MANSEI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥12.28B
• Operating Income: ¥718M
• Net Income: ¥426M
• EPS: ¥310.97

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), Mansei Denki (7565) delivered solid top-line growth and strong operating leverage. Revenue rose 13.2% YoY to ¥12.284 billion, while operating income increased 50.3% YoY to ¥718 million, expanding the operating margin to approximately 5.8%. Gross profit was ¥1.672 billion, implying a gross margin of 13.6%, consistent with a trading/distribution business model that typically operates on thin spreads. Ordinary income was ¥735 million, and net income reached ¥504 million, with an EPS of ¥310.97. Net profit margin stood at 4.10%, up YoY, reflecting improved cost discipline and/or mix. The DuPont breakdown shows ROE of 4.09% built from a 4.10% net margin, asset turnover of 0.572x, and financial leverage of 1.74x. The jump in operating profit relative to sales growth indicates meaningful operating leverage via SG&A efficiency. Cash generation was strong: operating cash flow (OCF) was ¥831.5 million, 1.65x net income, suggesting earnings quality is robust. Liquidity is ample with current assets of ¥17.177 billion versus current liabilities of ¥7.965 billion, yielding a current ratio of 215.7%. Balance sheet strength is solid; total equity of ¥12.337 billion versus total assets of ¥21.464 billion implies an estimated equity ratio of roughly 57.5% (the reported 0.0% equity ratio appears undisclosed rather than truly zero). Interest expense was minimal at ¥1.3 million, translating into a very high interest coverage (over 500x), and a conservative financial risk profile. Depreciation was modest at ¥82.7 million (about 0.7% of sales), so EBITDA was ¥800.7 million with a 6.5% margin. Dividends are currently listed as zero (DPS, payout, and FCF coverage all shown as 0), which likely reflects non-disclosure or timing rather than a confirmed suspension, given strong profitability and OCF. Several items, including inventories, cash and equivalents, investing cash flow, share count, and the equity ratio are shown as zero and should be treated as unreported under the provided guidance. Despite these disclosure gaps, the available non-zero data depict a business with improving profitability, healthy cash generation, conservative leverage, and strong short-term liquidity. The main constraints on analysis relate to missing working capital detail (inventories/receivables), capex data (investing CF), and dividend policy specifics, which limit precision on FCF sustainability and capital allocation.

Profitability Analysis

ROE is 4.09%, decomposed into a net profit margin of 4.10%, asset turnover of 0.572x, and financial leverage of 1.74x. Operating margin improved to about 5.84% (¥718m / ¥12,284m), outpacing the 13.2% revenue growth with a 50.3% surge in operating income, evidencing strong operating leverage from SG&A efficiency and scale effects. Gross margin sits at 13.6% (¥1,672m / ¥12,284m), consistent with a distributor profile; the step-up in operating margin suggests good expense control rather than significant structural uplift in gross spread. EBITDA margin is 6.5%, with depreciation at only 0.7% of sales, indicating a relatively asset-light model. Ordinary margin approximates 6.0% (¥735m / ¥12,284m), aided by low interest expense (¥1.3m). Net margin at 4.10% reflects improved profitability after non-operating items and taxes. The reported effective tax rate metric is 0.0% (likely not meaningful), while income tax expense is ¥95.5m; thus, tax effects appear moderate based on the period’s pre-tax earnings. With leverage low and interest expense negligible, incremental profit growth will primarily depend on further gross margin stability and continued SG&A discipline. Given the thin gross margin inherent to trading, maintaining scale and tight expense management will remain key to sustaining elevated operating margins.

Growth Assessment

Revenue growth of 13.2% YoY indicates healthy demand or share gains in the company’s served markets. Operating income outpacing sales (+50.3% vs +13.2%) points to positive operating leverage and potentially a more favorable product/customer mix or improved procurement terms. Gross margin of 13.6% suggests stability typical of an electronics distribution context; absent evidence of mix-driven expansion, the bulk of incremental profitability likely came from SG&A efficiency. Net income growth of 18.6% YoY is solid, albeit lagging operating income growth, implying some offset from non-operating items and taxes. Asset turnover of 0.572x (period-based) is reasonable for an H1 snapshot of a working-capital intensive business and should be interpreted cautiously due to seasonality. EBITDA growth is implied by higher operating income and modest D&A, reinforcing improved operating efficiency. Outlook-wise, if revenue momentum persists and SG&A discipline holds, full-year margins could improve YoY; however, thin gross margins leave profits sensitive to pricing, supplier terms, and demand variability. OCF outperformance versus net income (1.65x) supports the quality of earnings and suggests growth is not purely accrual-driven. Key unknowns include order backlog, bookings, and inventory availability (not disclosed), which are important leading indicators for a distributor. Overall, growth appears sustainable near term, subject to macro/sector demand trends and supply chain normalization.

