DAISHINKU CORP. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥19.59B
• Operating Income: ¥179M
• Net Income: ¥-106M
• EPS: ¥-10.07

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

Daishinku Co., Ltd. (6962) reported FY2026 Q2 consolidated results under JGAAP showing modest topline growth but materially pressured profitability and thin operating cushions. Revenue was ¥19.59bn (+0.8% YoY), with gross profit of ¥4.53bn and a gross margin of 23.1%, indicating weak pricing power and/or under-absorption of fixed costs. Operating income fell to ¥0.18bn (-59.5% YoY), implying an operating margin of just 0.9%, as operating leverage worked against the company amid a largely flat sales base. Ordinary income turned to a loss of ¥0.09bn, reflecting non-operating burden including interest expense of ¥0.15bn that nearly offset operating profit. Net income was a loss of ¥0.32bn (EPS -¥10.07), though the YoY change (+5.0% YoY) suggests the loss narrowed slightly versus the prior-year period. Despite the loss, operating cash flow was positive at ¥1.74bn, supported by ¥1.98bn of depreciation and likely a working capital release; this points to cash flow resilience even as reported earnings are weak. The OCF/Net Income ratio of -5.43 should be interpreted with caution because the denominator is negative; qualitatively it indicates OCF outpaced accounting earnings. Liquidity remains solid with a current ratio of 196.7% and a quick ratio of 175.9%, aided by ¥48.93bn of current assets versus ¥24.87bn of current liabilities. The balance sheet shows total assets of ¥90.16bn and total equity of ¥45.32bn (implied equity ratio ~50.2%), although the reported “Equity Ratio: 0.0%” is an unreported placeholder rather than actual zero. Leverage is moderate (debt-to-equity 0.99x; financial leverage 1.99x), but interest coverage is thin at 1.2x on an operating-income basis, leaving little room for further margin compression. EBITDA was ¥2.16bn (11.0% margin), highlighting a sizeable non-cash cost base that can translate into stronger cash generation if volumes recover. Investing cash flow and cash balance are not disclosed (zeros indicate unreported), limiting visibility on capex intensity, free cash flow and liquidity buffers. Dividend was nil (DPS ¥0.00), consistent with near-term earnings pressure and a prudent cash preservation stance. DuPont analysis yields an ROE of -0.71%, driven by a -1.63% net margin, low asset turnover of 0.217 (period-to-asset base, typical for a half-year snapshot), and leverage of 1.99x. Overall, the company appears to be at a cyclical trough in profitability with adequate liquidity and moderate leverage, leaving upside sensitivity to demand normalization and margin recovery. Key near-term variables include gross margin trajectory, non-operating costs (especially interest), and working capital management.

Profitability Analysis

ROE_decomposition: Calculated ROE is -0.71%, driven by Net Profit Margin of -1.63%, Asset Turnover of 0.217, and Financial Leverage of 1.99. The negative margin is the primary drag on ROE; asset turnover is low for the half-year snapshot, and leverage provides limited amplification. margin_quality: Gross margin at 23.1% indicates constrained pricing and/or low capacity utilization. Operating margin is 0.9% (¥179m operating income on ¥19.59bn sales), with a significant gap to gross margin reflecting SG&A and fixed-cost burden. EBITDA margin of 11.0% underscores substantial non-cash costs (D&A ¥1.98bn), which can convert to cash if volumes stabilize. operating_leverage: Revenue grew +0.8% YoY while operating income fell -59.5% YoY, evidencing negative operating leverage. With interest expense at ¥149m nearly consuming operating income, even small margin changes materially affect bottom line. A modest recovery in utilization or mix could disproportionately improve operating profit.

Growth Assessment

revenue_sustainability: Topline grew +0.8% YoY to ¥19.59bn, indicating stabilization but no strong recovery. Given the asset base (¥90.16bn), current run-rate implies low asset productivity in this part of the cycle. profit_quality: Ordinary loss of ¥91m despite positive operating income highlights non-operating headwinds. Tax expense was reported at ¥126m alongside a net loss, suggesting deferred tax effects or non-recurring items; the provided effective tax rate metric (0.0%) is not reliable. Cash conversion is better than earnings due to D&A and likely working capital release. outlook: Earnings sensitivity is high to gross margin improvement and non-operating cost control. If demand normalizes and factory utilization rises, operating leverage could lift margins and ROE; conversely, sustained weak volumes would keep interest coverage tight and ROE negative.

