Ledax Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.28B
• Operating Income: ¥-133M
• Net Income: ¥-35M
• EPS: ¥-4.11

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

Redax Co., Ltd. (76020) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥9.275bn, down 5.0% YoY, indicating a modest top-line contraction. Gross profit was ¥1.448bn, translating to a gross margin of 15.6%, which appears thin for sustaining overhead given current SG&A intensity. Operating income was a loss of ¥133m (roughly flat YoY), equating to an operating margin of -1.4%, while ordinary income and net income were losses of ¥101m and ¥85m, respectively. The net margin came to -0.92%, consistent with the provided DuPont input. EBITDA was negative at ¥74m, with an EBITDA margin of -0.8%, underscoring a weak earnings base before depreciation and interest. Cash flow from operating activities was materially negative at ¥832m, a key concern given the relatively modest operating loss, pointing to significant working capital outflows. Financing cash flow was a net inflow of ¥113m, suggesting reliance on external funding to partially bridge operational cash needs. The balance sheet shows total assets of ¥6.706bn and total equity of ¥4.769bn; while the reported equity ratio field shows 0.0% (undisclosed), the implied equity ratio is about 71% based on disclosed assets and equity, indicating a strong capital base. Current assets of ¥5.432bn versus current liabilities of ¥1.864bn yield a high current ratio of 291.5%, but with inventories undisclosed (reported as 0), the quick ratio is not reliably comparable to peers. Debt-to-equity is a modest 0.46x, and interest expense remains low at ¥1.0m, but negative operating profit renders interest coverage metrics not meaningful. DuPont analysis indicates ROE of -1.78%, driven primarily by negative net margin despite reasonable asset turnover (1.383x) and low leverage (1.41x). SG&A is inferred at roughly ¥1.581bn, or about 17.0% of sales, which currently exceeds gross profit and drives the operating loss. Revenue decline combined with thin gross margins increases operational sensitivity to top-line and mix changes, implying elevated operating leverage risk. With DPS at ¥0.00 and ongoing losses plus negative operating cash flow, distributions remain suspended appropriately under current conditions. Several data items are undisclosed (e.g., inventories, cash and cash equivalents, investing cash flows, equity ratio, shares), limiting precision on some ratios and coverage analyses. Overall, Redax presents a picture of resilient solvency but pressured profitability and cash generation, with near-term focus required on working capital discipline and gross margin enhancement.

Profitability Analysis

ROE_decomposition: ROE of -1.78% is consistent with DuPont inputs: net profit margin -0.92%, asset turnover 1.383x, and financial leverage 1.41x. The negative ROE is almost entirely attributable to the negative net margin; asset efficiency is reasonable, and leverage is restrained. margin_quality: Gross margin stands at 15.6% (gross profit ¥1,447.6m on revenue ¥9,275.0m). Operating margin is -1.4% (operating loss ¥133m), and net margin is -0.92% (net loss ¥85m). Inferred SG&A of about ¥1,580.6m (~17.0% of sales) exceeds gross profit, driving the operating loss. EBITDA margin of -0.8% indicates limited buffer even before depreciation and interest. operating_leverage: Given a slim gross margin and SG&A near 17% of sales, small changes in gross profit rate or revenue volume can materially swing operating income. The -5.0% YoY revenue decline likely exacerbated negative operating leverage this period.

Growth Assessment

revenue_sustainability: Revenue declined 5.0% YoY to ¥9.275bn. Without segment or product disclosures, sustainability is uncertain; current trends indicate headwinds in demand or pricing. profit_quality: Operating loss is broadly flat YoY (per disclosure), but negative EBITDA and thin gross margins signal fragile profit quality. Ordinary loss of ¥101m suggests minimal non-operating support. outlook: Stabilization requires improving gross margin via pricing/mix or procurement efficiencies and tighter SG&A control. Near-term growth recovery would need reacceleration in volumes or better mix, alongside working capital normalization to support cash conversion.

Financial Health

liquidity: Current assets ¥5,431.9m vs current liabilities ¥1,863.6m imply a current ratio of 291.5%. The quick ratio shows the same due to undisclosed inventories; thus, liquidity quality depends on the collectability and aging of receivables and other current assets. Working capital is sizeable at ¥3,568.4m. solvency: Total equity ¥4,769.0m vs total assets ¥6,706.0m implies an equity ratio of ~71% (reported equity ratio field is undisclosed). Debt-to-equity is 0.46x, indicating moderate leverage. Interest expense is low at ¥1.0m, but negative EBIT renders interest coverage not meaningful. capital_structure: Leverage appears conservative, with ample equity cushion. However, reliance on external financing (¥112.8m inflow) amid negative OCF suggests funding needs could rise if cash burn persists.

Cash Flow Quality

earnings_quality: OCF of -¥831.9m vs net loss of -¥85.0m produces an OCF/Net Income ratio of 9.79 (both negative), indicating cash outflow materially worse than accrual earnings—weak earnings quality this period. FCF_analysis: Investing cash flow is undisclosed (reported as 0), so Free Cash Flow cannot be robustly determined. Given large negative OCF, FCF is likely negative absent asset sales. working_capital: The scale of negative OCF alongside modest operating losses suggests significant working capital outflows (e.g., higher receivables or lower payables). With inventories undisclosed, the precise driver is unclear; improving collections and payables terms are likely key levers.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0.00 with a payout ratio of 0.0%. Given negative earnings, any payout would be uncovered. FCF_coverage: FCF coverage cannot be calculated due to undisclosed investing cash flows; with OCF negative, effective coverage is weak in practice. policy_outlook: Under current losses and cash outflows, maintaining suspension appears prudent until profitability and cash generation normalize. A future resumption would require sustained positive OCF and clearer visibility on capex needs.

Risk Assessment

Business Risks:

• Top-line pressure (revenue -5.0% YoY) amid potential demand softness or pricing constraints
• Thin gross margins (15.6%) limiting capacity to absorb SG&A
• High operating leverage to gross margin and volume swings
• Potential customer concentration or competitive pricing dynamics (not disclosed but typical for low-margin businesses)
• Supply chain or procurement cost volatility impacting gross margin

Financial Risks:

• Large negative operating cash flow (¥832m) creating funding needs
• Reliance on working capital financing; potential strain if receivable collection slows
• Negative EBIT leading to non-meaningful interest coverage despite low interest burden
• Information gaps (undisclosed cash balance, inventories, investing CF) limiting full assessment

Key Concerns:

• Sustained cash burn relative to earnings
• Insufficient gross profit to cover SG&A at current run-rate
• Execution risk in improving pricing/mix and cost control
• Potential need for additional financing if OCF does not improve

Investment Implications

Key Takeaways:

• ROE -1.78% driven by negative net margin; asset turnover and leverage are not the primary issues
• Gross margin 15.6% and SG&A ~17% of sales produce a structural operating loss
• Operating cash flow -¥832m is a major red flag; working capital discipline is urgent
• Balance sheet solvency appears solid (implied equity ratio ~71%, D/E 0.46x) despite losses
• Revenue contracted 5.0% YoY, intensifying negative operating leverage

Metrics to Watch:

• Gross margin (%) and procurement/pricing actions
• SG&A-to-sales ratio and opex run-rate
• Operating cash flow and working capital movements (receivables, payables, inventory days)
• Revenue growth trajectory and order intake/backlog (if disclosed)
• Net debt and liquidity headroom (cash balance, unused facilities)
• EBITDA margin progression and breakeven point

Relative Positioning: Within peers operating on thin margins, Redax shows weaker near-term cash conversion and profitability but relatively stronger solvency; turnaround hinges on margin uplift and working capital normalization.

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