PRONEXUS INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥18.42B
• Operating Income: ¥3.02B
• Net Income: ¥2.06B
• EPS: ¥81.19

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

Pronexus (7893) delivered FY2026 Q2 consolidated results showing modest topline growth but weaker bottom-line due to a markedly high tax burden and slight operating margin compression. Revenue rose 3.0% year over year to 184.21 billion yen-equivalent units (184.21 in 100M JPY), while operating income declined 4.6% YoY to 30.18, indicating some pressure in cost absorption or mix. Gross profit was 73.22 with a gross margin of 39.7%, evidencing a still-solid value-add profile in core services. SG&A totaled 42.17, equivalent to 22.9% of revenue, leaving an operating margin of 16.4%. Profit before tax was 30.65, nearly aligned with operating income, implying minimal non-operating distortion in the period (non-operating items unreported). Net income dropped 33.9% YoY to 20.71 as the effective tax rate surged to 47.7%, which is unusually high for a steady-state quarter. The net margin printed at 11.2%, down vs. the operating margin, largely on taxes rather than operating deterioration. DuPont decomposition shows ROE at 8.0%, driven by a net margin of 11.2%, asset turnover of 0.457, and financial leverage of 1.56x, consistent with a conservative balance sheet profile. Total assets stood at 402.67 and total equity at 257.90, implying a robust equity ratio of 62.4% and liabilities/equity of roughly 0.53x. Cash and equivalents were 123.09, while reported short-term loans were only 3.50, suggesting a sizable net cash position despite unreported long-term debt details. Accounts receivable of 31.03 and inventories of 6.14 are modest relative to the balance sheet, indicating manageable working capital intensity. Total comprehensive income of 23.13 exceeded net income by 2.42, indicating positive OCI contributions in the quarter. EPS (basic) was 81.19 yen, consistent with reported net income and average shares (25.51 million). Book value per share is calculated at 1,011 yen, reflecting a strong capital base. Dividend payout ratio is shown at 69.6%, implying an estimated DPS around the mid-50 yen level based on current EPS, though dividends were not disclosed in XBRL. Overall, operating performance remains healthy with resilient gross margins and conservative leverage; the key issue is the elevated tax rate that pulled down net earnings and ROE. Data limitations are material, particularly around cash flows, detailed non-operating items, and current liability composition; zeros represent unreported items, not actual zeros.

Profitability Analysis

ROE_decomposition: ROE 8.0% = Net margin 11.2% × Asset turnover 0.457 × Financial leverage 1.56x. The ROE is primarily constrained by modest asset turnover and a spike in the tax rate depressing net margin relative to operating performance. margin_quality: Gross margin 39.7% (73.22/184.21) demonstrates solid value-add. Operating margin 16.4% (30.18/184.21) indicates healthy cost discipline but is down YoY given OI -4.6% vs revenue +3.0%. Net margin 11.2% is disproportionately impacted by the 47.7% effective tax rate rather than non-operating losses. operating_leverage: Revenue grew 3.0% while operating income fell 4.6%, implying negative operating leverage in the half, likely from SG&A growth or mix effects. SG&A intensity is 22.9% of sales; without prior-year SG&A detail, we infer that fixed cost absorption was weaker or pricing/mix did not fully offset cost inflation.

Growth Assessment

revenue_sustainability: Topline grew 3.0% YoY to 184.21, a steady but unspectacular pace consistent with mature service lines. The gross margin of 39.7% indicates continued ability to monetize value-added offerings. profit_quality: Operating income contracted 4.6% despite growth, signalling pressure either from SG&A or project mix. Pretax margin of 16.6% closely tracks operating margin, suggesting limited non-operating noise. The primary drag to bottom-line was the elevated tax rate, not core operations. outlook: If the effective tax rate normalizes closer to historical levels, net income could mean-revert, supporting ROE. Near-term earnings trajectory will hinge on maintaining mid- to high-30% gross margins and stabilizing SG&A ratio near 23% while sustaining low- to mid-single-digit revenue growth.

