NISSAN SHATAI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥186.19B
• Operating Income: ¥5.55B
• Net Income: ¥3.71B
• EPS: ¥27.41

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

Verdict: Solid top-line growth with modest margin expansion and strong cash conversion in FY2026 Q2 (cumulative), but capital efficiency remains subdued versus benchmarks. Revenue rose 26.8% YoY to 1,861.9, driving operating income up 34.0% YoY to 55.5 and net income up 45.1% to 37.1. Operating margin is 3.0% (55.5/1,861.9), implying an estimated ~+16 bps improvement YoY based on growth differentials (operating income grew faster than revenue). Net margin is 2.0%, implying an estimated ~+25 bps YoY expansion given net profit outpaced sales growth. Gross margin sits at 4.9%, and SG&A ratio is a lean 1.9%, indicating better fixed-cost absorption on higher volumes. Ordinary income reached 60.3 with non-operating net gains of 4.7 supporting profit, but reliance on non-operating items is limited (non-operating income ratio 14.9%), keeping earnings quality anchored in operations. Operating cash flow was strong at 83.8, 2.26x net income, indicating high cash conversion and limited earnings quality concerns this quarter. Interest coverage is very robust at 241x on minimal interest expense, reflecting a conservative balance sheet and low financial risk. Liquidity is ample with a current ratio of 208%, cash of 747.6 exceeding accounts payable of 412.8, and working capital of 875. Capital efficiency is the weak spot: ROIC is 3.7% (below the 5% warning threshold), and ROE is 2.1%, highlighting low returns relative to equity base despite earnings growth. The effective tax rate of 31.1% is normalized, with limited distortion from tax items. With investing cash flows and capex unreported, free cash flow coverage of dividends cannot be confirmed despite a calculated payout ratio of 47.4% (appearing conservative). Balance sheet strength supports dividend stability, but sustained improvement in ROIC and margins is needed to drive medium-term valuation upside. Forward-looking, continued volume recovery, productivity gains, and cost control could maintain margin momentum, but thin sector margins and input cost volatility constrain upside. Overall, the quarter shows improving profitability and strong cash generation against a still low-return base, with a need to translate growth into higher ROIC.

Profitability Analysis

ROE decomposition (DuPont): ROE 2.1% = Net Profit Margin (2.0%) × Asset Turnover (0.705x) × Financial Leverage (1.47x). The most notable change versus last year is likely the net profit margin, inferred from net income growth (+45.1%) outpacing revenue growth (+26.8%), while leverage appears stable and asset turnover improved in line with sales. Business driver: better fixed-cost absorption from higher volumes (SG&A ratio at 1.9%) and slight improvement in operating margin to ~3.0% supported profitability; non-operating tailwinds (net +4.7) also modestly lifted ordinary income. Sustainability: volume-driven margin gains can persist if model mix, utilization, and procurement savings continue, but auto body manufacturing remains low-margin and sensitive to FX and input costs, so gains may be incremental rather than step-change. Concerning trends: ROIC at 3.7% remains below a 7–8% management target typical for manufacturers, signaling that improved earnings have not yet translated into adequate returns on invested capital. Also, gross margin at 4.9% leaves limited buffer against cost shocks; any SG&A uptick or raw material inflation could compress margins. Operating leverage appears positive (OI growth > sales growth), but the absence of SG&A YoY detail limits precision. Overall, ROE is primarily constrained by low net margins and modest asset turnover, with minimal leverage employed.

Growth Assessment

Revenue growth of +26.8% YoY indicates strong volume recovery and/or favorable price/mix, consistent with operating income growth of +34.0% and net income +45.1%. Operating margin at 3.0% suggests incremental operating leverage; estimated YoY margin expansion of ~16 bps indicates that cost structure scalability is improving. Gross margin at 4.9% is still thin, implying limited pricing power or cost pass-through in a competitive OEM-supplier environment. Ordinary income (60.3) benefited from net non-operating gains (4.7), but the profit mix remains largely operating-driven, which supports sustainability. The EBITDA margin of 5.9% provides some cushion for capex needs, but the margin level remains modest. Outlook: continued normalization of supply chains (semiconductors/logistics) and better plant utilization could support further margin gains; however, FX volatility and raw material steel/aluminum price changes could cap upside. With ROIC at 3.7%, future growth focus should be on productivity/asset turnover enhancement rather than pure volume expansion to improve returns. Absent segment disclosure, sustainability by model/program is not observable; concentration to Nissan OEM programs remains an implicit risk to growth continuity.

