CellSeed Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥65M
• Operating Income: ¥-824M
• Net Income: ¥-849M
• EPS: ¥-24.51

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

Cella Seed Co., Ltd. (77760) reported FY2025 Q3 standalone (JGAAP) results showing very weak profitability with some balance sheet strength but significant data limitations. Revenue was ¥65 million, down 52.8% YoY, highlighting a sharp contraction in top-line momentum. Operating income was a large loss of ¥-824 million (essentially flat YoY per disclosure), indicating a persistent heavy cost base relative to revenues. Ordinary income was ¥-823 million and net income was ¥-849 million, implying minimal non-operating relief and continued bottom-line pressure. EPS printed at ¥-24.51. The DuPont decomposition yields a net margin of -1,306.15%, asset turnover of 0.039x, and financial leverage of 1.27x, resulting in a calculated ROE of -64.76%, matching the reported figure and underscoring severe equity value erosion. The gross profit margin is shown as 121.4%, which conflicts with the revenue and cost of sales provided and likely reflects reclassification effects or inclusion of other operating income; margin quality is therefore uncertain. Liquidity metrics look exceptionally strong on the face of it, with a current ratio of 2,241.7% and working capital of ¥2,209 million, but current assets (¥2,312 million) exceed total assets (¥1,665 million), indicating inconsistencies in the balance sheet presentation. The equity ratio is shown as 0.0% despite total equity of ¥1,311 million, suggesting the reported equity ratio is a placeholder/unreported. Cash flow statements (OCF/ICF/FCF) and cash balances are unreported (shown as zeros), preventing assessment of cash burn and run-rate liquidity. Interest expense was modest at ¥1.55 million, with a mechanically large negative interest coverage ratio due to operating losses. The debt-to-equity ratio of 0.21x and total liabilities of ¥270 million relative to assets suggest low financial leverage. Dividend per share is zero, which is consistent with sizable losses and uncertain cash flows. Overall, the company remains in a heavy investment/loss-making phase with low revenue scale, high operating losses, and uncertain cash flow visibility; while the balance sheet suggests low leverage and large working capital, reported inconsistencies limit confidence. Key forward issues are revenue traction, expense discipline, and cash runway, none of which can be firmly assessed without cash flow disclosure.

Profitability Analysis

roe_decomposition: Net margin -1,306.15% x asset turnover 0.039x x financial leverage 1.27x = ROE -64.76%. The extremely negative net margin is the main driver of weak ROE; leverage is modest and does not amplify returns meaningfully. margin_quality: Reported gross profit (¥78.9m) exceeds the simple calculation from revenue (¥65.0m) and cost of sales (¥59.3m), yielding a displayed gross margin of 121.4%. This likely reflects reclassification under JGAAP (e.g., inclusion of grants/other operating income as part of gross profit) or mismapping in the disclosure. Operating margin remains deeply negative (operating loss ¥-824m vs. revenue ¥65m), indicating core operations are loss-making irrespective of the gross margin presentation. operating_leverage: Revenue declined 52.8% YoY, yet operating loss was essentially unchanged YoY, suggesting a largely fixed cost structure (R&D/SG&A) and limited variable cost flex. This indicates high operating leverage: small revenue bases cannot absorb fixed expenses, maintaining large operating losses. Ordinary loss roughly tracks operating loss, showing limited buffer from non-operating items.

Growth Assessment

revenue_sustainability: The revenue base is small (¥65m) and fell 52.8% YoY, indicating weak demand or timing of milestone/contract revenues. Sustainability is uncertain without segment or order book detail. profit_quality: Profitability is poor with net loss of ¥-849m and interest expense relatively minor (¥1.55m), implying losses are operational rather than financial. The discrepancy in gross margin complicates assessing product-level economics. outlook: Given the high fixed cost base and limited revenue scale, near-term profitability improvement likely depends on substantive revenue acceleration or material cost restructuring. Lack of cash flow and cash balance disclosure limits visibility on the company’s ability to sustain investment until commercialization milestones are reached.

