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

Financial Highlights

• Net Sales: ¥4.54B
• Operating Income: ¥1.03B
• Net Income: ¥796M
• 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

Matsuya R&D (73170) delivered resilient profitability in FY2026 Q2 despite top-line pressure, with revenue declining 8.0% YoY to ¥4,539m but operating income down a milder 3.3% YoY to ¥1,027m. Gross profit of ¥1,557.5m implies a gross margin of 34.3%, and operating margin held at a robust 22.6%, indicating effective cost control and operating leverage management. Ordinary income exceeded operating income at ¥1,096m, suggesting positive net non-operating contributions, despite ¥16.0m in interest expense. Net income rose 8.2% YoY to ¥861m, lifting net margin to 19.0%, aided by non-operating gains and a normalized tax burden. DuPont analysis shows ROE of 12.48% (net margin 18.97%, asset turnover 0.413x, leverage 1.59x), a solid return profile for a company with moderate balance sheet leverage. Liquidity appears very strong with a current ratio of 354.8% and quick ratio of 336.2%, underscoring substantial current asset coverage relative to short-term liabilities. Solvency is also conservative with total liabilities/equity at 0.58x and interest coverage at 64.2x, leaving ample headroom against financial stress. Operating cash flow was strong at ¥1,383m, equating to 1.61x net income, indicating high earnings quality and favorable working capital dynamics in the period. EBITDA reached ¥1,121.9m (24.7% margin), with modest D&A of ¥94.9m, highlighting an asset-light or efficiently utilized asset base. Inventory remained modest at ¥392.8m within current assets of ¥7,501m, supporting the elevated quick ratio. The effective tax rate reported as 0.0% is not reflective of the financials; based on net income and income tax, we infer a tax rate of roughly 25.5% in the period. Dividend and share data were not disclosed in XBRL (zeros indicate non-disclosure), so payout assessment relies on earnings and cash flow proxies rather than confirmed distributions. The equity ratio was also not disclosed despite reported equity of ¥6,898m; based on available figures, financial structure appears sound. Overall, the company exhibits strong profitability, excellent liquidity, and clean cash conversion despite revenue headwinds. Key uncertainties stem from undisclosed cash balances, capex/investing cash flows, share count, and dividend policy, which limit full assessment of free cash flow coverage and per-share capital allocation.

Profitability Analysis

ROE of 12.48% is driven primarily by a high net profit margin of 18.97%, with modest asset turnover of 0.413x and conservative financial leverage of 1.59x. Operating margin stands at 22.6% (¥1,027m / ¥4,539m), demonstrating efficient cost control despite an 8.0% YoY revenue decline, pointing to disciplined opex and pricing. Gross margin of 34.3% shows healthy value-add; the gap to operating margin suggests lean SG&A. Ordinary income (¥1,096m) above operating income indicates net non-operating gains (~¥69m net, after ¥16m interest), adding a supportive layer to profitability. EBITDA margin of 24.7% and low D&A (¥94.9m) highlight strong underlying operating economics and limited capital intensity. Interest coverage is 64.2x (operating income/interest), underscoring minimal drag from financing costs. Margin quality appears strong, with net margin expanding YoY alongside lower revenue, a sign of favorable mix, cost efficiencies, or ancillary income. Operating leverage is well-managed; the limited decline in operating income relative to revenue indicates fixed cost absorption is not constraining profitability.

Growth Assessment

Revenue contracted 8.0% YoY to ¥4,539m, signaling cyclical or demand-driven softness. Nevertheless, operating income fell only 3.3% YoY and net income rose 8.2% YoY, suggesting resilient margin management and positive non-operating contributions. The improvement in bottom line despite sales decline points to improved mix, cost optimization, or one-off gains in non-operating items. Given the absence of order intake/backlog disclosures, sustainability of margins and revenue trajectory cannot be fully assessed. With EBITDA margin at 24.7% and OCF comfortably above net income, profit quality appears solid. Outlook hinges on stabilization of top-line trends, maintaining gross margin discipline, and continuity of non-operating gains. Absent capex data, we cannot evaluate growth investments or capacity expansion. Key watchpoints are recovery in sales volumes, stability of gross margin amid potential input or FX volatility, and durability of non-operating income.

