Yagami Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.39B
• Operating Income: ¥1.09B
• Net Income: ¥660M
• EPS: ¥146.33

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

For FY2026 Q2 (consolidated, JGAAP), Yagami delivered solid top-line growth and strong operating leverage. Revenue rose 3.1% year over year to ¥5,392 million, while operating income increased 15.8% to ¥1,094 million, signaling healthy incremental margins. Gross profit of ¥2,181 million implies a gross margin of 40.5%, indicating resilient pricing and/or favorable mix. The operating margin expanded to approximately 20.3%, underscoring disciplined cost control and scale benefits. Ordinary income of ¥1,122 million exceeded operating income, suggesting modest positive non-operating contributions (e.g., interest/dividend income) with negligible interest burden. Net income climbed 23.3% YoY to ¥767 million, driving a net margin of 14.22%. DuPont decomposition shows ROE of 5.53% built from a 14.22% net margin, asset turnover of 0.298x, and financial leverage of 1.31x. The low asset turnover points to a balance sheet rich in current assets and equity; leverage is conservative. Liquidity is very strong with a current ratio of 3.81x and a quick ratio of 3.51x, supported by sizeable working capital of ¥10,913 million. Solvency is robust, with total liabilities at just ¥4,994 million versus equity of ¥13,858 million (implied equity ratio ~76.5%), and interest coverage is effectively unconstrained at over 5,300x. Operating cash flow of ¥663 million is 0.86x net income, a reasonable level but below 1.0, likely reflecting working capital timing; depreciation remains modest at ¥42 million, so earnings are not materially inflated by non-cash items. Financing cash outflow of ¥845 million suggests shareholder returns and/or debt service, though dividend data are not disclosed in XBRL. Several fields show zero (e.g., equity ratio, cash and equivalents, investing cash flow, DPS, shares), which indicates non-disclosure under the provided taxonomy rather than true zeros; analysis therefore relies on derived measures and standard interpretations. Despite data gaps, the trajectory points to margin resilience and prudent balance sheet management. The key watchpoints are sustainability of gross margin, working capital efficiency (given low asset turnover), and the durability of non-operating income. Overall, fundamentals suggest a quality earnings print supported by operating discipline and a conservative capital structure, with scope to enhance ROE via improved asset efficiency and cash conversion.

Profitability Analysis

ROE decomposition: ROE 5.53% = Net margin 14.22% × Asset turnover 0.298× × Financial leverage 1.31×. The dominant driver is a strong net margin; leverage contributes modestly, while low asset turnover drags overall ROE. margin_quality: - Gross margin: 40.5% (¥2,181m GP on ¥5,392m sales), indicating favorable pricing/mix and controlled input costs. - Operating margin: ~20.3% (¥1,094m OI), up faster than sales, reflecting cost discipline. - Ordinary margin: ~20.8% (¥1,122m), aided by positive non-operating items; interest expense is immaterial (¥0.206m). - Net margin: 14.22% (¥767m), robust versus typical trading/distribution peers. operating_leverage: Revenue +3.1% YoY vs operating income +15.8% implies high operating leverage (~5x), pointing to strong incremental margins in the period.

Growth Assessment

revenue_sustainability: Sales growth of 3.1% appears steady rather than rapid; sustainability likely hinges on public/private capex cycles and institutional demand. Mix and pricing discipline are important given the high gross margin. profit_quality: Margin expansion across the P&L (notably operating margin) indicates genuine cost leverage. Depreciation is modest (¥42m), so earnings are not reliant on non-cash items. Ordinary income above operating income suggests recurring financial income; reliance on such items should be monitored. outlook: With strong liquidity and minimal interest burden, the company is positioned to pursue measured growth. Key to sustaining profit growth will be maintaining gross margin, improving asset turns, and generating OCF at or above net income through tighter working capital.

Financial Health

liquidity: Current ratio 3.81x and quick ratio 3.51x indicate abundant short-term coverage. Working capital stands at ¥10,913m, and inventories are modest at ¥1,149m relative to current assets. solvency: Total liabilities ¥4,994m vs equity ¥13,858m yields a debt-to-equity of 0.36x. Implied equity ratio (equity/assets) is ~76.5% (13,858/18,113), despite the reported 0.0% placeholder. capital_structure: Financial leverage is low (Assets/Equity ~1.31x). Interest expense is negligible (¥0.206m) and interest coverage exceeds 5,300x, indicating minimal refinancing risk.

Cash Flow Quality

earnings_quality: OCF/Net income is 0.86x (¥663m/¥767m), acceptable but below 1.0, suggesting some working capital build or timing effects. Depreciation is small relative to EBIT, indicating limited non-cash uplift. FCF_analysis: Investing CF is shown as ¥0 due to non-disclosure; thus, Free Cash Flow cannot be reliably computed from provided data. Conceptually, FCF would be OCF minus capex; with capex unreported, FCF assessment is constrained. working_capital: Large current asset base (¥14,798m) versus current liabilities (¥3,885m) supports resilience but depresses asset turns. Monitoring receivables and inventory turns will be key to improving OCF conversion.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are shown as 0.0% due to non-disclosure; actual dividends are not provided. EPS is ¥146.33, but without DPS we cannot compute payout. FCF_coverage: FCF coverage cannot be assessed because investing cash flow (and thus capex) is unreported. Financing CF outflow of ¥845m may include dividends or buybacks, but the split is unknown. policy_outlook: Given strong balance sheet and cash generation, the company has capacity for shareholder returns; however, absence of disclosed DPS or policy commentary in the dataset limits visibility on dividend policy.

Risk Assessment

Business Risks:

• Dependence on institutional and public-sector procurement cycles, which can be lumpy.
• Pricing pressure from competitive distributors and OEMs.
• Supply chain constraints affecting lead times and fulfillment.
• Product mix shifts that could compress gross margins.
• Potential FX exposure on imported products (if applicable).

Financial Risks:

• Low asset turnover indicates efficiency risk; elevated working capital can weigh on cash conversion.
• Non-operating income contribution to ordinary income may be volatile.
• Customer concentration risk could extend receivable days (data not disclosed).
• Limited disclosure on investing cash flows impedes visibility on capex and FCF.

Key Concerns:

• Sustainability of high gross and operating margins amid competitive dynamics.
• OCF trailing net income (0.86x) points to working capital sensitivity.
• Data gaps (cash, capex, DPS) constrain full assessment of capital allocation and FCF.

Investment Implications

Key Takeaways:

• Strong operating leverage with double-digit operating profit growth on low-single-digit sales growth.
• Robust margins (OPM ~20%) and minimal interest burden support earnings resilience.
• Conservative balance sheet (implied equity ratio ~76.5%, D/E 0.36x) reduces solvency risk.
• Cash conversion is decent but not stellar (OCF/NI 0.86x); room to improve working capital efficiency.
• ROE of 5.53% is constrained by low asset turnover; improving asset efficiency is the main lever.

Metrics to Watch:

• Gross margin trajectory and mix-related impacts.
• Operating expense ratio and incremental margins as sales grow.
• OCF/Net income and working capital days (AR, inventory, AP turns).
• Capex and investing cash flows to firm up FCF.
• Composition of non-operating income and any FX sensitivity.

Relative Positioning: Within trading/distribution peers, Yagami exhibits above-average profitability and very strong balance sheet quality, offset by lower asset efficiency and incomplete cash flow disclosure.

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