ENPLAS CORPORATION FY2026 FY Earnings Report

Financial Highlights

• Net Sales: ¥42.54B
• Operating Income: ¥6.16B
• Net Income: ¥3.31B
• EPS: ¥587.90

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

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AI Financial Analysis

Executive Summary

Verdict: Strong topline and operating momentum with high-quality cash conversion, underpinned by a surge in Semiconductor Peripherals, tempered by working-capital intensity and elevated capex. Revenue rose 11.7% YoY to 425.4 and operating income increased 16.6% YoY to 61.64, lifting operating margin to 14.5%. Net income attributable to owners grew 32.7% YoY to 52.33, expanding net margin to 12.3%. Gross profit reached 193.55 with a gross margin of 45.5%. Operating margin expanded by roughly 60 bps YoY (from 13.9% to 14.5%), while gross margin compressed by about 40 bps. Net margin expanded by about 190 bps YoY (from 10.4% to 12.3%) on lower tax burden and improved non-operating line. Ordinary income rose 19.0% YoY to 64.82, supported by modest non-operating income (1.3% of sales) and low interest expense. Cash quality was solid: operating cash flow of 69.92 equates to 1.34x net income, and OCF/EBITDA of 0.82x is adequate in a heavy investment year. Free cash flow was slightly positive at 1.01 after sizable capex of 55.24 and 15.67 of intangible additions. Balance sheet strength is a key positive with cash and deposits of 238.17, total liabilities of 84.75, and current ratio at 606.6%. Segment mix improved substantially: Semiconductor Peripherals delivered 21.1% margin and 49.74 of operating income (≈81% of consolidated OP). Digital Communication contracted sharply and posted a loss, but its revenue share is small (3.9%). Dividend capacity looks conservative with a 16.7% payout ratio, albeit FCF coverage is tight this year due to growth investments. Forward-looking, guidance implies continued growth (sales +12.8% YoY and OP +3.8%), which appears attainable if Semiconductor momentum sustains and new capacity (high CIP) ramps on schedule. Key watch items include receivable days (77), CCC (123 days), and execution risk around large construction-in-progress (CIP at 36.9% of PPE). Overall, the earnings trajectory and cash generation support a constructive outlook, with working-capital discipline and project execution as primary focus areas.

Profitability Analysis

ROE decomposition: ROE (8.4%) = Net Profit Margin (12.3%) × Asset Turnover (0.599) × Financial Leverage (1.14x). The most material YoY change was in Net Profit Margin, which improved from roughly 10.4% to 12.3%, driven by stronger operating leverage in Semiconductor Peripherals and a lighter effective tax rate (16.4%). Asset turnover was broadly stable (current 0.599 vs prior ~0.606), as asset growth from capex and CIP largely matched revenue expansion. Financial leverage ticked up slightly (assets/equity 1.14x vs ~1.12x), but leverage contribution remains modest given the net cash position. The margin improvement reflects scale benefits and richer mix in high-margin semiconductor test sockets, partially offset by weakness in Digital Communication. Sustainability: operating margin expansion looks partly sustainable if semiconductor demand and utilization remain solid, and as new capacity moves from CIP to productive assets; however, mix normalization or a semiconductor downcycle could temper margins. SG&A rose to 131.90, but remained controlled relative to gross profit growth, supporting operating leverage.

Growth Assessment

Topline growth of 11.7% was volume- and mix-led, anchored by Semiconductor Peripherals (+46.4% sales, 21.1% margin). Operating income growth of 16.6% outpaced revenue on operating leverage and favorable segment mix. Ordinary income rose 19.0% with limited reliance on non-operating gains (interest income and minor FX net). EPS (basic) increased to 587.90 JPY, reflecting stronger profitability. The segment profile suggests sustainability tied to semiconductor cycle strength; Life Science and Energy Saving Solution delivered steady growth with improving profitability, offering some diversification. Digital Communication’s sharp contraction weighed on group diversity but is a smaller contributor. Capex at 55.24 and CIP of 92.52 indicate capacity expansion/new programs that can support medium-term growth if timely commercialized. Guidance for the next fiscal year targets Net Sales 4,800 and OP 640 (YoY +12.8% and +3.8%), implying modest further margin compression as costs/capacity ramp, yet still stable profitability. Execution on receivables and inventory normalization will be important to avoid growth being trapped in working capital. Overall growth quality is good, with recurring operating profit improvement, minimal dependence on one-offs, and cash conversion consistent with a growth investment phase.

