NANKAI PLYWOOD CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥12.57B
• Operating Income: ¥833M
• Net Income: ¥-400M
• EPS: ¥1,004.07

Income Statement

Balance Sheet

Cash Flow Statement

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

Nankai Plywood Co., Ltd. (Ticker: 78870) delivered a strong FY2026 Q2 consolidated result under JGAAP, highlighted by robust operating recovery and solid cash generation. Revenue grew 7.2% YoY to ¥12.57bn, while operating income surged 309.2% YoY to ¥0.83bn, evidencing significant operating leverage. Net income rose to ¥0.97bn (+890.1% YoY), translating to EPS of ¥1,004.07, implying a rough weighted-average share count of about 0.97 million shares (estimate based on provided EPS and net income; share count not disclosed). Profitability improved across the board, with a reported gross margin of 25.4%, EBITDA margin of 9.8%, and operating margin of 6.6%. Ordinary income of ¥1.61bn substantially exceeded operating income, indicating sizable non-operating gains that materially supported bottom-line performance this period. The DuPont-based ROE is 3.94%, driven by a 7.73% net margin, 0.382x asset turnover, and modest financial leverage of 1.34x, pointing to low balance-sheet risk but still subdued capital efficiency. Liquidity is very strong, with a current ratio of 356% and quick ratio of 314%, underpinned by ample current assets and relatively low current liabilities. The balance sheet remains conservative with total liabilities of ¥8.02bn against equity of ¥24.66bn (D/E of 0.33x), providing financial flexibility. Operating cash flow of ¥1.52bn outpaced net income (OCF/NI = 1.57x), indicating healthy earnings quality and favorable working-capital dynamics in the period. Financing cash flow was an outflow of ¥0.39bn, likely reflecting debt service and/or shareholder returns, but dividend details were not disclosed. Investing cash flow and cash balance were not reported, limiting free cash flow and cash position assessment; free cash flow is therefore not determinable from the provided dataset. The effective tax rate shown in calculated metrics (0.0%) is not reliable; using the provided tax expense and net income implies a rough tax burden of about 15%, though the exact pre-tax base is not available. While cyclical exposure to the housing/interior materials market persists, the large YoY rebound, strong liquidity, and high interest coverage (20.7x) reduce near-term financial risk. Key watchpoints include the sustainability of non-operating gains embedded in ordinary income, capex intensity (not disclosed), and margin resilience amid raw material and FX volatility. Overall, the quarter evidences improved operating execution and cash conversion on a conservatively financed balance sheet, albeit with limited visibility on investment needs and dividend policy due to non-disclosure of several items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.73% (NI ¥972m / Revenue ¥12,570m)
• asset_turnover: 0.382x (as provided; based on revenue vs. average assets)
• financial_leverage: 1.34x (Assets ¥32,918m / Equity ¥24,657m)
• calculated_ROE: 3.94% (matches reported) margin_quality:
• gross_margin: 25.4% (as provided)
• ebitda_margin: 9.8% (EBITDA ¥1,228m)
• operating_margin: 6.6% (OP ¥833m)
• ordinary_margin: 12.8% (Ordinary income ¥1,607m / Revenue)
• commentary: Operating margin expansion vs. revenue growth (+7.2% YoY) indicates strong operating leverage from cost control/mix. Ordinary income materially exceeds operating income, implying significant non-operating gains that may not be recurring; the quality of profitability is thus mixed—solid core improvement but elevated reliance on non-operating items. operating_leverage: High this period: revenue +7.2% YoY vs. operating income +309% YoY. This suggests a low prior-year base and/or improved fixed-cost absorption. Sustainability depends on demand stability and gross margin maintenance.

Growth Assessment

revenue_sustainability: Top-line growth of 7.2% YoY is consistent with a moderate recovery in housing/interior demand. Absent segment/geography detail, sustainability appears reasonable but exposed to domestic housing cycle and renovation trends. profit_quality: Core profitability improved (EBITDA and OP margins up), but the large gap between ordinary and operating income indicates dependence on non-operating items. Interest expense is modest (¥40m), so other non-operating income (e.g., FX, securities, equity-method) likely boosted results. outlook: If volume and mix hold, operating margins could remain in the mid–single-digit range, with incremental upside from ongoing cost efficiencies. However, normalization of non-operating gains could weigh on ordinary profit growth. Monitoring input cost inflation (wood, resins, logistics) and pricing power will be key.

