NAGAILEBEN Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥2.92B
• Operating Income: ¥412M
• Net Income: ¥318M
• EPS: ¥10.42

Income Statement

Balance Sheet

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

Q1 FY2026 was weaker YoY for Nagai Leben, with solid profitability in absolute terms but visible margin compression and lower earnings versus a softening top line. Revenue declined 9.0% YoY to 29.20 billion yen-equivalent (2.92 billion yen), and operating income fell 28.8% YoY to 4.12 billion yen-equivalent (0.412 billion yen). Operating margin slipped to 14.1% from approximately 18.0% a year ago, representing about 390 bps of compression. Net income decreased 23.2% YoY to 3.17 billion yen-equivalent (0.317 billion yen), with net margin at 10.9% versus roughly 12.9% in the prior-year quarter (down about 200 bps). Gross margin printed at 39.0%, but a prior-year gross margin was not disclosed to assess YoY movement. Non-operating income contributed 0.64, cushioning ordinary income (4.63), while non-operating expenses were modest at 0.13. The effective tax rate was 31.6%, consistent with a normal range for JGAAP filers. The balance sheet remains exceptionally conservative with cash and deposits of 203.50 and current assets of 330.33 against current liabilities of only 23.42. Liquidity is very strong: current ratio 1410.7% and quick ratio 1068.0%, and reported D/E of 0.08x signals minimal leverage. DuPont-calculated ROE is low at 0.8%, reflecting a combination of low asset turnover (0.070 for the quarter) and very low financial leverage (1.08x). Operating cash flow data were not disclosed, so earnings quality (OCF versus NI) cannot be evaluated this quarter. Dividend disclosure indicates a year-end DPS of 100 yen; mechanically this implies a high payout ratio against Q1 earnings, suggesting either seasonality in earnings or reliance on accumulated cash to fund distribution. Forward-looking, the key watchpoints are revenue trajectory into Q2–Q4, stabilization of operating margin, inventory discipline, and confirmation of full-year dividend capacity via cash generation. If revenue headwinds persist, operating leverage could pressure margins further, but the ample cash buffer provides flexibility to maintain investment and shareholder returns in the near term. Overall, Q1 indicates a demand slowdown and margin pressure, but with strong balance sheet resilience. The quarter’s verdict: soft fundamentals YoY, strong liquidity, and low capital efficiency.

Profitability Analysis

ROE decomposition (3-factor): Net profit margin 10.9% × Asset turnover 0.070 × Financial leverage 1.08x = ROE ~0.8%. The most material drag is the very low asset turnover, with an additional negative from lower operating margin YoY. Operating margin compressed from ~18.0% to 14.1% as operating income fell faster (-28.8%) than revenue (-9.0%), implying negative operating leverage and/or an unfavorable mix/price-cost balance in Q1. Non-operating items were net positive (income 0.64 vs expenses 0.13), partially offsetting operating softness at the ordinary income line. The tax burden (NI/EBT) is 0.683, slightly below the 0.70 benchmark, reflecting a normal-to-slightly-elevated effective tax rate. The interest burden (EBT/EBIT) of 1.126 indicates essentially no interest drag, consistent with minimal debt. Sustainability assessment: margin compression could reverse if order timing and seasonality normalize, but absent evidence, we view the lower margin as a near-term headwind that requires monitoring. Concerning trend: SG&A absolute value (7.27) declined less than operating income, and given revenue contraction, the SG&A ratio likely rose, signaling deleveraging; without a detailed SG&A breakdown, we cannot isolate components, but the negative operating leverage is visible.

Growth Assessment

Revenue declined 9.0% YoY to 29.20, indicating a soft start to the year. Profitability fell more sharply, with operating income down 28.8% and net income down 23.2%, evidencing operating deleverage. Non-operating income provided a modest cushion but does not change the underlying operating softness. With no R&D or depreciation disclosure, we cannot comment on internal investment intensity. Given the company’s historical seasonality (typical for B2B apparel and institutional procurement cycles), quarterly results can be lumpy; however, the magnitude of margin compression warrants caution until orders, pricing, and cost pass-through stabilize. Outlook hinges on demand recovery in healthcare apparel and uniform refresh cycles, price discipline, and inventory management to support gross margin. In the absence of guidance here, we assume a cautious near-term trajectory with the balance sheet allowing steady operations and selective investments.

