Matsuya R&D Co.,Ltd FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.54B
• Operating Income: ¥1.03B
• Net Income: ¥861M
• EPS: ¥40.34

Income Statement

Balance Sheet

Cash Flow Statement

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

Verdict: Solid profitability with margin expansion despite revenue decline; cash generation nearly matched earnings and balance sheet remains strong. Revenue decreased 8.0% YoY to 45.39, but operating income only slipped 3.3% to 10.27, ordinary income inched up 0.5% to 10.96, and net income rose 8.2% to 8.61. Gross profit was 15.47 for a gross margin of 34.1%. Operating margin improved to 22.6% (10.27/45.39) from an estimated 21.5% a year ago, an expansion of roughly 110 bps. Ordinary margin strengthened to 24.1% from an estimated 22.1% (+200 bps), aided by 0.99 of non-operating income (non-operating income ratio 11.5%). Net margin increased to 19.0% from an estimated 16.1% (+290 bps), supporting a DuPont ROE of 12.5%. SG&A was 5.19, implying an SG&A-to-sales ratio of 11.4%, which helped protect operating margins despite lower sales. Earnings quality is acceptable: OCF of 8.09 represents 0.94x of net income, slightly below 1.0 but not a red flag. Interest coverage is very strong at 65.3x, reflecting low financing burden. Liquidity is ample with a current ratio of 335% and quick ratio of 314%, underpinned by cash of 41.63 versus short-term loans of 7.50. Leverage is conservative: D/E is 0.59x and Debt/EBITDA about 1.9x. ROIC is a robust 16.5%, well above common 7–8% targets, indicating efficient capital deployment. Comprehensive income (1.70) lagged net income due to negative OCI, suggesting valuation or FX effects, but core earnings were resilient. Forward-looking, margin discipline and low leverage provide cushion if demand softness persists, while any recovery in top line could translate into operating leverage. Key watchpoints are sustaining OCF ≥ NI, demand normalization to stabilize asset turnover, and any shifts in non-operating gains.

Profitability Analysis

ROE decomposition (DuPont): ROE 12.5% = Net Profit Margin (19.0%) × Asset Turnover (0.413x) × Financial Leverage (1.59x). The most notable contributor this quarter is the improvement in net margin, which expanded an estimated ~290 bps YoY (to 19.0%), outweighing modest headwinds in asset turnover from lower sales. Business drivers: resilient gross spread (34.1% GP margin) and disciplined SG&A (11.4% of sales) lifted operating margin by ~110 bps; modest non-operating income (0.99) also supported ordinary and net margins. Sustainability: SG&A efficiency gains and mix could be sustainable if volumes stabilize, but part of the net margin lift stems from non-operating items that may be variable; treat as partially recurring. Asset turnover at 0.413x is pressured by the 8% revenue decline; a recovery in sales or tighter asset deployment would be needed to improve this leg of ROE. Financial leverage at 1.59x is moderate and stable, unlikely to be a major ROE driver near term. Concerning trends: none severe, but note revenue down 8% YoY while SG&A absolute value is roughly flat, implying some negative operating leverage risk if sales decline further; continue monitoring SG&A growth versus revenue.

Growth Assessment

Top line contracted 8.0% YoY to 45.39, indicating softer demand or timing effects. Despite the decline, operating income decreased only 3.3% to 10.27, showcasing cost control and favorable mix. Ordinary income increased 0.5% to 10.96 and net income rose 8.2% to 8.61, implying improved earnings quality and margin expansion. Operating margin rose to 22.6% (+~110 bps YoY estimate), and net margin to 19.0% (+~290 bps estimate). Non-operating income of 0.99 provided an incremental tailwind but is modest versus operating profit. With asset turnover at 0.413x, growth sustainability hinges on stabilizing or recovering revenue while maintaining margin discipline. Outlook: If demand normalizes, the company is positioned to deliver operating leverage due to controlled SG&A and healthy gross spread. Conversely, prolonged top-line pressure could cap ROE upside via weaker asset turnover. No segment disclosures were provided; therefore, growth drivers (product/region/customer mix) cannot be disaggregated.

