.332 billion (OCF/NI = 2.95x), indicating solid earnings-to-cash conversion and limited accrual risk in the period. Depreciation and amortization of ¥1.974 billion supports cash earnings (EBITDA ¥3.481 billion). Working capital dynamics are not disclosed in detail, but the high OCF suggests either effective collection or inventory/payables management during the half. Investing cash flow is shown as zero, which we treat as undisclosed; therefore, free cash flow cannot be reliably computed despite the dataset showing FCF as zero. The absence of cash & equivalents disclosure limits assessment of net cash/liquidity buffers beyond current ratios. Overall, cash flow quality appears good on the operating side, but full FCF quality assessment is constrained by missing investing cash data.

Dividend Sustainability

Annual DPS and payout ratio are shown as 0.00, which should be interpreted as not disclosed rather than actual zeros for analytical purposes. Without confirmed DPS or a stated policy, we cannot compute a reliable payout ratio or free cash flow coverage of dividends. From a capacity standpoint, current profitability (net income ¥1.332 billion) and strong OCF (¥3.933 billion) would generally support modest distributions, but capital allocation must be balanced against capex/strategic investments, which are not disclosed in investing CF. We therefore refrain from drawing conclusions on dividend sustainability and instead note that any payout policy should be anchored to normalized operating cash flow and maintenance/growth capex once disclosed.

Risk Assessment

Business Risks:

• Margin pressure from input cost inflation and pricing lag affecting operating leverage
• Product mix shifts in automotive/communications components reducing profitability
• Demand cyclicality in autos, telecom infrastructure, and related electronics end-markets
• Currency fluctuations (notably JPY vs. USD/EUR/CNY) impacting both revenues and costs
• Supply chain constraints and lead-time volatility affecting deliveries and inventories
• Customer concentration risk typical of tiered automotive supply chains

Financial Risks:

• Limited disclosure of investing cash flows and cash balances impedes FCF and net cash assessment
• Potential working capital swings inherent in project and production cycles
• Exposure to interest rate changes is currently modest but could rise with higher leverage or refinancing
• Tax rate volatility given the apparent discrepancy between reported tax expense and calculated effective tax rate metric

Key Concerns:

• Operating margin compression (-28.4% YoY in operating income) despite revenue growth
• Bottom-line strength driven by non-operating/tax items, raising sustainability questions
• Incomplete visibility on capex and cash reserves due to undisclosed investing CF and cash balances

Investment Implications

Key Takeaways:

• Revenue growth of +4.6% YoY demonstrates resilient demand, but operating leverage turned negative
• ROE at 2.49% is constrained by low net margin (3.12%) and modest asset turnover (0.532x)
• Liquidity and solvency are strong (current ratio 249%, debt-to-equity 0.45x, interest coverage 15.7x)
• Operating cash flow is robust (¥3.933b; 2.95x net income), supporting earnings quality
• Data gaps (investing CF, cash, dividend details) limit full FCF and shareholder return analysis

Metrics to Watch:

• Gross and operating margin trajectory and cost pass-through effectiveness
• Order trends/backlog in automotive and communications segments
• FX rates (USD/JPY, EUR/JPY) and hedging outcomes
• Capex and investing cash flows to gauge growth vs. maintenance spend
• Inventory levels and working capital turns
• Ordinary vs. operating income gap (non-operating items) and tax rate normalization
• ROE improvement via margin recovery and asset utilization

Relative Positioning: Within TSE-listed electronic components/auto-related peers, Yokowo exhibits conservative leverage and strong liquidity but currently underperforms on operating margin and ROE; sustained improvement hinges on margin recovery and better asset utilization while maintaining cash 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