Sportsfield Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥3.15B
• Operating Income: ¥698M
• Net Income: ¥414M
• EPS: ¥62.62

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

Sports Field Co., Ltd. (TSE: 7080) delivered solid topline and earnings expansion in FY2025 Q3 on a consolidated JGAAP basis, with revenue of ¥3,154 million (+10.8% YoY) and operating income of ¥698 million (+7.2% YoY). Net income rose 10.4% YoY to ¥457 million, translating to EPS of ¥62.62. Profitability remains robust: gross profit margin stands at 86.8%, operating margin at about 22.1%, and net margin at 14.5%. Operating leverage was positive but moderated versus revenue growth, suggesting some incremental SG&A investment or cost normalization. DuPont analysis indicates a strong ROE of 21.72%, driven primarily by a high net margin (14.49%), modest asset turnover (~1.00x), and moderate financial leverage (assets/equity of 1.49x). Balance sheet strength is notable: total assets of ¥3,140 million and total equity of ¥2,104 million imply an equity ratio around 67% (calculated), despite the reported equity ratio field showing 0.0% (unreported). Liquidity looks ample with a current ratio of 296% and working capital of ¥1,495 million, consistent with the low working-capital intensity of a services model. Financial risk appears low, given minimal interest expense (¥1.28 million) and extremely high interest coverage (~547x). Ordinary income of ¥700 million is close to operating income, indicating limited non-operating volatility in the quarter. While depreciation and amortization were not disclosed, operating income provides a clean view of core profit generation. The effective tax rate is implied at roughly 34% (¥236 million tax on ~¥693 million pre-tax profit), which is typical for Japan and suggests no unusual tax items. Cash flow data were not disclosed this quarter, so operating cash conversion and free cash flow cannot be evaluated; this is the key analytical limitation. Dividend information shows DPS as unreported (0.00), so payout policy and cash returns cannot be assessed from this dataset. Overall, the company combines double-digit revenue growth, high margins, and strong ROE with a conservative balance sheet, which is attractive for a niche HR services franchise. Outlook hinges on sustaining placement volumes and pricing in the campus recruiting cycle, while managing SG&A to preserve operating leverage.

Profitability Analysis

ROE_decomposition: Reported ROE is 21.72%, derived from Net Profit Margin 14.49% × Asset Turnover 1.004 × Financial Leverage 1.49. The primary driver is the elevated net margin, with asset turnover around 1.0x and moderate leverage providing a supportive but secondary contribution. margin_quality: Gross margin is 86.8% (¥2,736.7m/¥3,154.0m), consistent with a service-heavy revenue mix and limited cost of sales (¥111.4m). Operating margin is ~22.1% (¥698m/¥3,154m), indicating disciplined SG&A despite growth investments. Net margin of 14.5% includes an implied effective tax rate of ~34% (¥236.2m tax on ~¥693.2m pre-tax), suggesting normal tax treatment and limited non-recurring items. operating_leverage: Revenue grew 10.8% YoY while operating income grew 7.2% YoY, implying modest operating margin compression and indicating that fixed costs or strategic investments rose ahead of revenue. Leverage remains positive but lower than the prior period; maintaining SG&A efficiency will be key to sustain margin levels.

Growth Assessment

revenue_sustainability: Topline growth of +10.8% YoY appears healthy for a specialized HR services provider, likely supported by solid demand in the graduate recruitment cycle and client adoption in niche sports-affiliated segments. profit_quality: Ordinary income closely tracks operating income (¥700m vs. ¥698m), pointing to low non-operating noise. Interest expense is de minimis (¥1.3m), and the implied tax rate is in a normal range, supporting high-quality earnings. outlook: With ROE at 21.7% and a strong balance sheet, the company is well-positioned to invest for growth. Key dependencies include hiring sentiment among client companies, student placement volumes, fee rates, and the timing/seasonality of campus recruiting. Maintaining pricing and utilization while scaling consultant headcount should support continued growth, though operating leverage may be tempered if SG&A investments persist.