Financial Health

Liquidity is exceptionally strong: current assets 330.33 vs current liabilities 23.42 imply a current ratio of 14.1x; quick ratio at 10.7x confirms ample near-term coverage. No warning on Current Ratio (<1.0) or D/E (>2.0); the D/E of 0.08x is very conservative. Maturity mismatch risk is low given cash and deposits of 203.50 alone exceed total current liabilities by a large margin. Interest-bearing debt is unreported, but low D/E and positive interest burden metric suggest negligible financial debt. Off-balance sheet obligations were not disclosed; thus, we cannot assess guarantees or other commitments. Equity remains high at 383.36 against total assets of 415.35, underscoring solvency strength.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow were not disclosed, so OCF/Net Income and FCF coverage cannot be assessed this quarter. Consequently, we cannot test OCF/NI > 1.0 or identify accrual-driven earnings. Working capital items on the balance sheet show inventories of 80.26 and receivables of 17.89; without OCF, we cannot quantify cash conversion or potential working capital release/usage. Given strong cash holdings (203.50), near-term liquidity is not an issue; however, confirmation of cash generation in subsequent quarters is important to validate earnings quality.

Dividend Sustainability

Disclosed DPS indicates a year-end dividend of 100 yen and no Q2 interim dividend. Using Q1 net income only, the calculated payout ratio mechanically appears very high (969.6%), but this is not indicative of full-year payout because dividends are typically evaluated against full-year earnings and cash flow. With 203.50 in cash and minimal leverage, the company has balance sheet capacity to support dividends in the near term. However, absent OCF/FCF data and full-year earnings guidance, sustainability beyond the short term depends on recovery in operating income and maintaining gross margin. We will reassess once half-year results and cash flow statements are available.

Risk Assessment

Business Risks:

• Demand volatility and procurement timing in institutional healthcare apparel impacting quarterly revenue
• Margin pressure from pricing competition and input cost fluctuations affecting gross margin
• Inventory risk (80.26 in inventories) if demand weakens further, potentially requiring markdowns
• Potential seasonality leading to uneven quarterly performance

Financial Risks:

• Low capital efficiency and cash drag with very high cash balance depressing ROIC and ROE
• Dividend policy pressure if earnings recovery lags and cash flows do not cover distributions
• Concentration risk if sales are reliant on a limited customer base (not disclosed)

Key Concerns:

• Operating margin compression of ~390 bps YoY
• ROIC at 1.6% well below a 5% warning threshold
• Visibility on cash generation is low due to unreported cash flow statements this quarter

Investment Implications

Key Takeaways:

• Top line down 9.0% YoY to 29.20 with outsized operating profit decline (-28.8%)
• Operating margin fell to 14.1% from ~18.0% (≈390 bps compression)
• Net margin decreased ~200 bps to 10.9%
• Balance sheet is exceptionally strong: current ratio 14.1x, D/E 0.08x, cash 203.50
• Low ROE (0.8%) driven by low asset turnover and minimal leverage
• ROIC at 1.6% highlights capital efficiency challenge
• Dividend payout against Q1 earnings appears high; sustainability should be judged on full-year cash flows
• Non-operating income provided modest support but does not offset core operating softness

Metrics to Watch:

• Revenue run-rate and order intake into Q2–Q3
• Gross margin trajectory and pricing versus input cost dynamics
• SG&A ratio to sales and operating leverage
• Inventory turnover and receivables collection
• Operating cash flow and free cash flow once disclosed
• Dividend guidance relative to full-year earnings

Relative Positioning: Within apparel suppliers to healthcare/ institutional markets, Nagai Leben shows superior liquidity and solvency but faces near-term growth and capital efficiency headwinds; sustaining mid-teens operating margins will be key to defending returns.

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