Daitron Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥72.80B
• Operating Income: ¥5.05B
• Net Income: ¥2.57B
• EPS: ¥328.15

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

Daitron Co., Ltd. (TSE: 76090) reported solid FY2025 Q3 year-to-date results with revenue of ¥72.8bn, up 9.3% YoY, indicating resilient demand across its electronics-related businesses. Gross profit was ¥13.11bn, translating to an 18.0% gross margin, which is respectable for a tech trading/manufacturing hybrid and suggests stable pricing and product mix. Operating income rose 31.2% YoY to ¥5.05bn, materially outpacing sales growth and implying positive operating leverage and disciplined SG&A management. Operating margin expanded to roughly 6.94% (¥5.05bn / ¥72.80bn), versus implied prior-year levels given the 31% profit growth on 9% sales growth. Ordinary income of ¥5.06bn was only slightly above operating income, indicating limited reliance on non-operating gains and manageable financial costs. Net income reached ¥3.48bn (+35.3% YoY), yielding a net margin of 4.79%, underpinned by improved operating performance. Based on the reported tax expense (¥1.26bn) and ordinary income (¥5.06bn), the implied effective tax rate is approximately 24.9%, consistent with Japan’s statutory range. DuPont analysis points to a 10.48% ROE, driven by a 4.79% net margin, roughly 1.0x asset turnover, and 2.19x financial leverage; this is a balanced return profile with modest leverage. The balance sheet appears sound with total assets of ¥72.83bn and total equity of ¥33.24bn, implying an equity ratio of about 45.6% (despite the reported metric showing 0.0%, which we treat as unreported). Liquidity is strong: the current ratio is 179.4% and the quick ratio is 160.4%, supported by ¥65.20bn of current assets against ¥36.35bn of current liabilities. Working capital is ample at ¥28.85bn, and inventories are a manageable ¥6.91bn, reducing near-term liquidity risk. Financial risk is modest with total liabilities/equity at 1.21x and an interest coverage ratio of 192.1x, reflecting minimal sensitivity to financing costs. Cash flow statements and depreciation/amortization were not disclosed in the provided XBRL (zeros indicate unreported), which limits cash conversion and capex assessment. Dividend data were also unreported, so payout trends and distributions cannot be evaluated from this dataset. Overall, profitability momentum, cost discipline, and a solid balance sheet underpin the outlook, but the lack of cash flow disclosure and the sector’s inherent cyclicality warrant close monitoring of working capital and order trends. We base our conclusions strictly on the disclosed non-zero items and acknowledge that missing cash flow and share data constrain depth in several areas (FCF, DPS, and per-share metrics).

Profitability Analysis

roe_decomposition: ROE 10.48% = Net margin 4.79% × Asset turnover ~1.00x × Financial leverage 2.19x. The return profile is driven by improved operating margin and moderate leverage rather than aggressive gearing. margin_quality: Gross margin at 18.0% suggests stable pricing/mix. Operating margin of ~6.94% (¥5.05bn / ¥72.80bn) benefited from SG&A discipline; implied SG&A is ~¥8.06bn (gross profit ¥13.11bn minus OI ¥5.05bn), or ~11.1% of sales. Net margin of 4.79% reflects limited drag from non-operating items and an implied effective tax rate ~24.9%. operating_leverage: Operating income grew 31.2% YoY vs revenue +9.3%, evidencing positive operating leverage. The small gap between operating and ordinary income indicates profitability is primarily operational, not financial, in nature.

Growth Assessment

revenue_sustainability: Revenue rose 9.3% YoY to ¥72.8bn, indicating steady demand in core markets. With inventories at ¥6.91bn (10.0% of sales), inventory build appears controlled, supporting near-term fulfillment without excessive stock risk. profit_quality: Ordinary income (¥5.06bn) closely tracks operating income (¥5.05bn), implying limited reliance on non-core gains; interest expense is small (¥26.3m). Net income growth of 35.3% YoY reflects both operating leverage and a normalized tax burden (~24.9%). outlook: Given the improved margins and strong liquidity, the company appears well-positioned to navigate demand fluctuations. However, as an electronics/semiconductor-exposed business, growth remains sensitive to capex cycles, inventory digestion at customers, and FX. Continued monitoring of order intake, backlog, and segment mix will be critical (not provided here).

