TOBA,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥14.42B
• Operating Income: ¥749M
• Net Income: ¥494M
• EPS: ¥141.39

Income Statement

Balance Sheet

Cash Flow Statement

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

For FY2026 Q2, 株式会社鳥羽洋行 reported steady top-line growth and stronger operating leverage, with revenue of ¥14.421bn (+1.7% YoY) and operating income of ¥749m (+13.2% YoY). Gross profit was ¥2.084bn, yielding a gross margin of 14.5%, and operating margin expanded to roughly 5.2%, pointing to disciplined SG&A control and/or a more favorable mix. Ordinary income reached ¥802m, and net income was ¥558m (+13.1% YoY), translating to a net margin of 3.87%. DuPont decomposition indicates an ROE of 2.67% for the half, driven by moderate asset turnover (0.507x) and conservative leverage (1.36x); on a simple annualized view, ROE would approximate the mid-5% range, assuming similar back-half performance. Interest coverage is exceptionally strong at roughly 1,259x, reflecting minimal interest burden and resilient operating earnings. The balance sheet is conservative: total assets are ¥28.433bn versus total liabilities of ¥9.746bn, implying liabilities-to-equity of 0.47x and an equity share of capital of about 73.5% based on reported balances. Liquidity appears solid with a current ratio of 250.9% and sizable working capital of ¥14.004bn. Despite earnings growth, operating cash flow was negative at -¥515m, resulting in an OCF/NI ratio of -0.92, likely due to working capital build (e.g., receivables or other current asset increases; inventories were not disclosed). Investing cash flow was not disclosed and financing cash flow showed an outflow of ¥951m, suggesting net shareholder returns or debt repayments, though specific items were not provided. EBITDA came in at ¥838m and the EBITDA margin at 5.8%, consistent with a low-capex, trading-oriented earnings profile with limited D&A (¥89m). The tax expense disclosed (¥235m) implies a normalized effective tax rate in the high-20s to low-30s, even though a calculated metric stated 0.0%; the disclosed tax amount is the more informative figure. Dividend data were not disclosed (DPS and payout presented as 0.00), so capital return policy cannot be assessed from this dataset; however, financing outflows indicate some form of capital allocation. Overall, profitability is improving modestly on stable revenue, with strong coverage and conservative leverage offset by weak first-half cash conversion. Sustaining earnings momentum will likely hinge on managing gross margins and working capital discipline in the second half. Data limitations (undisclosed inventories, investing CF, equity ratio, and share count) constrain precision, but the available figures support a view of healthy fundamentals with near-term cash flow execution risks. The company’s high liquidity and low financial risk provide cushion as it optimizes working capital.

Profitability Analysis

ROE decomposition: ROE 2.67% = Net margin 3.87% × Asset turnover 0.507 × Financial leverage 1.36. On a simple annualized basis, implied ROE ≈ ~5.3% if H2 mirrors H1. margin_quality: Gross margin 14.5% (GP ¥2.084bn on ¥14.421bn revenue) is consistent with a distribution/trading profile. Operating margin ≈ 5.2% (OI ¥749m) benefited from cost discipline, as OI outpaced revenue growth. Net margin at 3.87% reflects modest non-operating tailwinds and a normalized tax burden; depreciation is light (¥89m), so EBITDA-to-EBIT spread is small. operating_leverage: Revenue +1.7% YoY versus operating income +13.2% indicates positive operating leverage, likely from SG&A efficiency or improved mix. Incremental margins appear healthy, but sustainability depends on maintaining gross spread and cost control amid modest top-line growth.

Growth Assessment

revenue_sustainability: Top-line grew 1.7% YoY to ¥14.421bn, suggesting stable demand but limited volume/price expansion. Absent backlog or order intake data, sustainability is assumed steady rather than robust. profit_quality: Operating income expanded faster than sales, indicating mix or efficiency gains. Ordinary income of ¥802m and minimal interest expense (¥0.6m) underscore earnings quality from operations rather than financial leverage. outlook: If mix and cost discipline persist, full-year operating margin can remain near or slightly above H1 levels. Watch for second-half seasonality and potential normalization of SG&A savings. Annualized ROE could reach mid-5% assuming stable margins and controlled working capital.

