Alue Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥2.60B
• Operating Income: ¥218M
• Net Income: ¥-97M
• EPS: ¥55.41

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Alue Co., Ltd. (7043) reported FY2025 Q3 consolidated results under JGAAP with strong top-line momentum but flat profitability at the operating and net levels. Revenue rose 19.6% year over year to ¥2,598 million, while operating income was flat at ¥218 million, indicating material margin compression despite healthy growth. Gross profit was ¥1,283 million, implying a gross margin of about 49.4%, which is robust for a services-centric model but suggests that selling, general and administrative expenses expanded significantly. Ordinary income of ¥222 million modestly exceeded operating income, pointing to small net non-operating gains offsetting interest costs. Net income was ¥141 million (EPS ¥55.41), effectively flat YoY, and net profit margin stood at 5.43%. DuPont decomposition shows ROE of 10.81%, driven by a modest net margin, solid asset turnover of 1.099, and moderate financial leverage of 1.81x. Liquidity indicators are strong with a current ratio of 249.3% and working capital of approximately ¥819 million, implying ample short-term coverage. The balance sheet shows total assets of ¥2,365 million and total equity of ¥1,304 million, corresponding to a leverage consistent with the DuPont financial leverage factor; the reported 0.0% equity ratio reflects non-disclosure in the dataset rather than a true zero. Interest expense was limited at ¥2.147 million, and interest coverage is strong at 101.5x, suggesting minimal financial burden from debt-like obligations. The effective tax line shows a negative tax expense (¥-36.8 million), which likely reflects tax benefits or deferred tax adjustments, contributing to stable bottom-line results despite flat operating profit. Cash flow figures are not disclosed in this dataset (shown as zeros), limiting assessment of cash conversion and free cash flow. Dividends are not indicated (DPS 0, payout 0%), and share count metrics are not provided, which constrains per-share and capital allocation analyses beyond EPS. Overall, the company demonstrates healthy revenue growth, adequate returns, and strong liquidity, but the lack of operating leverage this quarter and reliance on cost investment to drive growth are key observations. The outlook hinges on converting top-line gains into margin expansion while sustaining quality of earnings through cash generation. Data limitations (notably cash flows, cash balance, and share count) require caution in interpreting coverage and payout metrics.

Profitability Analysis

ROE_decomposition: ROE 10.81% = Net margin 5.43% x Asset turnover 1.099 x Financial leverage 1.81. The result indicates moderate profitability on sales, efficient asset use, and conservative-to-moderate leverage. margin_quality: Gross margin ~49.4% (¥1,283m/¥2,598m) is solid. Operating margin ~8.39% (¥218m/¥2,598m) reflects cost pressure versus strong revenue growth. Net margin 5.43% benefits from a negative tax expense this period, which may not be recurring. operating_leverage: Revenue grew +19.6% YoY while operating income was flat, indicating negative operating leverage this quarter (SG&A growth offset gross profit gains). Sustained growth will require better expense discipline or mix improvements to restore operating margin expansion.

Growth Assessment

revenue_sustainability: Top-line growth of +19.6% suggests healthy demand, likely from training/services expansion and client acquisition or higher utilization. Absence of inventory supports a services-weighted model, but sustainability depends on repeat corporate demand and capacity utilization. profit_quality: Flat operating income despite strong revenue indicates increased operating costs (e.g., personnel, delivery capacity, sales investments). Net income stability benefits from non-operating items and tax benefits; underlying profit quality would be clearer with cash flow data. outlook: If growth investments normalize and pricing/mix hold, operating margins could recover, supporting ROE around low double digits. Key sensitivities include utilization, project mix, and client procurement cycles. Tax benefits are unlikely to be a persistent driver.

Financial Health

liquidity: Current assets ¥1,367m vs. current liabilities ¥548m yields a current ratio of 249.3% and working capital of ~¥818.7m, indicating strong short-term liquidity. Quick ratio matches due to zero-reported inventories. solvency: Total assets ¥2,365m and total equity ¥1,304m imply financial leverage ~1.81x. Interest coverage is strong at 101.5x, suggesting manageable debt service. capital_structure: Debt-to-equity is shown as 0.55x (likely using total liabilities as a proxy given no breakdown). Equity represents roughly 55% of assets by implication, consistent with moderate leverage.

Cash Flow Quality

earnings_quality: Operating cash flow and free cash flow are not disclosed (zeros indicate unreported). As a result, OCF/Net Income and FCF metrics cannot be assessed, and earnings-to-cash conversion remains uncertain. FCF_analysis: Free cash flow not available. With depreciation unreported, we cannot infer capex intensity or maintenance needs. Service-centric models typically have lighter capex, but verification is needed. working_capital: High current ratio and substantial working capital suggest cushion, but without cash/receivables detail and OCF, we cannot judge collection cycles or working capital efficiency.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is indicated at 0.0% with DPS 0. This suggests no dividend distribution for the period. FCF_coverage: Not assessable due to unreported OCF/FCF. Coverage analysis cannot be performed. policy_outlook: With ROE at ~10.8% and moderate leverage, capacity for future shareholder returns could exist contingent on cash generation and growth investment needs. However, absent cash flow disclosure and explicit policy, visibility is low.

Risk Assessment

Business Risks:

• Dependence on corporate training demand and client budgeting cycles
• Potential pricing pressure and mix shifts impacting margins
• Execution risk from scaling delivery capacity (personnel and partners)
• Seasonality around fiscal year planning of enterprise clients
• Competition from domestic and digital learning providers

Financial Risks:

• Margin compression due to rising SG&A and personnel costs
• Uncertain cash conversion given lack of disclosed OCF
• Potential reliance on tax benefits or non-operating items to sustain net income
• Working capital swings from receivables and prepayments

Key Concerns:

• Negative operating leverage despite strong revenue growth
• Lack of cash flow disclosure limits assessment of earnings quality
• Sustainability of negative tax expense impact on net income

Investment Implications

Key Takeaways:

• Strong revenue growth (+19.6% YoY) but flat operating income indicates cost pressure
• ROE at 10.81% supported by solid asset turnover and moderate leverage
• Liquidity is strong with a current ratio of ~2.5x and sizable working capital
• Interest burden is minimal; coverage above 100x
• Earnings quality and cash generation cannot be validated without OCF/FCF

Metrics to Watch:

• Operating margin trajectory and SG&A as a % of sales
• Order backlog or bookings (if disclosed) and revenue visibility
• OCF/Net income and FCF once disclosed
• Receivables days and collection trends
• Repeat rate and utilization in core training services
• Tax rate normalization in coming quarters

Relative Positioning: Within Japan’s HR development/training peer set, the company shows above-average growth and solid ROE with conservative leverage, but trails on operating leverage realization this quarter; visibility on cash conversion is weaker due to undisclosed cash flow data.

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