Shindengen Electric Manufacturing Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥54.25B
• Operating Income: ¥2.32B
• Net Income: ¥-1.09B
• EPS: ¥235.50

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

Shindengen Electric (TSE: 6844) delivered a solid FY2026 Q2 performance with revenue of ¥54.247bn, up 7.3% YoY, and a sharp recovery in operating income to ¥2.318bn (+532% YoY), indicating strong operating leverage and improved cost control from a low base. Gross profit reached ¥7.305bn, implying a gross margin of 13.5%, while operating margin expanded to 4.3% (operating income/revenue), a meaningful improvement versus the prior year. Ordinary income was ¥2.465bn (ordinary margin ~4.5%), supported by lower non-operating drag and manageable interest costs (¥161m). Net income came in at ¥2.430bn (net margin 4.48%), essentially flat YoY despite the large operating profit rebound, suggesting the prior-year bottom line benefited from non-recurring items and/or different non-operating effects. Tax expense was ¥459m; the implied effective tax rate appears in the mid-teens to high-teens if measured against a likely pre-tax profit that includes ordinary income plus any extraordinary items, though exact pre-tax reconciliation is not disclosed. The DuPont decomposition yields a reported ROE of 3.63% based on a net margin of 4.48%, asset turnover of 0.369x, and financial leverage of 2.20x; while this is constructive, it remains modest and may understate annualized returns if this period represents approximately a half-year. Balance sheet strength is notable, with total assets of ¥147.0bn and equity of ¥66.9bn, implying an equity ratio of roughly 45.5% (based on disclosed balances; the reported 0.0% equity ratio appears undisclosed rather than true zero). Liquidity is robust: current assets of ¥84.2bn against current liabilities of ¥30.9bn yield a current ratio of 272%, complemented by a quick ratio of 233%. Working capital stood at ¥53.3bn, providing a buffer against supply chain or demand volatility. Leverage appears manageable with total liabilities-to-equity at approximately 1.05x; interest coverage is healthy at 14.4x using operating income. Inventory of ¥12.0bn represents about 14% of current assets, suggestive of prudent stock levels relative to scale, though turnover data is not provided. Cash flow data (OCF/FCF/Cash) were not disclosed in this filing, limiting direct assessment of earnings-to-cash conversion; similarly, depreciation and EBITDA were not reported in the XBRL mapping. Dividend per share and share count data were also not disclosed here; therefore dividend capacity cannot be precisely evaluated from this dataset. Overall, core profitability is improving on modest top-line growth, the balance sheet is sound, and financial flexibility is adequate; the key watchpoints are the sustainability of margin gains, cash conversion (once disclosed), and the role of non-operating/extraordinary items in bridging ordinary to net income.

Profitability Analysis

ROE_decomposition: DuPont results: Net margin 4.48% × Asset turnover 0.369 × Financial leverage 2.20 = ROE 3.63%. Asset turnover is calculated using period revenue over period-end assets and may understate annualized efficiency if the period is semiannual. Financial leverage (Assets/Equity) is consistent with the balance sheet (≈2.20x). margin_quality: Gross margin is 13.5% (¥7.305bn/¥54.247bn). Operating margin is ~4.27% (¥2.318bn/¥54.247bn), reflecting sizeable SG&A efficiency: SG&A is inferred at ~¥4.99bn (~9.2% of sales). The step-up from gross to operating margin indicates fixed-cost absorption and cost discipline. Ordinary margin is ~4.54%, and net margin is 4.48%; the narrow gap suggests limited non-operating drag, though an implied extraordinary item likely influenced the tax and net line. operating_leverage: Revenue grew 7.3% YoY while operating income surged 532% YoY from a depressed base, demonstrating strong operating leverage. The improvement likely stems from better mix/pricing in power electronics and tighter SG&A control; sustaining this leverage will depend on volume stability and input cost normalization.

Growth Assessment

revenue_sustainability: Top-line growth of 7.3% YoY is respectable given cyclical dynamics in automotive and industrial power electronics. Without segment disclosure, durability is uncertain; however, the scale of working capital suggests the company can support continued shipment volumes. profit_quality: Core profit improvement is evident at the operating level. The flat YoY net income despite strong operating recovery implies last year's bottom line included supportive non-operating/extraordinary effects. Interest burden is modest (¥161m), and tax expense (¥459m) indicates normalized taxation; margin gains appear primarily operational rather than financial. outlook: If end-market demand (automotive electronics, industrial power supplies, energy solutions) holds and cost discipline persists, operating margin could remain in the mid-4% range or gradually improve. Key to the outlook will be input costs, pricing power in power semiconductors/power supplies, and inventory normalization. Absent disclosed cash flows, capex intensity and depreciation trends remain unknown, tempering visibility on medium-term margin and ROE trajectory.

