MICRONICS JAPAN CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥50.41B
• Operating Income: ¥11.30B
• Net Income: ¥5.75B
• EPS: ¥183.02

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

Nihon Micronics (TSE: 6871) delivered strong FY2025 Q3 year‑to‑date performance with revenue of ¥50.4bn, up 29.3% YoY, evidencing a solid recovery in semiconductor test-related demand. Profitability scaled with growth: operating income rose 30.7% YoY to ¥11.3bn, and net income increased 23.3% YoY to ¥7.08bn. Operating margin was a robust ~22.4% (¥11.3bn/¥50.4bn), supported by a 37.4% gross margin and disciplined SG&A, which we infer at roughly 15.0% of sales. Ordinary income (¥11.27bn) tracked closely to operating income, indicating minimal non-operating drag (interest expense only ¥6m). Net margin was 14.05%, underpinning DuPont ROE of 12.39% via net margin of 14.05%, asset turnover of 0.582x, and financial leverage of 1.52x. Balance sheet quality is solid: total assets were ¥86.7bn, equity ¥57.2bn, and liabilities ¥30.3bn, implying low leverage (D/E 0.53x) and an equity ratio around 66% by our calculation, despite the unreported equity ratio field. Liquidity is comfortable with current assets of ¥44.5bn versus current liabilities of ¥27.6bn (current ratio 161%). Interest coverage is extremely strong at ~1,883x, reflecting negligible financial risk from debt service. Cash flow statements and several ancillary items (depreciation, EBITDA, cash and equivalents, OCF/FCF) were unreported; therefore, free cash flow and cash conversion cannot be assessed from this dataset. Similarly, dividend details are unreported (DPS and payout show as zero placeholders), limiting dividend policy analysis to capacity indicators. Despite these data gaps, available metrics indicate healthy operating leverage, improving profitability, and a conservative capital structure. The YoY expansion suggests cyclical tailwinds in probe cards/test solutions, while cost discipline preserved margins. Tax expense of ¥3.27bn versus net income implies an effective tax rate in the low 30% range on a pre‑tax basis, consistent with Japan statutory norms. Overall earnings quality appears sound from the income statement perspective, but verification via operating cash flow is not possible due to disclosure limitations. Inventory and working capital dynamics cannot be fully evaluated as inventories are unreported, though reported working capital is ¥16.93bn. We acknowledge data limitations—zeros denote unreported items—and base conclusions strictly on disclosed non‑zero figures.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 14.05%
• asset_turnover: 0.582
• financial_leverage: 1.52
• calculated_ROE: 12.39%
• commentary: ROE of 12.39% is driven primarily by strong net margin (14.05%) and moderate asset turnover (0.58x), with restrained leverage (1.52x). Implied ROA is ~8.2% (NPM × ATO), consistent with healthy underlying profitability. margin_quality: Gross margin of 37.4% supports an operating margin of ~22.4%. The gap between gross profit (¥18.86bn) and operating income (¥11.30bn) implies SG&A of ~¥7.56bn (~15.0% of sales), signaling disciplined opex. Ordinary income (¥11.27bn) is close to operating income, indicating minimal non-operating noise; interest expense is de minimis (¥6m). Net margin at 14.05% remains robust even after taxes. operating_leverage: Operating income growth (+30.7% YoY) outpaced revenue growth (+29.3% YoY), indicating positive operating leverage as fixed costs were spread over higher volumes. The stable to expanding OPM suggests scale benefits and/or a favorable mix (likely higher-value test solutions).

Growth Assessment

revenue_sustainability: Revenue grew 29.3% YoY to ¥50.41bn, consistent with a cyclical upturn in semiconductor testing demand. The magnitude suggests broad-based recovery across end markets or share gains in probe-related products. profit_quality: Operating profit growth (+30.7% YoY) and close alignment of ordinary income to operating income imply earnings quality is supported by core operations rather than non-recurring items. Tax expense (¥3.27bn) aligns with a normalized effective tax rate, supporting the durability of net profit. outlook: With strong margins and low financial leverage, the company is well positioned to benefit from further semiconductor cycle normalization. That said, sustainability depends on order momentum in advanced nodes, memory, and HPC-related test demand. Lack of cash flow and order backlog disclosure in this dataset tempers visibility.

