MEDIKIT CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥11.92B
• Operating Income: ¥2.24B
• Net Income: ¥1.28B
• EPS: ¥92.40

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Medikit Co., Ltd. (7749) reported solid topline and resilient profitability for FY2026 Q2 (consolidated, JGAAP). Revenue was ¥11.921bn, up 5.6% YoY, indicating steady demand in its medical devices portfolio. Operating income was ¥2.242bn (+1.0% YoY), implying modest operating leverage as cost growth broadly tracked sales. Net income reached ¥1.350bn (+5.6% YoY), with a reported EPS of ¥92.40, reflecting disciplined below-the-line items and minimal finance costs. The net profit margin stood at 11.32%, while operating margin was approximately 18.8%, consistent with a high value-added product mix. Gross margin is disclosed at 36.0%; however, there is a discrepancy between the reported gross profit and cost of sales figures, which suggests classification or disclosure differences within COGS or production variances. DuPont decomposition yields ROE of 2.95%, derived from 11.32% net margin, 0.227x asset turnover, and 1.15x financial leverage—a profile characterized by strong margins and very low leverage, but modest asset efficiency for the period. Liquidity is exceptionally strong, with a current ratio of 540% and ample working capital of ¥27.08bn, supported by a light liability structure (debt-to-equity of 0.16x). Cash flow generation is healthy: operating cash flow (OCF) of ¥1.409bn equates to 1.04x net income, indicating reasonably good earnings quality for the half-year. Interest expense is negligible (¥3.8m), and interest coverage is extremely robust (≈593x), underscoring minimal financial risk. Cash and cash equivalents and investing cash flows were not disclosed (zeros appear to be placeholders), limiting free cash flow analysis and capital allocation insights. Dividend data were also undisclosed (DPS and payout shown as 0), so the current policy and payout capacity cannot be verified from this dataset. Overall, the company exhibits a conservative balance sheet, solid margins, and positive operating cash conversion, while ROE is held back by low asset turnover and a highly equity-heavy capital structure. Data limitations—particularly around cash, investing CF, and dividends—and the gross profit/COGS inconsistency warrant caution in interpretation. The outlook appears stable given revenue growth and margin resilience, pending more detail on capex, inventory dynamics, and product/regulatory trends.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 11.32%
• asset_turnover: 0.227x (Revenue ¥11.921bn / Total assets ¥52.475bn; likely understated for a half-year period)
• financial_leverage: 1.15x (Assets/Equity ≈ 52.475/45.740)
• calculated_ROE: 2.95% (matches reported ROE)
• commentary: ROE is margin-led and constrained by low leverage and half-year asset turnover; annualized turnover should improve on a full-year basis if H2 sales are comparable or stronger. margin_quality:
• gross_margin: 36.0% (per disclosure; note discrepancy vs COGS implies possible classification differences)
• operating_margin: 18.8% (¥2.242bn / ¥11.921bn)
• ordinary_margin: 19.6% (¥2.333bn / ¥11.921bn)
• net_margin: 11.32%
• tax_rate: Implied effective tax rate ~42–43% (Income tax ¥1.001bn vs pre-tax ≈ ¥2.35bn); the provided 0.0% is clearly a placeholder. operating_leverage: Revenue grew +5.6% YoY while operating income increased +1.0% YoY, indicating mild negative operating leverage in the period, likely from higher fixed costs, inflationary inputs, or increased SG&A (e.g., R&D, sales expansion). EBITDA of ¥2.906bn implies an EBITDA margin of 24.4%, providing a cushion against input volatility.

Growth Assessment

revenue_sustainability: Topline growth of +5.6% YoY suggests steady volume/pricing in core products. Given the sector, recurring hospital demand and procedure volumes likely underpin stability; reimbursement/price revisions and export FX could modulate growth. profit_quality: Operating margin stability and OCF/NI of 1.04 point to reasonable earnings quality. Minimal interest expense isolates operating performance as the main driver of bottom line. outlook: Near-term outlook appears stable with incremental growth, assuming continued demand and controlled cost inflation. Watch for H2 seasonality, product mix shifts, and any price revisions in domestic/overseas markets that could influence margin trajectory.

