MEIWA INDUSTRY CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥11.12B
• Operating Income: ¥217M
• Net Income: ¥-45M
• EPS: ¥31.47

Income Statement

Balance Sheet

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

Meiwa Industry Co., Ltd. (7284) delivered modest topline growth and a sharp rebound in operating profitability in FY2026 Q2 under JGAAP on a consolidated basis. Revenue rose 0.9% YoY to ¥11.121bn, while operating income surged to ¥217m (+199.1% YoY), indicating meaningful cost control and/or mix improvement despite a flattish demand backdrop. Gross profit was ¥1.523bn, implying a gross margin of 13.7%, and the operating margin expanded to roughly 2.0%, a notable improvement from the prior-year period’s depressed level. Ordinary income came in at ¥156m, below operating income, reflecting net non-operating costs, including ¥67.6m of interest expense. Net income was ¥110m, down 60.3% YoY, suggesting either a high tax burden, extraordinary items, or prior-year one-offs that boosted the base; this contrasts with the strong operating rebound and warrants attention to below-the-line items. DuPont decomposition points to an ROE of 0.95%, driven by a slim net margin of 0.99%, asset turnover of 0.473x, and financial leverage of 2.04x, illustrating that low margins remain the key constraint on returns. The company’s balance sheet appears reasonably balanced: total assets were ¥23.496bn, equity ¥11.529bn (implied equity ratio about 49.1%), and total liabilities ¥12.972bn (D/E ~1.13x as total liabilities-to-equity). Liquidity looks adequate with a current ratio of 142% and a quick ratio of 120%, supported by ¥2.275bn of inventories and solid working capital of ¥4.288bn. Interest coverage of 3.2x (operating income/interest expense) is acceptable but leaves limited cushion if operating conditions soften. Cash flow statements were not disclosed (zeros indicate unreported), limiting assessment of cash generation and capex intensity this quarter; similarly, D&A was not reported, so EBITDA cannot be inferred. Dividend per share (DPS) is undisclosed (reported as 0.00), and payout appears nil in the period, aligning with the company’s priority on rebuilding earnings quality and balance sheet resilience. EPS was ¥31.47, which implies an approximate share count near 3.5 million, subject to rounding and potential treasury share effects. Net margin compression versus operating margin suggests pressure from interest, taxes, and/or non-operating items; a clearer view of extraordinary gains/losses would refine the quality of earnings assessment. Inventory levels relative to current assets appear manageable, though working capital discipline remains a key lever to convert earnings to cash. Overall, the quarter demonstrates improved operating efficiency with restrained revenue growth, while the sharp decline in net income highlights the importance of controlling financial and non-operating headwinds. Data gaps (cash flows, D&A, equity ratio disclosure) limit precision, but the available metrics indicate cautious improvement in core operations with residual pressure below the operating line.

Profitability Analysis

ROE_decomposition: ROE 0.95% = Net margin 0.99% × Asset turnover 0.473 × Financial leverage 2.04. The driver is low net margin; asset utilization is moderate and leverage is not excessive. margin_quality: Gross margin 13.7% (¥1.523bn/¥11.121bn) indicates modest value-add. Operating margin ~1.95% (¥217m/¥11.121bn) improved sharply YoY, evidencing cost control and/or better product mix. Net margin 0.99% lags operating margin due to non-operating expenses (interest ¥67.6m) and taxes/other items. operating_leverage: Revenue +0.9% YoY vs operating income +199.1% YoY implies strong operating leverage from a low base. Small improvements in gross profit or opex efficiency flowed disproportionately to EBIT.

Growth Assessment

revenue_sustainability: Topline grew 0.9% YoY to ¥11.121bn, suggesting stable demand but limited volume/price growth. Sustainability will depend on end-market trends and pricing power amid input cost normalization. profit_quality: Operating recovery to ¥217m with a 2.0% margin shows improving core execution. However, ordinary income (¥156m) and net income (¥110m) trail EBIT due to financing and other below-the-line items, tempering overall earnings quality. outlook: With modest sales growth and clear cost discipline, incremental margin expansion is plausible if volumes firm and non-operating drags abate. Monitoring non-operating gains/losses, tax effects, and interest costs is key to translating operating gains into net profits.

