TOKYO SEIMITSU CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥77.07B
• Operating Income: ¥14.72B
• Net Income: ¥13.59B
• EPS: ¥237.18

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

Tokyo Seimitsu (7729) delivered resilient FY2026 Q2 consolidated results under JGAAP, with revenue up 7.9% year over year to ¥77.1bn and operating income up 9.8% to ¥14.7bn, indicating positive operating leverage. Gross margin stood at 37.5% and operating margin at roughly 19.1%, underscoring solid cost control and pricing discipline despite a mixed demand environment in semiconductor and metrology markets. Ordinary income reached ¥15.0bn, slightly above operating income, reflecting minimal non-operating drag and very low financing costs. Net income declined 29.1% YoY to ¥9.6bn, pointing to a heavier tax burden and/or special items versus the prior-year period; based on the disclosed tax expense, the implied effective tax rate is closer to ~30% rather than the 0.0% shown in the summary metrics, which likely reflects an unreported denominator. DuPont deconstruction indicates an ROE of 5.34%, driven primarily by a healthy net margin of 12.5%, moderate asset turnover of 0.323x, and conservative financial leverage (1.32x). Cash generation was strong: operating cash flow of ¥20.0bn was about 2.1x net income, suggesting high earnings quality and favorable working capital dynamics. Liquidity is robust with a current ratio of ~361% and a quick ratio of ~355%, supported by a large current asset base versus current liabilities. The balance sheet appears conservative: total liabilities are only ¥61.7bn against equity of ¥180.0bn, implying low leverage; the reported debt-to-equity ratio of 0.34x here represents total liabilities to equity rather than interest-bearing debt. Interest coverage is extremely high at ~220x, reflecting minimal interest expense of ¥67m. While the equity ratio is listed as 0.0% and cash/equivalents and investing cash flow are shown as zero, under the provided instruction these zeros indicate unreported items, not actual values; hence solvency, cash and capital expenditure assessments rely on partial data. Free cash flow cannot be reliably computed because investing cash flow and capex are unreported this period. Dividend data (DPS and payout) are also unreported here, so we cannot assess shareholder return trends within this snapshot. Overall, Tokyo Seimitsu demonstrates solid profitability, strong cash conversion, and a conservative capital structure, but the YoY decline in net income and the absence of investing and dividend disclosures warrant cautious interpretation. Near-term outlook hinges on semiconductor capital spending cycles and metrology demand normalization. We focus on sustaining double-digit operating margins, maintaining OCF strength relative to earnings, and clarity on investment outlays and dividend policy as key markers for the remainder of FY2026.

Profitability Analysis

ROE_decomposition: ROE 5.34% = Net profit margin 12.47% × Asset turnover 0.323 × Financial leverage 1.32. The ROE profile is margin-led, with modest asset intensity and conservative leverage dampening variability. margin_quality: Gross margin 37.5% and operating margin ~19.1% (¥14.717bn/¥77.070bn) indicate good cost discipline and pricing power. Ordinary income margin ~19.4% (¥14.978bn/¥77.070bn). The net margin of 12.5% is compressed vs operating margin due to taxes and non-operating/special items. operating_leverage: Revenue +7.9% YoY versus operating income +9.8% YoY implies positive operating leverage. EBITDA margin is 22.3% (¥17.185bn), with D&A at ¥2.468bn (~3.2% of sales), suggesting a relatively light depreciation burden that supports operating leverage.

Growth Assessment

revenue_sustainability: Top-line growth of 7.9% YoY suggests steady demand recovery, likely supported by semiconductor process control and metrology exposure, though cyclical swings remain a risk. profit_quality: Operating income grew faster than sales, and interest expense is negligible, supporting underlying earnings momentum. The YoY decline in net income (-29.1%) indicates tax normalization and/or non-recurring effects compared to a favorable prior-year base. outlook: Assuming stable gross margins and cost discipline, mid-teens operating margins appear defensible near term. Sustainability depends on capital spending trends in semiconductors and industrial metrology and the company’s order backlog trajectory (not disclosed here).

