CHIYODA INTEGRE CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥28.32B
• Operating Income: ¥2.25B
• Net Income: ¥2.32B
• EPS: ¥188.45

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

Chiyoda Integre Co., Ltd. (TSE:69150) reported FY2025 Q3 consolidated results under JGAAP showing a softer topline and compressed profitability against a strong balance sheet. Revenue was ¥28.317bn, down 9.3% YoY, reflecting demand normalization and/or product mix headwinds. Gross profit of ¥8.450bn translates to a 29.8% gross margin, which appears resilient; however, operating income declined 23.2% YoY to ¥2.250bn, implying negative operating leverage. Operating margin was approximately 7.95%, indicating increased SG&A intensity or pricing/mix pressure despite relatively stable gross margins. Ordinary income came in at ¥2.443bn, and net income was ¥1.844bn, down 20.4% YoY, with a reported net margin of 6.51%. The DuPont framework yields a calculated ROE of 4.84%, driven by a modest net margin (6.51%), asset turnover of 0.596x, and low financial leverage of 1.25x. Balance sheet strength is notable: total assets are ¥47.5bn versus total liabilities of ¥9.733bn and equity of ¥38.08bn, implying low gearing (D/E 0.26x) and an implied equity ratio around 80% based on the disclosed totals (the reported 0.0% equity ratio reflects non-disclosure in XBRL rather than an actual zero). Liquidity is very strong with a current ratio of 410% and quick ratio of 388%, supported by sizable working capital of ¥25.927bn. Interest expense is minimal at ¥14m, yielding an interest coverage of ~161x and indicating negligible financial risk from borrowing costs. The cash flow statement line items were not disclosed (zeros denote unreported), so operating and free cash flow conversion cannot be assessed from this release. Depreciation and EBITDA figures are also not disclosed, limiting visibility on non-cash expense structure and true operating cash generation. The difference between ordinary income and net income suggests the presence of non-operating or extraordinary items, which, combined with the reported tax expense of ¥992m, makes the effective tax rate estimate from the metrics unreliable. Inventory is modest at ¥1.872bn relative to revenue, hinting at an asset-light operating model and/or efficient inventory management. Dividend per share is unreported (0 indicates not disclosed), and payout/FCF coverage metrics are therefore not meaningful in this dataset; however, earnings capacity and balance sheet resilience indicate room for policy flexibility. Overall, results point to cyclical or mix-driven pressure on profits, but the company remains financially conservative with ample liquidity and very low leverage. Key uncertainties relate to end-market demand recovery, price-cost dynamics, and currency impacts, while the strong balance sheet provides downside protection.

Profitability Analysis

ROE is 4.84%, decomposed into a 6.51% net margin, 0.596x asset turnover, and 1.25x financial leverage, indicating returns are primarily constrained by modest margins and limited leverage rather than excessive asset intensity. Operating margin is ~7.95% (¥2.25bn/¥28.317bn), down YoY given operating income fell faster than revenue (-23.2% vs. -9.3%), evidencing negative operating leverage during the period. Gross margin of 29.8% suggests materials and manufacturing costs are being managed, but the spread between gross and operating margin widened, implying higher SG&A or R&D burden and/or pricing discounts. Ordinary margin is ~8.63% (¥2.443bn/¥28.317bn), slightly above operating margin, indicating net financial/non-operating contributions were positive. Net margin of 6.51% reflects tax and extraordinary item effects; the tax line is sizable (¥992m), but reported metric for effective tax rate is unreliable due to disclosure constraints. Interest expense is minimal (¥14m), and interest coverage at ~160.7x underscores that financing costs are not a drag on profitability. Without depreciation data, EBITDA and EBITDA margin are not assessable, but the strong gross margin indicates the core product economics remain sound. Overall, margin compression coupled with negative operating leverage points to cyclical demand softness, product mix shifts toward lower-margin SKUs, and/or timing of expense recognition. Sustained margin recovery will likely require either topline re-acceleration or SG&A efficiency gains. The modest leverage (1.25x) limits ROE uplift, consistent with the company’s conservative capital structure.

Growth Assessment

Revenue declined 9.3% YoY to ¥28.317bn, suggesting normalization after prior-cycle strength or weaker demand in key end-markets such as consumer electronics and automotive components. Operating income fell 23.2% YoY to ¥2.25bn, indicating deterioration in operating leverage; the decline exceeds the revenue contraction, implying cost absorption or mix pressure. Net income decreased 20.4% YoY to ¥1.844bn, better than the operating income decline due to positive non-operating/extraordinary factors. Gross margin (29.8%) appears stable, implying cost of goods sold did not deteriorate materially; profit pressure was mainly at the SG&A/overhead level. Asset turnover is 0.596x, consistent with a modest growth phase and possible inventory discipline (inventory at ¥1.872bn). With cash flow figures undisclosed, we cannot validate revenue-to-cash conversion, which limits assessment of demand sustainability and order-to-cash cycle health. Near-term outlook hinges on recovery in electronics demand, customer product launch cycles, and FX; the company’s low leverage positions it to navigate volatility. Pricing power and pass-through of material cost changes will be critical to margin recovery. Absent visibility into backlog or regional sales mix, we assume demand recovery is gradual with potential seasonal improvements tied to device and auto model cycles. Strategic shifts toward higher-value functional materials or automotive-related applications could support medium-term growth quality. Overall, growth sustainability is cautious near term with room for improvement as end-markets stabilize.