Financial Health

liquidity: Current assets ¥2,258.2m vs. current liabilities ¥762.9m yield a current ratio of ~296% and quick ratio of ~296% (inventory unreported), indicating strong short-term liquidity. Working capital stands at ¥1,495.3m. solvency: Total liabilities are ¥944.1m against total equity of ¥2,104.0m; implied equity ratio is ~67% (2,104/3,140), and leverage (assets/equity) is 1.49x as per DuPont. Interest burden is negligible with interest expense of ¥1.28m and interest coverage ~547x. capital_structure: Debt-to-equity is reported at 0.45x (based on total liabilities/equity). The company operates with low financial risk and ample capacity to fund growth organically.

Cash Flow Quality

earnings_quality: Cash flow data are not disclosed this period. Earnings quality is inferred from stable margins, low non-operating items, and a normal implied tax rate. However, confirmation via OCF and working capital movements is not possible from the dataset. FCF_analysis: Free cash flow cannot be calculated as operating and investing cash flows are unreported. Given the asset-light model and low interest burden, the medium-term FCF potential is likely solid, but verification awaits cash flow disclosure. working_capital: Inventories are unreported (0). With services-based revenue, receivables and accrued revenues typically drive working capital; monitoring DSO and collection patterns is important, especially around the graduation hiring season.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are unreported (0.00), so current dividend policy cannot be assessed from the provided data. Earnings capacity at ¥457m net income suggests room for shareholder returns, but policy remains unknown. FCF_coverage: FCF coverage of dividends cannot be evaluated because OCF and capex are unreported. policy_outlook: Given strong ROE and low leverage, the company has optionality to balance reinvestment and distributions. Any shift toward a defined payout policy would depend on sustained cash conversion and growth opportunities.

Risk Assessment

Business Risks:

• Cyclical hiring demand tied to macro conditions and client capex/employment plans
• Seasonality and timing risk around new-graduate recruitment cycles
• Pricing pressure and competition in HR placement services
• Dependence on placement volumes and consultant productivity/utilization
• Potential client concentration in key industries or large accounts
• Regulatory changes affecting labor dispatch/recruitment activities

Financial Risks:

• Working capital swings affecting cash conversion (receivables, accrued revenue)
• Exposure to tax rate fluctuations (implied ~34%) and any tax policy changes
• Potential increase in fixed cost base reducing operating leverage if growth slows
• Limited visibility due to unreported cash flow data in the period

Key Concerns:

• Moderation in operating leverage vs. revenue growth (OP +7.2% vs. Sales +10.8%)
• Lack of disclosed cash flow figures prevents assessment of cash conversion and FCF
• Unreported DPS/payout leaves capital return policy unclear

Investment Implications

Key Takeaways:

• Double-digit revenue growth (+10.8% YoY) with solid profitability (OP margin ~22%)
• High ROE at 21.72% driven by strong net margin and moderate leverage
• Robust balance sheet with implied equity ratio ~67% and current ratio ~296%
• Interest burden is minimal; interest coverage ~547x
• Operating leverage positive but softened, signaling higher SG&A investment
• Cash flow and dividend data unreported, limiting visibility on cash returns

Metrics to Watch:

• Operating cash flow and free cash flow conversion versus net income
• DSO/receivables trends and collection efficiency around peak hiring seasons
• SG&A-to-sales ratio and consultant productivity (placements per head, fee rates)
• Operating margin trajectory and unit economics (pricing vs. cost inflation)
• Ordinary income stability and effective tax rate normalization
• Headcount growth and capacity utilization in core segments

Relative Positioning: Within Japan-listed HR and staffing peers, Sports Field exhibits above-average margins and ROE with conservative leverage, consistent with a niche, asset-light placement model; visibility on cash conversion and capital return policy remains a relative gap until cash flow disclosures are available.

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