Financial Health

liquidity: Current assets ¥169.3bn vs current liabilities ¥46.9bn yield a current ratio ~361% and quick ratio ~355% (inventory ¥2.9bn), indicating ample near-term liquidity. solvency: Total liabilities ¥61.7bn vs equity ¥180.0bn imply a conservative balance sheet; the leverage multiple (assets/equity) is 1.32x. Interest coverage ~220x denotes very low financial risk. capital_structure: Debt-to-equity reported at 0.34x here reflects total liabilities/equity, not necessarily interest-bearing debt. The reported equity ratio of 0.0% is unreported in this dataset; based on assets and equity, the implied equity ratio would be roughly ~75–76%.

Cash Flow Quality

earnings_quality: OCF ¥19.997bn vs net income ¥9.612bn (OCF/NI ~2.08x) indicates high earnings quality, with strong cash conversion and likely favorable working capital inflows. FCF_analysis: Free cash flow cannot be determined because investing cash flow is unreported (shown as zero by convention in this dataset). Capex disclosure is also absent, limiting visibility on reinvestment intensity. working_capital: Working capital stands at ¥122.4bn, reflecting a large buffer. Inventory is reported at ¥2.86bn (very low relative to sales), which may reflect classification differences or partial disclosure; receivables and payables breakdowns are not available.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥237.18 for the period. Dividend per share and payout ratio are shown as 0.00, which indicates unreported rather than zero; thus, payout cannot be assessed from this dataset. FCF_coverage: Not assessable this period due to unreported investing cash flow and capex, which precludes free cash flow calculation. policy_outlook: Without current DPS or guidance data in this extract, we cannot infer policy changes. Historically, sustainability would hinge on maintaining strong OCF and modest leverage, both of which appear supportive based on available figures.

Risk Assessment

Business Risks:

• Exposure to semiconductor capital expenditure cycles affecting metrology and inspection demand
• Potential pricing pressure and competitive dynamics in precision measurement and semiconductor equipment
• Supply chain constraints or component lead-time volatility impacting deliveries and costs
• Foreign exchange fluctuations affecting export competitiveness and translation effects
• Customer concentration risks with major semiconductor and electronics clients

Financial Risks:

• Uncertainty around capex intensity due to unreported investing cash flow this period
• Potential volatility in effective tax rate, with implied rate around ~30% versus prior-year comparison
• Limited visibility on dividend commitments due to unreported DPS data
• Working capital swings inherent to project-based deliveries and acceptance timing

Key Concerns:

• Net income down 29.1% YoY despite operating growth, pointing to tax/special item headwinds
• Lack of investing cash flow and cash balance disclosure in this snapshot limits FCF assessment
• Inventory and equity ratio fields appear incomplete, constraining detailed asset quality analysis

Investment Implications

Key Takeaways:

• Solid topline growth (+7.9% YoY) with stronger operating income (+9.8% YoY) evidences positive operating leverage
• Strong cash conversion (OCF/NI ~2.1x; OCF margin ~26%) supports earnings quality
• Conservative capital structure with very high interest coverage (~220x) and low liabilities relative to equity
• Net margin (12.5%) and ROE (5.34%) are primarily margin-driven, with moderate asset turnover and low leverage
• YoY net income decline (-29.1%) likely driven by higher taxes and/or non-recurring items vs a favorable base
• FCF and dividend sustainability cannot be concluded due to unreported investing and dividend data

Metrics to Watch:

• Order intake and backlog in semiconductor/metrology segments
• Gross and operating margin trajectory relative to mix and pricing
• Capex and investing cash outflows (when disclosed) to gauge reinvestment and FCF
• Effective tax rate normalization versus prior years
• Working capital movements (receivables, advances, and inventory when disclosed)
• DPS and payout guidance updates

Relative Positioning: Within Japan’s precision measurement and semiconductor equipment space, Tokyo Seimitsu appears financially conservative with strong margins and cash conversion, positioning it well versus peers in a cyclical upswing; however, limited disclosure on investing cash flows and dividends in this snapshot tempers comparative clarity.

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