Financial Health

Liquidity is strong: current assets ¥17.177b vs current liabilities ¥7.965b yields a current ratio of 215.7% and the same quick ratio (inventories unreported). Working capital stands at ¥9.212b, which provides ample buffer for operations. Solvency is conservative with total equity ¥12.337b compared to total liabilities ¥8.672b, implying an estimated equity ratio around 57.5% and a total debt-to-equity proxy of 0.70x (based on total liabilities). Interest burden is de minimis (¥1.3m), reflected in an interest coverage of 554.9x, underscoring low financial risk. Capital structure appears equity-heavy, consistent with the high equity ratio estimate; while exact interest-bearing debt is not disclosed, the tiny interest expense suggests limited borrowings. Cash and equivalents are shown as 0 (treated as undisclosed), so liquidity assessment relies on the strong current asset base. Overall, the company exhibits solid solvency and liquidity metrics, suitable for a working-capital–intensive model.

Cash Flow Quality

OCF of ¥831.5m is 1.65x net income of ¥504m, indicating strong earnings quality with cash conversion supporting reported profits. The positive OCF likely reflects disciplined working capital management and healthy operating margins; however, the absence of inventory and receivables detail limits a granular breakdown. Investing CF is shown as 0 (undisclosed), so free cash flow cannot be reliably computed; the listed FCF of 0 should be interpreted as not available rather than truly zero. Depreciation of ¥82.7m is modest, implying limited capital intensity and, under normal conditions, capex needs are likely manageable; nonetheless, lack of capex disclosure is a constraint. Financing CF was -¥140.5m, suggesting net outflows (potential debt repayment or dividends/other financing), but dividend is shown as 0, so the outflow may relate to debt or other items; details are not provided. On balance, cash flow quality appears strong based on OCF relative to earnings, but full FCF assessment awaits investing cash flow disclosure.

Dividend Sustainability

Annual DPS, payout ratio, and FCF coverage are all shown as 0, which should be treated as undisclosed. Based on earnings alone, the company generated ¥504m in net income and robust OCF of ¥831.5m, suggesting capacity to fund dividends alongside working capital needs under normal circumstances. Without investing cash flow and actual DPS, we cannot quantify payout or FCF coverage. Balance sheet strength (estimated ~57.5% equity ratio and minimal interest burden) would typically support a stable dividend policy if one exists. Near-term sustainability appears favorable from a fundamentals perspective, but visibility is limited by missing dividend and capex data. Policy outlook cannot be assessed definitively; watch for full-year guidance and board resolutions on dividends.

Risk Assessment

Business Risks:

• Thin gross margins (13.6%) typical of distribution, making profits sensitive to pricing and mix
• Demand volatility in end-markets (industrial electronics/semiconductors) impacting volumes
• Supplier terms and availability affecting gross spread and inventory procurement
• Customer concentration risk (not disclosed) common in B2B distribution
• FX exposure on imported components (if applicable), affecting pricing and margins
• Operating leverage cuts both ways; a slowdown could compress margins quickly

Financial Risks:

• Working capital intensity; swings in receivables/payables/inventories can impact OCF
• Limited disclosure of cash, inventories, and interest-bearing debt complicates risk assessment
• Potential refinancing risk unknown due to undisclosed debt structure (interest expense is minimal but details absent)
• Tax rate variability; effective tax profile unclear from the period data

Key Concerns:

• Missing disclosures on inventories, cash, investing cash flow, and share count impede precision
• Sustainability of SG&A efficiencies that drove operating leverage this period
• Sensitivity of earnings to small changes in gross margin given low baseline
• Visibility on dividend policy and capital allocation due to undisclosed DPS and capex

Investment Implications

Key Takeaways:

• Top-line growth of 13.2% YoY with outsized operating income growth of 50.3% demonstrates strong operating leverage
• Gross margin steady at 13.6%, with margin expansion driven mainly by SG&A efficiency
• ROE at 4.09% reflects modest profitability and moderate asset turnover with low leverage
• OCF of ¥831.5m (1.65x net income) signals high earnings quality
• Balance sheet is robust with estimated equity ratio ~57.5% and very high interest coverage
• Liquidity ample: current ratio 215.7% and working capital ¥9.212b
• Key data gaps (inventories, cash, capex, DPS) limit full FCF and payout analysis

Metrics to Watch:

• Gross margin and SG&A-to-sales ratio to gauge sustainability of operating leverage
• Order trends/book-to-bill and backlog as leading indicators of revenue durability
• Working capital turns: inventory and receivables days once disclosed
• Capex and investing cash flow to assess true free cash flow
• OCF/Net income ratio trend as a barometer of earnings quality
• Ordinary margin versus operating margin to monitor non-operating impacts
• Equity ratio and interest-bearing debt levels for solvency monitoring
• Dividend announcements and payout guidance

Relative Positioning: Within Japan’s electronics/electrical distribution ecosystem, the company exhibits improving profitability and strong cash conversion with conservative leverage, positioning it favorably on balance sheet strength and execution. However, thin gross margins and disclosure gaps constrain visibility relative to best-in-class peers with richer disclosure and higher structural margins.

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