Japan Antenna Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.19B
• Operating Income: ¥1.48B
• Net Income: ¥944M
• EPS: ¥88.18

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

Verdict: A strong topline and operating rebound in FY2026 Q2 was overshadowed at the bottom line by extraordinary items, yielding mixed headline earnings quality. Revenue rose 33.3% YoY to 61.94, with gross profit at 30.24 and gross margin at a robust 48.8%, reflecting favorable mix/pricing or cost control. Operating income surged 83.6% YoY to 14.81, implying significant operating margin expansion to 23.9%. Based on growth rates, prior-year operating margin is estimated around 17.4%, indicating roughly 650 bps of operating margin expansion YoY. Ordinary income reached 15.06, supported modestly by non-operating income of 0.26 (dividends 0.10, interest 0.11). Profit before tax dropped to 8.03 due to sizable extraordinary losses (implied roughly -7.0 between ordinary income and PBT). Net income was 9.44, down 77.9% YoY, cushioned by a tax credit (effective tax rate -17.6%). EPS came in at 88.18 JPY on an average share count of 10.72 million. The divergence between operating momentum and net income decline suggests FY2025 likely benefited from large one-time gains; this year is more reflective of core operations. Cash generation lagged earnings: operating cash flow was 4.30, only 0.46x net income, signaling working capital absorption alongside growth. The balance sheet is exceptionally liquid and conservatively financed, with current ratio 7.78x, quick ratio 7.33x, and D/E 0.18x, underpinned by cash and deposits of 105.34. Asset efficiency remains modest (asset turnover 0.316), consistent with a cash-heavy balance sheet. DuPont ROE is 5.7%, driven primarily by net margin and tempered by low leverage and slow asset turnover. Forward-looking, the improvement in core margins is encouraging, but the sustainability of growth depends on demand normalization, component supply dynamics, and the absence of recurring extraordinary losses. Investors should monitor the normalization of cash conversion, extraordinary item trends, and whether the tax credit repeats. Overall, the quarter showcases strong core execution with headline volatility from non-recurring items and softer cash conversion.

Profitability Analysis

ROE decomposition: 5.7% = 15.2% Net Profit Margin × 0.316 Asset Turnover × 1.18x Financial Leverage. The biggest YoY swing likely occurred in the net margin at the bottom line, given net income fell 77.9% despite strong operating growth, implying a deterioration driven by extraordinary losses and tax effects. Operating profitability improved materially: operating margin rose to 23.9% (estimated +650 bps YoY) as operating income (+83.6%) outpaced revenue (+33.3%), indicating positive operating leverage and/or mix improvements. Gross margin is high at 48.8%, and SG&A ratio is 24.9% (15.43/61.94), suggesting good cost discipline relative to gross profit expansion. Ordinary margin was 24.3%, but the bridge to PBT shows a roughly 7.0 one-time loss below ordinary income, which depressed bottom-line margin. Asset turnover at 0.316 remains a constraint on ROE, reflecting a large cash position and relatively low capital intensity. Financial leverage is low at 1.18x, keeping ROE conservative but balance sheet risk modest. Business drivers for margin improvement likely include product mix (antenna/communications components), pricing power, and cost control; the drag to net margin stems from non-recurring losses and a tax credit that lifted net after a weak PBT. Sustainability: operating improvements appear more sustainable than the non-operating/extraordinary swings; however, maintaining a near-24% OPM will depend on volume sustainability and cost input stability. Watch for any reversion if SG&A growth begins to outstrip revenue; currently, operating leverage is favorable with no sign (from disclosed data) of SG&A inflation outpacing sales.

Growth Assessment

Revenue growth of +33.3% YoY to 61.94 indicates strong demand recovery or share gains, potentially aided by 5G/communications-related projects or customer wins. Operating income growth of +83.6% far outpaced sales, confirming operating leverage and mix/pricing benefits. Non-operating income was a small positive contributor (0.26), not a major growth driver. The sharp YoY decline in net income (-77.9%) indicates a high base last year likely driven by non-recurring gains; current-year extraordinary losses also weighed on PBT. Current gross margin at 48.8% and OPM at 23.9% suggest healthy core profitability. Sustainability of revenue growth will hinge on end-market momentum in communications infrastructure and device demand; watch order backlog, lead times, and any commentary on customer inventory normalization. With asset turnover at 0.316, further growth without proportional asset expansion could incrementally lift ROE. Medium-term outlook appears constructive on operations, but reported earnings may remain volatile if extraordinary items recur. Limited disclosure on R&D and capex constrains assessment of innovation pipeline and capacity expansion plans. Overall, recurring earnings trajectory looks positive, but headline growth rates will normalize as one-offs fade.

