SIIX CORPORATION FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥214.44B
• Operating Income: ¥6.81B
• Net Income: ¥3.37B
• EPS: ¥91.28

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

Siix Corporation (シークス株式会社, 7613) reported FY2025 Q3 (nine months) consolidated results showing resilient profitability despite revenue softness. Revenue declined 4.7% YoY to ¥214.4bn, but operating income rose 6.6% YoY to ¥6.81bn, indicating margin repair and cost discipline. Gross profit was ¥21.07bn, implying a gross margin of 9.8%, while the operating margin improved to 3.2%. Ordinary income of ¥6.92bn slightly exceeded operating income, suggesting positive non-operating items offset interest expense. Net income increased 26.6% YoY to ¥4.30bn, lifting net margin to 2.01% and EPS to ¥91.28. DuPont metrics indicate a calculated ROE of 4.34% driven by a 2.01% net margin, 1.06x asset turnover, and 2.04x financial leverage. Balance sheet strength is solid with a current ratio of 199% and a quick ratio of 169%, supported by working capital of ¥77.7bn. Leverage is moderate with total liabilities/equity of 1.17x and assets/equity (financial leverage) of 2.04x. Interest expense of ¥1.27bn yields an interest coverage ratio of roughly 5.4x based on operating income, an adequate buffer. The reported effective tax rate metric is 0.0%, but based on disclosed taxes (¥2.32bn) and net income, the implied tax rate is approximately 35%, highlighting a data presentation limitation in the provided metrics. Inventory stood at ¥23.64bn; this equates to roughly 32 days of inventory on hand, a reasonable level for an EMS/trading model. Cash flow statements are unreported (zeros reflect non-disclosure, not actual values), limiting assessment of earnings cash conversion and capex intensity. Dividend data (DPS and payout ratio) are also unreported, so dividend capacity must be inferred from earnings and balance sheet strength rather than actual distributions. Overall, the quarter reflects improved cost efficiency and stable financial health, but thin margins, interest burden, and reliance on non-operating gains temper quality. Data gaps (notably cash flows, depreciation, and dividends) constrain the depth of analysis; conclusions focus on disclosed non-zero items.

Profitability Analysis

ROE_decomposition: ROE 4.34% = Net margin 2.01% × Asset turnover 1.06× × Financial leverage 2.04×. Net income ¥4.30bn on revenue ¥214.44bn yields thin but improving profitability. Asset efficiency is reasonable for an EMS/trading model, while leverage is moderate and supportive. margin_quality: Gross margin 9.8% (¥21.07bn GP) and operating margin 3.2% (¥6.81bn OI) indicate SG&A of ~¥14.26bn or 6.65% of sales. Ordinary income exceeds operating income by ~¥0.11bn despite ¥1.27bn interest expense, implying non-operating gains (e.g., FX or investment income) of ~¥1.38bn. Net margin of 2.01% improved YoY alongside earnings growth, but remains structurally thin. operating_leverage: Operating income grew 6.6% on a 4.7% revenue decline, evidencing positive operating leverage (cost scaling and mix). With gross margin steady at ~9.8% and SG&A ratio contained, incremental margins improved in the period. Sustainability will depend on volume normalization and FX.

Growth Assessment

revenue_sustainability: Revenue fell 4.7% YoY to ¥214.44bn, pointing to softer end-demand and/or normalization after prior elevated cycles. The company’s diversified EMS/trading exposure typically tracks global electronics cycles; visibility depends on orders and backlog not disclosed here. profit_quality: Profit growth outpaced revenue (OI +6.6%, NI +26.6%), driven by cost control and non-operating support. Interest expense remains material, but was offset by non-operating gains in this period. The implied tax rate (~35%) is standard, suggesting earnings quality is not tax-driven. outlook: If demand stabilizes and cost actions hold, margins could be maintained near current levels. Risks include macro/electronics-cycle softness, FX volatility, and mix shifts. Growth reacceleration likely requires order recovery; absent that, earnings depend on continued efficiency and cost discipline.

