STAR MICRONICS CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥51.64B
• Operating Income: ¥3.76B
• Net Income: ¥1.55B
• EPS: ¥67.12

Income Statement

Balance Sheet

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

Star Micronics (TSE:7718) reported FY2025 Q3 (cumulative) consolidated results under JGAAP with steady top-line expansion and improving operating profitability. Revenue reached ¥51.642bn, up 7.5% YoY, indicating resilient demand across its end markets. Gross profit came in at ¥17.800bn, implying a gross margin of 34.5%, consistent with the provided margin metric. Operating income rose 13.6% YoY to ¥3.759bn, lifting the operating margin to roughly 7.3%, suggesting modest operating leverage and/or mix improvements. Ordinary income was ¥3.982bn, exceeding operating income due to positive net non-operating balance. Net income surged 74.7% YoY to ¥2.731bn, driving a cumulative net margin of 5.29%; the magnitude of bottom-line growth likely reflects non-operating factors and/or the absence of prior-year one-offs rather than purely recurring operational gains. DuPont decomposition shows net margin of 5.29%, asset turnover of 0.440x, and financial leverage of 1.19x, yielding an ROE of 2.77% on a cumulative basis. The balance sheet is conservative: total assets are ¥117.287bn against total liabilities of ¥18.354bn and total equity of ¥98.443bn, implying an equity ratio near 84% (despite a reported equity ratio of 0.0% which appears undisclosed in the dataset). Liquidity is very strong with a current ratio of 432% and quick ratio of 343%, underpinned by ¥68.330bn in current assets and ¥15.811bn in current liabilities. Interest expense is minimal at ¥24.1m, and interest coverage is a very comfortable 156x, reflecting low financial risk. Inventories stand at ¥14.169bn (about 21% of current assets), a level that appears manageable given the revenue base but should be monitored for turns. Cash flow statements and depreciation were not disclosed in this dataset (zeros indicate unreported), limiting assessment of earnings-to-cash conversion and capital intensity in the period. Dividend data is also not disclosed here, so payout and cash returns cannot be validated from this extract. Overall, the company exhibits solid YTD growth, expanding operating profit, and a highly liquid, under-levered balance sheet; however, the lack of cash flow disclosure and the step-up in net income versus operating income underscore the need to examine non-operating drivers and sustainability into FY2025 Q4 and the next fiscal year.

Profitability Analysis

ROE_decomposition: ROE (2.77%) = Net margin (5.29%) × Asset turnover (0.440x) × Financial leverage (1.19x). The result indicates ROE is primarily constrained by modest asset turnover and moderate margins rather than financial leverage, which is low by design given the strong equity base. margin_quality: Gross margin is 34.5% (¥17.800bn gross profit on ¥51.642bn revenue), signaling healthy value-add. Operating margin is ~7.3% (¥3.759bn), evidencing opex discipline but also indicating room to scale SG&A further. The spread between ordinary income (¥3.982bn) and operating income suggests supportive non-operating contributions; net income outpaced operating income growth (+74.7% vs +13.6%), pointing to non-recurring or non-operating tailwinds that may not be fully repeatable. operating_leverage: Revenue grew 7.5% YoY while operating income rose 13.6% YoY, implying positive but measured operating leverage. This likely reflects product mix and cost control; further scale benefits could emerge if revenue momentum continues and fixed costs remain contained.

Growth Assessment

revenue_sustainability: Top-line growth of 7.5% YoY (to ¥51.642bn) indicates solid demand conditions. Without segment or geographic breakdowns, the breadth of growth cannot be confirmed; however, the gross margin level suggests pricing and mix have held up. profit_quality: Operating profit grew 13.6% to ¥3.759bn, outpacing revenue and suggesting some mix or cost efficiency tailwinds. Net profit growth of 74.7% far exceeds operational growth, implying non-operating gains and/or the absence of prior-year charges. Sustainability depends on the persistence of these non-operating factors; the core operating trajectory appears steady but not explosive. outlook: With a strong balance sheet and ample liquidity, the company is well-positioned to support inventory, working capital, and selective investment as demand normalizes. Near-term earnings trajectory likely hinges on maintaining gross margin discipline, converting backlog to sales, and avoiding adverse FX or component cost swings. Monitoring Q4 seasonality, backlog/inventory normalization, and any guidance updates will be key to assessing carryover momentum into the next fiscal year.