Financial Health

Liquidity is very strong: current assets 171.71 vs current liabilities 22.08 yield a current ratio of 7.78x; quick ratio is 7.33x driven by cash of 105.34 and receivables of 35.35. Solvency is conservative with total liabilities 29.76 vs equity 166.20 (D/E 0.18x). No warning on current ratio (<1.0) or D/E (>2.0); both are comfortably healthy. Maturity mismatch risk is low given current assets far exceed current liabilities and no material short-term borrowings disclosed. Interest-bearing debt details are unreported, but the balance sheet composition suggests low leverage and ample liquidity buffer. Off-balance sheet obligations are not disclosed in the provided data; none identified. Equity is solid with retained earnings 78.54 and capital surplus 63.18 supporting resilience. Working capital is ample at 149.63, enabling flexibility for procurement and investment.

Cash Flow Quality

OCF of 4.30 versus net income of 9.44 yields OCF/NI of 0.46x, flagged as a quality concern (<0.8). The likely drivers are working capital absorption consistent with rapid sales growth (e.g., higher receivables of 35.35 and inventory of 9.79) and timing effects. Depreciation and amortization of 0.60 are modest relative to operating income, indicating a relatively light asset base. Free cash flow cannot be calculated due to unreported capex; hence dividend and capex coverage cannot be fully assessed. Financing cash flows are minimal (-0.01), indicating limited reliance on external financing this quarter. No clear signs of earnings management are visible from the disclosures, but the OCF shortfall vs NI warrants monitoring for persistent receivable days elongation or inventory build. Sustainability: given strong liquidity, a temporary cash conversion dip is manageable; sustained OCF/NI below 0.8 would raise concern about cash realization.

Dividend Sustainability

Dividend data (DPS, total dividends, payout) are unreported, preventing a direct payout ratio or FCF coverage assessment. Balance sheet capacity is strong (cash 105.34, low leverage), which supports the ability to maintain modest dividends if policy is unchanged. However, near-term OCF underperformance (0.46x NI) and earnings volatility from extraordinary items suggest prudence in raising dividends until cash conversion normalizes. Without capex and FCF disclosure, we assume maintenance-level capex given low D&A (0.60), implying potential headroom for distributions. Policy outlook cannot be inferred from the data; monitor full-year guidance and any stated shareholder return targets.

Risk Assessment

Business Risks:

• Demand cyclicality in communications/antenna end-markets and project timing risk (e.g., 5G rollout pacing).
• Pricing and input cost risk (metals like copper/aluminum and electronic components) affecting gross margin.
• Supply chain constraints or lead-time volatility impacting deliveries and inventory levels.
• Customer concentration risk if large telecom OEMs/operators represent significant sales.
• Product obsolescence risk given rapid technology cycles in communications hardware.

Financial Risks:

• Cash conversion risk: OCF/NI at 0.46x indicates working capital absorption may persist if growth continues.
• Earnings volatility from extraordinary items affecting PBT and net margin.
• FX exposure if there is export/import activity (not disclosed), potentially impacting margins.
• Interest rate risk on large cash balances (reinvestment yield variability) and any unreported debt.

Key Concerns:

• Large extraordinary loss (~7.0) between ordinary income and PBT this quarter; recurrence would depress reported earnings.
• Negative effective tax rate (-17.6%) indicates tax credits or one-offs; sustainability unclear.
• Limited disclosure on capex, dividends, and interest-bearing debt constrains full cash and return analyses.

Investment Implications

Key Takeaways:

• Core operations strengthened materially: operating income +83.6% on revenue +33.3% with OPM ~23.9%.
• Bottom-line volatility persists due to extraordinary items; net income -77.9% YoY despite strong operations.
• Balance sheet is cash-rich and under-levered (D/E 0.18x; cash 105.34), providing resilience.
• Cash conversion lag (OCF/NI 0.46x) is the main near-term quality watchpoint.
• ROE at 5.7% reflects strong net margin but is capped by low leverage and modest asset turnover.

Metrics to Watch:

• Cash conversion cycle: OCF/NI, receivables days, inventory days.
• Sustainability of operating margin at ~24% amid input cost and pricing dynamics.
• Extraordinary gains/losses and their recurrence; reconciliation from ordinary income to PBT.
• Order trends and backlog related to communications infrastructure projects.
• Capital allocation: capex levels, dividend policy, and use of large cash holdings.

Relative Positioning: Within electronics/components peers, the company exhibits superior liquidity and near-term operating margin strength, but lower ROE due to conservative leverage and cash-heavy balance sheet; headline earnings may appear weaker versus peers in periods with sizable one-offs.

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