Poppins Corporation FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥25.63B
• Operating Income: ¥1.33B
• Net Income: ¥550M
• EPS: ¥87.59

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

Poppins (TSE:7358) reported FY2025 Q3 (cumulative) consolidated results under JGAAP with steady top-line growth and resilient operating profit, alongside a pronounced improvement at the net income level. Revenue was 25,628 million yen, up 9.0% year over year, indicating healthy demand in core childcare and nursing-related services. Gross profit reached 4,934 million yen, yielding a gross margin of 19.3%, broadly consistent with a labor-intensive service model where personnel costs dominate cost of sales. Operating income came in at 1,327 million yen, up 8.7% YoY, translating to an operating margin of approximately 5.2%. Ordinary income was 1,306 million yen, slightly below operating income due to minor net non-operating expenses; interest expense was modest at 13 million yen. Net income rose sharply to 853 million yen (+55.2% YoY), suggesting favorable below-OP items and/or tax effects that amplified bottom-line growth relative to operating trends. The company’s DuPont metrics point to an ROE of 9.51%, built on a 3.33% net margin, 1.607x asset turnover, and 1.78x financial leverage. Balance sheet quality appears sound: total assets were 15,950 million yen and total equity 8,972 million yen, implying an equity ratio of about 56%, despite the reported “0.0%” equity ratio placeholder. Liquidity is strong with a current ratio of 229% and working capital of 7,048 million yen, supporting operating stability through seasonality and receivables cycles typical in public-fee-based businesses. Interest coverage is robust at roughly 102x, reflecting low financial risk from debt service. Cash flow statement items were not disclosed in the provided XBRL (shown as zeros), so operating cash flow and free cash flow cannot be assessed from this dataset. Similarly, DPS and payout metrics appear as zero, indicating non-disclosure rather than actual zeros; dividend policy assessment thus relies on qualitative inference rather than confirmed cash returns. Operating leverage looks modestly negative this period (OP growth slightly lagging revenue), implying some cost pressure or investment spend. Nevertheless, the strong net income growth improves capital efficiency metrics within the period. Overall, the business exhibits stable profitability for a human-capital-intensive service provider, prudent leverage, and ample liquidity, though the lack of cash flow disclosure limits earnings quality validation. Key uncertainties include wage inflation for caregivers, recruitment/retention dynamics, government subsidy frameworks, and utilization rates across centers. We focus on sustaining operating margin, working capital discipline, and conversion of earnings into cash once cash flow data are available.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.33% (NI 853m / Revenue 25,628m)
• asset_turnover: 1.607x (Revenue 25,628m / Assets 15,950m)
• financial_leverage: 1.78x (Assets 15,950m / Equity 8,972m)
• calculated_ROE: 9.51% (matches provided DuPont figure) margin_quality:
• gross_margin: 19.3% (4,934m / 25,628m), consistent with high personnel cost structure
• operating_margin: 5.2% (1,327m / 25,628m), stable YoY with OP +8.7% vs revenue +9.0%
• ordinary_margin: 5.1% (1,306m / 25,628m), slight net non-operating expense
• net_margin: 3.33% (853m / 25,628m), significantly improved YoY given +55.2% NI growth operating_leverage: Revenue grew 9.0% while operating income grew 8.7%, indicating slightly negative operating leverage in the period (costs and/or strategic investments offsetting some scale benefits). Net income growth outpaced revenue and OP due to below-OP and tax effects. tax_and_interest:
• interest_expense: 13m yen; negligible drag on profitability
• effective_tax_rate_estimate: Approximately 27–28% inferred (Income tax 327m vs pre-tax roughly NI + tax ≈ 1,180m), noting the provided 0.0% ETR is a placeholder due to undisclosed items

Growth Assessment

revenue_sustainability: Top-line growth of +9.0% YoY suggests solid demand in childcare/eldercare services and likely contributions from facility additions and/or improved utilization. Growth quality appears organic with limited reliance on financial income. profit_quality: Operating profit growth (+8.7% YoY) broadly tracks revenue, indicating stable unit economics. The delta between OP and NI growth (+55.2% YoY NI) implies supportive below-OP items and/or tax normalization, which may not fully recur. outlook: Assuming continued expansion of service capacity and stable public/private fee frameworks, mid-single to high-single digit revenue growth is plausible. Key dependencies include staffing availability, wage trends, and occupancy/utilization. Margin resilience hinges on labor cost control and pricing/subsidy pass-through.

