IMAGE MAGIC Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥6.88B
• Operating Income: ¥497M
• Net Income: ¥296M
• EPS: ¥122.82

Income Statement

Balance Sheet

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

Image Magic Co., Ltd. (77930) reported strong FY2025 Q3 year-to-date results on a standalone JGAAP basis, with topline and profit growth outpacing expectations typical for small-cap manufacturers/solution providers. Revenue rose 23.2% YoY to ¥6,878m, demonstrating healthy demand and/or successful capacity scaling. Operating income increased 36.4% YoY to ¥497m, indicating positive operating leverage and cost discipline. Ordinary income was ¥499m, broadly in line with operating income, as financing costs remained minimal (interest expense ¥2.3m). Net income grew 18.4% YoY to ¥296m, implying a net margin of 4.30%. Gross profit reached ¥2,144m, putting gross margin at 31.2%, a solid level supportive of profitability quality. Operating margin improved to approximately 7.23% (operating income/revenue), up about 0.7 percentage points versus the implied prior-year level, reflecting scale benefits. DuPont analysis indicates ROE of 14.59%, driven by a 4.30% net margin, robust asset turnover of 2.119x, and modest financial leverage of 1.60x. Balance sheet strength appears sound, with total assets of ¥3,246m, equity of ¥2,029m, and liabilities of ¥1,214m (D/E about 0.60x). Liquidity is comfortable (current ratio 192.8%, quick ratio 183.9%) supported by limited inventories (¥86m) relative to current assets. Interest coverage is very strong at 216.5x, suggesting low financial risk from debt service. Using income tax expense (¥123m) and net income, the implied effective tax rate is approximately 29% (not 0% as in the automated metric, which appears unreported), consistent with typical JGAAP statutory burdens. Cash flow items (operating, investing, financing) and cash & equivalents are not disclosed in the provided dataset (shown as zero by flag), limiting assessment of earnings-to-cash conversion and capital intensity. Dividend information is absent (DPS and payout shown as zero indicate non-disclosure), so capital return policy cannot be confirmed. Overall, profitability momentum, solid ROE, and a conservative balance sheet are positives, though the lack of cash flow disclosure and standalone-only view constrain visibility into cash generation, reinvestment needs, and dividend capacity.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 4.30%
• asset_turnover: 2.119
• financial_leverage: 1.6
• calculated_ROE: 14.59%
• commentary: ROE is supported primarily by high asset turnover and expanding operating margins, with modest leverage. The DuPont bridge (4.30% × 2.119 × 1.60 ≈ 14.59%) indicates efficiency-led returns rather than balance-sheet leverage. margin_quality:
• gross_margin: 31.2% (¥2,144m GP on ¥6,878m revenue)
• operating_margin: 7.23% (¥497m OI on ¥6,878m revenue)
• ordinary_margin: 7.26% (¥499m on ¥6,878m revenue)
• net_margin: 4.30% (¥296m NI on ¥6,878m revenue)
• tax_rate_comment: Implied effective tax rate ~29% using NI and income tax expense; the reported 0.0% is a placeholder due to non-disclosure formatting. operating_leverage:
• revenue_growth_YoY: 23.2%
• operating_income_growth_YoY: 36.4%
• implication: Operating income grew faster than revenue, implying positive operating leverage. Prior-year OPM estimated ~6.53% vs current ~7.23%, an expansion of roughly +70 bps.

Growth Assessment

revenue_sustainability: Double-digit revenue growth (23.2% YoY to ¥6.88bn) suggests healthy demand and/or capacity expansion. Inventory levels are low (¥86m), implying a lean model and potentially short cycle times; sustainability will depend on order flow and throughput. profit_quality: Margin expansion at both gross and operating levels points to improved mix, scale benefits, and/or cost efficiencies. Minimal interest burden supports clean ordinary profit conversion from operating profit. outlook: With asset turnover at 2.12x and leverage modest, further ROE gains would likely come from continued margin improvement and efficient asset utilization. Key to outlook: maintaining pricing power, controlling COGS amid input variability, and sustaining utilization rates.