Financial Health

liquidity: Current assets ¥48.93bn vs current liabilities ¥24.87bn yield a current ratio of 196.7% and a quick ratio of 175.9%, indicating strong short-term liquidity. Working capital is ¥24.06bn, providing buffer. solvency: Total liabilities ¥44.67bn vs equity ¥45.32bn imply debt-to-equity of 0.99x and financial leverage of 1.99x. Implied equity ratio is ~50.2% (equity/assets), despite the reported 0.0% placeholder. capital_structure: Interest expense of ¥149m versus operating income of ¥179m results in thin interest coverage (1.2x). While leverage is moderate, low profitability elevates refinancing and covenant sensitivity if conditions worsen.

Cash Flow Quality

earnings_quality: OCF of ¥1.74bn exceeds accounting earnings (net loss ¥0.32bn), supported by ¥1.98bn D&A and likely working capital inflows; OCF/NI ratio of -5.43 reflects the negative denominator and should be read qualitatively as strong cash conversion in the period. FCF_analysis: Investing cash flow is not disclosed (reported as 0 by placeholder), preventing a reliable free cash flow estimate. Given D&A of ¥1.98bn, maintenance capex is likely non-trivial; true FCF could be materially below OCF depending on capex. working_capital: Inventories are ¥5.18bn; with strong quick ratio, the company appears to have released working capital in the period. Monitoring inventory turnover and receivables collection will be critical to sustaining OCF if demand remains soft.

Dividend Sustainability

payout_ratio_assessment: Dividend per share is ¥0.00 with a reported payout ratio of 0.0%, consistent with a net loss (EPS -¥10.07). A payout would not be supported by earnings at current run-rate. FCF_coverage: FCF coverage cannot be assessed due to undisclosed investing CF (placeholder 0). Assuming ongoing capex, sustained dividends would require improved profitability and continued positive OCF. policy_outlook: Given thin operating margins and negative net income, a conservative dividend stance is prudent until earnings visibility improves and interest coverage strengthens.

Risk Assessment

Business Risks:

• Cyclical demand in end-markets leading to utilization swings and margin volatility
• Pricing pressure and product mix shifts compressing gross margin (23.1% this period)
• Operating leverage risk as small revenue changes drive large EBIT swings (-59.5% YoY OI on +0.8% sales)
• Supply chain and lead-time variability affecting inventory and delivery performance
• FX fluctuations impacting export competitiveness and input costs

Financial Risks:

• Thin interest coverage at 1.2x increases sensitivity to rate moves and earnings dips
• Ordinary loss (¥91m) despite positive OI highlights non-operating burden
• Limited visibility on cash balances and capex due to undisclosed cash and investing CF
• Potential working capital reversal risk if demand softens, pressuring OCF
• Moderate leverage (D/E 0.99x) could rise if losses persist or capex is debt-funded

Key Concerns:

• Sustained low operating margin (0.9%) with near-zero buffer versus interest expense
• Dependence on working capital releases and D&A for cash generation
• Unreported investing CF and cash balances constrain assessment of true FCF and liquidity headroom

Investment Implications

Key Takeaways:

• Topline stabilized (+0.8% YoY) but profitability remains weak (OI margin 0.9%)
• Ordinary and net losses driven by non-operating drag and thin operating cushion
• OCF positive (¥1.74bn) aided by D&A (¥1.98bn) and likely working capital release
• Liquidity is solid (current ratio 196.7%, quick ratio 175.9%), leverage moderate (D/E 0.99x)
• Interest coverage is tight at 1.2x; margin improvement is critical for resilience
• Implied equity ratio ~50.2% despite reported placeholder of 0.0%
• Dividend suspended (DPS ¥0.00), consistent with preservation amid negative earnings

Metrics to Watch:

• Gross margin trajectory and operating margin versus interest expense
• Order trends and book-to-bill (not disclosed), as indicators of demand normalization
• Inventory turnover and receivables collection to sustain OCF
• Capex and investing CF to gauge true FCF and cash needs
• FX exposure and its impact on ASPs and input costs
• Ordinary income drivers (interest and other non-operating items) affecting bottom line

Relative Positioning: Within Japan’s electronic components space, Daishinku currently exhibits below-par profitability and asset productivity but maintains solid liquidity and moderate leverage; recovery potential hinges on cyclical demand normalization and margin repair.

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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