AlphaPurchase Corporation FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥42.82B
• Operating Income: ¥1.03B
• Net Income: ¥594M
• EPS: ¥73.97

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

Alpha Purchase Co., Ltd. (consolidated, JGAAP) delivered solid profit growth in FY2025 Q3 year-to-date, with revenue up 6.1% YoY to ¥42.8bn and operating income up 22.6% YoY to ¥1.03bn, indicating positive operating leverage. Gross profit of ¥3.99bn implies a gross margin of 9.3%, consistent with a low-margin distribution/procurement model but showing enough scale benefit to lift operating margin to roughly 2.4%. Ordinary income of ¥1.04bn is close to operating income, reflecting minimal non-operating drag; interest expense was a negligible ¥0.1m. Net income rose 20.7% YoY to ¥717m, with a reported EPS of ¥73.97. DuPont decomposition highlights a 1.67% net margin, strong asset turnover of 2.71x, and financial leverage of 2.47x, yielding an ROE of 11.22%, aligned with the reported figure. EBITDA was ¥1.49bn, for a 3.5% margin, supporting the view of measured operating efficiency in a thin-margin business. Cash conversion was weak: operating cash flow was only ¥77.6m, or 0.11x net income, suggesting a working capital build or seasonal patterns in receivables/payables. Balance sheet leverage is moderate, with liabilities/equity at 1.93x and a computed equity ratio around 40.5% (vs. a reported 0.0% which appears undisclosed). Liquidity looks acceptable on headline ratios (current ratio 129.7%), but cash and equivalents were not disclosed, and most liabilities are current, indicating reliance on short-term funding. The interest coverage ratio is extremely high (9,745x), reflecting very low interest costs and limited refinancing risk near term. Taxes paid (¥233m) imply an effective tax rate in the mid-20% range on a simple basis, though the reported effective tax rate metric at 0.0% appears undisclosed. Dividend was not disclosed (DPS 0), with a reported payout ratio of 0%, consistent with either no interim dividends or an undisclosed policy for the period. Overall, profitability momentum is firm and ROE is healthy for the business model, but cash flow quality and short-term balance sheet intensity warrant monitoring. Data limitations include undisclosed cash, inventories, investing cash flows, and share count, which constrain deeper per-share and cash coverage analyses. Outlook hinges on sustaining revenue growth while managing working capital to convert earnings into cash.

Profitability Analysis

ROE_decomposition: ROE 11.22% = Net Margin 1.67% × Asset Turnover 2.713 × Financial Leverage 2.47. The result indicates that returns are predominantly driven by high asset turnover and moderate leverage rather than margin strength. margin_quality: Gross margin 9.3% and EBITDA margin 3.5% indicate a low-margin operating model with disciplined overheads. Operating margin is approximately 2.4% (¥1,033m/¥42,822m). Ordinary income closely tracks operating income, signaling limited non-operating noise. The implied effective tax burden (~23–25% using reported tax expense vs. pre-tax) is consistent with normal levels. operating_leverage: Revenue grew 6.1% YoY while operating income rose 22.6% YoY, evidencing positive operating leverage and some fixed-cost dilution. The scale effect appears to be the principal driver of margin expansion given stable gross margin characteristics typical of the business.

Growth Assessment

revenue_sustainability: Top-line growth of 6.1% YoY suggests stable demand and possible share gains in core categories. Given the high asset turnover, growth appears volume-led rather than mix-led margin expansion. profit_quality: Net income growth of 20.7% outpaced sales, supported by operating leverage and minimal financing costs. However, profit quality is tempered by low cash conversion (OCF/NI 0.11x), hinting at a working capital build that has not yet reversed. outlook: Assuming continued demand resilience and disciplined SG&A, mid-single-digit revenue growth with incremental margin gains is plausible. Near-term earnings trajectory will depend on normalizing working capital and maintaining procurement/sourcing efficiencies.