Financial Health

liquidity: Current ratio 250.9% and working capital of ¥14.004bn point to strong short-term solvency. Quick ratio equals current ratio as inventories were not disclosed, implying liquidity is driven by cash/receivables/other current assets. solvency: Liabilities/Equity at 0.47x and interest coverage ~1,259x indicate very low financial risk. Based on balances, equity/asset ratio is approximately 73.5% (¥20.889bn/¥28.433bn). capital_structure: Conservative leverage with limited interest-bearing debt indicated by minimal interest expense. Ample equity base supports resilience and flexibility for working capital needs.

Cash Flow Quality

earnings_quality: OCF/NI is -0.92 (OCF -¥515m vs NI ¥558m), indicating weak cash conversion in H1, likely from working capital investment rather than earnings shortfall. FCF_analysis: Free cash flow not disclosed (investing cash flows not provided). Given negative OCF and unspecified capex, FCF likely negative in H1. D&A is low (¥89m), suggesting structurally light capex, but confirmation requires investing CF disclosure. working_capital: Large working capital base (¥14.004bn) and negative OCF imply increases in receivables or other current assets; inventories are undisclosed. Monitoring AR days and CCC is critical to judge cash conversion normalization in H2.

Dividend Sustainability

payout_ratio_assessment: Dividend metrics (DPS, payout) are not disclosed in this dataset. With NI of ¥558m in H1 and strong balance sheet, capacity exists, but the absence of policy details prevents assessment of target payout. FCF_coverage: Not assessable given undisclosed investing CF and negative OCF in H1. Sustainable dividends would require normalization of OCF in H2. policy_outlook: Financing outflow of ¥951m suggests capital returns or debt repayment, but specifics are not provided. Until OCF stabilizes and capital policy is disclosed, dividend visibility remains limited.

Risk Assessment

Business Risks:

• Low top-line growth (+1.7% YoY) exposes earnings to margin and mix fluctuations.
• Dependence on working capital-intensive operations heightens cash conversion risk.
• Potential price competition and supplier terms pressure gross margins in a trading/distribution model.
• Demand sensitivity to industrial capex cycles and macro conditions.
• Customer concentration risk cannot be assessed but is common in specialized trading businesses.

Financial Risks:

• Negative H1 operating cash flow (-¥515m) raises near-term liquidity management needs.
• Undisclosed inventories and investing CF reduce visibility on cash uses and asset quality.
• If receivables growth drove OCF weakness, counterparty risk and collections timing become key.
• Potential interest rate normalization could modestly increase financing costs, albeit from a very low base.

Key Concerns:

• Cash conversion: restoring OCF to align with NI in H2.
• Gross margin resilience amid modest revenue growth.
• Visibility on capital allocation (dividends vs. buybacks vs. debt).

Investment Implications

Key Takeaways:

• Earnings leverage is improving: OI +13.2% on +1.7% revenue.
• Balance sheet is strong with low leverage (liabilities/equity 0.47x) and high liquidity.
• Cash conversion was weak in H1 (OCF/NI -0.92), likely from working capital build.
• Interest burden is negligible (coverage ~1,259x).
• Dividend/capital return policy not discernible from provided data.

Metrics to Watch:

• AR days, CCC, and OCF/NI ratio for cash conversion normalization.
• Gross margin and SG&A ratio to confirm operating leverage sustainability.
• Order intake/backlog (if available) to gauge H2 revenue trajectory.
• Ordinary income vs. operating income gap to monitor non-operating items.
• Investing cash flows and capex to validate FCF potential.

Relative Positioning: Within Japanese trading/distribution peers, the company exhibits conservative leverage and strong coverage, mid-single-digit operating margins, and currently weaker cash conversion; execution on working capital will likely determine relative FCF strength in the near term.

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