ASTI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥30.71B
• Operating Income: ¥585M
• Net Income: ¥162M
• EPS: ¥140.64

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

ASTI Co., Ltd. (TSE: 68990) reported FY2026 Q2 (cumulative) consolidated results under JGAAP showing modest top-line growth with stronger profit momentum. Revenue was ¥30.713 billion, up 0.6% YoY, indicating a stable demand environment despite sectoral cost and supply chain pressures. Gross profit reached ¥2.956 billion, translating to a gross margin of 9.6%, which remains thin and characteristic of EMS/auto-electronics and component assembly businesses. Operating income rose to ¥585 million (+9.7% YoY), driving an operating margin of ~1.9%, suggesting positive operating leverage and cost control. Ordinary income was ¥525 million, and net income surged 174% YoY to ¥439 million, lifting net margin to 1.43%, aided by better operating efficiency and likely fewer below-operating line drags. DuPont analysis yields ROE of 1.82%, decomposed into a 1.43% net margin, asset turnover of 0.68x, and financial leverage of 1.87x; returns are primarily constrained by thin margins rather than asset intensity or leverage. Liquidity is strong with a current ratio of 2.46x and quick ratio of 2.31x, supported by sizable current assets (¥29.60 billion) and relatively low inventories (¥1.77 billion). The balance sheet is resilient; equity of ¥24.10 billion against total assets of ¥45.13 billion implies an equity ratio of roughly 53% (despite a reported 0.0% placeholder), providing a solid solvency buffer. Interest coverage is healthy at 13.3x, reflecting manageable finance costs (¥43.9 million) relative to operating profit. The reported effective tax rate of 0.0% in the metrics appears to be a data artifact; using disclosed taxes (¥191.4 million) and ordinary income (¥525 million) implies an effective rate of roughly 36–37%, consistent with Japan’s statutory range. Cash flow statement items are unreported in this dataset (zeros denote non-disclosure), limiting assessment of cash conversion and free cash flow. Dividend per share is reported as ¥0 with a 0% payout, suggesting either an absence of interim dividends or policy conservatism pending full-year visibility. EPS was ¥140.64, which implies roughly 3.1 million shares outstanding, although share count is not disclosed in this extract. Overall, ASTI demonstrates improving profitability on flat revenue, strong liquidity, moderate leverage, and adequate interest coverage; however, structurally thin margins and absent cash flow disclosures temper confidence in earnings quality assessment. The outlook hinges on sustaining margin gains amid input cost dynamics, FX, and customer pricing, with cash flow data a key missing piece for a full quality-of-earnings read.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 1.43% (NI ¥439m / Revenue ¥30,713m)
• asset_turnover: 0.68x (Revenue ¥30,713m / Total assets ¥45,133m)
• financial_leverage: 1.87x (Assets ¥45,133m / Equity ¥24,102m)
• calculated_ROE: 1.82% (matches provided DuPont result) margin_quality: Gross margin is 9.6%, indicating limited pricing power typical of EMS/auto-electronic assembly. Operating margin is ~1.9% (¥585m/¥30,713m), up versus last year given operating income grew faster than revenue (+9.7% vs +0.6%), pointing to cost containment and/or mix improvement. Ordinary margin is 1.7%, and net margin is 1.43%, with the spread from operating to net affected by interest (¥43.9m) and taxes (¥191.4m). The reported effective tax rate in the metrics (0.0%) is inconsistent with disclosed taxes; using ordinary income as proxy for pre-tax implies ~36–37% tax rate, consistent with norms. Depreciation and EBITDA are not disclosed, limiting insight into underlying cash margins. operating_leverage: Positive: revenue grew 0.6% YoY while operating income grew 9.7% YoY, implying incremental margins above the average margin base. Sustaining this will depend on maintaining procurement efficiency, yield, and product mix while managing FX and input costs.

Growth Assessment

revenue_sustainability: Top-line growth of +0.6% YoY suggests steady demand but not expansionary conditions. Given ASTI’s industry exposure, growth likely tracks automotive/electronics build schedules and customer programs rather than discretionary pricing. profit_quality: Profit expansion is driven by operating efficiency rather than revenue acceleration. With thin gross margins (9.6%), incremental cost control is a key driver. Absence of depreciation/EBITDA data constrains assessment of cash operating profitability. The YoY surge in net income (+174%) also suggests prior-year base effects (e.g., non-operating items or tax effects). outlook: Near-term outlook is cautiously constructive if cost improvements persist. Risks include input cost volatility, FX (imported components), and customer pricing pressure. Revenue visibility likely tied to OEM order flows and supply chain normalization; margin progress is the primary lever for further earnings growth.