Financial Health

Liquidity is strong: current ratio 208.1% and quick ratio 208.1% comfortably exceed benchmarks, with cash and deposits of 747.6 covering 92% of current liabilities (809.6). No explicit short- or long-term loan balances are disclosed, but interest expense is minimal (0.23) and interest coverage is 241x, suggesting low leverage and limited refinancing risk. The provided D/E metric is 0.47x, indicating conservative capital structure, though interest-bearing debt specifics are unreported. Maturity mismatch risk appears low: current assets (1,684.6) significantly exceed current liabilities (809.6), and accounts payable (412.8) are well covered by cash (747.6) plus receivables (745.1). Total equity is 1,790.7 (book value per share 1,322 JPY), supporting resilience. No off-balance sheet obligations are disclosed in the provided data. There are no threshold warnings (Current Ratio <1.0 or D/E >2.0). Overall solvency and liquidity positions are robust.

Cash Flow Quality

Earnings quality is high with OCF/Net Income at 2.26x, reflecting strong cash conversion. OCF of 83.8 comfortably exceeds net income of 37.1, likely driven by add-backs from depreciation (54.3) and manageable working capital movements. Free cash flow cannot be assessed as investing cash flows and capex were not reported; consequently, dividend and capex coverage from FCF is indeterminable. No signs of aggressive working capital management are evident from the disclosed metrics; receivables (745.1) are sizable but broadly aligned with revenue scale, and cash levels are high. The gap between EBITDA (109.8) and OCF (83.8) appears reasonable given typical working capital needs in auto manufacturing. Overall, cash flow quality supports the reported earnings, with no red flags from the available data.

Dividend Sustainability

The calculated payout ratio is 47.4%, which sits within a generally sustainable range (<60%). However, total dividends paid and DPS details are unreported, and FCF coverage cannot be calculated due to missing investing cash flows and capex. Balance sheet strength (high liquidity, low apparent leverage) and strong OCF provide a buffer for distributions. Absent guidance, we assume a stable-to-cautious dividend stance aligned with earnings growth and cash generation, with potential for adjustments depending on capex intensity for model changes and efficiency upgrades. Policy outlook depends on sustaining OCF and improving ROIC; with ROIC at 3.7%, management may prioritize reinvestment to lift returns before materially increasing payouts.

Risk Assessment

Business Risks:

• OEM customer concentration risk (high exposure to Nissan programs)
• Thin structural margins (gross margin 4.9%, operating margin ~3.0%)
• Commodity/input cost volatility (steel, aluminum, energy) impacting COGS
• FX exposure (JPY volatility affecting export/import balance and procurement)
• Supply chain disruptions (semiconductors, logistics constraints)
• Program lifecycle and mix risk (model changes affecting utilization)
• Quality/recall and warranty cost risk typical in auto body manufacturing

Financial Risks:

• Low capital efficiency (ROIC 3.7% below 5% benchmark)
• Potential capex requirements for line changes and electrification readiness
• Limited visibility on debt profile due to unreported interest-bearing debt details
• Dependence on working capital discipline to sustain OCF

Key Concerns:

• ROE of 2.1% and ROIC of 3.7% imply returns below likely cost of capital
• Sustainability of margin gains amidst input cost and wage inflation
• Missing disclosures (capex, investing CF, dividend cash out) constrain FCF assessment

Investment Implications

Key Takeaways:

• Revenue growth (+26.8% YoY) translated into disproportionate profit growth (OI +34%, NI +45%) with modest margin expansion.
• Cash conversion is strong (OCF/NI 2.26x) and liquidity is ample (current ratio 208%).
• Capital efficiency is the primary headwind (ROIC 3.7%, ROE 2.1%).
• Earnings quality is solid with limited reliance on non-operating items.
• Balance sheet conservatism limits downside risk but may cap return on equity absent efficiency gains.

Metrics to Watch:

• Operating margin trend (currently ~3.0%) and gross margin (4.9%)
• ROIC progression from 3.7% toward >5% and ideally >7%
• Capex and investing cash flows to assess FCF and dividend coverage
• Working capital metrics (DSO on receivables, payables discipline)
• Non-operating income/expenses stability
• FX impact and raw material cost pass-through

Relative Positioning: Within Japanese auto parts/body manufacturers, Nissan Shatai shows improving profitability and superior liquidity with very low financial risk, but it lags on capital efficiency (ROIC/ROE) and remains exposed to OEM concentration and thin structural margins.

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