Helios Techno Holding Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.43B
• Operating Income: ¥249M
• Net Income: ¥350M
• EPS: ¥13.64

Income Statement

Balance Sheet

Cash Flow Statement

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

Helios Techno Holding (TSE:69270) reported FY2026 Q2 consolidated results under JGAAP showing resilient gross profitability but pronounced operating leverage to a 6.0% YoY revenue decline. Revenue was ¥4.432bn, gross profit ¥1.833bn, and operating income ¥249m, implying a gross margin of 41.4% and an operating margin of 5.6%. The steep 43.6% YoY drop in operating income versus a 6% revenue decline indicates meaningful negative operating leverage and/or mix pressure, despite strong gross margin levels. Ordinary income of ¥341m exceeded operating income by roughly ¥92m, suggesting positive non-operating contributions (e.g., financial or other non-core gains) cushioning operating softness. Net income was ¥247m (NPM 5.57%), and the DuPont bridge yields ROE of 1.56% = 5.57% margin × 0.185x asset turnover × 1.51x leverage, evidencing moderate profitability on a conservatively levered balance sheet. EBITDA was ¥336.9m (7.6% margin), reflecting modest operating cash earnings relative to revenue. Interest expense was minimal at ¥2.8m, producing a very strong interest coverage of ~89.7x, consistent with low financial risk. Operating cash flow was negative at -¥582.1m despite positive net income, pointing to a timing-heavy working capital drag and/or non-cash profit components this quarter. Investing and financing cash flows are shown as zero, which indicates non-disclosure rather than true zeros; therefore total free cash flow and cash balance analysis are constrained by data gaps. The balance sheet headline ratios indicate strong liquidity: current assets of ¥18.0bn against current liabilities of ¥4.81bn yield a current ratio of ~3.75x and a quick ratio of ~3.74x, supported by very low reported inventories. Leverage appears low with total liabilities of ¥5.06bn and total equity of ¥15.85bn (D/E ~0.32x), implying ample balance sheet flexibility. That said, the Equity Ratio and cash balance fields are unreported in the data feed, so precise capital structure and liquidity buffers cannot be fully validated. The effective tax rate shown as 0.0% is not reliable given taxes expensed of ¥151.7m; tax comparability is limited. Dividend and per-share data (DPS, shares outstanding, BVPS) are not disclosed here, limiting shareholder return analysis. Overall, the company demonstrates healthy gross profitability and low financial risk, but earnings are sensitive to revenue fluctuations and near-term cash conversion is weak, warranting close monitoring of order momentum and working capital.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin 5.57% × asset turnover 0.185 × financial leverage 1.51 = ROE 1.56% (matches reported). Gross margin of 41.4% is solid, indicating favorable product mix/pricing and/or cost control at the COGS level. Operating margin of 5.6% is materially lower than gross margin, pointing to a heavy SG&A/R&D burden or scale diseconomies this quarter. EBITDA margin of 7.6% suggests modest operating cash earnings capacity given the scale of the business. The YoY divergence (revenue -6.0%, operating income -43.6%) highlights notable negative operating leverage—small volume/mix declines materially impacted profit, implying a relatively high fixed-cost base or elevated opex. Ordinary income (¥341m) exceeding operating income by ~¥92m indicates supportive non-operating items, which may not be sustainable as a driver of recurring profitability. Interest expense is minimal (¥2.8m) and coverage is strong (~89.7x), indicating limited sensitivity to rate movements. Overall, profitability quality is mixed: strong gross economics but heightened sensitivity at the operating line.

Growth Assessment

Revenue contracted 6.0% YoY to ¥4.432bn, signaling softer demand or adverse mix in the period. The magnitude of the operating profit decline (-43.6% YoY) relative to revenue suggests that near-term profit growth will be highly dependent on restoring volume/mix and controlling fixed costs. Net income declined 29.4% YoY to ¥247m, buffered by non-operating gains, which may not recur. Asset turnover at 0.185x implies a relatively asset-heavy or underutilized asset base against current revenue run-rate, limiting ROE. Sustainability of revenue will hinge on order intake, backlog conversion, and end-market trends (not disclosed here). Profit quality is constrained by negative OCF despite positive earnings, suggesting working capital headwinds or timing issues; absent disclosure on investing cash flows, we cannot judge total cash burn. Near-term outlook: stabilization of top line and normalization of working capital are key to re-expanding operating margins and improving earnings resilience.

