Imasen Electric Industrial Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥42.56B
• Operating Income: ¥486M
• Net Income: ¥1.85B
• EPS: ¥45.95

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

Imasen Electric Industrial Co., Ltd. (7266) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥42.56bn, down 8.5% YoY, but operating income improved sharply to ¥0.49bn (+204.9% YoY), evidencing significant cost discipline and/or product mix improvement despite top-line pressure. Gross profit was ¥3.19bn, translating to a thin gross margin of 7.5%, while operating margin was 1.1%, consistent with a low-margin, volume-driven auto-parts profile. Net income came in at ¥0.99bn (-45.7% YoY), creating a divergence from the strong operating rebound; this suggests non-operating and/or tax effects impacted bottom line under JGAAP, as ordinary income (¥0.40bn) is below operating income and recorded income tax expense (¥1.10bn) is outsized relative to ordinary income. DuPont metrics indicate a modest ROE of 1.88%, driven by a 2.32% net margin, 0.567x asset turnover, and 1.43x financial leverage—highlighting low profitability rather than balance-sheet constraint as the key limiter of returns. Liquidity is robust, with a current ratio of 256.7% and quick ratio of 188.1%, helped by sizeable working capital (¥32.12bn). The balance sheet is conservatively capitalized: total liabilities of ¥25.29bn against equity of ¥52.59bn (debt-to-equity 0.48x), implying an equity ratio around 70% by calculation (notwithstanding the disclosed 0.0% placeholder). Cash generation was strong relative to earnings; operating cash flow of ¥2.61bn implies an OCF/net income ratio of 2.64x, supporting earnings quality. Interest coverage at 3.7x (operating income/interest) is adequate given the low leverage, though operating cushions remain thin. EBITDA was ¥1.98bn (4.6% margin), pointing to limited operating headroom if volumes weaken further. Revenue contraction may reflect normalization from prior supply-chain disruptions or program timing in the auto sector; nevertheless, the sharp operating improvement indicates progress on fixed-cost absorption, procurement, or pricing/mix. Dividend information is not disclosed; financing cash outflow of ¥3.05bn likely reflects debt repayments and/or shareholder returns, but DPS and cash balance were not reported. Data limitations exist for several items (e.g., cash balance, investing cash flow, equity ratio, DPS), and zeros should be interpreted as unreported rather than true zeros. Overall, the company shows defensive financial health and improving operating traction, but profitability remains structurally modest and bottom-line volatility from non-operating/tax items is a near-term watchpoint.

Profitability Analysis

ROE_decomposition: ROE 1.88% = Net margin 2.32% x Asset turnover 0.567x x Leverage 1.43x. The main constraint is the low net margin; leverage is modest and asset turnover is typical for an auto supplier with sizable working capital. margin_quality: Gross margin 7.5% and operating margin 1.1% indicate tight cost-to-serve dynamics. Operating income grew +204.9% YoY despite an 8.5% revenue decline, suggesting improved cost control, mix, or price recovery. However, ordinary income (¥0.40bn) fell below operating income (¥0.49bn), implying negative non-operating impact (e.g., FX, equity method, or other non-operating expenses). Net margin at 2.32% is inflated versus ordinary income due to below-the-line items; tax expense reported (¥1.10bn) appears high relative to ordinary and operating income under JGAAP classification. operating_leverage: The swing to higher operating income on lower revenue implies favorable operating leverage from fixed-cost absorption improvements and cost-downs. EBITDA margin at 4.6% provides limited buffer; further volume declines could pressure operating earnings given thin gross margins.

Growth Assessment

revenue_sustainability: Revenue declined 8.5% YoY to ¥42.56bn, likely reflecting program timing, customer production schedules, and/or normalization in the auto value chain. Sustainability will hinge on recovery in OEM builds, ramp of awarded programs, and currency effects. profit_quality: Operating income improvement appears operationally driven, but ordinary income undershot operating income and net income fell YoY, pointing to volatility in non-operating lines and tax effects. The OCF/net income ratio of 2.64x supports underlying earnings quality this period. outlook: Assuming stable OEM production and continued cost control, operating profitability could remain on an improving trajectory. However, thin gross margins, exposure to auto cycle, and potential non-operating/tax volatility temper visibility. Monitoring backlog/program pipeline and customer mix will be key.

