SPK CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥36.45B
• Operating Income: ¥1.81B
• Net Income: ¥1.19B
• EPS: ¥131.00

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

SPK Co., Ltd. delivered solid first-half FY2026 (Q2 cumulative) results under JGAAP on a consolidated basis, with both top-line and operating profit outpacing prior-year levels. Revenue increased 9.0% YoY to ¥36.45bn, while operating income rose 15.6% YoY to ¥1.81bn, indicating positive operating leverage. Gross profit of ¥6.09bn implies a gross margin of 16.7%, and operating margin improved to roughly 5.0% (¥1.81bn / ¥36.45bn). Ordinary income reached ¥1.95bn, and net income was ¥1.32bn (+11.2% YoY), resulting in a net margin of 3.63%. DuPont metrics show a calculated ROE of 4.75%, driven by a net margin of 3.63%, asset turnover of 0.807x, and financial leverage of 1.62x. The balance sheet appears conservative: total assets were ¥45.19bn, total liabilities ¥17.11bn, and total equity ¥27.85bn, implying an equity ratio of approximately 61.6% despite the reported 0.0% (which reflects non-disclosure in the XBRL, not an actual zero). Liquidity is strong with a current ratio of 298.8% and quick ratio of 202.0%, supported by sizeable working capital of ¥22.82bn. Interest expense was modest at ¥17m, and interest coverage is very high at 106.4x, underscoring low financial risk. Based on net income plus reported income tax, the effective tax rate is approximately 30.3%, rather than 0.0% (again, the 0.0% presented is due to non-disclosure). Cash flow statements (OCF/ICF/FCF) and depreciation were not disclosed in this dataset, so EBITDA and cash conversion cannot be assessed from the provided figures. Inventories stood at ¥11.11bn; versus six-month cost of sales of ¥27.34bn, this suggests inventory days on hand of roughly mid-70s on a half-year basis—reasonable for a trading/distribution business but still a key area to monitor. Dividend data (DPS, payout, FCF coverage) were not disclosed; thus dividend sustainability must be assessed qualitatively from earnings capacity and balance sheet strength. Overall, SPK exhibits resilient growth, improving profitability, and a strong balance sheet, but the absence of cash flow disclosures and dividend information constrains assessment of earnings quality and capital returns.

Profitability Analysis

ROE decomposition:

• net_profit_margin: 3.63% (¥1,322m / ¥36,450m)
• asset_turnover: 0.807x (¥36,450m / ¥45,191m)
• financial_leverage: 1.62x (Assets/Equity = ¥45,191m / ¥27,846m)
• calculated_ROE: 4.75% (matches reported DuPont output) margin_quality:
• gross_margin: 16.7% (¥6,087m / ¥36,450m)
• operating_margin: 4.96% (¥1,808m / ¥36,450m)
• ordinary_margin: 5.36% (¥1,952m / ¥36,450m)
• net_margin: 3.63%
• commentary: YoY operating income growth (+15.6%) outpaced revenue (+9.0%), implying margin expansion versus last year. Cost control and/or mix effects likely contributed, as gross margin is healthy for a trading-heavy model. operating_leverage:
• degree_of_operating_leverage_estimate: ≈1.7x (15.6% OI growth / 9.0% revenue growth)
• interpretation: Positive operating leverage is evident; fixed cost base appears efficiently leveraged to higher sales.

Growth Assessment

revenue_sustainability: Revenue grew 9.0% YoY to ¥36.45bn for the half year, consistent with steady demand in automotive/industrial distribution. Sustainability will hinge on aftermarket demand, pricing power amid FX/cost swings, and supplier/customer breadth. profit_quality: Operating profit growth (+15.6% YoY) exceeded sales growth, indicating improved operating efficiency or better mix. Interest burden is minimal (¥17m), so earnings are largely operational. Effective tax rate inferred at ~30.3% (¥575m / ~¥1,897m pre-tax). outlook: With strong liquidity and low leverage, the company appears well positioned to continue incremental growth. Key swing factors include FX (imported parts), inventory discipline, and regional demand trends. Absent cash flow disclosures, near-term earnings quality appears sound but confirmation via OCF would strengthen confidence.