Financial Health

Liquidity is robust: current assets of ¥34.283bn versus current liabilities of ¥8.356bn yield a current ratio of 410% and quick ratio of 388%, indicating ample short-term coverage. Working capital stands at ¥25.927bn, providing operational flexibility through cycles. Solvency is strong with total liabilities of ¥9.733bn against equity of ¥38.08bn (D/E 0.26x). Based on total assets of ¥47.5bn and equity of ¥38.08bn, the implied equity ratio is roughly 80% (the reported 0.0% reflects non-disclosure rather than economic reality). Interest expense is only ¥14m, and interest coverage is ~160.7x, signaling negligible refinancing or rate risk. The capital structure is conservative, leaving capacity for investment or shareholder returns if management elects. Cash and equivalents were not disclosed in the cash flow section, so net cash/net debt cannot be precisely determined from this dataset. Inventory is modest relative to sales, suggesting low working capital intensity and potentially shorter cash conversion, though receivables/payables data are not provided. Overall, the balance sheet provides substantial resilience against demand volatility.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed (zeros indicate unreported), so OCF/NI and free cash flow cannot be meaningfully assessed from this release. Depreciation is also not disclosed, preventing us from separating cash and non-cash components of operating profit. In the absence of cash flow data, earnings quality must be inferred indirectly: low interest expense and strong working capital position are supportive, but the negative operating leverage and YoY profit decline warrant caution on cash conversion. Inventory of ¥1.872bn looks lean relative to sales scale, which could be positive for working capital efficiency; however, receivables and payables are not detailed, limiting visibility on the cash conversion cycle. Without capex disclosure, we cannot judge the reinvestment burden or maintenance vs. growth spending. As such, we view earnings-to-cash conversion as indeterminate this quarter, and recommend monitoring subsequent filings for OCF and FCF detail.

Dividend Sustainability

Annual DPS and payout ratios are not disclosed in this dataset (zeros reflect non-reporting). With net income of ¥1.844bn and a strong equity base, there appears to be capacity to sustain or resume dividends subject to policy, cash generation, and investment needs; however, absent OCF/FCF disclosure, coverage cannot be verified. Reported payout ratio and FCF coverage metrics here are therefore not decision-useful. The conservative balance sheet (D/E 0.26x, high liquidity) supports flexibility, but profit decline and uncertain cash conversion counsel prudence until cash flows are disclosed. Policy outlook likely remains conservative near term, with potential alignment to earnings stability and visibility on end-market recovery.

Risk Assessment

Business Risks:

• Demand volatility in consumer electronics and automotive end-markets impacting volumes and mix
• Pricing pressure and limited pass-through of raw material cost inflation
• Customer concentration risk typical in component/functional materials supply chains
• Product cycle timing risk tied to smartphone and automotive model launches
• Competition from domestic and Asian peers leading to margin compression
• FX volatility (JPY vs. USD/CNY/KRW) affecting export competitiveness and translation

Financial Risks:

• Uncertain cash flow conversion due to lack of disclosed OCF/FCF data this period
• Potential working capital swings if receivables stretch during weaker demand
• Extraordinary/non-operating items introducing earnings volatility
• Tax rate variability given complex non-operating/extraordinary effects

Key Concerns:

• Negative operating leverage as operating income fell faster than revenue
• Limited visibility on cash generation, capex, and free cash flow
• ROE at 4.84% reflects modest profitability and low leverage
• Dependence on cyclical end-markets with uncertain recovery timing

Investment Implications

Key Takeaways:

• Topline declined 9.3% YoY to ¥28.317bn with operating income down 23.2% YoY, indicating margin pressure and negative operating leverage
• Gross margin stable at 29.8%, but SG&A intensity likely rose, compressing operating margin to ~7.95%
• ROE at 4.84% driven by modest net margin and asset turnover; low leverage limits return amplification
• Balance sheet is very strong (implied equity ratio ~80%, D/E 0.26x, interest coverage ~161x)
• Cash flow data not disclosed; earnings-to-cash conversion and capex/FCF remain key unknowns

Metrics to Watch:

• OCF/Net income conversion and free cash flow once disclosed
• Gross and operating margin trajectory, including SG&A ratio
• Order trends/end-market demand indicators in electronics and automotive
• FX rates (USD/JPY, CNY/JPY) and pricing pass-through of materials
• Inventory, receivable, and payable turns to assess cash conversion cycle
• Capex and depreciation to gauge reinvestment needs and EBITDA bridge

Relative Positioning: Within Japanese functional materials/electronic components peers, Chiyoda Integre exhibits stronger-than-average balance sheet resilience and liquidity, with mid-tier profitability pressured near term by negative operating leverage; earnings quality and cash conversion remain the primary differentiators to watch versus peers emphasizing higher value-add niches.

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