Financial Health

liquidity: Current assets ¥68.330bn vs current liabilities ¥15.811bn yields a current ratio of 432% and a quick ratio of 343%, indicating ample short-term liquidity. Working capital stands at ¥52.518bn, providing strong buffer for operations. solvency: Total liabilities ¥18.354bn vs equity ¥98.443bn implies low leverage (Debt-to-Equity 0.19x as provided). Interest expense is only ¥24.1m with coverage of 156x, underscoring minimal financial strain. capital_structure: Implied equity ratio is approximately 84% (equity ¥98.443bn / assets ¥117.287bn). The company operates with conservative leverage, affording resilience against cyclical downturns and room for strategic investments.

Cash Flow Quality

earnings_quality: Cash flow statements and depreciation are not disclosed in this dataset (zeros indicate unreported). As such, OCF/Net Income and FCF cannot be evaluated here. Given the divergence between operating and net income growth, validating cash conversion will be important. FCF_analysis: Free cash flow is not available in the provided data. Absent capex and OCF details, we cannot assess reinvestment intensity or FCF margin for the period. working_capital: Inventories are ¥14.169bn (about 21% of current assets). With revenue at ¥51.642bn, implied inventory-to-sales is ~27% on a cumulative basis; without turnover metrics, it is difficult to judge efficiency. The sizable working capital base (¥52.518bn) provides flexibility but should be monitored for turns and potential de-stocking risk.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed in this dataset (zeros indicate unreported). Therefore, an accurate payout ratio cannot be derived from the provided information. FCF_coverage: FCF is not available; coverage of dividends by FCF cannot be assessed from this dataset. policy_outlook: From a capacity standpoint, the balance sheet strength (low leverage, high liquidity) and positive earnings suggest potential ability to fund stable dividends, but without OCF/FCF and actual DPS, we cannot opine on sustainability or policy direction. Review official disclosures for announced dividends and shareholder return policies.

Risk Assessment

Business Risks:

• Demand cyclicality in key end markets affecting order visibility and utilization
• Product mix shifts that could pressure gross margins
• Supply chain constraints or component cost volatility impacting delivery and costs
• Foreign exchange fluctuations affecting revenue translation and margins
• Competitive pricing dynamics in core product lines

Financial Risks:

• Potential inventory build leading to working capital drag if demand slows
• Non-operating income dependence to support net profit growth, which may not be recurring
• FX-related gains/losses affecting ordinary income
• Limited visibility on cash flows and capex due to undisclosed CF data in this dataset

Key Concerns:

• Sustainability of the sharp increase in net income relative to operating income
• Lack of disclosed cash flow data impedes assessment of earnings-to-cash conversion
• Inventory levels warrant monitoring for turns and obsolescence risk if demand softens

Investment Implications

Key Takeaways:

• Revenue up 7.5% YoY to ¥51.642bn with gross margin at 34.5%
• Operating income up 13.6% to ¥3.759bn; positive but measured operating leverage
• Net income up 74.7% to ¥2.731bn, likely aided by non-operating factors
• ROE at 2.77% driven by modest margins/turnover and low leverage
• Balance sheet extremely strong: implied equity ratio ~84%, current ratio 432%, interest coverage 156x
• Cash flow and DPS not disclosed in this dataset; further review required for payout and FCF

Metrics to Watch:

• Operating margin trajectory and SG&A efficiency into Q4
• Non-operating income/expense components and any extraordinary items
• OCF, capex, and FCF once disclosed to validate earnings quality
• Inventory turns and backlog conversion
• FX impacts on revenue and margins

Relative Positioning: Financially conservative with strong liquidity and low leverage, positioning the company favorably versus more levered peers; profitability is solid but not high-ROE, with upside tied to operating leverage, mix improvements, and disciplined working capital.

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