SUKEGAWA ELECTRIC CO.,LTD. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥5.47B
• Operating Income: ¥1.17B
• Net Income: ¥794M
• EPS: ¥144.06

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

Sukegawa Electric Industry Co., Ltd. (single-entity, JGAAP) delivered a strong FY2025 Q4 (full-year) with clear operational momentum and healthy cash generation. Revenue rose 10.1% YoY to ¥5.467bn, while operating income grew 27.1% to ¥1.165bn, pointing to meaningful operating leverage. Gross profit of ¥1.762bn implies a gross margin of 32.2%, and operating margin expanded to 21.3%, reflecting improved mix/pricing and/or fixed-cost dilution. Ordinary income of ¥1.177bn was slightly above operating income, indicating a modest positive non-operating balance despite low interest costs. Net income increased 24.5% to ¥794m, and EPS was ¥144.06, implying an estimated share count of roughly 5.5–5.6 million shares (derived) given shares outstanding were not disclosed. DuPont ROE was 16.24%, driven by a healthy 14.52% net margin, asset turnover of 0.724x, and moderate financial leverage of 1.54x (Assets/Equity). Cash generation was solid: operating cash flow came in at ¥826m, exceeding net income (OCF/NI = 1.04x), and free cash flow was ¥620m despite ¥206m investing cash outflows (likely capex and other investments). The balance sheet appears robust: current ratio of 274% and quick ratio of 263.6% indicate ample short-term liquidity, while total liabilities/equity of 0.58x suggests conservative leverage. Interest coverage is exceptionally strong at 216x, highlighting low financial risk. Reported “Effective Tax Rate: 0.0%” appears inconsistent with disclosed income tax (¥255m) and net income, which imply an effective rate around the mid-20% range; we treat the 0% figure as an undisclosed placeholder. Equity ratio and cash balance were shown as zero, which we interpret as not disclosed rather than true zero balances. Dividend data (DPS, payout, FCF coverage) were also shown as zero/unreported, so we cannot draw conclusions on distribution policy for the period. Overall, profitability quality appears high, earnings are increasingly cash-backed, and the capital structure is conservative. Key sensitivities include order intake visibility, potential mix shifts affecting gross margins, and working capital swings typical of project- or build-to-order businesses. Given single-entity reporting, any subsidiary-level volatility or consolidation effects are outside this dataset. Despite some missing disclosures, the available non-zero data points support a view of improved operating efficiency, resilient margins, and sound financial health through FY2025.

Profitability Analysis

ROE of 16.24% decomposes into Net Profit Margin (14.52%) × Asset Turnover (0.724x) × Financial Leverage (1.54x). The primary driver is margin strength, with operating margin at 21.3% (¥1,165m / ¥5,467m) and gross margin at 32.2%. EBITDA of ¥1,343.6m yields a 24.6% EBITDA margin, reinforcing healthy contribution from core operations. The spread between gross and operating margin (~10.9ppt) indicates disciplined SG&A and operating efficiency. Ordinary income exceeding operating income by ¥12m suggests small favorable non-operating items offsetting interest of ¥5.4m, which is negligible relative to EBIT. Operating leverage is evident: operating income grew 27.1% vs. revenue growth of 10.1%, implying an OI-to-sales growth multiplier of roughly 2.7x. Asset utilization is moderate (ATO 0.724x), typical for capital goods/industrial firms with meaningful fixed assets or long production cycles. Return on assets is approximately 10.5% (¥794m / ¥7,546m), consistent with strong operational returns given the capital base. Margin quality looks robust, supported by positive OCF/NI and limited drag from interest costs. Potential margin risks include input cost inflation and mix shifts, but current data point to favorable cost control and pricing power.

Growth Assessment

Top-line growth of 10.1% YoY indicates healthy demand, while the 27.1% YoY rise in operating income shows improving operational scalability. The positive delta between revenue and operating income growth suggests either mix improvement, cost discipline, or better capacity utilization. Ordinary income tracked operating profit closely, implying limited dependency on non-operating gains for growth. Net income rose 24.5%, with tax expense growing in line with profits, suggesting the bottom-line growth is chiefly operational rather than financial. Sustainability will depend on order backlog, customer concentration, and exposure to cyclical end-markets (not disclosed here). The company’s moderate asset turnover indicates growth may remain tied to efficient asset use and potential capacity enhancements. With EBITDA margin at 24.6% and strong OCF, reinvestment capacity exists to support future growth without stressing the balance sheet. Investing outflows of ¥206m are consistent with maintenance and/or selective growth capex; further clarity on capex mix would refine growth durability assessment. Outlook qualitatively hinges on maintaining the current margin structure and demand trajectory; without backlog and segment disclosures, we assume a steady-state to modest growth baseline.