Financial Health

liquidity:

• current_ratio: 192.8% (CA ¥1,871,941k / CL ¥971,034k)
• quick_ratio: 183.9% (CA–Inventories ¥1,785,923k / CL ¥971,034k)
• working_capital: ¥900,907k
• commentary: Ample near-term liquidity with limited inventory burden supports operational flexibility. solvency:
• total_assets: ¥3,246,000k
• total_equity: ¥2,029,000k
• total_liabilities: ¥1,214,399k
• debt_to_equity: 0.60x
• interest_coverage: 216.5x (OI ¥497m / interest ¥2.296m)
• commentary: Leverage is modest and coverage is very strong, indicating low solvency risk under current conditions. capital_structure: Assets/Equity at 1.60x (financial leverage) indicates conservative use of debt. Equity ratio was shown as 0.0% in the dataset due to non-disclosure formatting; based on provided balances, equity ratio would approximate 62.5% (¥2,029m/¥3,246m).

Cash Flow Quality

earnings_quality: Ordinary income aligns closely with operating income and interest is minimal, suggesting limited non-operating distortions. However, cash flow statements are not disclosed (zeros indicate unreported), preventing OCF-based validation of earnings quality. FCF_analysis: Free cash flow cannot be computed due to missing OCF and capex data (depreciation also not disclosed). As a result, FCF coverage of dividends and reinvestment needs cannot be assessed from the provided dataset. working_capital: Current assets are sizable relative to current liabilities; inventories are low at ¥86m, which may reflect short lead times or a service/printing workflow. Without AR/AP details or period changes, we cannot evaluate cash conversion cycle dynamics.

Dividend Sustainability

payout_ratio_assessment: Payout ratio and DPS are shown as 0.00, which indicates non-disclosure rather than true zero. With EPS at ¥122.82 and NI at ¥296m, there is theoretical capacity for dividends, but no policy details are available. FCF_coverage: Unavailable due to unreported operating and investing cash flows; hence dividend coverage by FCF cannot be evaluated. policy_outlook: No explicit dividend policy disclosed in the provided data; capital allocation stance (growth reinvestment vs. distributions) remains unclear. Monitoring future disclosure and shareholder returns commentary is necessary.

Risk Assessment

Business Risks:

• Sensitivity to demand cycles and order volumes given operating leverage and utilization dependence.
• Potential input cost volatility affecting gross margin (materials, logistics, energy).
• Execution risk in scaling operations while maintaining quality and delivery times.
• Customer concentration risk (not disclosed; common for niche providers) could impact revenue volatility.
• Product/technology obsolescence risk if solutions are tied to specific platforms or formats.

Financial Risks:

• Limited visibility on cash generation due to missing cash flow disclosure.
• Potential capex needs (depreciation unreported) could require funding if growth continues.
• Working capital swings could impact liquidity despite currently strong ratios.
• Tax rate variability (~29% implied) may affect net margins if incentives or loss carryforwards change.

Key Concerns:

• Absence of cash flow and capex data limits assessment of earnings-to-cash conversion.
• Standalone (non-consolidated) reporting constrains visibility into group-wide risk and resources.
• Dividend policy and capital return intentions are not disclosed.

Investment Implications

Key Takeaways:

• Revenue up 23.2% YoY to ¥6.88bn with operating income up 36.4% YoY, demonstrating positive operating leverage.
• ROE of 14.59% driven by 4.30% net margin, 2.12x asset turnover, and modest 1.60x leverage.
• Strong liquidity (CR 193%, QR 184%) and low interest burden (coverage 216.5x) reduce financial risk.
• Margins improved (OPM ~7.23% vs ~6.53% implied prior year), suggesting scale benefits and/or mix improvement.
• Cash flow disclosure absent; FCF and dividend capacity cannot be verified.

Metrics to Watch:

• Operating cash flow and capex (to validate earnings quality and capital intensity).
• Gross and operating margin progression (pricing power, cost control).
• Asset turnover and working capital days (AR/AP/Inventory turns).
• Order intake/backlog and utilization rates to gauge revenue sustainability.
• Effective tax rate normalization and any one-off items.
• Any announcement on dividend policy or share repurchases.

Relative Positioning: Within Japan small/mid-cap manufacturing/service peers, the company’s ~14.6% ROE with modest leverage and improved operating margins appears competitive; however, lack of cash flow disclosure and standalone-only reporting temper comparability and conviction.

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