KONDOTEC INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥40.64B
• Operating Income: ¥2.17B
• Net Income: ¥1.53B
• EPS: ¥57.01

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

Kondotec Co., Ltd. reported FY2026 Q2 consolidated results under JGAAP showing steady topline growth with disciplined cost control and strong liquidity. Revenue reached ¥40.6bn, up 5.2% YoY, while gross profit was ¥8.48bn, implying a gross margin of 20.9%, broadly stable. Operating income rose 6.2% YoY to ¥2.17bn, delivering an operating margin of 5.3% and evidencing modest positive operating leverage. Ordinary income of ¥2.28bn exceeded operating income, indicating small but positive non-operating contributions. Net income was ¥1.46bn, down 4.3% YoY, compressing net margin to 3.59%; the decline at the bottom line contrasts with the rise in operating profit and likely reflects a heavier tax burden and/or below-the-line factors. EPS was ¥57.01. DuPont analysis shows a calculated ROE of 3.71%, built from a 3.59% net margin, 0.617x asset turnover, and 1.68x financial leverage—pointing to moderate profitability with conservative leverage. The balance sheet is robust: total assets were ¥65.83bn and total equity ¥39.29bn; this implies an equity ratio around 59.7% based on the provided balances (the equity ratio metric field is unreported). Liquidity is strong with a 174% current ratio and 147% quick ratio, supported by ¥17.34bn of working capital. Interest expense is minimal at ¥10m, and interest coverage is exceptionally high at 216.9x, underscoring low financial risk. Operating cash flow of ¥1.98bn exceeds net income, with an OCF/NI ratio of 1.36, indicative of decent cash conversion; OCF/EBITDA is about 70.6%. Investing and cash balances are shown as zero in the metric section, which should be interpreted as unreported rather than actual zero; hence Free Cash Flow cannot be assessed from the provided data. The effective tax rate metric is displayed as 0.0%, but the income statement indicates taxes of ¥824m; based on ordinary income, the implied tax burden appears around the mid-30% range for the period. Inventory is ¥6.31bn, a manageable level relative to sales and current assets, though period-on-period inventory movement is not disclosed. Overall, the company exhibits stable core profitability, conservative leverage, and adequate cash generation, with some pressure at the net level likely tied to tax and non-operating items. Data gaps on investing cash flows, dividends, and share counts limit full assessment of capital allocation and per-share dynamics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.59%
• asset_turnover: 0.617
• financial_leverage: 1.68
• calculated_ROE: 3.71%
• interpretation: ROE is driven primarily by moderate asset efficiency and modest leverage; margin remains the main swing factor. margin_quality:
• gross_margin: 20.9% (¥8.475bn/¥40.636bn)
• operating_margin: 5.34% (¥2.169bn/¥40.636bn)
• ordinary_margin: 5.61% (¥2.279bn/¥40.636bn)
• net_margin: 3.59%
• commentary: Stable gross margin with a slight lift in operating margin YoY suggests disciplined SG&A control. The spread between operating and ordinary income indicates modest non-operating gains. operating_leverage:
• revenue_growth_YoY: 5.2%
• operating_income_growth_YoY: 6.2%
• assessment: Positive but modest operating leverage, implying cost base scaling slightly below revenue growth.

Growth Assessment

revenue_sustainability: Topline growth of 5.2% YoY appears steady, consistent with a stable demand environment and/or mix benefits; no segment detail provided to parse volume vs. price. profit_quality: Operating profit grew ahead of sales, supported by stable margins. Net profit declined 4.3% YoY, likely due to higher tax burden and below-the-line items rather than deterioration in core operations. outlook: Assuming demand remains stable and cost discipline continues, mid-single-digit revenue growth with stable to slightly improving operating margins is plausible. Key swing factors include input costs, pricing power, and non-operating/tax effects.

Financial Health

liquidity:

• current_ratio: 174.1%
• quick_ratio: 147.1%
• working_capital: ¥17.339bn
• assessment: Strong near-term liquidity headroom with ample buffer against short-term obligations. solvency:
• debt_to_equity: 0.68x (using total liabilities/equity)
• interest_coverage: 216.9x (EBIT/interest)
• equity_ratio_inferred: ≈59.7% (¥39.287bn/¥65.830bn)
• assessment: Conservative capital structure with low interest burden; solvency risk appears low. capital_structure: Leverage is modest, relying more on equity funding. Room exists to deploy additional balance sheet capacity if warranted by returns.

Cash Flow Quality

earnings_quality:

• OCF_to_NetIncome: 1.36
• OCF_to_EBITDA: ≈70.6%
• commentary: OCF comfortably covers accounting earnings, suggesting limited accrual risk in the period. FCF_analysis:
• reported_FCF: 0 (investing CF not disclosed; treat as unreported)
• capex_visibility: Not disclosed; cannot distinguish maintenance vs. growth capex.
• interpretation: True FCF cannot be determined from the provided data; OCF strength is encouraging but capital intensity is unknown for the period. working_capital:
• inventories: ¥6.312bn
• observations: Inventory appears reasonable relative to current assets and sales, but absence of trend data limits assessment of turns and potential build.

Dividend Sustainability

payout_ratio_assessment: Payout ratio appears as 0.0% due to unreported dividend per share; cannot assess actual payout. FCF_coverage: Not assessable given unreported investing cash flows and DPS. OCF coverage of earnings is healthy, but dividend capacity depends on capex and policy. policy_outlook: Without disclosed DPS or guidance, assume a conservative stance aligned with strong balance sheet; visibility insufficient to comment on trajectory.

Risk Assessment

Business Risks:

• Demand cyclicality in construction- and infrastructure-related end-markets.
• Input cost volatility affecting gross margins if pricing power is limited.
• Supply chain and procurement risks impacting inventory availability and working capital.
• Customer concentration risk (not disclosed) potentially affecting revenue stability.
• Competitive pressures in distribution and industrial hardware markets.

Financial Risks:

• Potential working-capital swings affecting OCF despite current strength.
• Tax rate variability influencing net income given the gap between operating and net results.
• Limited visibility on capex and investing outflows could mask capital intensity.

Key Concerns:

• Net income decline (-4.3% YoY) despite higher operating profit suggests below-the-line pressure.
• Incomplete disclosure on investing cash flows and dividends limits FCF and payout analysis.
• ROE at 3.71% is modest; improvements hinge on margin expansion or asset efficiency gains.

Investment Implications

Key Takeaways:

• Stable core operations with 5.2% revenue growth and 6.2% operating profit growth.
• Healthy margins (gross 20.9%, operating 5.3%) and strong liquidity (current ratio 174%).
• Low financial risk profile with 216.9x interest coverage and inferred equity ratio near 60%.
• Cash generation quality is solid (OCF/NI 1.36), though FCF is not determinable.
• ROE of 3.71% is restrained; scope for improvement via margin and turnover optimization.

Metrics to Watch:

• Operating margin trajectory versus input cost trends.
• Working capital efficiency (inventory and receivables turns).
• Capex and investing cash flows to gauge true FCF.
• Effective tax rate and non-operating items driving net income volatility.
• Asset turnover improvements to lift ROA and ROE.

Relative Positioning: Within Japan’s industrial distribution and construction hardware segment, Kondotec appears operationally stable with conservative leverage and above-average liquidity, but delivers modest returns on equity relative to peers that achieve higher asset turnover or margin differentiation.

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