OHASHI TECHNICA INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥19.97B
• Operating Income: ¥1.12B
• Net Income: ¥769M
• EPS: ¥118.62

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

Ohashi Technica (TSE:7628) delivered a resilient FY2026 Q2, with operating fundamentals improving despite a slight revenue contraction. Revenue declined 1.8% year over year to ¥19.97bn, yet operating income rose 27.6% to ¥1.12bn, indicating meaningful margin expansion and effective cost control. Gross profit was ¥4.22bn, implying a gross margin of 21.1%, and operating margin reached approximately 5.6%. Ordinary income came in at ¥1.33bn, while net income surged 100.4% YoY to ¥1.52bn, lifting net margin to 7.61%. The step-up from ordinary to net income suggests the presence of non-recurring gains, which enhanced bottom-line performance beyond core operations. Under DuPont, ROE is 3.93%, driven by a 7.61% net margin, low asset turnover of 0.419x, and modest financial leverage of 1.23x. Liquidity is exceptionally strong with a current ratio of 475.7% and a quick ratio of 406.1%, supported by ¥37.64bn in current assets versus ¥7.91bn in current liabilities. The balance sheet is conservative: total liabilities are ¥9.03bn against equity of ¥38.72bn, implying a computed equity ratio around 81% and debt-to-equity of 0.23x. Cash generation is healthy, with operating cash flow of ¥1.51bn almost matching net income (OCF/NI 0.99), underscoring solid earnings quality for the period. EBITDA was ¥1.58bn with a 7.9% margin, and interest coverage was an extremely comfortable 396x due to minimal interest expense of ¥2.83m. Working capital is ample at ¥29.73bn and inventories appear well-managed at ¥5.51bn. Financing cash outflows of ¥585m likely reflect shareholder returns and/or debt/service outlays, though itemization is not disclosed. Dividends are not disclosed (DPS and payout shown as zero placeholders), so dividend conclusions rely on capacity rather than stated policy. Overall, core profitability improved, cash conversion was strong, and leverage remained low, albeit net income benefited from one-off items. Data gaps remain (e.g., investing cash flows, detailed extraordinary items, share data), but available metrics point to improving operating efficiency and robust financial health.

Profitability Analysis

ROE of 3.93% reflects: net margin 7.61% × asset turnover 0.419 × financial leverage 1.23, highlighting modest returns constrained by low capital turnover rather than leverage. Operating margin of ~5.6% (¥1.122bn/¥19.967bn) expanded meaningfully YoY given operating income rose 27.6% despite a 1.8% sales decline, indicating mix improvement and/or SG&A discipline. Gross margin stands at 21.1% (¥4.220bn/¥19.967bn), supporting the operating margin uplift; the gap between gross and operating margin (~15.5pp) implies controlled overhead relative to last year. Ordinary margin is ~6.7% (¥1.331bn/¥19.967bn), above operating margin, consistent with small net financial income/other non-operating gains. Net margin at 7.61% exceeds ordinary margin, evidencing non-recurring or below-the-line gains (extraordinary or similar) that boosted bottom line. EBITDA of ¥1.584bn implies an EBITDA margin of 7.9% and suggests moderate operating leverage: EBITDA delta versus operating income (add-back of ¥462m D&A) provides cushion for cash earnings. Interest burden is negligible (interest expense ¥2.83m), with interest coverage at ~396x, so profitability is not sensitive to financing costs. The key drag on ROE is asset turnover at 0.419x, consistent with a cash-rich, working-capital-heavy model; incremental ROE improvement likely requires either sustained margin uplift or better asset utilization. Overall margin quality looks better at the operating level, but headline net profitability is flattered by one-offs.

Growth Assessment

Top-line declined 1.8% YoY to ¥19.97bn, indicating slight softness in end-market demand or FX effects, yet the company achieved substantial operating profit growth (+27.6% YoY) via margin improvement. The expansion in operating margin to ~5.6% suggests pricing, mix, or cost efficiencies outweighed volume pressure. Ordinary income of ¥1.33bn shows core profitability improved beyond operating results, while the leap in net income to ¥1.52bn appears partly non-recurring. Revenue sustainability near term hinges on automotive production volumes and customer demand across regions; absent clear growth catalysts, a flat-to-low single-digit growth trajectory is plausible. Profit quality at the operating level is improving, with EBITDA margin at 7.9% and strong cost control; however, net income growth is inflated by special gains. Outlook depends on mix resilience, ability to maintain SG&A discipline, and supply chain normalization; if volumes stabilize, operating leverage could further support earnings. FX exposure (imports/overseas subsidiaries) may introduce volatility, though low financial leverage mitigates downside risk to net income.