Financial Health

Liquidity appears strong: current assets ¥18.022bn vs current liabilities ¥4.807bn yield a current ratio of 375% and quick ratio of 374%, with inventories reported at a very low ¥50.6m. Solvency is solid with total liabilities ¥5.063bn and total equity ¥15.845bn (D/E ~0.32x), suggesting low leverage and ample capacity to absorb shocks. Interest burden is negligible (interest expense ¥2.8m), reinforcing low financial risk. However, cash & equivalents and the equity ratio are unreported in this dataset, limiting precise assessment of immediate liquidity buffers and capital adequacy. Working capital is sizable at ¥13.215bn, which can support operations but may also tie up cash if turnover slows. Overall, the balance sheet indicates conservative financing and strong short-term coverage, subject to the caveat of missing cash details.

Cash Flow Quality

Earnings quality is weakened this quarter by negative operating cash flow (-¥582.1m) versus positive net income (¥247m), yielding an OCF/NI ratio of -2.36. This suggests significant working capital outflows and/or non-cash profit components; given very low reported inventories, the drag likely stems from receivables and/or reduced payables (not disclosed here). Depreciation & amortization was ¥87.9m, modest relative to EBITDA, indicating limited non-cash addbacks beyond D&A. Investing cash flow is unreported (shown as 0), preventing calculation of free cash flow and capex intensity; financing cash flow is also shown negative but should be treated as unreported for detailed composition. Given these gaps, we cannot ascertain whether negative OCF is temporary (timing) or structural; monitoring OCF reversion in subsequent quarters is essential.

Dividend Sustainability

Dividend per share (DPS) and payout ratio fields are shown as zero, indicating non-disclosure in this dataset rather than actual zeros. Without DPS, shares outstanding, and free cash flow, a formal payout coverage analysis cannot be performed. From an earnings perspective, net income is positive (¥247m), but OCF is negative, implying that near-term dividend capacity would rely on balance sheet cash or working capital release, the status of which is not disclosed here. The company’s low leverage provides theoretical headroom, but prudence suggests prioritizing cash conversion before committing to higher payouts. Dividend policy outlook cannot be inferred from the provided data.

Risk Assessment

Business Risks:

• Revenue sensitivity: a 6% decline in sales led to a 43.6% drop in operating income, indicating high operating leverage.
• Non-operating reliance: ordinary income exceeded operating income by ~¥92m, suggesting earnings partly depend on non-core items.
• Demand volatility and mix risk in end-markets (details not disclosed).
• Working capital intensity and timing risk leading to negative OCF despite profits.

Financial Risks:

• Negative operating cash flow (-¥582m) raises short-term liquidity management risk if sustained.
• Limited visibility on cash balances and equity ratio due to non-disclosure.
• Potential receivables concentration or collection risk (implied by OCF drag; specifics not disclosed).
• Tax cash outflows may be significant relative to earnings (¥151.7m tax expense), though effective tax rate details are unclear.

Key Concerns:

• Negative OCF versus positive net income (OCF/NI -2.36).
• High sensitivity of operating profit to revenue changes.
• Dependence on non-operating gains to support ordinary income.
• Data gaps on cash, investing CF, dividends, and per-share metrics limit full assessment.

Investment Implications

Key Takeaways:

• Gross margin is strong at 41.4%, but operating margin compressed to 5.6% amid revenue softness.
• ROE is modest at 1.56%, constrained by low asset turnover and conservative leverage.
• Balance sheet appears strong (current ratio ~3.75x, D/E ~0.32x), suggesting low solvency risk.
• Operating cash flow was materially negative, warranting close monitoring of working capital.
• Non-operating items supported earnings; sustainability is uncertain.

Metrics to Watch:

• Order intake/backlog and revenue trajectory in coming quarters.
• Operating margin recovery and SG&A efficiency.
• Working capital movements (receivables, payables) and OCF normalization.
• Capex and investing cash flows once disclosed (for FCF generation).
• Composition of non-operating income and its recurrence.
• Tax cash payments versus accounting tax expense.

Relative Positioning: Relative to typical TSE industrial/technology peers, Helios Techno exhibits a conservative balance sheet with strong liquidity and low leverage, solid gross profitability, but weaker operating leverage management and cash conversion this quarter; full peer comparison is constrained by missing cash and per-share disclosures.

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