ENOMOTO Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥14.65B
• Operating Income: ¥729M
• Net Income: ¥270M
• EPS: ¥92.21

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Enomoto Co., Ltd. (TSE: 6928) delivered a solid FY2026 Q2 performance with clear signs of operating leverage and improved profitability. Revenue rose 9.2% year over year to ¥14.65bn, underpinning a doubling of operating income (+103.9% YoY) to ¥0.73bn and net income (+117.9% YoY) to ¥0.59bn. Profitability expanded across the P&L: operating margin reached roughly 5.0% and net margin 4.01%, supported by disciplined costs and a lean non-operating burden. Ordinary income (¥0.81bn) exceeded operating income, indicating positive net non-operating contributions, while net income reflected a modest tax charge. Gross margin stood at 11.3%, and EBITDA margin at 12.7%, pointing to material depreciation (¥1.14bn) and a capital-intensive asset base. The DuPont breakdown yields a 2.78% ROE for the period, driven by a 4.01% net margin, asset turnover of 0.45x, and moderate financial leverage of 1.54x. Operating cash flow was healthy at ¥0.88bn, exceeding net income (OCF/NI = 1.50x), which signals good earnings quality for the half. Liquidity appears robust with a current ratio of 230% and quick ratio of 205%, and implied equity ratio is strong at roughly 65% based on reported assets and equity (the disclosed 0% equity ratio is not indicative and should be viewed as undisclosed). Interest expense is minimal at ¥16m, and interest coverage is very high at 45x, underscoring low financial risk. Working capital is ample at ¥9.96bn, helping buffer cyclical volatility. Investment cash flows were not disclosed, so free cash flow cannot be reliably assessed this quarter despite positive OCF. Dividend data were not disclosed (DPS and payout values shown as zero reflect non-disclosure), so dividend sustainability cannot be concluded from this release. Overall, the quarter demonstrates strong operating leverage on moderate top-line growth, improved cash conversion, and a solid balance sheet, albeit with data gaps around cash position, capex, and dividends. Going forward, sustaining margin gains while managing capital intensity will be key to compounding ROE. Monitoring capex trajectory, working capital discipline, and pricing/mix in core segments will be central to assessing the durability of the earnings recovery.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.01% (NI ¥588m / Revenue ¥14,652m)
• asset_turnover: 0.45x (Revenue ¥14,652m / Assets ¥32,587m)
• financial_leverage: 1.54x (Assets ¥32,587m / Equity ¥21,175m)
• calculated_ROE: 2.78% (matches reported DuPont figure) margin_quality: Gross margin: 11.3% (¥1,652m GP on ¥14,652m Revenue) indicates modest value-add typical of precision components/leadframe businesses., Operating margin: ~5.0% (¥729m OI) shows strong YoY expansion given OI more than doubled on single-digit revenue growth., Ordinary income margin: ~5.5% (¥811m) suggests supportive non-operating items (e.g., FX or financial income) or lower non-operating costs., Net margin: 4.01% reflects a modest tax burden and possibly some extraordinary items between ordinary and net income. operating_leverage: Revenue +9.2% YoY vs Operating income +103.9% YoY indicates significant operating leverage and tight cost control., EBITDA margin 12.7% vs operating margin ~5.0% highlights high D&A (¥1,139m), consistent with a capital-intensive model; sustaining OI improvement will depend on utilization and mix.

Growth Assessment

revenue_sustainability: Top-line growth of +9.2% YoY is healthy; durability will hinge on demand in semiconductor/precision components end-markets and customer mix., Asset turnover at 0.45x suggests room for better utilization; incremental volume could further enhance margins via fixed-cost absorption. profit_quality: Net income +117.9% YoY with OCF/NI at 1.50x supports quality of earnings this period., Ordinary income exceeded operating income, implying favorable non-operating contributions; sustainability of this gap should be monitored. outlook: If volume and mix remain supportive, operating leverage should continue to aid margins., Key swing factors: capacity utilization, raw material costs (e.g., copper), pricing power, and FX.