Financial Health

liquidity: Current ratio 179.4%, quick ratio 160.4%, and working capital ¥28.85bn indicate robust short-term solvency. Current assets are ¥65.20bn vs current liabilities ¥36.35bn. solvency: Total liabilities/equity is 1.21x; interest coverage is 192.1x (¥5.05bn OI / ¥26.3m interest), suggesting low financial risk. Equity ratio is approximately 45.6% (computed: ¥33.24bn / ¥72.83bn), despite the reported 0.0% figure being an unreported placeholder. capital_structure: Moderate leverage with ample equity base provides flexibility. Ordinary income in line with operating income indicates minimal dependence on financial income or leverage to achieve earnings.

Cash Flow Quality

earnings_quality: With ordinary income nearly equal to operating income and minimal interest expense, earnings quality appears operationally driven. The implied tax rate (~24.9%) supports normalized after-tax earnings. fcf_analysis: Operating, investing, and financing cash flows were not disclosed in the provided data (zeros represent unreported). As such, FCF and cash conversion cannot be quantified for this period. working_capital: Working capital stands at ¥28.85bn. Inventories at ¥6.91bn (10.0% of sales) seem manageable, but without receivables/payables turnover data, we cannot assess cash conversion cycles. Earnings may remain sensitive to period-end working capital swings typical for trading-oriented models.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio were not disclosed (zeros denote unreported). Therefore, payout discipline and historical policy cannot be assessed from this dataset. fcf_coverage: Free cash flow is unreported; coverage of dividends cannot be evaluated. policy_outlook: With ROE at 10.48% and a strong balance sheet, there appears capacity for distributions in general terms, but any view on sustainability requires actual cash flow and dividend policy disclosures, which are unavailable here.

Risk Assessment

Business Risks:

• Semiconductor and electronics cycle exposure affecting orders and pricing
• Customer capex timing and demand volatility in equipment and components
• Inventory obsolescence risk amid rapid technology cycles
• Supplier concentration and lead-time/supply chain constraints
• FX fluctuations impacting import costs and export competitiveness
• Competitive pricing pressure in distribution and equipment markets

Financial Risks:

• Working capital intensity and potential cash flow volatility
• Credit risk from customer receivables in down-cycles
• Potential need for incremental funding in a sharp upturn (to finance inventories/receivables), albeit leverage is currently moderate
• Interest rate risk is limited given minimal interest expense but not zero

Key Concerns:

• Absence of cash flow disclosure limits assessment of cash conversion and FCF
• Sector cyclicality could compress margins if demand weakens
• Visibility on orders/backlog and segment mix is not provided, constraining forward view

Investment Implications

Key Takeaways:

• Strong year-to-date profit momentum with operating income up 31.2% on 9.3% sales growth
• Healthy operating margin (~6.94%) and net margin (4.79%) driven by SG&A discipline
• Robust liquidity (current ratio 179%, quick 160%) and moderate leverage (liabilities/equity 1.21x)
• ROE at 10.48% supported by moderate leverage and stable margins
• Earnings predominantly operational with little non-operating contribution
• Cash flow and dividend data unreported, limiting cash conversion and payout analysis

Metrics to Watch:

• Order intake and backlog (book-to-bill) for demand visibility
• Gross and operating margin trends by segment/product mix
• Working capital metrics: receivable and inventory turnover, days on hand
• Cash flow from operations and free cash flow conversion
• FX exposure and hedging impact on margins
• Capex levels and D&A once disclosed (to gauge maintenance vs growth investment)

Relative Positioning: Within Japan’s electronics trading/equipment peer set, Daitron exhibits a solid balance sheet, high liquidity, strong interest coverage, and a mid-teens gross margin with operating margins near 7%. ROE around 10% is competitive without excessive leverage, though the lack of cash flow disclosure tempers comparative assessment of cash conversion versus peers.

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