A&D HOLON Holdings Company,Limited FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥30.38B
• Operating Income: ¥3.16B
• Net Income: ¥1.78B
• EPS: ¥62.25

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

For FY2026 Q2 (consolidated, JGAAP), A&D Holon Holdings posted revenue of ¥30.381bn, essentially flat YoY (+0.0%), indicating a pause in top-line momentum after prior growth phases. Gross profit was ¥13.764bn, implying a robust gross margin of 45.3%, which continues to signal healthy pricing and/or product mix in core measurement and inspection businesses. Operating income declined 3.6% YoY to ¥3.156bn, with an operating margin of 10.4%, reflecting mild negative operating leverage as flat revenue met a slightly higher operating cost base. Ordinary income was ¥3.330bn, and net income declined 3.7% YoY to ¥1.704bn, putting the net margin at 5.61%. DuPont decomposition yields ROE of 3.86%, driven by a 5.61% net margin, an asset turnover of 0.438x, and financial leverage of 1.57x; the primary constraint on ROE is modest net profitability and a conservative balance sheet. Liquidity is strong: current ratio 226.8%, quick ratio 184.0%, and working capital of ¥28.888bn, underscoring comfortable near-term funding capacity. The balance sheet is conservatively financed, with total liabilities of ¥26.207bn versus total equity of ¥44.198bn; this implies an equity ratio of about 63.7% (despite the reported equity ratio field showing 0.0%, which is undisclosed data rather than an actual value). Interest expense was ¥174m, and interest coverage stood at 18.1x, indicating ample buffer against financing costs. Despite solid margins and balance sheet strength, the soft operating profit trend against flat sales suggests some pressure on operating leverage and cost containment. The effective tax burden, inferred using ordinary income, appears near 42% (¥1.396bn tax on ¥3.330bn ordinary income), which is materially higher than the reported 0.0% metric that reflects missing data rather than reality. Cash flow statements, depreciation, and dividends were not disclosed in the dataset (zeros indicate unreported), which meaningfully limits assessment of earnings quality, FCF, and capital return policy. EPS was ¥62.25, but share count and book value per share were undisclosed, preventing per-share balance sheet cross-checks. Inventory stood at ¥9.758bn against current assets of ¥51.668bn, suggesting manageable inventory intensity, though turnover cannot be precisely assessed without cash flow and average balances. Overall, the company enters the second half with solid gross margins, strong liquidity, and low leverage, but with modest ROE and slight margin compression at flat sales. Sustained earnings progression will likely depend on improving operating leverage, stable gross margins, and confirmation that working capital is not consuming cash. The absence of cash flow and dividend disclosures is a key limitation and should be monitored in the next filing.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.61% (NI ¥1.704bn / Revenue ¥30.381bn)
• asset_turnover: 0.438x (Revenue ¥30.381bn / Assets ¥69.3bn)
• financial_leverage: 1.57x (Assets ¥69.3bn / Equity ¥44.198bn)
• calculated_ROE: 3.86% (matches reported) margin_quality:
• gross_margin: 45.3% (¥13.764bn / ¥30.381bn) — robust and supportive of value-add positioning
• operating_margin: 10.4% (¥3.156bn / ¥30.381bn) — down YoY given -3.6% operating income on flat sales
• ordinary_margin: 11.0% (¥3.330bn / ¥30.381bn)
• net_margin: 5.61% — moderated by finance costs and a relatively high tax burden operating_leverage: Negative in the period: revenue flat while operating income declined 3.6% YoY, implying incremental costs (SG&A/R&D) were not fully offset by pricing or mix. Preserving the 45%+ gross margin while improving cost efficiency will be key to re-accelerating operating margin. tax_burden_comment: Implied effective tax near ~42% using ordinary income as proxy for pre-tax (¥1.396bn/¥3.330bn), versus a reported 0.0% metric that reflects non-disclosure.

Growth Assessment

revenue_sustainability: Top line flat YoY at ¥30.381bn suggests stable demand but no incremental growth in the half; visibility into order intake/backlog is not provided, limiting forward read-through. profit_quality: Gross margin resilience indicates healthy product economics; however, slight operating margin compression suggests cost pressure or less favorable mix. Interest burden modest (¥174m), but a relatively high tax burden weighs on net. outlook: Near-term performance hinges on restoring positive operating leverage while maintaining gross margins. FX, component input prices, and end-market capex cycles (not disclosed here) are potential swing factors. With strong liquidity and low leverage, the company has flexibility to support growth investments, but confirmation via cash flow data is needed.

