CMK CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥47.21B
• Operating Income: ¥448M
• Net Income: ¥2.63B
• EPS: ¥20.95

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

For FY2026 Q2, 日本シイエムケイ株式会社 reported revenue of ¥47.2bn (+2.0% YoY), but operating income fell sharply to ¥0.45bn (-74.6% YoY), indicating pronounced margin compression and negative operating leverage despite modest top-line growth. Gross profit was ¥7.60bn, translating to a gross margin of 16.1%, while operating margin contracted to 0.95%, highlighting elevated costs and/or unfavorable mix and utilization. Ordinary income of ¥1.09bn exceeded operating income, implying meaningful non-operating gains net of interest expense (¥0.19bn). Net income reached ¥1.49bn (-42.5% YoY), outpacing ordinary income due to sizable extraordinary gains; net plus taxes (¥0.92bn) implies roughly ¥2.42bn of pre-tax profit, suggesting approximately ¥1.32bn in net extraordinary gains before tax during the period. The DuPont framework shows a low ROE of 1.95% driven by a thin net margin (3.16%), modest asset turnover (0.339x), and moderate financial leverage (assets/equity 1.82x). EBITDA was ¥3.33bn (7.0% margin), with depreciation and amortization of ¥2.88bn weighing heavily on EBIT, consistent with a capital-intensive footprint. Interest coverage by EBIT was about 2.4x, indicating tighter headroom against rising interest costs. Liquidity is solid: current ratio 185.2%, quick ratio 155.1%, and working capital ¥28.70bn, providing flexibility to manage near-term volatility. The balance sheet appears conservatively capitalized, with debt-to-equity of 0.88x and an implied equity ratio around 54.9% (derived from disclosed assets and equity), notwithstanding the equity ratio field shown as zero (undisclosed). Operating cash flow was strong at ¥5.73bn, yielding an OCF/Net Income ratio of 3.84x, indicative of robust cash conversion likely aided by working capital inflows and non-cash D&A. Investing cash flow and cash balance were not disclosed (shown as zero, treated as undisclosed), limiting visibility on free cash flow and liquidity buffers; reported FCF of zero should be interpreted as not available rather than truly zero. Dividend data (DPS, payout) were not provided, so distribution capacity and policy execution cannot be verified from this dataset alone. Overall, the quarter reflects resilient revenue but pressured core profitability, offset in part by non-operating and extraordinary items and supported by strong operating cash generation. The key near-term issues are restoring operating margin, sustaining cash conversion without over-reliance on working capital releases, and maintaining adequate interest coverage. Data gaps (notably investing cash flows, cash balance, and dividends) temper the completeness of conclusions, but the available figures point to adequate liquidity and solvency with weak underlying operating profitability.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.16% (Net Income ¥1.492bn / Revenue ¥47.212bn)
• asset_turnover: 0.339x
• financial_leverage: 1.82x (Assets ¥139.4bn / Equity ¥76.5bn)
• calculated_ROE: 1.95% (matches reported)
• commentary: Low ROE is primarily driven by a compressed net margin; leverage is moderate and asset turnover subdued, consistent with a capital-intensive profile. margin_quality:
• gross_margin: 16.1% (¥7.595bn/¥47.212bn)
• operating_margin: 0.95% (¥0.448bn/¥47.212bn)
• ordinary_margin: 2.31% (¥1.092bn/¥47.212bn)
• net_margin: 3.16%
• drivers: Significant divergence between operating and net margins due to non-operating and extraordinary gains; core margin pressure likely from input cost inflation, pricing/mix, and/or utilization. operating_leverage: Revenue grew +2.0% YoY while operating income declined -74.6% YoY, indicating negative operating leverage; fixed-cost absorption appears weaker and/or cost pass-through lagging. High D&A (¥2.88bn) relative to EBIT also magnifies sensitivity of operating profit to small revenue or cost changes.

Growth Assessment

revenue_sustainability: Top-line grew modestly (+2.0% YoY), suggesting stable demand, likely underpinned by core end-markets (e.g., automotive/industrial PCBs). However, the small growth rate amid a weak profit response implies competitive pricing or mix headwinds. profit_quality: Net profit benefited from extraordinary gains (implied ~¥1.32bn pre-tax), masking weak operating profitability. Ordinary income also exceeded operating income due to net non-operating gains. Core earnings quality is therefore mixed: operating weakness versus supportive below-the-line items. outlook: Near-term growth hinges on restoring operating margins via better utilization, cost control, and pricing discipline. Sustained demand recovery and material cost normalization would help; absent that, growth in reported earnings may rely on non-operating or extraordinary items, which are not repeatable.