Financial Health

Liquidity is very strong: current ratio 335% and quick ratio 314% (no warning thresholds breached). Working capital is 54.15, with cash and deposits of 41.63 comfortably exceeding current liabilities of 23.04 and short-term loans of 7.50—no maturity mismatch risk apparent. Solvency is solid: total liabilities 40.89 vs equity 68.98 yields D/E 0.59x (well below the 2.0x warning). Interest-bearing debt totals approximately 21.46 (ST 7.50 + LT 13.96), implying Debt/EBITDA ~1.92x—conservative. Interest coverage is 65.3x, indicating ample buffer against rate increases. Intangible assets of 11.47 (≈10.4% of total assets) are notable but not excessive; monitor for impairment risk if growth slows. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

OCF of 8.09 is 0.94x net income (8.61), slightly below 1.0 but above the 0.8 caution level—overall acceptable quality. Working capital dynamics are not fully disclosed, limiting a deep dive into receivables/inventory changes, but high cash balance suggests no aggressive pull-forwards. Capex was 1.40; using OCF minus capex as a proxy, FCF is approximately 6.69, indicating solid internal funding capacity. Financing CF was -2.95, suggesting net debt repayment and/or dividends; detailed dividend cash flows were unreported. No clear signs of working capital manipulation are evident from the limited data. Sustaining OCF at or above NI would further validate earnings quality in subsequent quarters.

Dividend Sustainability

The calculated payout ratio is 24.8%, comfortably below the 60% benchmark, suggesting room to sustain or modestly increase distributions. While DPS data were not disclosed, applying the payout to net income (8.61) implies dividends of roughly 2.14. Proxy FCF of ~6.69 (OCF 8.09 minus capex 1.40) covers this implied dividend about 3.1x, indicating strong coverage. Balance sheet flexibility (cash 41.63 and low leverage) further supports dividend capacity. Absent explicit policy guidance or DPS, we assume a stable-to-prudent payout philosophy; watch for any step-ups tied to earnings trajectory and cash needs.

Risk Assessment

Business Risks:

• Top-line contraction (-8.0% YoY) indicating demand softness or timing issues
• Potential customer concentration typical for the sector (not disclosed), which could amplify volume volatility
• Intangible asset impairment risk (intangible assets 11.47; ~10% of assets) if growth underperforms
• Execution risk in maintaining SG&A discipline if sales decline further

Financial Risks:

• Interest rate risk on 21.46 of interest-bearing debt (mix of ST and LT loans not detailed for floating/fixed)
• OCF/NI at 0.94x—acceptable but should be watched for any deterioration below 0.8x
• Negative OCI impact (comprehensive income 1.70 vs NI 8.61) suggests valuation/FX sensitivity

Key Concerns:

• Sustaining margin gains amid lower volumes (asset turnover at 0.413x)
• Reliance on non-operating gains (0.99) for part of ordinary income; variability risk
• Visibility: limited disclosure on segment mix, order backlog, and investing cash flows

Investment Implications

Key Takeaways:

• Margins expanded meaningfully despite an 8% revenue decline, lifting net income by 8.2% YoY
• ROE at 12.5% and ROIC at 16.5% indicate strong capital efficiency
• Balance sheet is liquid and conservatively leveraged (D/E 0.59x; interest coverage 65x)
• Earnings quality solid with OCF ≈ 0.94x NI and proxy FCF positive after capex
• Comprehensive income drag warrants monitoring of OCI drivers (securities/FX)

Metrics to Watch:

• Revenue trajectory and order trends to improve asset turnover
• OCF/NI maintaining ≥1.0x over coming quarters
• Operating margin and SG&A-to-sales ratio sustainability
• Non-operating income volatility and composition
• Capex pipeline versus cash generation

Relative Positioning: Within peers, the company exhibits above-average profitability and capital efficiency with below-average leverage and strong liquidity; near-term weakness is concentrated in top-line momentum rather than margin quality.

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