Mitsui High-tec,Inc. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥162.98B
• Operating Income: ¥9.23B
• Net Income: ¥9.35B
• EPS: ¥40.56

Income Statement

Balance Sheet

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

Mitsui High-tec (TSE: 6966) reported FY2026 Q3 consolidated results under JGAAP with modest top-line growth but notable margin compression. Revenue was 1,629.81 (100M JPY), up 3.0% YoY, while operating income declined 19.5% YoY to 92.29, indicating negative operating leverage. Gross profit was 233.97, implying a gross margin of 14.4%, but the operating margin fell to 5.7%, highlighting cost pressure and/or weaker price/mix. SG&A was 119.32, and the arithmetic GP minus SG&A would imply 114.65 of operating income; the reported 92.29 suggests approximately 22.4 of other operating charges (unitemized), weighing on profitability. Ordinary income of 103.63 was aided by non-operating income of 21.05 (including 6.69 of interest income) and 5.93 of non-operating expenses (including 2.14 of interest expense), though there appears to be roughly 3.8 of additional non-operating headwinds not itemized. Profit before tax rose to 132.12, exceeding ordinary income by about 28.5, indicating the presence of net extraordinary gains. Net income was 74.12, down 20.7% YoY, with an effective tax rate of 29.2%, consistent with a normalized tax burden. Liquidity is strong: current assets of 1,082.20 and current liabilities of 443.27 yield a current ratio of 244.1% and quick ratio of 223.9%. The balance sheet is conservative with equity of 1,139.71 (equity ratio ~47.3%) and long-term loans of 659.25 partially offset by cash and deposits of 443.84, implying modest net debt if short-term debt is minimal (unreported). Interest coverage remains robust at 43.1x, suggesting ample capacity to service debt despite lower operating profits. DuPont ROE is 6.5%, driven by a 4.5% net margin, 0.677x asset turnover, and 2.11x financial leverage, marking a mid-single-digit return profile pressured by margins. Comprehensive income of 69.40 is below net income, implying negative other comprehensive income impacts (e.g., FX or securities valuation), modestly reducing equity accretion. Working capital stands at 638.93, supporting operational resilience, though receivables data are unreported. Cash flow statements are not disclosed, limiting assessment of earnings-to-cash conversion and free cash flow; therefore, cash flow quality conclusions are provisional. Dividend data are mostly unreported; however, a calculated payout ratio of 106.5% suggests distributions exceeded earnings on a period basis, raising sustainability questions absent corroborating cash flow and policy detail. Overall, the company shows resilient liquidity and balance sheet strength, but faces cost/mix headwinds and elevated one-off items that distort the P/L, with incomplete disclosures on cash flows and dividends constraining visibility.

Profitability Analysis

ROE_decomposition: ROE 6.5% = Net margin 4.5% x Asset turnover 0.677 x Financial leverage 2.11x. The primary drag is margin compression; leverage is moderate and asset turnover is below 1x, indicative of capital intensity. margin_quality: Gross margin 14.4%; operating margin 5.7% (92.29/1,629.81). Operating income trails the GP minus SG&A bridge by ~22.4, implying other operating charges (e.g., one-off costs, impairments, or R&D classified as operating), which reduces underlying margin quality. Net margin is 4.5%, aided by net financial income but diluted by a typical tax rate and non-operating items. operating_leverage: Revenue +3.0% YoY while operating income -19.5% YoY indicates negative operating leverage, consistent with fixed-cost absorption pressure and/or pricing/mix deterioration. Interest coverage is strong (43.1x), so financial leverage does not amplify earnings volatility at current levels.

Growth Assessment

revenue_sustainability: Top-line growth of 3.0% YoY is modest. Without segment detail or order/backlog data, sustainability cannot be firmly assessed; however, the combination of modest growth and margin pressure suggests competitive pricing and/or cost inflation within core businesses. profit_quality: Ordinary income 103.63 vs PBT 132.12 highlights net extraordinary gains (~28.5) in the period; therefore, PBT and net income include non-recurring elements. Comprehensive income (69.40) is below net, reflecting OCI losses and indicating external market factors (e.g., FX, securities valuation) weighed on equity. outlook: Given margin compression and reliance on non-operating and extraordinary items, near-term earnings trajectory depends on cost control and normalization of one-offs. Absent evidence of accelerating demand or improved mix, profit recovery may lag revenue growth.