Financial Health

Liquidity is robust: current ratio 475.7% and quick ratio 406.1% reflect sizable current assets (¥37.64bn) versus current liabilities (¥7.91bn). Working capital is ample at ¥29.73bn, and inventories of ¥5.51bn appear proportionate (about 14.6% of current assets). Solvency is strong with total liabilities of ¥9.03bn and equity of ¥38.72bn; computed equity ratio is approximately 81% (despite a reported placeholder of 0%) and debt-to-equity is 0.23x. Interest expense is minimal (¥2.83m), and coverage is 396x, indicating negligible refinancing risk. Asset intensity is elevated relative to sales (asset turnover 0.419x), implying balance sheet conservatism and potential capacity to fund growth without external capital. Overall capital structure is very conservative and supports resilience through cycles.

Cash Flow Quality

Operating cash flow of ¥1.51bn tracks net income of ¥1.52bn (OCF/NI 0.99), signaling good earnings quality with limited accrual distortion in the half. EBITDA of ¥1.58bn compares closely with OCF, pointing to healthy cash conversion and manageable working capital swings. Investing cash flow is undisclosed (shown as zero placeholder), so Free Cash Flow cannot be reliably computed; the displayed FCF of zero should be treated as unreported. Financing cash outflow of ¥585m suggests cash use for distributions or debt/service, though DPS is not disclosed and interest expense is small; buybacks or dividend payments (if any) are not itemized. Working capital remains a key lever: sizable receivables/cash balances can both buffer and swing OCF; the current period indicates disciplined management. Overall, cash generation supports ongoing operations and potential shareholder returns, conditional on capex needs that are not disclosed.

Dividend Sustainability

Dividend data are not disclosed for the period (DPS and payout shown as zero placeholders), so conclusions rely on capacity rather than stated policy. Capacity appears solid given OCF of ¥1.51bn, low leverage, and minimal interest burden; however, without investing cash flows, true FCF coverage cannot be assessed. If maintenance capex is modest (as suggested by low D&A of ¥462m), structural FCF could be healthy, supporting potential distributions. The notable financing cash outflow (¥585m) may include dividends and/or buybacks, but itemization is unavailable. Absent policy disclosure, payout trajectory remains uncertain; the balance sheet could support stable or flexible returns, but sustainability should be judged once capex and DPS are reported.

Risk Assessment

Business Risks:

• End-market cyclicality in automotive production affecting volumes and pricing
• Foreign exchange volatility impacting margins and translation (USD, CNY, other Asian currencies)
• Customer concentration risk typical in automotive supply chains
• Raw material price pass-through and sourcing risks (e.g., steel/fasteners)
• Supply chain disruptions and logistics costs
• Geopolitical and regional demand shifts across Asia and North America

Financial Risks:

• Low asset turnover (0.419x) indicating potential efficiency drag on ROE
• Working capital intensity leading to OCF variability across quarters
• Earnings volatility from non-recurring items that boosted net income this period
• FX-related balance sheet and cash flow swings
• Limited disclosure on investing cash flows and capital commitments

Key Concerns:

• Net income uplift appears partly non-recurring, inflating ROE and net margin
• Slight revenue contraction raises questions on demand momentum
• Data gaps (investing CF, DPS, equity ratio disclosure) limit full assessment of FCF and payout

Investment Implications

Key Takeaways:

• Operating performance improved materially with operating income +27.6% YoY despite a 1.8% sales decline
• Margins expanded: gross 21.1%, operating ~5.6%, EBITDA 7.9%
• Net income of ¥1.52bn benefited from non-recurring gains beyond ordinary income
• ROE 3.93% constrained by low asset turnover; leverage remains modest (1.23x assets/equity)
• Balance sheet is very strong with an estimated ~81% equity ratio and 0.23x D/E
• OCF of ¥1.51bn closely matches net income, indicating solid cash conversion
• Financing cash outflow of ¥585m suggests capacity for distributions and/or de-leveraging, but details are undisclosed

Metrics to Watch:

• Top-line trajectory by region and customer to gauge volume recovery
• Sustainability of operating margin at ~5.6% and drivers of gross margin
• Asset turnover improvement and working capital efficiency (DSO/DIO/DPO if disclosed)
• Nature and recurrence of non-operating/extraordinary gains
• Investing cash flows and capex levels to refine FCF and payout capacity
• FX sensitivities and hedging effects on ordinary income

Relative Positioning: Compared to Japanese auto-related trading/fastener peers, Ohashi Technica exhibits stronger balance sheet conservatism (very high equity ratio, minimal interest burden) and improving operating margins, but maintains modest ROE due to low asset turnover; the earnings quality is solid at the operating level, while headline net income is flattered by one-offs.

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
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