Financial Health

liquidity:

• current_ratio: 298.8% (¥34,296m / ¥11,476m)
• quick_ratio: 202.0% (~(¥34,296m - ¥11,114m) / ¥11,476m)
• working_capital: ¥22,820m
• commentary: Ample liquidity with large buffers in current assets; limited short-term refinancing risk. solvency:
• equity_ratio: ≈61.6% (¥27,846m / ¥45,191m) despite reported 0.0% due to non-disclosure
• debt_to_equity: 0.61x (¥17,110m / ¥27,846m)
• interest_coverage: 106.4x (¥1,808m / ¥17m)
• commentary: Low leverage and strong coverage indicate robust solvency; balance sheet conservatism provides resilience. capital_structure: Liabilities are modest relative to equity, suggesting capacity to absorb working capital swings and invest without stressing the balance sheet.

Cash Flow Quality

earnings_quality: Core profitability appears healthy given margin trends and low interest burden; however, the absence of OCF and D&A disclosures prevents assessment of cash conversion and non-cash components. FCF_analysis: Free cash flow could not be computed due to non-disclosure of OCF and capex; EBITDA is also not derivable as D&A was not disclosed (reported as 0 indicates unavailable). working_capital: Inventories ¥11,114m vs. 6M COGS ¥27,344m imply inventory days ≈ 74 days (11,114 / 27,344 × ~182), reasonable but important to monitor for obsolescence and FX-driven repricing. Receivables/payables not disclosed, limiting full WC analysis.

Dividend Sustainability

payout_ratio_assessment: Not assessable from provided data; DPS and payout ratio are shown as 0.00, which indicates non-disclosure rather than actual zero. EPS is ¥131.00 for the period, implying capacity for distributions exists, but policy details are not available here. FCF_coverage: Not measurable as FCF is not disclosed; any coverage commentary would be speculative without OCF and capex. policy_outlook: With a strong equity base and low leverage, the company could support stable dividends under typical policies for trading companies; however, without disclosed DPS/CF, we cannot draw conclusions on actual policy or sustainability.

Risk Assessment

Business Risks:

• Demand cyclicality in automotive and industrial aftermarket segments
• FX volatility affecting import costs and pricing competitiveness
• Inventory obsolescence risk given breadth of SKUs in distribution
• Supplier concentration and procurement terms changes
• Logistics and freight cost fluctuations impacting margins
• Competition from domestic and overseas distributors affecting pricing

Financial Risks:

• Working capital intensity leading to cash flow volatility despite accounting profits
• Credit risk on receivables (not disclosed) in a distribution-heavy model
• Interest rate risk is limited currently given low interest expense, but could rise with higher borrowings
• Potential mismatch between inventory valuation and rapid price changes (FX or commodity-linked)

Key Concerns:

• Non-disclosure of cash flow statement and depreciation impedes earnings quality assessment
• Dividend data (DPS, payout) not provided, limiting visibility on shareholder returns
• Reported equity ratio of 0.0% in the dataset (non-disclosure) could be misinterpreted without recalculation

Investment Implications

Key Takeaways:

• Top-line growth of 9.0% YoY with stronger operating profit growth (+15.6%) indicates improving profitability
• ROE of 4.75% reflects moderate returns driven by healthy margins and asset efficiency with conservative leverage
• Balance sheet strength is a standout: equity ratio ~61.6%, current ratio ~3.0x, interest coverage >100x
• Working capital management, particularly inventory turnover, remains a pivotal driver of cash generation
• Assessment is constrained by non-disclosure of OCF, capex, and DPS

Metrics to Watch:

• Operating cash flow and free cash flow once disclosed
• Inventory days and gross margin trajectory
• SG&A-to-sales ratio for confirmation of operating leverage
• FX rates and import cost pass-through
• Ordinary income vs. operating income gap (non-operating gains/losses)

Relative Positioning: Within Japanese parts trading/distribution peers, SPK exhibits above-average balance sheet resiliency, mid-teens gross margins, mid-single-digit operating margins, and moderate ROE; cash flow visibility is currently below peers due to disclosure gaps in this dataset.

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