Financial Health

Liquidity is strong, with a current ratio of 274% and a quick ratio of 263.6%, reflecting substantial liquid current assets versus short-term obligations. Working capital of ¥2,802m provides a sizable cushion for operations and order execution. Solvency appears solid: total liabilities/equity is 0.58x, consistent with a conservative capital structure. Interest coverage at 216x indicates very low interest burden and ample headroom under potential rate or earnings stress. Total assets of ¥7,546m vs. equity of ¥4,890m produce financial leverage of 1.54x, moderate by industry standards. The reported equity ratio of 0.0% is clearly an undisclosed item rather than an actual figure; using available data, equity/total assets would be roughly 64.8%. Cash and equivalents were not disclosed (reported as zero), so net debt cannot be determined; however, given low interest expense and strong liquidity ratios, net leverage is unlikely to be high. No covenant or maturity profile data are provided, limiting detailed solvency risk analysis.

Cash Flow Quality

Operating cash flow of ¥826m slightly exceeds net income of ¥794m (OCF/NI = 1.04x), indicating good earnings quality and limited accrual build for the year. Free cash flow of ¥620m (OCF – Investing CF) is solid, supporting internal funding of growth and potential shareholder returns. Investing outflows of ¥206m likely reflect capex and possibly smaller strategic investments; without detail, we assume a mix of maintenance and selective growth spending. Working capital appears well-managed given strong liquidity ratios; however, the precise drivers (receivables, payables, contract assets) are not disclosed. Depreciation & amortization of ¥178.6m vs. EBITDA indicates a reasonable non-cash component, consistent with the asset base. Financing cash outflow of ¥336m suggests debt repayment and/or shareholder returns, but dividend/buyback details are not disclosed here. The positive gap between EBITDA and OCF is modestly negative (as OCF < EBITDA), as expected due to taxes and working capital needs; nothing indicates aggressive revenue recognition or cash strain.

Dividend Sustainability

Dividend-related figures (DPS, payout ratio, FCF coverage) are shown as zero, which indicates non-disclosure rather than actual zero. Therefore, we cannot assert the presence or absence of dividends in FY2025 based on this dataset. If a dividend were paid, earnings capacity (NI ¥794m) and FCF (¥620m) would offer room for distributions while maintaining balance sheet strength. EPS of ¥144.06 and inferred shares outstanding of roughly 5.5–5.6 million imply capacity for modest per-share dividends without leverage. Financing CF outflow of ¥336m could include dividends and/or debt reduction or buybacks; allocation is unclear. In the absence of disclosed policy, we assume a prudent stance aligned with maintaining liquidity and funding growth capex. Key to sustainability would be stable OCF/NI at ≥1.0x and continued low leverage.

Risk Assessment

Business Risks:

• Demand cyclicality in industrial/end-markets influencing order intake and utilization
• Potential customer concentration or project concentration impacting revenue visibility
• Input cost inflation (materials, energy) pressuring gross margin
• Execution risk on made-to-order or project-based deliveries affecting working capital
• Limited disclosure (single-entity) on segment or geographic diversification

Financial Risks:

• Working capital volatility impacting OCF despite solid annual coverage
• Interest rate and credit availability risks are currently low but not zero
• Capex timing risk could compress FCF in investment up-cycles
• Tax rate variability; actual effective rate appears mid-20% despite undisclosed metric

Key Concerns:

• Dividend and capital allocation policy not disclosed in this dataset
• Equity ratio and cash balance reported as zero (undisclosed), limiting net leverage analysis
• Lack of order backlog/book-to-bill data to assess forward revenue sustainability

Investment Implications

Key Takeaways:

• Strong operating leverage: operating income +27.1% vs. revenue +10.1%
• High-quality earnings: OCF/NI = 1.04x and FCF of ¥620m
• Healthy margins: 32.2% gross, 21.3% operating, 24.6% EBITDA
• Conservative balance sheet: liabilities/equity 0.58x; interest coverage 216x
• ROE 16.24% supported mainly by robust net margins and moderate leverage

Metrics to Watch:

• Order backlog and book-to-bill to gauge revenue visibility
• Gross margin trajectory (mix/pricing vs. input costs)
• OCF/NI ratio and working capital turns (DSO, DPO, DIO) if disclosed
• Capex intensity vs. growth (Investing CF detail, maintenance vs. expansion)
• Effective tax rate and any structural changes
• Shareholder returns (DPS, buybacks) once disclosed

Relative Positioning: Within Japanese small-cap industrials/electrical equipment peers, the company exhibits above-average operating margins, strong cash conversion, and conservative leverage, albeit with lower disclosure depth (single-entity) and limited visibility on dividends and backlog.

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