Financial Health

liquidity:

• current_ratio: 539.7% (¥33.244bn / ¥6.159bn)
• quick_ratio: 516.1% (low inventories at ¥1.452bn; strong liquid asset base implied)
• working_capital: ¥27.084bn
• commentary: Exceptional liquidity; ample buffer for operations and contingencies. solvency:
• debt_to_equity: 0.16x (Total liabilities ¥7.315bn / Equity ¥45.740bn)
• interest_coverage: ≈593x (Operating income ¥2.242bn / Interest expense ¥3.778m)
• equity_ratio: ≈87.2% (Equity/Assets; disclosed 0.0% is a placeholder)
• commentary: Ultra-conservative capital structure with minimal financial risk. capital_structure: Highly equity-funded balance sheet; low leverage dampens ROE but enhances resilience and flexibility.

Cash Flow Quality

earnings_quality: OCF/Net income = 1.04 (¥1.409bn / ¥1.350bn), indicating solid cash conversion for H1. free_cash_flow_analysis: Investing CF is undisclosed (0 placeholder). Without capex data, FCF cannot be reliably computed; reported FCF of 0 reflects missing data rather than economic reality. working_capital: Inventories are modest at ¥1.452bn relative to current assets; details on receivables and payables are not provided. The positive OCF suggests working-capital discipline, but turnover insights are limited by disclosure.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥92.40, but DPS and payout ratio are shown as 0 (likely undisclosed). Hence, payout cannot be assessed from this dataset. FCF_coverage: Not assessable due to missing investing CF and cash data; reported 0.00x is a placeholder. policy_outlook: With strong liquidity and low leverage, capacity for distributions exists in principle; however, actual policy, timing, and any reinvestment priorities (capex, R&D) are not discernible from the provided data.

Risk Assessment

Business Risks:

• Healthcare reimbursement and pricing revisions impacting domestic margins.
• Regulatory and quality compliance (GMP, QMS, approvals) affecting product availability and cost.
• Product mix shifts and competition in medical disposables/devices influencing gross margin.
• Supply chain and sterilization/logistics constraints leading to cost or delivery risks.
• Export exposure and FX volatility affecting overseas revenue and margins.
• Hospital budget cycles and procedure volumes driving demand variability.

Financial Risks:

• Potential raw material and component cost inflation pressuring gross margin.
• Working capital swings (receivables, inventories) impacting cash conversion.
• Limited leverage reduces ROE; capital efficiency becomes a key focus.
• Concentration risk in key customers or products could amplify earnings volatility.

Key Concerns:

• Discrepancy between reported gross profit and cost of sales figures, which clouds gross margin interpretation.
• Missing disclosures for cash and equivalents, investing cash flows, and dividends limit FCF and capital allocation assessment.
• Half-year asset turnover depresses DuPont efficiency; full-year dynamics are needed for a cleaner read.

Investment Implications

Key Takeaways:

• Topline growth of +5.6% YoY with steady operating profit indicates resilient demand.
• High operating and EBITDA margins (18.8% and 24.4%) support earnings resilience.
• ROE of 2.95% is margin-led but constrained by low leverage and asset turnover.
• Exceptional liquidity (current ratio ~540%) and minimal interest burden reduce financial risk.
• OCF/NI of 1.04 suggests decent cash conversion for H1.
• Data gaps (cash, investing CF, dividends) and a GP/COGS mismatch temper analytical precision.
• Monitoring H2 seasonality and cost trends is important for full-year margin and ROE trajectory.

Metrics to Watch:

• Gross margin trend and reconciliation of COGS vs reported gross profit.
• Operating margin progression vs sales growth (operating leverage).
• OCF/NI and working-capital movements (receivables, inventories, payables).
• Capex intensity once investing CF is disclosed (impact on FCF).
• FX rates and export mix affecting ordinary income.
• Any updates to dividend policy or treasury share activity.
• Inventory turnover and lead times, given supply chain sensitivities.

Relative Positioning: Versus TSE-listed medtech peers, Medikit shows stronger balance sheet conservatism (very low leverage), healthy margins, and high interest coverage, but exhibits modest ROE due to low asset turnover and equity-heavy funding. Overall risk is low, with efficiency the primary lever for improving returns.

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