Financial Health

Liquidity is exceptionally strong: current ratio 606.6% and quick ratio 606.6%, with cash and deposits of 238.17 far exceeding current liabilities of 66.89. Solvency is conservative: debt-to-equity 0.14x, interest coverage 89.3x at EBIT level (and 124x at EBITDA), and total liabilities only 11.9% of total assets. No warnings on leverage thresholds. Maturity mismatch risk is low: short-term obligations are amply covered by cash and receivables (89.67) and working capital stands at 338.89. Lease obligations are modest relative to cash flow (CL 2.38 and NCL 10.23). Off-balance sheet obligations noted are immaterial in the provided data. Equity increased to 625.71, driven by retained earnings and a higher foreign currency translation adjustment, supporting future investment capacity.

Notable B/S Changes

Intangible Assets: +17.96 (+257%) to 23.94 - stepped-up software and intangible investment to support growth. Accounts Payable (trade): +6.44 (+47.9%) to 19.88 - higher procurement aligned with revenue and inventory build. Investment Securities: +3.46 (+46.4%) to 10.92 - increased financial investments; modest impact on liquidity risk. Construction in Progress: +40.72 (+78.6%) to 92.52 - significant capacity expansion; monitor ramp and ROI. Deferred Tax Assets: +7.92 (+410%) to 9.85 - recognition of deductible temporary differences; supports equity. Valuation & Translation Adjustments (AOCI): +19.29 (+32.9%) to 77.99 - primarily FX translation gains boosting net assets. Non-Controlling Interests: -6.16 (-80.4%) to 1.50 - structural change in subsidiaries’ ownership/earnings attribution.

Cash Flow Quality

OCF/Net Income at 1.34x indicates healthy earnings cash conversion. FCF was slightly positive at 1.01 despite elevated capex (55.24) and intangible additions (15.67), consistent with a growth investment cycle (CapEx/Depreciation 2.31x). Cash conversion (OCF/EBITDA) of 0.82x is below the 0.9x ‘excellent’ benchmark, reflecting working-capital build: receivables increased (DSO 77 days) and inventories rose (raw materials + finished goods build), while payables also increased but remain relatively low. No signs of aggressive working-capital manipulation; tax payments and consumption tax movements also weighed on OCF in the year. Dividend and capex together exceeded FCF, but ample cash on hand bridged the gap.

Dividend Sustainability

Declared DPS totaled 90 JPY (45 + 45). The payout ratio is 16.7%, comfortably within sustainable bounds. On an OCF basis, dividends are well covered; on an FCF basis, coverage is tight at 0.12x due to high capex intensity in the year. With substantial cash (238.17) and low leverage, maintenance of the current dividend appears manageable even through an investment-heavy period. Future dividend flexibility will depend on capex cadence and the pace of OCF normalization as new capacity ramps and working capital turns.

Risk Assessment

Business risks include Segment concentration in Semiconductor Peripherals (55.5% of sales; ~81% of OP) exposes earnings to semiconductor cycle volatility, Digital Communication contraction and losses indicate product/market headwinds in optical/LED components, Pricing and customer concentration risk typical in semiconductor tooling/test sockets, Execution risk on scaling new capacity and technology transitions in key end markets.

Financial risks include Working-capital intensity: DSO 77 days and CCC 123 days elevate cash tied in operations, High construction-in-progress (CIP 36.9% of PPE) concentrates capital in non-productive assets pending ramp, FCF sensitivity to capex: CapEx/Depreciation at 2.31x implies continued cash demands if growth plan persists.

Key concerns include Quality Alert – HIGH_RECEIVABLE_DAYS: DSO 77 days indicates slower collections; while not unusual in certain industrial chains, it has lengthened and increases cash conversion risk, Quality Alert – LONG_CCC: CCC at 123 days (warning threshold >120) reflects extended operating cycle; this can compress OCF if growth continues without tighter WC control, Quality Alert – HIGH_CIP: CIP at 36.9% of PPE (>20% threshold) highlights project timing/execution risk; delays could defer revenue and depress returns.

Investment Implications

Key takeaways include Margin mix improved meaningfully on Semiconductor Peripherals strength (21.1% segment margin), Operating leverage and a lower effective tax rate lifted net margin to 12.3% and ROE to 8.4%, Cash generation is solid relative to earnings; FCF is constrained by deliberate growth investments, Balance sheet provides ample capacity to fund growth while sustaining dividends, Working-capital discipline and CIP-to-revenue conversion are the near-term swing factors.

Metrics to watch include DSO trend and CCC (targeting <90 days), CIP balance and conversion into productive PPE (ramp timing, yield), Segment margins, especially Semiconductor Peripherals vs Digital Communication recovery, OCF/EBITDA and FCF after capex as capacity ramps, Order intake/backlog (if disclosed) to validate guidance trajectory.

Regarding relative positioning, Within Japanese precision/industrial components peers, Enplas combines above-average operating margins with a conservative balance sheet. Its semiconductor exposure drives superior profitability in up-cycles, offset by higher working-capital needs and cycle risk compared to more diversified peers.