Financial Health

liquidity:

• current_assets: ¥51.668bn
• current_liabilities: ¥22.780bn
• current_ratio: 226.8%
• quick_ratio: 184.0%
• working_capital: ¥28.888bn
• commentary: Ample liquidity headroom; inventory at ¥9.758bn appears manageable relative to current assets. solvency_capital_structure:
• total_assets: ¥69.300bn
• total_liabilities: ¥26.207bn
• total_equity: ¥44.198bn
• debt_to_equity: 0.59x (liabilities/equity)
• implied_equity_ratio: 63.7% (equity/assets) — conservative capitalization
• interest_coverage: 18.1x (operating income/interest expense)
• commentary: Low leverage and strong coverage reduce financial risk; balance sheet can support investment needs.

Cash Flow Quality

earnings_quality: Cash flow statements and depreciation are undisclosed (zeros reflect non-reporting), preventing direct reconciliation of earnings to cash. As such, OCF/NI and EBITDA-based analyses cannot be assessed from this dataset. free_cash_flow: FCF not derivable due to missing OCF and capex data; the reported FCF of 0 reflects non-disclosure rather than actual cash generation. working_capital_dynamics: Ending inventory is ¥9.758bn and working capital is ¥28.888bn; without cash flow detail or average balances, we cannot determine whether working capital was a use or source of cash in the period.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are undisclosed in this dataset (reported 0.00 reflects non-disclosure). EPS is ¥62.25, but without DPS we cannot evaluate payout discipline. FCF_coverage: Not assessable; FCF is undisclosed. Balance sheet strength suggests capacity, but confirmation requires cash flow data. policy_outlook: No dividend policy signals available here. Future disclosures on DPS/total payout and capital allocation priorities will be necessary to evaluate sustainability.

Risk Assessment

Business Risks:

• End-market cyclicality in precision instruments/inspection equipment and related capex spending cycles
• Product mix and pricing pressure affecting gross margin sustainability
• Foreign exchange volatility given likely export exposure (revenue sensitivity to JPY/USD, JPY/CNY, etc.)
• Supply chain and component availability potentially impacting lead times and costs
• Technology obsolescence and need for ongoing R&D to maintain differentiation
• Customer concentration and order timing risk typical in equipment markets

Financial Risks:

• Working capital swings (receivables and inventory) potentially impacting OCF in flat or declining sales periods
• Tax rate volatility (implied burden ~42%) reducing net profitability
• Interest rate normalization modestly affecting financing costs, though current coverage is strong
• FX translation and transaction impacts on margins and reported earnings

Key Concerns:

• Non-disclosure of cash flow statements, depreciation/amortization, and dividend data in this dataset
• Slight negative operating leverage with flat revenue and lower operating income
• Moderate ROE (3.86%) despite strong balance sheet, implying profitability is the key lever for returns

Investment Implications

Key Takeaways:

• Revenue flat YoY at ¥30.381bn; operating income down 3.6% and net income down 3.7%
• Gross margin solid at 45.3%, but operating margin slipped to 10.4%
• ROE at 3.86% constrained by modest net profitability despite conservative leverage
• Liquidity strong (current ratio 226.8%, quick ratio 184.0%); D/E low at 0.59x
• Interest coverage healthy at 18.1x; implied equity ratio ~63.7%
• Cash flow, D&A, and dividend details not disclosed — key gap for assessing earnings quality and capital returns

Metrics to Watch:

• Order intake/backlog and book-to-bill (to gauge near-term revenue trajectory)
• Gross and operating margin trends (pricing, mix, and cost control)
• OCF/Net income and FCF (upon disclosure) to validate earnings quality
• Working capital intensity (inventory and receivables turns) and cash conversion cycle
• FX rates and hedging impact on margins
• Effective tax rate normalization and any structural tax items

Relative Positioning: Versus TSE precision equipment peers, A&D Holon exhibits strong gross margins and a conservative balance sheet, but its ROE is on the low side, making margin execution and cash conversion the principal levers for improved capital efficiency.

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