Financial Health

liquidity: Current ratio: 230%; Quick ratio: 205%—ample near-term liquidity., Working capital: ¥9,955m provides a sizable buffer for operations and inventory cycles. solvency: Implied equity ratio ~65.0% (Equity ¥21,175m / Assets ¥32,587m); the disclosed 0% is an undisclosed placeholder., Debt-to-equity: 0.52x indicates moderate leverage; interest expense is low (¥16m) with strong coverage (45x). capital_structure: Financial leverage at 1.54x is conservative, supporting resilience., Large D&A (¥1,139m) points to significant invested capital; careful capex planning is important to maintain balance sheet strength.

Cash Flow Quality

earnings_quality: Operating CF ¥884m vs Net income ¥588m gives OCF/NI of 1.50x, indicating solid cash conversion., Interest outflows (¥16m) are modest relative to EBITDA (¥1,868m) and OCF. FCF_analysis: Investing CF not disclosed (reported as zero), so capex and true FCF cannot be determined for the period., Given D&A of ¥1,139m, maintenance capex is likely material; absent disclosure, we cannot assess FCF coverage or sustainability. working_capital: Working capital is strong at ¥9,955m; inventory of ¥1,915m appears manageable relative to revenue scale., Net OCF strength suggests either stable working capital or favorable collection cycles, though detailed drivers were not disclosed.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are shown as zero due to non-disclosure; EPS was ¥92.21, but actual dividends for the period are not provided. FCF_coverage: Not assessable this quarter because investing cash flows/capex were not disclosed; OCF was positive at ¥884m. policy_outlook: Without disclosed dividend policy, we cannot infer intent; historically, sustainability would depend on capex cadence, OCF consistency, and balance sheet flexibility.

Risk Assessment

Business Risks:

• End-market cyclicality in semiconductors/electronics and automotive components.
• Raw material price volatility (e.g., copper, specialty steels) impacting gross margin.
• Customer concentration and pricing pressure from large OEMs/Tier-1s.
• Utilization risk given capital intensity; under-absorption can compress margins.
• Technological shifts (packaging/leadframe design changes) requiring ongoing capex.
• FX volatility affecting export competitiveness and input costs.

Financial Risks:

• Capex burden relative to OCF, given high D&A and potential capacity investments.
• Working capital swings (receivables and inventories) impacting cash conversion.
• Potential mismatch between reported earnings and cash if non-operating items fluctuate.
• Limited disclosure on cash and investment CF this quarter impairs visibility on liquidity headroom.

Key Concerns:

• Lack of disclosed investing cash flows and cash balance obscures true FCF and liquidity runway.
• Sustainability of non-operating tailwinds that lifted ordinary income above operating income.
• Maintaining gross margin gains amid input cost and FX volatility.

Investment Implications

Key Takeaways:

• Strong operating leverage: OI +104% on +9% revenue.
• Healthy cash conversion: OCF/NI at 1.50x.
• Conservative balance sheet with implied ~65% equity ratio and 45x interest coverage.
• Capital intensity remains high (D&A ¥1.14bn), making capex discipline pivotal.
• Data gaps (Investing CF, cash balance, dividends) limit full assessment of FCF and capital return capacity.

Metrics to Watch:

• Capex and investing cash flows; resulting FCF trend.
• Gross and operating margins, especially vs raw material and FX movements.
• Order trends, backlog, and capacity utilization rates.
• Working capital turns (DSO/DIO/DPO) and OCF/NI ratio.
• ROE progression via margin and asset turnover improvements.
• Interest-bearing debt levels and any changes in leverage.
• Dividend policy disclosures and payout guidance.

Relative Positioning: Relative to TSE precision component peers, Enomoto exhibits improving profitability with strong operating leverage and robust liquidity, coupled with modest financial leverage; however, its capital intensity is high and disclosure gaps on capex/FCF constrain visibility versus best-in-class peers that provide fuller cash flow detail.

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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