LINTEC Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥154.75B
• Operating Income: ¥12.77B
• Net Income: ¥10.82B
• EPS: ¥135.48

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

Lintec Co., Ltd. (7966) reported FY2026 Q2 (cumulative first half) consolidated results under JGAAP showing modest topline decline and sharper profit contraction, amid otherwise very strong balance sheet metrics. Revenue was ¥154.8bn, down 2.4% YoY, with operating income of ¥12.8bn (-6.7% YoY) and net income of ¥8.9bn (-17.4% YoY). Gross margin stood at 26.6%, and operating margin at 8.3%, indicating some margin pressure versus the prior year given operating profit fell more than sales. Net margin was 5.77%, weighed by non-operating items and a normalized tax burden. Ordinary income (¥12.5bn) was slightly below operating income, implying net negative non-operating balance (including ¥217m interest expense). The DuPont decomposition yields a calculated ROE of 3.72% (net margin 5.77% × asset turnover 0.473 × leverage 1.36), consistent with the reported ROE. Liquidity and solvency remain a clear strength: current ratio 275%, quick ratio 184%, and an implied equity ratio of approximately 73% (despite the disclosed equity ratio field showing 0.0%, which reflects non-disclosure, not zero). Working capital is sizable at ¥122.8bn, with inventories of ¥64.1bn underpinning operations in adhesive tapes/labels and related materials businesses. Interest coverage is robust at 58.8x, reflecting low financial risk. Cash flow statement items (OCF/FCF) and depreciation/EBITDA were not disclosed in the XBRL for this period; therefore, any cash flow-based quality assessment is constrained. The effective tax rate metric shown as 0.0% in the calculated section reflects missing tags; based on available figures, the implied tax rate is roughly 29–30%. Dividend per share and payout data were not disclosed; EPS was ¥135.48 for the half. Overall, the company exhibits resilient profitability in the context of softer demand, clear operating leverage effects, and a very strong balance sheet, but earnings quality cannot be fully validated without operating cash flow disclosure. Outlook hinges on the pace of demand recovery in industrial/electronics end-markets and inventory normalization. We note the analysis relies solely on available non-zero data and treats zero entries as not disclosed.

Profitability Analysis

ROE is 3.72% for the half, decomposed as net margin 5.77% × asset turnover 0.473 × financial leverage 1.36. Operating margin is 8.25% (¥12.77bn/¥154.75bn), ordinary margin is 8.07%, and net margin is 5.77%. The YoY gap between revenue (-2.4%) and operating income (-6.7%) indicates negative operating leverage in the period, suggesting either unfavorable mix, price/cost pressure, or elevated fixed costs against softer volumes. Gross margin at 26.6% provides room for operating expenses but appears compressed relative to the prior year (not disclosed, but inferred from the larger decline in operating income than revenue). Non-operating impact is mildly negative (ordinary income < operating income), with interest expense of ¥217m immaterial versus operating income (coverage ~59x). The implied effective tax rate, approximated at ~29–30% from income tax ¥3.73bn relative to pre-tax profit, contributed to the steeper YoY decline in net income (-17.4%) than operating income. Margin quality is adequate for an industrial materials company but appears under near-term pressure; sustaining gross margin will be key to stabilizing operating margin.

Growth Assessment

Topline contracted 2.4% YoY to ¥154.8bn, indicative of subdued demand in key end-markets in the half. Operating income fell 6.7% YoY, pointing to negative operating leverage, likely from volume softness and/or product mix shifts. Net income declined 17.4% YoY, reflecting both operating margin pressure and normalized tax burden; non-operating items were a small net drag. Revenue sustainability will depend on recovery in domestic/overseas industrial activity and electronics-related demand, as well as pricing discipline. Profit quality cannot be cross-checked against cash generation because OCF/FCF were not disclosed; hence, we cannot confirm earnings-to-cash conversion. Outlook near term is cautious but stable: with strong balance sheet and ample working capital, the company can navigate demand volatility while pursuing pricing, mix optimization, and cost control to protect margins. Any improvement in utilization and raw material cost tailwinds could restore operating leverage on a recovery.