Financial Health

liquidity: Current ratio 142.4% and quick ratio 119.9% indicate adequate short-term coverage. Working capital stands at ¥4.288bn, supported by inventories of ¥2.275bn. solvency: Interest coverage at 3.2x is acceptable but not robust; a downturn in EBIT could pressure coverage. Total liabilities/Equity is ~1.13x (¥12.972bn/¥11.529bn). capital_structure: Implied equity ratio ~49.1% (¥11.529bn/¥23.496bn) despite the reported 0.0% disclosure flag. Leverage is moderate, providing some flexibility but requiring continued earnings support to maintain coverage.

Cash Flow Quality

earnings_quality: Cash flow statements and D&A were not disclosed this quarter; therefore, EBITDA and OCF-based earnings quality cannot be quantified. The low net margin versus operating margin and non-operating burdens suggest a need for disciplined cash conversion. FCF_analysis: OCF and capex are unreported; Free Cash Flow cannot be derived. Given inventory levels and modest margins, FCF resilience hinges on working capital turnover and capex discipline. working_capital: Current assets ¥14.404bn (including inventories ¥2.275bn) vs current liabilities ¥10.116bn. Focus should be on inventory turns and receivables collection to support OCF in subsequent quarters.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is reported as 0.0% with DPS unreported; no cash flow data to corroborate. Given net income of ¥110m and ongoing margin rebuilding, a conservative payout stance appears consistent with near-term priorities. FCF_coverage: Unassessable this quarter due to unreported OCF and capex; dividend coverage cannot be verified. policy_outlook: Future distribution capacity will depend on sustaining operating margin gains, stabilizing non-operating items (interest/other), and demonstrating consistent OCF generation.

Risk Assessment

Business Risks:

• Muted demand growth (revenue +0.9% YoY) limiting operating leverage realization if cost tailwinds fade
• Input cost volatility affecting a modest gross margin base (13.7%)
• Product mix and pricing power constraints in competitive end-markets
• Operational execution risk in inventory and cost control to sustain margin gains

Financial Risks:

• Interest coverage of 3.2x leaves limited cushion if EBIT softens
• Non-operating and tax impacts depressing net income vs operating income
• Working capital intensity potentially weighing on OCF in softer periods
• Data unavailability on cash, OCF, and capex impedes full solvency/FCF assessment

Key Concerns:

• Net income down 60.3% YoY despite EBIT recovery indicates below-the-line pressure
• Reliance on cost control over revenue growth for profit improvement
• Unreported cash flow and D&A figures prevent validation of earnings-to-cash conversion

Investment Implications

Key Takeaways:

• Core operations improved materially: operating income ¥217m (+199% YoY) on slight sales growth
• Net income ¥110m (−60% YoY) highlights non-operating/tax headwinds
• Liquidity adequate (current ratio 142%, quick ratio 120%); leverage moderate (liabilities/equity ~1.13x)
• Interest coverage 3.2x acceptable but sensitive to EBIT volatility
• Cash flow and D&A not disclosed; FCF and EBITDA not verifiable this quarter

Metrics to Watch:

• Operating margin trajectory and gross margin resilience
• Ordinary income vs operating income gap (non-operating costs, interest)
• Effective tax rate and any extraordinary items
• Inventory turns, receivables days, and overall OCF
• Capex levels and D&A once disclosed
• Interest expense trend and debt structure

Relative Positioning: Within Japan small/mid-cap industrial components peers, Meiwa exhibits improving operating efficiency from a low base, moderate leverage, and adequate liquidity, but lags on net margin durability and transparency on cash generation due to unreported 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