Financial Health

liquidity: Current ratio 129.7% and quick ratio 129.7% indicate adequate short-term coverage, with positive working capital of ¥3.65bn. Cash was not disclosed, and nearly all liabilities are current (¥12.27bn), so liquidity rests on receivable collections and supplier terms. solvency: Liabilities-to-equity is 1.93x. Using total equity of ¥6.39bn and total assets of ¥15.78bn, the computed equity ratio is ~40.5%. Interest burden is de minimis (interest expense ¥0.1m), and interest coverage is exceptionally high (9,745x). Structural solvency risk appears low given moderate leverage and strong coverage. capital_structure: Funding is skewed to current liabilities, consistent with a working-capital intensive model. With negligible financial interest expense, debt likely comprises low-cost short-term facilities and trade payables.

Cash Flow Quality

earnings_quality: OCF of ¥77.6m versus net income of ¥717m (0.11x) indicates weak conversion in the period, likely due to receivables growth or payables compression. Depreciation of ¥461m supports EBITDA/NI alignment but does not offset working capital outflows. FCF_analysis: Investing cash flow was undisclosed (reported as 0). Without capex data, free cash flow cannot be reliably measured; the provided FCF figure of 0 should be treated as not disclosed. Qualitatively, low OCF suggests constrained FCF in the quarter-to-date. working_capital: Inventory data were not disclosed. Given the business model and high asset turnover, receivables and payables swings likely drive OCF volatility. Monitoring DSO and DPO will be critical to assess normalization in Q4.

Dividend Sustainability

payout_ratio_assessment: DPS is reported as 0 and payout ratio 0%, indicating no disclosed dividends for the period. With EPS at ¥73.97, there is earnings capacity, but the company may be prioritizing reinvestment or balance sheet flexibility. FCF_coverage: FCF is not disclosed (reported as 0). Given low OCF, coverage of potential dividends from internally generated cash appears limited in the period; visibility improves once working capital normalizes and capex is disclosed. policy_outlook: No explicit policy is provided. A sustainable dividend framework would require consistent OCF above maintenance capex; current period data do not allow assessment of medium-term payout capacity.

Risk Assessment

Business Risks:

• Thin gross margins (9.3%) heighten sensitivity to input cost fluctuations and pricing pressure.
• Reliance on high asset turnover implies vulnerability to demand slowdowns or customer procurement rationalization.
• Working-capital intensity can drive cash flow volatility, particularly around quarter ends.
• Supplier concentration and terms risk typical of procurement/distribution models.
• Execution risk in maintaining SG&A discipline to sustain operating leverage.

Financial Risks:

• High proportion of current liabilities increases refinancing and liquidity management demands.
• Low OCF relative to earnings (0.11x) raises short-term cash conversion risk.
• Limited disclosure of cash, inventories, and investing cash flows reduces visibility on FCF and liquidity buffers.
• Potential exposure to interest rate normalization on short-term facilities, albeit current interest costs are minimal.

Key Concerns:

• Weak cash conversion despite strong earnings momentum.
• Dependence on working capital financing in a low-margin model.
• Data gaps (cash balance, capex, inventories) constrain full assessment of financial resilience.

Investment Implications

Key Takeaways:

• ROE of 11.22% is sound, driven by strong asset turnover and moderate leverage.
• Positive operating leverage evidenced by operating income growth (+22.6% YoY) outpacing revenue (+6.1%).
• Cash flow quality is the main watchpoint; OCF/NI at 0.11x suggests working capital drag.
• Balance sheet appears solid with a computed equity ratio ~40.5% and negligible interest burden.
• Liquidity adequate on ratios, but heavy use of current liabilities warrants close monitoring of collections and payables.

Metrics to Watch:

• OCF/Net income and free cash flow once capex is disclosed.
• Receivables days (DSO), payables days (DPO), and any inventory disclosures.
• Gross margin stability amid input cost and pricing dynamics.
• SG&A as a percent of sales to gauge sustainability of operating leverage.
• Leverage mix between short-term and long-term funding; interest cost trends.

Relative Positioning: Within low-margin procurement/distribution peers, the company exhibits above-average asset turnover and healthy ROE, but weaker cash conversion in the period and heavier reliance on short-term liabilities position it as operationally efficient yet working-capital intensive.

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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