Financial Health

liquidity:

• current_ratio: 185.2%
• quick_ratio: 155.1%
• working_capital: ¥28.696bn
• assessment: Strong liquidity cushion for near-term obligations; inventory at ¥10.141bn appears manageable relative to half-year sales. solvency:
• debt_to_equity: 0.88x
• interest_coverage: 2.4x (EBIT/Interest Expense: ¥0.448bn/¥0.189bn)
• equity_ratio: Approximately 54.9% (calculated: Equity ¥76.456bn / Assets ¥139.409bn), noting the reported 0.0% field reflects nondisclosure.
• assessment: Moderate leverage with adequate, but not ample, interest coverage; vigilance warranted if rates rise or operating profits remain depressed. capital_structure: Balanced with a solid equity base; leverage provides some financial flexibility, but rising debt costs could pressure coverage if operating recovery lags.

Cash Flow Quality

earnings_quality: OCF/Net Income at 3.84x (¥5.726bn/¥1.492bn) signals strong cash conversion, supported by non-cash D&A and likely working capital inflows. FCF_analysis: Investing cash flow is not disclosed (shown as zero), so true free cash flow cannot be determined. The reported FCF of zero should be treated as unavailable rather than an actual zero. working_capital: Positive OCF suggests efficient collections and/or inventory reduction; sustainability of this working capital release should be monitored to avoid reversal in subsequent periods.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are not disclosed (zeros indicate nondisclosure). With EPS at ¥20.95 for the period, capacity cannot be assessed without dividend policy details and full-year earnings visibility. FCF_coverage: Not assessable due to undisclosed investing cash flows and cash balance; OCF was positive, but capex needs for a capital-intensive business could be substantial. policy_outlook: Absent disclosed dividends and policy, evaluate future guidance, capex plans, and targeted payout frameworks to judge sustainability.

Risk Assessment

Business Risks:

• Margin pressure from input cost inflation (copper laminates, energy) and pricing competition.
• Utilization risk in a capital-intensive PCB manufacturing footprint, amplifying operating leverage.
• End-market cyclicality, especially automotive and industrial electronics demand swings.
• Customer concentration risk typical in PCB supply chains.
• FX exposure (JPY volatility) affecting export competitiveness and translation effects.
• Supply chain and geopolitics (China exposure, trade restrictions, logistics).

Financial Risks:

• Tight interest coverage (~2.4x) if operating recovery is delayed or rates rise.
• Potential reversal of working capital benefits that supported OCF.
• Capex intensity requiring sustained OCF or access to financing; investing CF undisclosed.
• Earnings volatility due to reliance on non-operating/extraordinary gains this period.

Key Concerns:

• Sharp deterioration in operating margin despite revenue growth.
• Dependence on extraordinary gains to achieve net profit growth relative to operating line.
• Limited visibility on cash and investing flows, constraining FCF and liquidity assessment.

Investment Implications

Key Takeaways:

• Core profitability is weak: operating margin at 0.95% with significant YoY decline in operating income.
• Net income benefited from non-operating and extraordinary items, inflating bottom-line relative to core performance.
• Liquidity is strong and leverage moderate, but interest coverage is only ~2.4x.
• Cash conversion is robust (OCF/NI 3.84x), likely aided by working capital; durability is uncertain.
• Data gaps on investing CF and cash balance limit assessment of FCF and balance sheet liquidity.

Metrics to Watch:

• Operating margin and EBITDA margin recovery trajectory.
• Order trends, book-to-bill, and pricing/mix indicators.
• Inventory days and receivables turnover to gauge working capital sustainability.
• Capex and investing cash flows to clarify FCF profile.
• Interest coverage and debt metrics amid rate/credit conditions.
• FX impacts on revenue and costs.

Relative Positioning: Within the Japanese PCB and electronics components space, the company appears financially sound with solid liquidity and moderate leverage, but currently underperforms on operating profitability, relying more on non-operating and extraordinary items to support earnings.

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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