Financial Health

liquidity:

• current_ratio: 228.9% (CA 12,515m / CL 5,467m)
• quick_ratio: 228.9% (inventories not disclosed; business is service-heavy, so quick ≈ current)
• working_capital: 7,048m yen solvency:
• equity_ratio_estimated: 56.2% (Equity 8,972m / Assets 15,950m); reported 0.0% is a non-disclosure placeholder
• debt_to_equity: 0.91x (Total liabilities 8,208m / Equity 8,972m), indicating moderate leverage overall
• interest_coverage: ≈102x (OP 1,327m / Interest 13m), implying very low debt service risk capital_structure: Moderate liability load with strong equity base provides flexibility. Interest-bearing debt specifics are not disclosed here; however, the minimal interest expense points to limited financial leverage in practice.

Cash Flow Quality

earnings_quality: Cannot be fully assessed due to non-disclosure of cash flow statement (OCF, ICF, FCF shown as zeros are placeholders). Accrual versus cash conversion is therefore unknown for this period. FCF_analysis: Free cash flow not disclosed. With OP margin ~5.2% and labor-intensive operations, FCF typically depends on working capital movement (receivables from municipalities/corporates) and maintenance capex for facilities. working_capital: Strong current assets relative to current liabilities suggest headroom, but without OCF we cannot confirm collection efficiency. Receivables days and payables terms are key unknowns.

Dividend Sustainability

payout_ratio_assessment: Payout ratio shown as 0.0% and DPS 0.00 are non-disclosure placeholders; actual distributions cannot be inferred from the provided data. FCF_coverage: Not assessable given the absence of OCF and capex figures. Dividend capacity should be evaluated against normalized OCF after maintenance capex once disclosed. policy_outlook: Without stated DPS or policy, sustainability hinges on consistent OCF generation and balance sheet strength. Current leverage and liquidity are supportive should the company choose to distribute, but no conclusion can be drawn without cash flow data.

Risk Assessment

Business Risks:

• Labor cost inflation and staffing shortages in childcare/eldercare impacting margins and capacity
• Dependence on public subsidies/fee schedules and potential regulatory revisions
• Utilization and enrollment variability across centers affecting revenue per facility
• Execution risk in opening new facilities (ramp-up, licensing, location)
• Service quality and compliance risk in a highly regulated sector
• Client concentration risk if corporate-contracted childcare is material

Financial Risks:

• Working capital strain from receivables cycles with municipalities/corporates
• Potential increase in lease and facility-related commitments not fully visible in this dataset
• Interest rate risk is limited currently but could rise with higher borrowings for expansion
• Cash flow visibility is low due to non-disclosure; earnings-to-cash conversion unverified

Key Concerns:

• Non-disclosure of cash flow statements limits assessment of earnings quality
• Net income outpacing operating income due to below-OP/tax effects may not be repeatable
• Sensitivity to wage hikes and inability to fully pass through costs could compress OPM

Investment Implications

Key Takeaways:

• Top-line growth of 9.0% YoY with stable operating margin around 5.2%
• ROE at 9.5% supported by solid asset turnover (1.61x) and moderate leverage (1.78x EM)
• Net income growth (+55.2% YoY) driven by below-OP/tax effects; sustainability uncertain
• Strong liquidity (current ratio ~229%) and sizable working capital buffer
• Interest burden is minimal (coverage ~102x), indicating low financial stress
• Cash flow data missing; FCF and OCF conversion remain key unknowns

Metrics to Watch:

• Operating margin trend and personnel cost ratio
• Utilization/enrollment rates and number of operating facilities
• Receivables days and OCF once disclosed
• Maintenance and growth capex, including lease commitments
• Policy/subsidy changes and pricing pass-through ability
• ROE trajectory and asset turnover as the network scales

Relative Positioning: Within Japan’s childcare/eldercare services space, Poppins exhibits solid growth and disciplined leverage with margins typical for a labor-intensive operator; its balance sheet appears stronger-than-average, but clarity on cash generation and working capital dynamics is needed to fully benchmark operational efficiency.

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