Financial Health

Liquidity is very strong: current ratio 354.8% and quick ratio 336.2% indicate substantial liquid resources relative to ¥2,114m in current liabilities. Working capital is ample at ¥5,387m, with inventories modest at ¥393m within current assets of ¥7,501m. Solvency is conservative with total liabilities of ¥3,975m versus equity of ¥6,898m (debt-to-equity 0.58x on a broad liabilities basis), implying a low reliance on leverage. Interest expense is minimal at ¥16.0m and well-covered. The equity ratio was not disclosed in XBRL, but the reported balance sheet composition implies a healthy capitalization. Cash and equivalents were not disclosed; however, the very high quick ratio suggests significant liquid assets exist even if not itemized. Overall balance sheet strength supports operational flexibility and cushions against macro headwinds.

Cash Flow Quality

Operating cash flow of ¥1,383m represents 1.61x net income (¥861m), indicating strong earnings-to-cash conversion and likely favorable working capital movements. EBITDA of ¥1,121.9m versus OCF suggests effective cash realization from operations beyond non-cash D&A. Investing cash flow was not disclosed (reported as zero), preventing estimation of capex and thus free cash flow; the reported FCF of zero should be interpreted as undisclosed rather than absent. Without capex, we cannot assess maintenance vs. growth spending or the sustainability of cash generation after investments. Working capital quality appears sound given the high quick ratio and modest inventory level; however, detailed AR/AP turnover data are unavailable. Overall, earnings quality is high, but incomplete disclosure of investing flows limits full FCF assessment.

Dividend Sustainability

Dividend per share and payout ratios were not disclosed (zeros denote non-disclosure), so we cannot confirm current dividend policy or distributions. On a capacity basis, net income of ¥861m and strong OCF provide ample theoretical coverage for dividends, but absent capex and cash balance data, true free cash flow coverage cannot be determined. If we assume a normalized tax rate (~25.5%) and stable margins, the company would have room for distributions while preserving balance sheet strength; however, this remains an assumption. Until investing cash flows and cash balances are disclosed, any dividend sustainability assessment remains provisional.

Risk Assessment

Business Risks:

• Top-line contraction (-8.0% YoY) suggests demand cyclicality or order timing risk
• Margin sensitivity to product mix and pricing amid softer sales
• Potential customer concentration or project timing volatility (not disclosed)
• Supply chain and component availability risks affecting delivery and costs
• FX exposure risk if revenue/costs are internationally linked (not disclosed)

Financial Risks:

• Incomplete disclosure of cash and investing cash flows limits visibility on FCF
• Non-operating income contribution to ordinary income may be non-recurring
• Potential working capital reversals after a strong OCF quarter
• Unreported equity ratio and cash balances reduce clarity on capital structure granularity

Key Concerns:

• Sustained revenue decline could pressure fixed-cost absorption over time
• Reliance on non-operating gains to support net income may not be durable
• Lack of capex data obscures reinvestment needs and true FCF
• Dividend policy and per-share capital allocation are unclear due to undisclosed share/dividend data

Investment Implications

Key Takeaways:

• Strong profitability with operating margin of 22.6% and ROE of 12.48% despite revenue softness
• High earnings quality with OCF at 1.61x net income
• Very strong liquidity (current ratio 355%, quick ratio 336%) and low financial risk (interest coverage 64x)
• Non-operating gains boosted ordinary income, a metric to monitor for sustainability
• Data gaps on cash, capex, and dividends constrain full FCF and shareholder return analysis

Metrics to Watch:

• Revenue trajectory and order backlog/book-to-bill (if disclosed)
• Gross and operating margins, especially mix/inflation pass-through
• OCF/NI ratio and working capital movement (AR/AP/inventory turns)
• Capex and investing cash flows to derive true FCF
• Non-operating income components and sustainability
• Tax rate normalization vs. inferred ~25.5%

Relative Positioning: Within Japanese small/mid-cap industrials, the company exhibits above-average margins and solid ROE with conservative leverage and very strong liquidity, though growth visibility is currently weaker given the revenue decline and limited disclosure on order trends and capex.

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