Financial Health

liquidity: Current assets ¥84.189bn vs. current liabilities ¥30.920bn yield a current ratio of 272%. Quick ratio at 233% indicates substantial liquid buffers beyond inventories. Working capital is ¥53.269bn. solvency: Total liabilities are ¥70.352bn against equity of ¥66.889bn, implying liabilities/equity of ~1.05x and liabilities/assets of ~48%. Interest coverage is strong at ~14.4x (¥2.318bn/¥161m). Equity ratio calculated from balances is ~45.5% (notwithstanding the undisclosed reported equity ratio). capital_structure: Financial leverage (Assets/Equity) is ~2.20x. The mix of interest-bearing vs. non-interest-bearing liabilities is not disclosed here, but the modest interest cost suggests manageable debt. The company appears to maintain a conservative balance sheet relative to its asset base.

Cash Flow Quality

earnings_quality: Lack of disclosed OCF and depreciation prevents a traditional cash earnings cross-check (e.g., OCF/NI, EBITDA). Nonetheless, the strong interest coverage and stable margins suggest earnings are not heavily reliant on financial engineering. FCF_analysis: FCF was not disclosed. Without OCF and capex, we cannot quantify free cash flow generation or coverage. The sizable working capital base could either absorb or release cash depending on demand and inventory cycles. working_capital: Inventories are ¥12.039bn (~14% of current assets). With current assets of ¥84.189bn and current liabilities of ¥30.920bn, liquidity headroom is significant. Monitoring receivables days, payables days, and inventory turns (not disclosed) will be critical to assess cash conversion going forward.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio were not disclosed in this dataset (zeros indicate non-disclosure). EPS is ¥235.50 for the period, implying earnings capacity, but without dividend data we cannot derive a payout ratio. FCF_coverage: FCF was not reported; therefore, dividend coverage by free cash flow cannot be evaluated from this filing. policy_outlook: Given the modest reported ROE (3.63%) and improving operations, the company may prioritize reinvestment to lift medium-term profitability, but actual policy requires management guidance and historical dividend practice, which are not available in the provided data.

Risk Assessment

Business Risks:

• End-market cyclicality in automotive and industrial power electronics demand
• Pricing pressure and product mix shifts in power semiconductors and power supplies
• Input cost volatility (materials, components, energy) affecting gross margins
• Supply chain disruptions impacting deliveries and inventory normalization
• Foreign exchange fluctuations affecting export competitiveness and translation

Financial Risks:

• Limited visibility on cash generation due to undisclosed OCF/FCF
• Potential working capital swings influencing short-term liquidity
• Exposure to interest rate changes on any floating-rate debt (debt breakdown undisclosed)
• Earnings sensitivity to non-operating/extraordinary items impacting net income

Key Concerns:

• Sustainability of operating margin gains after a low-base rebound
• Lack of cash flow and depreciation disclosure constraining earnings quality assessment
• Flat YoY net income despite strong operating recovery, implying reliance on non-operating/extraordinary items in comparison base

Investment Implications

Key Takeaways:

• Top-line growth of 7.3% YoY with significant operating income rebound (+532% YoY) signals improving core profitability
• Healthy balance sheet with calculated equity ratio ~45.5% and strong liquidity (current ratio 272%)
• Interest coverage robust at ~14.4x; modest financial risk
• Reported ROE 3.63% remains modest; further improvement likely hinges on sustained margin expansion and asset efficiency
• Data gaps (OCF, FCF, depreciation, DPS) limit full assessment of cash conversion and shareholder return capacity

Metrics to Watch:

• Operating margin trajectory and SG&A-to-sales ratio
• Inventory levels and working capital days to gauge cash conversion
• Ordinary-to-net income bridge (non-operating and extraordinary items)
• Capex and depreciation once disclosed to assess maintenance vs. growth spend
• FX sensitivity and pricing in key product lines

Relative Positioning: Within Japanese power electronics/component peers, the company shows improving operating momentum and conservative liquidity, though profitability and ROE are still mid-pack and constrained by limited visibility on cash generation compared with peers that disclose stronger OCF/FCF metrics.

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
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