Financial Health

Liquidity is very strong with a current ratio of 275.4% and quick ratio of 183.9%, supported by current assets of ¥192.77bn against current liabilities of ¥69.99bn. Working capital is ¥122.78bn, and inventories are sizeable at ¥64.05bn, typical for the business model but a monitoring point in downcycles. Total liabilities are ¥94.35bn versus equity of ¥239.92bn; the implied equity ratio is about 73.4% (despite the reported field showing 0.0% due to non-disclosure), and debt-to-equity is 0.39x using total liabilities as a proxy. Interest coverage is 58.8x, indicating minimal financial risk. Asset turnover at 0.473x (H1 revenue vs period-end assets) is modest and reflects capital intensity and elevated working capital.

Cash Flow Quality

Operating cash flow, investing cash flow, financing cash flow, and depreciation/EBITDA were not disclosed (zeros reflect non-reporting). As a result, OCF/Net Income and FCF metrics cannot be reliably assessed for this period. Earnings quality should therefore be interpreted cautiously. Balance-sheet indicators suggest capacity to fund operations (large working capital and low leverage), but inventory of ¥64.05bn implies potential cash tied up; without OCF data we cannot determine whether inventory was building or normalizing. Free cash flow coverage of dividends cannot be computed. In prior patterns for similar companies, depreciation is typically material; the absence of D&A here is a disclosure gap, not an economic zero.

Dividend Sustainability

Dividend per share and payout ratio are not disclosed for the period (fields show zero due to non-reporting). EPS is ¥135.48 for H1, indicating earnings capacity; however, without OCF/FCF disclosure we cannot assess cash coverage. The balance sheet is conservative (equity ratio ~73%, low leverage), suggesting capacity to sustain a typical dividend policy if maintained, but actual policy, interim/annual DPS, and payout targets are not provided in the data. Assessment thus remains inconclusive pending official dividend guidance and cash flow disclosure.

Risk Assessment

Business Risks:

• End-market cyclicality in industrial, packaging, and electronics-related demand impacting volumes and mix
• Raw material price volatility affecting gross margin
• Negative operating leverage during volume downturns
• Inventory management risk given sizeable inventories (¥64.05bn)
• Foreign exchange fluctuations affecting export competitiveness and translation
• Competitive pricing pressure in labels/adhesives and specialty materials

Financial Risks:

• Potential working capital absorption during downturns reducing cash conversion
• Exposure to interest rate changes is limited but present (interest expense ¥217m)
• Cash flow visibility is low for the period due to non-disclosure of OCF/FCF
• Asset turnover efficiency risk if demand remains soft

Key Concerns:

• Operating margin compression with revenue decline (-2.4% YoY) translating to larger operating income decline (-6.7% YoY)
• Steeper net income decline (-17.4% YoY) due to tax and non-operating items
• Lack of cash flow and depreciation disclosure reduces confidence in earnings quality assessment

Investment Implications

Key Takeaways:

• Revenue down 2.4% YoY to ¥154.8bn; operating income down 6.7% YoY to ¥12.8bn
• Net income down 17.4% YoY to ¥8.9bn; net margin 5.77%
• ROE 3.72% via DuPont (5.77% × 0.473 × 1.36)
• Gross margin 26.6%; operating margin 8.25%
• Very strong balance sheet with implied equity ratio ~73% and interest coverage ~59x
• Large working capital (¥122.8bn) and inventories (¥64.1bn) warrant monitoring
• Cash flow, depreciation, EBITDA, DPS not disclosed; limits cash-based assessment

Metrics to Watch:

• OCF and FCF trends and OCF/NI conversion once disclosed
• Inventory days and working capital turns
• Gross and operating margin trajectory vs raw material costs and pricing
• Order trends and revenue growth in key segments/end-markets
• Effective tax rate normalization and non-operating gains/losses
• Capital expenditure and depreciation once disclosed
• Dividend announcements and payout policy

Relative Positioning: Within Japan-listed industrial materials/adhesives peers, Lintec exhibits a highly conservative balance sheet and strong liquidity, but currently shows modest ROE and margin compression amid softer demand; earnings defensiveness is supported by financial strength, while near-term performance hinges on demand recovery and margin management.

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