Financial Health

liquidity: Current assets ¥156.21bn vs current liabilities ¥78.47bn yields a current ratio of 199% and quick ratio of 169%, indicating ample short-term coverage. Working capital is ¥77.74bn, providing operational flexibility. solvency: Total liabilities of ¥116.45bn vs equity of ¥99.16bn imply D/E of 1.17x and financial leverage (assets/equity) of 2.04x. Interest coverage is ~5.4x (OI/interest), adequate but sensitive to cyclical earnings. capital_structure: Balance sheet suggests moderate leverage appropriate for a trading/EMS model. Note: the provided ‘Equity Ratio: 0.0%’ appears undisclosed; by calculation equity/asset is ~49% (¥99.16bn/¥202.50bn). Minor inconsistencies between totals likely reflect disclosure classification/rounding in the snapshot.

Cash Flow Quality

earnings_quality: Cash flow statements (OCF/ICF/FCF) are unreported; OCF shown as zero should be treated as missing. As such, we cannot corroborate earnings with cash conversion. Interest expense and taxes are recognized, supporting accrual validity, but non-operating gains partly underpin ordinary income. FCF_analysis: With depreciation unreported (zero indicates non-disclosure), EBITDA and maintenance capex cannot be estimated. Free cash flow cannot be assessed from the provided data. working_capital: Inventories are ¥23.64bn (~32 days on hand using period cost of sales), which appears controlled. Receivables and payables are not disclosed, limiting a full cash conversion cycle view. The sizable working capital base (¥77.74bn) suggests meaningful cash tied to operations typical of an EMS/trader.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are unreported (zeros reflect non-disclosure). Based on YTD net income of ¥4.30bn, the company appears to have earnings capacity to fund dividends, but without historical dividend data or policy disclosure we cannot derive a payout profile. FCF_coverage: FCF is unreported, preventing coverage analysis. Liquidity and moderate leverage provide some buffer, but sustainable dividends hinge on cash generation and capex needs not provided. policy_outlook: Absent disclosed DPS/policy, we infer that dividend decisions will balance cyclical earnings, working capital swings, and leverage discipline. Clearer guidance on capital allocation would improve visibility.

Risk Assessment

Business Risks:

• Electronics cycle exposure leading to revenue volatility
• Customer concentration risk typical in EMS/trading models
• Pricing pressure and thin margins in contract manufacturing and component trading
• Supply chain disruptions and logistics constraints
• FX volatility impacting both revenue and costs
• Inventory obsolescence risk amid rapid product lifecycles
• Geopolitical and tariff risks affecting cross-border supply chains

Financial Risks:

• Interest expense burden (¥1.27bn YTD) reducing earnings cushion
• Potential earnings sensitivity to non-operating items (e.g., FX gains/losses)
• Working capital swings affecting operating cash flows
• Refinancing risk if credit markets tighten (details on maturities not disclosed)
• Tax rate variability (implied ~35%) impacting net margins

Key Concerns:

• Sustainability of margin improvements amid declining revenue
• Dependence on non-operating gains to offset interest costs
• Limited visibility due to undisclosed cash flow and depreciation data

Investment Implications

Key Takeaways:

• Revenue down 4.7% YoY to ¥214.44bn, but operating income up 6.6% YoY to ¥6.81bn
• Gross margin 9.8% and operating margin 3.2% reflect effective cost control
• Net income ¥4.30bn, net margin 2.01%, EPS ¥91.28; ROE 4.34%
• Interest expense ¥1.27bn with interest coverage ~5.4x; ordinary income aided by non-operating gains
• Strong liquidity (current ratio 199%, quick ratio 169%) and moderate leverage (D/E 1.17x)
• Inventory ~32 days indicates reasonable working capital discipline
• Cash flow and depreciation data not disclosed; limits FCF and EBITDA assessment
• Dividend data not disclosed; payout capacity must be inferred from earnings and balance sheet

Metrics to Watch:

• Order trends and book-to-bill ratio
• Gross and operating margin trajectory (cost pass-through, mix)
• Inventory, receivables, and payables days (cash conversion cycle)
• Non-operating income/expense breakdown and FX sensitivity
• Interest coverage and borrowing costs
• Capex and depreciation (once disclosed) to gauge maintenance vs growth spend
• OCF/NI and FCF generation as cash flow data become available
• Equity ratio and net debt metrics for balance sheet resilience

Relative Positioning: Relative to domestic EMS/trading peers, Siix exhibits typical low-margin, volume-driven economics with moderate leverage and strong liquidity. Near-term profitability appears supported by cost control and non-operating gains, but sustained outperformance would require stable demand, disciplined working capital, and improved operating 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