Financial Health

liquidity: Current assets 1,082.20 vs current liabilities 443.27 produce a current ratio of 244.1% and quick ratio of 223.9%, supported by 443.84 in cash and deposits. Working capital is 638.93, providing ample cushion. solvency: Equity 1,139.71 and total assets 2,406.90 imply an equity ratio of ~47.3%. Long-term loans total 659.25; noncurrent liabilities exceed current liabilities, spreading refinancing risk. Interest coverage is 43.1x, indicating comfortable debt service capacity. capital_structure: Debt-to-equity is 0.99x (reported). Using disclosed items only, long-term loans are ~0.58x of equity and are partially offset by cash; a proxy net debt to equity using LT loans only is ~0.19x, but short-term borrowings are unreported, so true net leverage may be higher.

Cash Flow Quality

earnings_quality: OCF is unreported, preventing direct assessment of earnings-to-cash conversion. The presence of non-operating and extraordinary items suggests statutory earnings include elements not tied to core cash generation. FCF_analysis: Capex and OCF are unreported; hence FCF cannot be derived. Given the capital-intensive profile (asset turnover 0.677), capex likely influences FCF volatility, but this cannot be quantified here. working_capital: Inventories are 89.58; accounts payable are 233.78. Receivables are unreported. With limited disclosure, we cannot evaluate DSO/DIO/DPO or working capital efficiency. High working capital (638.93) indicates liquidity headroom but not necessarily efficiency.

Dividend Sustainability

payout_ratio_assessment: The calculated payout ratio of 106.5% exceeds 100%, implying dividends outpaced earnings for the period. However, DPS and total dividends paid are unreported, so the ratio’s basis may reflect company guidance or interim allocations; treat with caution. FCF_coverage: FCF is unreported, so cash coverage of dividends cannot be assessed. Cash on hand (443.84) is sizable, but sustainable dividends depend on recurring OCF and capex requirements, not cash balances alone. policy_outlook: With earnings down 20.7% YoY and margin pressures evident, maintaining an above-earnings payout would likely require reliance on balance sheet capacity or improving cash generation; absent disclosed policy or FCF detail, visibility is low.

Risk Assessment

Business Risks:

• Margin compression from input cost inflation and/or adverse price/mix
• Negative operating leverage amid modest revenue growth
• Dependence on non-operating and extraordinary items to support statutory earnings
• Potential FX volatility affecting OCI and comprehensive income
• Industry cyclicality given capital goods/auto-electronics exposure (general sector context)

Financial Risks:

• Partial reliance on long-term loans (659.25) with unknown short-term debt exposure
• Unreported cash flow statement obscures OCF stability and FCF coverage
• Potential working capital volatility with incomplete receivables disclosure
• Dividend payout above earnings (calculated 106.5%) may strain cash if sustained

Key Concerns:

• Operating income decline (-19.5% YoY) despite revenue growth (+3.0%)
• Unitemized other operating charges (~22.4) pressuring core profitability
• Earnings boosted by extraordinary gains (~28.5), clouding underlying trend
• Limited disclosure on OCF, capex, and dividend details reduces visibility

Investment Implications

Key Takeaways:

• Top-line grew 3.0% YoY but margins compressed; operating margin at 5.7%
• ROE at 6.5% reflects subdued profitability; leverage moderate at 2.11x
• Strong liquidity (current ratio 244%) and high interest coverage (43.1x)
• Ordinary-to-PBT gap indicates sizable extraordinary gains in the period
• Comprehensive income below net income suggests OCI headwinds
• Dividend sustainability uncertain as calculated payout exceeds earnings

Metrics to Watch:

• Operating margin trajectory and any normalization of other operating charges
• Order trends/backlog and pricing/mix in core products
• OCF/Net income ratio and capex to assess FCF generation
• Net debt (including any short-term borrowings) and refinancing schedule
• Inventory and payable dynamics; receivables disclosure when available
• Dividend policy updates and payout guidance

Relative Positioning: Versus TSE electrical components/precision peers, Mitsui High-tec shows strong liquidity and balance sheet resilience but mid-tier ROE and pressured margins, with higher reliance on non-core and extraordinary items this period and limited cash flow disclosure, placing it in a cautious middle-of-the-pack profitability profile.

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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