Financial Health

liquidity: Current assets ¥44.54bn vs current liabilities ¥27.61bn yields a current ratio of 161% and positive working capital of ¥16.93bn, indicating ample near-term liquidity. Quick ratio reported equal to current ratio due to unreported inventories. solvency: Debt-to-equity is 0.53x based on total liabilities to equity (¥30.34bn/¥57.17bn). Interest coverage is extremely strong at ~1,883x (operating income/interest expense), indicating minimal solvency risk from interest burdens. capital_structure: Equity ratio is not reported in the dataset; calculated equity-to-assets is ~66% (¥57.17bn/¥86.66bn), reflecting a conservative balance sheet with significant equity buffer.

Cash Flow Quality

earnings_quality: OCF is unreported, so accrual-versus-cash conversion cannot be assessed. However, limited non-operating items and normalized tax expense support the quality of reported earnings from the P/L perspective. FCF_analysis: Free cash flow is unreported. With depreciation also unreported, we cannot estimate maintenance capex or FCF proxy. Cash and equivalents are unreported, so liquidity from cash reserves cannot be determined. working_capital: Inventories are unreported; thus inventory turns and the mix of working capital cannot be evaluated. Reported working capital is ¥16.93bn, consistent with the healthy current ratio.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are unreported (zeros are placeholders). Using earnings capacity (net income ¥7.08bn) and a conservative balance sheet, the capacity for distributions appears adequate in principle, but precise payout cannot be assessed. FCF_coverage: FCF is unreported, so coverage of dividends by free cash flow cannot be evaluated. policy_outlook: Without disclosed DPS or policy guidance in this dataset, we cannot infer policy changes. Given cyclical end-market exposure, a flexible payout approach would be consistent with sector practice, but confirmation requires additional disclosures.

Risk Assessment

Business Risks:

• Cyclicality of semiconductor capital spending affecting probe/test demand
• Product mix and pricing pressure in advanced-node probe cards
• Customer concentration risk with major semiconductor manufacturers/test houses
• Technology transition risk (HPC/AI, HBM, advanced packaging) requiring continuous R&D investment
• Supply chain constraints for precision components and materials

Financial Risks:

• Limited visibility on cash generation due to unreported OCF/FCF
• Potential working capital swings typical in upcycles (receivables and inventories), with inventories unreported here
• FX exposure from exports impacting margins and earnings volatility
• Capex intensity for technology leadership potentially lifting cash needs in peak investment phases

Key Concerns:

• Unreported cash flow statements prevent assessment of cash conversion and FCF sustainability
• Inventories unreported, limiting view on demand-supply balance and potential obsolescence risk
• Equity ratio unreported in the dataset (calculated ~66%), suggesting reliance on our derived metric

Investment Implications

Key Takeaways:

• Strong topline growth (+29.3% YoY) with operating leverage (+30.7% YoY OI)
• Healthy margins: 37.4% gross and ~22.4% operating; net margin 14.05%
• ROE 12.39% driven by profitability rather than leverage (financial leverage 1.52x)
• Conservative balance sheet: equity ~66% of assets, D/E 0.53x, interest coverage ~1,883x
• Earnings quality appears solid from P/L; cash conversion unverified due to unreported OCF/FCF

Metrics to Watch:

• Order intake/backlog for probe/test solutions as a forward indicator
• Operating cash flow and free cash flow to validate earnings quality
• Capex and depreciation to gauge reinvestment needs and sustainable FCF
• Working capital trends (receivables days, inventory levels/turns when disclosed)
• Gross margin trajectory amid mix/pricing and FX
• Tax rate normalization versus reported one-offs

Relative Positioning: Within semiconductor test ecosystem peers, the company exhibits above-average profitability and low leverage, positioning it well to capitalize on the upcycle; confirmation via cash generation and backlog disclosure would strengthen the relative view.

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