Financial Health

liquidity: Current ratio 256.7% and quick ratio 188.1% indicate strong short-term liquidity. Working capital of ¥32.12bn provides a sizable liquidity cushion. solvency: Debt-to-equity 0.48x (total liabilities/equity) implies conservative leverage. Calculated equity ratio is approximately 70.1% (equity ¥52.59bn / assets ¥75.06bn), despite the disclosed 0.0% placeholder, indicating a solid capital base. capital_structure: Assets ¥75.06bn funded primarily by equity (¥52.59bn). Interest coverage at 3.7x is adequate; modest leverage reduces refinancing risk, though profitability-driven coverage is still somewhat tight.

Cash Flow Quality

earnings_quality: OCF ¥2.61bn versus net income ¥0.99bn yields OCF/NI of 2.64x, indicating strong conversion and suggesting favorable working capital movements and/or non-cash charges (D&A ¥1.49bn). FCF_analysis: Investing cash flow was not disclosed (reported as 0), so Free Cash Flow cannot be reliably determined; the provided FCF of 0 should be treated as an unreported placeholder, not an actual value. working_capital: High current assets (¥52.63bn) relative to current liabilities (¥20.50bn) and inventories of ¥14.05bn indicate meaningful working capital intensity typical of auto components. The period’s healthy OCF suggests either inventory drawdown or receivables collection tailwinds, but itemized changes were not disclosed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio were not disclosed (zeros are placeholders). With EPS at ¥45.95, capacity for dividends depends on sustainable operating cash flow and capex needs. FCF_coverage: FCF is not computable due to missing investing cash flow; therefore, dividend coverage by FCF cannot be assessed from the provided data. policy_outlook: No policy information provided. Given a strong equity base and positive OCF, the balance sheet can support shareholder returns, but prudent policy would consider margin thinness, program volatility, and capex for model refreshes and EV-related components.

Risk Assessment

Business Risks:

• Auto production volatility impacting volumes and fixed-cost absorption
• Program concentration with key OEMs and model change timing risk
• Price-down pressure from OEMs compressing margins
• Input cost and logistics volatility affecting gross margins
• Technology transition risk (electrification, lightweighting) requiring ongoing investment
• FX exposure affecting non-operating results and competitiveness

Financial Risks:

• Thin operating and EBITDA margins leaving limited cushion in downturns
• Ordinary income below operating income indicates non-operating headwinds
• Tax volatility under JGAAP classifications affecting bottom line
• Working capital intensity tying up cash in inventories/receivables

Key Concerns:

• Sustainability of operating improvement amid declining revenue
• Non-operating and tax line volatility depressing net income
• Limited visibility on capex and cash balance due to unreported items

Investment Implications

Key Takeaways:

• Sharp operating profit recovery (+204.9% YoY) despite -8.5% revenue indicates effective cost control/mix improvement
• ROE of 1.88% constrained by low net margin; balance sheet strength is not the limiting factor
• Strong liquidity (current ratio 2.57x; quick ratio 1.88x) and conservative leverage (D/E 0.48x) underpin resilience
• OCF/NI of 2.64x signals solid earnings quality this period
• Non-operating and tax effects reduced ordinary and net income; bottom-line volatility is a key watchpoint
• Data gaps (cash, investing CF, DPS) limit full assessment of FCF and capital allocation

Metrics to Watch:

• Revenue trajectory by customer/program and any recovery in auto builds
• Gross and operating margin progression (targeting >8% gross, >2% operating as milestones)
• Ordinary income vs operating income gap (non-operating items, FX gains/losses)
• Capex and investing cash flows to assess true FCF and reinvestment needs
• Working capital turns (inventory days, receivable days) and OCF sustainability
• Interest coverage and leverage in relation to earnings volatility

Relative Positioning: Financially conservative with strong equity backing relative to many small/mid auto-parts peers, but structurally lower margins and sensitivity to OEM price-downs place profitability toward the lower end of the peer spectrum; recent operating rebound is a positive differentiator if sustained.

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
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