Financial Health

liquidity:

• current_ratio: 355.6%
• quick_ratio: 314.3%
• working_capital: ¥12,825m
• commentary: Very strong near-term liquidity, supported by sizeable quick assets and manageable current liabilities. solvency:
• debt_to_equity: 0.33x (Total liabilities ¥8,020m / Equity ¥24,657m)
• interest_coverage: 20.7x (Operating income / Interest expense)
• equity_ratio_note: Reported equity ratio 0.0% is not disclosed; based on totals, equity/asset ≈ 74.9% implies a very conservative capital structure. capital_structure: Low leverage with ample equity buffer. Financing CF outflow suggests active liability management and/or shareholder returns, but specifics are not disclosed.

Cash Flow Quality

earnings_quality: OCF/Net income = 1.57x (¥1,524m / ¥972m), indicating strong cash conversion and supportive working-capital movements. free_cash_flow: Not determinable; investing CF not disclosed. D&A of ¥395m suggests maintenance capex needs, but actual capex unknown. working_capital_dynamics: High working capital base (¥12,825m). Inventories are modest relative to current assets (¥2,075m), supporting the strong quick ratio; continued monitoring of inventory turnover and receivables collection is advised.

Dividend Sustainability

payout_ratio_assessment: Payout ratio shown as 0.0%, but dividend disclosure is not available. We cannot assess payout against earnings without DPS or total dividends. fcf_coverage: Not assessable; FCF is not determinable due to lack of investing CF disclosure. policy_outlook: Financing CF outflow may include dividends or buybacks, but with no DPS data, visibility on policy is limited. Balance sheet capacity for returns exists given low leverage and strong liquidity.

Risk Assessment

Business Risks:

• Exposure to domestic housing and renovation cycles impacting demand for interior materials and storage systems.
• Raw material price volatility (wood-based materials, resins) and logistics costs affecting gross margins.
• FX risk if importing materials; yen fluctuations can influence COGS.
• Competitive pricing pressure in building materials and interior fittings.
• Product mix and capacity utilization risk affecting operating leverage.

Financial Risks:

• Earnings reliance on non-operating income inflating ordinary profit versus operating profit.
• Capex visibility is limited; potential step-up in investment could pressure FCF.
• Inventory and receivables management in a cyclical demand environment.
• Potential interest rate normalization, though current coverage is strong.

Key Concerns:

• Sustainability of the large non-operating contribution to ordinary income.
• Lack of disclosure on investing cash flows and cash balance constrains FCF and liquidity granularity.
• Moderate ROE (3.94%) despite strong balance sheet indicates room for improved capital efficiency.

Investment Implications

Key Takeaways:

• Solid top-line growth (+7.2% YoY) with outsized operating profit rebound (+309% YoY) demonstrates strong operating leverage.
• Ordinary income meaningfully above operating income points to significant non-operating gains; recurring earnings power likely closer to operating profit.
• Cash conversion is healthy (OCF/NI 1.57x) and liquidity is robust (quick ratio 314%), reducing near-term financial risk.
• Balance sheet is conservative (D/E 0.33x), offering flexibility for investment or returns.
• Capital efficiency remains modest (ROE 3.94%); improving asset turnover or margin mix would be key to lift ROE.

Metrics to Watch:

• Breakdown of non-operating income and its recurrence.
• Gross margin trajectory vs. input cost and pricing actions.
• Capex and investing cash flows to gauge sustainable FCF.
• Working capital turnover (inventory days, receivable days).
• Order trends and backlog as indicators of revenue sustainability.
• ROE components: asset turnover and leverage vs. margin.
• Dividend or buyback disclosures (DPS, total payout).

Relative Positioning: Within Japan’s building materials/interior fittings peer set, the company exhibits stronger liquidity and lower leverage than typical, with mid–single-digit operating margin and moderate ROE; current ordinary-profit outperformance appears boosted by non-operating items, suggesting core profitability is improving but not structurally superior.

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