Financial Health

liquidity: Current assets are reported at ¥2,312.219m vs. current liabilities of ¥103.144m, implying a current ratio of 2,241.7% and working capital of ¥2,209.075m. However, current assets exceeding total assets (¥1,665m) indicates a reporting inconsistency; still, the large positive working capital suggests ample short-term liquidity on paper. solvency: Total liabilities are ¥269.880m versus total equity of ¥1,311m, indicating low leverage (D/E 0.21x). The equity ratio is shown as 0.0% but is likely unreported; based on totals, implied equity ratio would be roughly 78–79%. capital_structure: Financial leverage is modest (assets/equity 1.27x). Interest burden is low (¥1.55m), and interest coverage is deeply negative due to operating losses rather than high debt. The balance sheet appears conservatively financed, but cash position is not disclosed.

Cash Flow Quality

earnings_quality: OCF is unreported (shown as 0), preventing assessment of accruals or OCF/NI. The displayed OCF/NI ratio of 0.00 is not meaningful in this context. fcf_analysis: Investing and financing cash flows are unreported (both 0). Free cash flow cannot be determined. The absence of cash flow data precludes analysis of burn rate and self-funding capacity. working_capital: Reported working capital is ¥2,209m, a large buffer relative to current liabilities (¥103m). However, the inconsistency with total assets suggests caution; composition (cash vs. receivables vs. other current assets) is unknown, limiting quality assessment.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00 and net income is deeply negative (¥-849m), making dividends impractical. The payout ratio is shown as 0.0%, which is consistent with a loss-making profile. fcf_coverage: FCF is unreported (shown as 0), so FCF coverage cannot be assessed. In the absence of positive earnings and known FCF, sustained dividends are unlikely. policy_outlook: Given ongoing losses and limited visibility on cash generation, a conservative dividend stance is expected to continue until profitability and cash generation are established.

Risk Assessment

Business Risks:

• Revenue concentration and volatility given small scale (¥65m) and -52.8% YoY decline.
• High operating leverage due to fixed R&D/SG&A costs, sustaining large operating losses.
• Uncertain gross margin construct due to potential classification effects under JGAAP.
• Commercialization and execution risk if products are early-stage or require regulatory milestones.
• Potential dependence on external funding or partnerships if cash burn is significant.

Financial Risks:

• Lack of cash flow and cash balance disclosure impedes assessment of runway and liquidity.
• Persistent net losses (-¥849m) erode equity and could necessitate future equity financing.
• Reporting inconsistencies (current assets > total assets; equity ratio 0.0%) complicate ratio reliability.
• Interest coverage negative due to operating losses, though absolute interest cost is low.

Key Concerns:

• Sustained operating losses with no visibility on OCF.
• Sharp revenue contraction and uncertain demand trajectory.
• Balance sheet presentation inconsistencies affecting analytical confidence.

Investment Implications

Key Takeaways:

• ROE is severely negative at -64.76%, driven by an extremely negative net margin and very low asset turnover.
• Revenue base is small and declining (-52.8% YoY), with limited evidence of scale benefits.
• Operating loss remains large (¥-824m), indicating a heavy fixed cost structure.
• Balance sheet leverage is low (D/E 0.21x) and reported working capital is sizable (¥2,209m), but disclosures are inconsistent.
• Cash flow data are unreported, limiting insight into cash burn and funding needs.

Metrics to Watch:

• Quarterly revenue growth and backlog/contract wins to evidence commercialization.
• Operating expense trajectory (R&D and SG&A) for signs of cost discipline.
• Disclosure of cash and cash equivalents and OCF to gauge runway.
• Gross margin definitions/reconciliations to clarify underlying unit economics.
• Equity issuance or financing activity that could affect dilution and liquidity.

Relative Positioning: Within loss-making, early-commercialization life science/med-tech peers on the TSE, the company exhibits weaker top-line momentum and similarly heavy operating losses, but appears less leveraged financially; however, inadequate cash flow disclosure and reporting inconsistencies place it at a transparency disadvantage.

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