NANSIN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.72B
• Operating Income: ¥33M
• Net Income: ¥-73M
• EPS: ¥-5.48

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

Nansin Co., Ltd. (TSE:7399) reported FY2026 Q2 consolidated (JGAAP) results showing stable topline with a slight revenue decline of 0.2% YoY to ¥4,724 million. Gross profit was ¥936.7 million, translating to a gross margin of 19.8%, indicating continued cost pressures but broadly stable product-level profitability. Operating income improved materially to ¥33 million (+227% YoY), lifting operating margin to 0.7%, though profitability remains thin. Ordinary income reached ¥88 million, implying positive non-operating contributions offsetting low operating leverage. Despite these improvements, net income was a loss of ¥37 million (net margin -0.78%), aided by a tax credit (income tax of -¥45.7 million), which cushioned bottom-line weakness. The DuPont ROE decomposition yields a calculated ROE of -0.32%, driven by a small negative net margin, moderate asset turnover of 0.329x, and low financial leverage of 1.22x. The balance sheet is conservative: total assets are ¥14,349 million and total equity is ¥11,736 million, implying an equity ratio of approximately 81.8% (the reported 0.0% equity ratio appears undisclosed rather than zero). Liquidity is strong, with a current ratio of 571.9% and quick ratio of 447.1%, supported by working capital of ¥8,161 million. Operating cash flow was positive at ¥30.8 million despite the net loss, indicating supportive non-cash items and/or working capital dynamics. Financing cash flow was a large outflow of ¥1,606.7 million, suggesting debt reduction or potential shareholder returns unrelated to dividends; exact drivers are not disclosed in the provided dataset. Depreciation and amortization totaled ¥114.5 million, helping bridge earnings to cash flow and highlighting the asset intensity of the business. Interest expense remains minimal at ¥2.35 million, and interest coverage by operating income stands at a comfortable 14.0x. Dividend per share is disclosed as ¥0.00 for the period, consistent with the net loss and a likely conservative capital policy. Several key items (e.g., investing cash flows, cash balance, share count) are not disclosed in the data and are shown as zero; these should be treated as unavailable rather than actual zeros. Overall, Nansin shows improving operating traction but remains in a low-margin position; a robust balance sheet underpins resilience while cash generation is modest and visibility on capital allocation is limited due to disclosure gaps.

Profitability Analysis

roe_decomposition:

• net_profit_margin: -0.0078
• asset_turnover: 0.329
• financial_leverage: 1.22
• calculated_roe: -0.0032
• comments: ROE remains slightly negative due to a modest net loss despite improvements at the operating and ordinary income levels. Low leverage limits both downside risk and ROE amplification. margin_quality:
• gross_margin: 0.198
• operating_margin: 0.007
• ordinary_margin: 0.0186
• net_margin: -0.0078
• drivers: ['Gross margin stable but sub-20% suggests continued input cost and pricing pressure.', 'Operating margin improved to 0.7% on cost control and operating efficiency, but remains thin.', 'Ordinary income above operating income indicates supportive non-operating items (e.g., FX, investment income), improving pre-tax results.', 'Negative net margin mitigated by a tax credit; underlying tax-normalized profitability likely near breakeven.'] operating_leverage:
• assessment: Low to moderate
• evidence: ['Revenue essentially flat (-0.2% YoY) alongside a swing to positive operating income suggests some operating leverage realization.', 'EBITDA margin at 3.1% and D&A of ¥114.5m indicate a meaningful fixed-cost base; incremental volume/pricing gains could lift margins disproportionately.', 'Thin operating margin implies sensitivity to small changes in gross profit.']

Growth Assessment

revenue_sustainability:

• revenue: 4724000000
• yoy_growth: -0.2
• comment: Topline is broadly stable; slight contraction suggests end-market softness or pricing normalization. Sustainability hinges on demand in industrial casters/material handling and export conditions. profit_quality:
• operating_income: 33000000
• yoy_comment: Operating income improved sharply (+227% YoY) from a low base, underscoring cost discipline but also highlighting still-fragile margins.
• mix_comment: Ordinary income exceeds operating income, indicating reliance on non-operating gains; core profit quality is improving but not yet robust. outlook:
• near_term: With stable revenue and improving cost control, a return to marginal profitability is plausible if gross margin holds and SG&A remains contained.
• medium_term: Margin expansion potential via product mix upgrades, price optimization, and scale efficiencies; however, end-market cyclicality and input costs remain key variables.