Financial Health

liquidity: Cash and equivalents are 123.09, a sizable buffer relative to short-term loans of 3.50. Current assets total 183.41; current liabilities were not disclosed, so current and quick ratios are not calculable. Reported working capital metric (183.41) appears to mirror current assets and should be treated cautiously given missing current liability data. solvency: Equity ratio 62.4% (equity 257.90 over assets 402.67) underscores a strong capital base. Liabilities/equity is about 0.53x (136.40/257.90). Long-term loans and interest-bearing debt totals were unreported, but the large cash position versus disclosed short-term borrowings implies net cash. capital_structure: Financial leverage of 1.56x (assets/equity) is low, consistent with conservative funding. Absence of detailed interest-bearing debt and interest expense data limits precision on coverage and refinancing risk assessments.

Cash Flow Quality

earnings_quality: Alignment of operating and pretax income suggests clean non-operating results. However, lack of OCF and D&A disclosure prevents cross-checking accrual intensity or non-cash contributions. FCF_analysis: Operating CF and capex were unreported, so FCF cannot be derived. Cash balance of 123.09 provides flexibility even if near-term OCF is volatile. working_capital: Accounts receivable of 31.03 and inventories of 6.14 appear manageable; accounts payable is 24.99. Without OCF, we cannot assess collection efficiency or cash conversion, and the reported ‘working capital’ likely equals current assets due to missing current liabilities.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 69.6%. With EPS at 81.19 yen, this implies a DPS in the mid-50 yen range for the period basis, though dividend details were not disclosed. Such a payout is elevated relative to an 8% ROE, but potentially supportable given net cash and high equity ratio. FCF_coverage: Not assessable due to unreported OCF and capex. Cash on hand (123.09) provides interim coverage, but medium-term sustainability should be validated against OCF once disclosed. policy_outlook: Given the conservative balance sheet and historically steady operations, management could prioritize stable to progressive dividends; however, maintaining a ~70% payout would depend on tax rate normalization and stable operating margins.

Risk Assessment

Business Risks:

• Negative operating leverage if SG&A growth outpaces revenue amid modest topline expansion
• Margin pressure from input cost inflation or adverse sales mix
• Execution risk in higher value-added services needed to sustain 39–40% gross margins
• Customer concentration or seasonality could drive quarter-to-quarter volatility (extent unreported)

Financial Risks:

• High effective tax rate (47.7%) compressing net income and ROE
• Limited visibility on interest-bearing debt and interest expense due to unreported items
• Cash flow opacity: OCF, capex, and FCF unreported, impeding dividend coverage assessment
• Liquidity metrics (current/quick ratios) not calculable due to missing current liabilities

Key Concerns:

• Significant YoY decline in net income (-33.9%) primarily from tax effects
• Operating income decline (-4.6%) against +3.0% revenue growth indicates cost/mix headwinds
• Data limitations (non-operating details, cash flows, current liabilities) constrain analysis precision

Investment Implications

Key Takeaways:

• Topline growth of 3.0% with resilient gross margin (39.7%) indicates stable core demand
• Operating margin at 16.4% remains healthy but slipped YoY, warranting SG&A discipline
• ROE at 8.0% is mainly suppressed by an unusually high tax rate; normalization is a key lever
• Balance sheet strength (equity ratio 62.4%, net cash likely) provides downside protection
• Dividend payout ratio of 69.6% appears high relative to ROE; sustainability hinges on OCF and tax rate path

Metrics to Watch:

• Effective tax rate trajectory vs. normalized range
• SG&A-to-sales ratio and operating margin trend
• Order intake and revenue growth to confirm demand durability
• Cash from operations and capex to gauge FCF and dividend coverage
• Asset turnover (0.457) as an efficiency driver of ROE
• Receivables and payables movements for cash conversion

Relative Positioning: Within TSE-listed business service and disclosure-support peers, Pronexus exhibits above-average capital solidity (high equity ratio, likely net cash) and solid operating margins, but currently lags on bottom-line momentum due to tax effects; sustaining gross margins and improving operating leverage are key to restoring ROE competitiveness.

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
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