Financial Health

liquidity: Current ratio 2.46x (CA ¥29.60bn / CL ¥12.03bn) and quick ratio 2.31x indicate strong short-term coverage. Working capital is ¥17.56bn, offering ample buffer. solvency: Equity ¥24.10bn vs. assets ¥45.13bn implies an equity ratio of ~53% (the reported 0.0% is a placeholder), and assets/equity leverage of 1.87x is moderate. Interest coverage is robust at 13.3x; interest expense of ¥43.9m is small relative to operating profit. capital_structure: Debt-to-equity of 0.89x (using total liabilities/equity) suggests moderate overall leverage, though the split between interest-bearing debt and operating liabilities is undisclosed. Capital intensity and capex requirements cannot be evaluated from the provided data.

Cash Flow Quality

earnings_quality: OCF is undisclosed in this dataset; therefore, the reported OCF/NI of 0.00 should not be interpreted as poor cash conversion. With thin margins, earnings quality hinges on working capital discipline and capex needs, neither of which are observable here. FCF_analysis: Free cash flow cannot be calculated without OCF and capex. While earnings improved, confirmation via cash generation is not possible from disclosed figures. working_capital: Inventories of ¥1.77bn are low relative to half-year sales (~5.8% of revenue), suggesting lean inventory or a product mix with shorter cycles. Receivables and payables are undisclosed; overall working capital is sizeable at ¥17.56bn, supporting operations but cash conversion timing remains unknown.

Dividend Sustainability

payout_ratio_assessment: Reported DPS is ¥0 and payout 0%. With net income of ¥439m, the company has capacity to pay, but appears conservative or deferring to full-year decisions. Without cash flow data and capex outlook, prudent to assume an earnings-retentive stance. FCF_coverage: Unavailable due to lack of OCF and capex data; the stated 0.00x is a placeholder, not an indication of inability to cover. policy_outlook: Given modest ROE (1.82%) and a solid balance sheet, management may prioritize reinvestment and balance sheet strength. Any move to initiate or raise dividends would likely depend on consistent margin gains and demonstrable cash generation at year-end.

Risk Assessment

Business Risks:

• Customer concentration and pricing power typical in automotive/electronics supply chains
• Input cost inflation (resins, metals, logistics) pressuring low gross margins
• Foreign exchange volatility impacting imported components and export pricing
• Program/volume risk tied to OEM production schedules and model cycles
• Technology and quality assurance requirements; potential recall/liability risks
• Supply chain disruptions (semiconductors, logistics) affecting deliveries and costs

Financial Risks:

• Thin operating margin (~1.9%) leaves limited buffer against shocks
• Working capital needs may fluctuate, affecting operating cash flow
• Interest-bearing debt mix unknown; refinancing risk can’t be assessed from data
• Tax rate variability vs. ordinary income (effective ~36–37%) impacts net profitability
• Limited visibility on capex and depreciation may mask underlying cash needs

Key Concerns:

• Sustainability of recent margin improvements amid cost and FX headwinds
• Absence of cash flow disclosures prevents validation of earnings quality
• Structural low gross margins cap ROE despite moderate leverage

Investment Implications

Key Takeaways:

• Revenue essentially flat (+0.6% YoY) but operating profit up 9.7% indicates positive operating leverage
• Net income up 174% YoY; margin expansion and potentially cleaner below-operating items
• ROE 1.82% constrained by thin net margin (1.43%), not asset intensity
• Balance sheet solid with ~53% equity ratio and current ratio 2.46x
• Interest coverage 13.3x shows manageable financial burden
• Cash flow visibility absent; cannot assess FCF or cash conversion
• DPS currently ¥0; payout policy appears conservative pending full-year results

Metrics to Watch:

• Gross and operating margins (cost pass-through and mix effects)
• Operating cash flow and free cash flow at FY-end
• Inventory turns, receivables days, and payables days
• Order trends with key OEM/customers and backlog visibility
• FX rates (USD/JPY, CNY/JPY) and hedging outcomes
• Interest-bearing debt level and maturity profile
• Capex and depreciation trajectory (for cash vs. accrual earnings gap)

Relative Positioning: Within domestic EMS/auto-electronics peers, ASTI’s liquidity and equity buffer are solid, but profitability remains on the low end given sub-2% operating margin; continued cost discipline and mix upgrades are needed to close the gap.

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