Financial Health

liquidity:

• current_assets: 9890736000
• current_liabilities: 1729504000
• current_ratio: 5.719
• quick_ratio: 4.471
• working_capital: 8161232000
• comment: Very strong liquidity; ample buffer to meet short-term obligations. solvency:
• total_assets: 14349000000
• total_liabilities: 2706428000
• total_equity: 11736000000
• equity_ratio_approx: 0.818
• debt_to_equity: 0.23
• interest_coverage_operating: 14.0
• comment: Low leverage and strong equity base support solvency. Interest burden is minimal and well covered. capital_structure:
• assessment: Conservative
• notes: ['Financing CF outflow of ¥1.61bn suggests deleveraging and/or shareholder distributions (non-dividend), reducing financial risk.', 'Low D/E ratio implies capacity to fund growth if needed; however, limited disclosure on gross debt and cash balances constrains precision.']

Cash Flow Quality

earnings_quality:

• net_income: -37000000
• operating_cf: 30812000
• ocf_to_net_income: -0.83
• comment: Positive OCF despite a net loss indicates supportive non-cash items (notably ¥114.5m D&A) and/or working capital management; earnings quality appears acceptable for this period. fcf_analysis:
• operating_cf: 30812000
• investing_cf_reported: 0
• capex_proxy_comment: Investing CF is undisclosed; without capex, true free cash flow cannot be determined. EBITDA of ¥147.5m and D&A of ¥114.5m suggest ongoing maintenance investment needs.
• fcf_comment: Headline FCF shown as 0 is an undisclosed placeholder; underlying FCF likely modestly positive to neutral depending on capex timing. working_capital:
• inventories: 2158380000
• observations: ['Inventory equals roughly 45.7% of half-year sales, typical for industrial components but warrants monitoring for obsolescence or demand slowdown.', 'Strong current asset position underpins liquidity; cash level is undisclosed in the dataset.']

Dividend Sustainability

payout_ratio_assessment:

• annual_dps: 0.0
• payout_ratio: 0.0
• comment: No dividend for the period, consistent with a net loss and a conservative balance sheet approach. fcf_coverage:
• fcf_coverage_ratio: n/a
• comment: FCF is not derivable due to missing capex/investing cash flow details; coverage assessment cannot be made quantitatively. policy_outlook:
• assessment: Maintaining capital to support operations and potential deleveraging appears prioritized. A resumption or initiation of dividends would likely require sustained profitability and clearer FCF visibility.

Risk Assessment

Business Risks:

• End-market cyclicality in industrial and logistics sectors affecting caster demand.
• Input cost volatility (steel, rubber, plastics) impacting gross margin.
• Foreign exchange fluctuation effects on both non-operating income and export competitiveness.
• Product mix and pricing power constraints limiting margin expansion.
• Inventory management risk if demand softens.

Financial Risks:

• Thin operating margin leaves little buffer against shocks.
• Large financing cash outflow reduces financial flexibility if not matched by strong liquidity (cash level undisclosed).
• Dependence on non-operating gains to support ordinary income in the period.
• Potential working capital swings affecting OCF.

Key Concerns:

• Sustainability of margin improvement from a very low base.
• Visibility on capex and cash balances due to undisclosed investing CF and cash data.
• Continued reliance on tax credits and non-operating items to offset weak operating margin.

Investment Implications

Key Takeaways:

• Revenue stable with slight decline; operating income improved sharply but margins remain thin.
• Balance sheet is strong with an estimated 81.8% equity ratio and low leverage.
• Positive OCF despite net loss supported by D&A; true FCF unclear due to missing capex data.
• Large financing outflow suggests deleveraging or other capital actions; details undisclosed.
• Dividend suspended/none; capital preservation prioritized.

Metrics to Watch:

• Gross margin trajectory and input cost trends.
• Operating margin and SG&A ratio for evidence of sustainable operating leverage.
• Ordinary vs. operating income mix to gauge reliance on non-operating items.
• Inventory levels and turnover to assess demand health and cash conversion.
• Capex and investing cash flows to clarify FCF and capital allocation.
• Net cash/debt position once cash and debt disclosures are available.

Relative Positioning: Relative to small-cap Japanese industrial component peers, Nansin exhibits superior balance sheet strength and liquidity, but currently operates with below-average operating margins and higher sensitivity to small movements in gross profit; execution on mix/pricing and cost control will determine competitiveness.

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