Colan Totte.Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥6.92B
• Operating Income: ¥1.81B
• Net Income: ¥1.33B
• EPS: ¥146.49

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

Colantotte Co., Ltd. (77920) delivered a strong FY2025 Q4 (JGAAP, non-consolidated) performance, with revenue of ¥6,917 million, up 16.4% YoY. Gross profit reached ¥3,968 million, translating to a robust gross margin of about 57.4%, indicating healthy pricing power and/or mix. Operating income rose 20.6% YoY to ¥1,810 million, outpacing sales growth and signaling positive operating leverage. Ordinary income of ¥1,827 million slightly exceeded operating income, suggesting modest non-operating gains. Net income increased 29.7% YoY to ¥1,328 million, lifting net margin to 19.2%, an attractive level for a branded consumer/healthcare products company. DuPont decomposition yields an ROE of 25.7%, driven by a high net margin (19.2%), solid asset turnover (1.03x), and modest leverage (assets/equity of 1.30x). The implied equity ratio (equity/asset) is approximately 76.9%, indicating a conservative balance sheet despite the reported equity ratio field showing 0.0% (unreported). Liquidity appears strong with a current ratio of 297% and working capital of ¥2,587 million, providing ample short-term flexibility. Cash generation was positive: operating cash flow (OCF) of ¥998 million and free cash flow (FCF) of ¥695 million, although OCF/Net Income at 0.75 suggests working capital absorption during the period. Depreciation and amortization are modest at ¥84 million, consistent with an asset-light model, and EBITDA margin is a healthy 27.4%. Income taxes paid were ¥458 million; based on net income, the implied effective rate is roughly mid-20% (approx. 25–26%), even though the provided “effective tax rate” metric shows 0.0% due to disclosure mapping limitations. No interest expense was reported, reinforcing a low financial risk profile. The company paid no dividends (DPS ¥0, payout 0%), retaining cash presumably to support growth or maintain flexibility. Key limitations include unreported items such as inventories, cash and equivalents, equity ratio, and share counts; however, the available non-zero data points provide sufficient basis to assess profitability and financial health. Overall, the company demonstrates strong profitability, disciplined cost control, and a solid balance sheet, with continued focus needed on cash conversion and working capital dynamics.

Profitability Analysis

ROE_decomposition: ROE 25.7% = Net Profit Margin 19.2% × Asset Turnover 1.03× × Financial Leverage 1.30×. High ROE is primarily margin-driven, with modest asset efficiency and low leverage contribution. margin_quality: Gross margin ~57.4% and operating margin ~26.2% (¥1,810m/¥6,917m) indicate strong unit economics and controlled operating expenses. Ordinary income slightly above operating income suggests small positive non-operating contributions. Net margin at 19.2% is strong for the category. operating_leverage: Revenue grew +16.4% YoY while operating income grew +20.6% YoY, evidencing positive operating leverage from fixed cost dilution or improved sales mix/marketing efficiency.

Growth Assessment

revenue_sustainability: Top-line growth of +16.4% YoY appears robust relative to typical consumer health peers; sustainability will depend on brand momentum, channel execution, and product pipeline. profit_quality: Gross and operating margins expanded alongside revenue, implying quality growth not solely driven by discounting. Ordinary income alignment with operating income suggests limited reliance on non-core gains. outlook: Given strong margins and ROE, the business appears positioned for continued profitable growth, contingent on maintaining marketing ROI, product innovation, and channel breadth. Monitoring working capital intensity is key as growth scales.

Financial Health

liquidity: Current assets ¥3,898m vs current liabilities ¥1,312m yields a current ratio of 297% and working capital of ¥2,587m, indicating ample liquidity. Quick ratio is reported equal to current ratio due to unreported inventories. solvency: Total liabilities ¥1,322m vs equity ¥5,167m implies low leverage (liabilities/equity ~0.26x). No interest expense reported, indicating minimal interest-bearing debt or negligible cost of debt. capital_structure: Implied equity ratio ≈76.9% (¥5,167m/¥6,717m), despite the reported equity ratio field being 0.0% (unreported). Balance sheet appears conservative with substantial equity cushioning.

Cash Flow Quality

earnings_quality: OCF of ¥998m vs net income of ¥1,328m yields OCF/NI of 0.75, indicating earnings exceeded cash generation, likely due to working capital investment. EBITDA of ¥1,894m supports the cash-generative core. FCF_analysis: FCF of ¥695m (OCF ¥998m minus investing CF ¥303m) is solid and covers growth investments while preserving balance sheet strength. working_capital: Working capital increased (implied by OCF < NI), consistent with growth. Specific drivers (inventory, receivables, payables) are not disclosed; continued monitoring of cash conversion is warranted.

Dividend Sustainability

payout_ratio_assessment: No dividend declared (DPS ¥0; payout 0%). With NI of ¥1,328m and FCF of ¥695m, capacity exists for distributions, but the company prioritized reinvestment or balance sheet preservation. FCF_coverage: If a dividend were introduced, current FCF suggests room for coverage; however, with DPS at ¥0, FCF coverage metrics are not applicable this period. policy_outlook: Given strong profitability and low leverage, the company could contemplate future shareholder returns; near-term policy likely balances growth investment with optionality for dividends or buybacks.

Risk Assessment

Business Risks:

• Demand volatility for magnetic therapy/healthcare accessories and reliance on brand perception
• Marketing ROI risk and potential increases in customer acquisition costs
• Channel concentration risk (e-commerce, TV shopping, retail partners) and sell-through variability
• Product cycle risk and need for continuous innovation and endorsements
• Regulatory and labeling requirements for health/medical-related products in Japan and export markets
• Competition from domestic and overseas wellness/healthcare brands
• FX exposure on imported materials or outsourced production if applicable

Financial Risks:

• Working capital absorption as sales grow, pressuring OCF/NI
• Potential receivables collection and inventory obsolescence risks (inventory not disclosed)
• Non-consolidated reporting may obscure group-level exposures if affiliates exist
• Concentration of earnings in a single-entity structure
• Limited visibility on cash balances and interest-bearing debt due to unreported line items

Key Concerns:

• OCF/Net Income at 0.75 indicates weaker cash conversion versus earnings
• Key balance sheet items (cash, inventories) not disclosed, limiting granularity
• Equity ratio field reported as 0.0% (unreported) despite strong implied equity base
• No dividend despite robust profitability, leaving capital allocation trajectory uncertain

Investment Implications

Key Takeaways:

• Revenue +16.4% YoY with operating income +20.6% confirms positive operating leverage
• High margins (gross ~57%, operating ~26%) and ROE 25.7% signal strong unit economics
• Conservative balance sheet with implied equity ratio ~77% and low leverage (0.26x)
• Positive FCF of ¥695m supports optionality for reinvestment or future shareholder returns
• Cash conversion lag (OCF/NI 0.75) warrants monitoring as growth continues

Metrics to Watch:

• OCF/Net Income and cash conversion cycle (DSO/DPO/DIO when available)
• Gross and operating margin trends versus advertising and promotion intensity
• Sales growth by channel and product mix to assess sustainability
• Capex and intangible investment levels relative to growth
• Any initiation or changes in dividend/buyback policy
• Asset turnover and inventory turns (when disclosed)

Relative Positioning: Within Japan-listed consumer health/wellness peers, Colantotte exhibits above-average profitability and ROE, coupled with a conservative balance sheet; transparency on cash and working capital would further solidify its strong relative financial profile.

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