TACHIKAWA CORPORATION FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥31.08B
• Operating Income: ¥3.16B
• Net Income: ¥2.03B
• EPS: ¥117.35

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

Tachikawa Corporation (Tachikawa Blind Industrial Co., Ltd., 7989) reported steady topline growth and improved profitability in FY2025 Q3 on a consolidated JGAAP basis, with revenue up 3.7% YoY to ¥31.08bn. Operating income rose 7.5% YoY to ¥3.16bn, outpacing sales growth and indicating positive operating leverage. Ordinary income exceeded operating income at ¥3.29bn, implying modest net non-operating gains or income. Net income advanced 19.8% YoY to ¥2.36bn, supported by better operating performance and limited financing costs. Gross margin remains strong at 39.8%, and operating margin improved to roughly 10.2%, underscoring good pricing discipline and cost control. EBITDA reached ¥4.04bn with a 13.0% margin, signaling resilient core earnings capacity. DuPont decomposition yields an ROE of 4.32% (Net margin 7.59% × Asset turnover 0.481 × Leverage 1.18), suggesting that low financial leverage and moderate asset turnover temper equity returns despite solid margins. The balance sheet is very conservative: total equity of ¥54.58bn on assets of ¥64.62bn implies an equity ratio of about 84.5% (the reported 0.0% appears undisclosed rather than zero), and debt metrics are minimal with a debt-to-equity ratio of 0.20x and interest expense of only ¥0.28m. Liquidity appears ample with a current ratio near 500% and working capital of ¥31.65bn, providing strong short-term flexibility. Cash conversion is the key soft spot this quarter: operating cash flow of ¥1.19bn is only 0.5x net income, pointing to working capital investment or timing effects. Investing cash flow and cash balances were not disclosed in XBRL (zeros indicate non-disclosure), limiting free cash flow analysis; financing cash outflow of ¥0.77bn suggests shareholder returns or debt repayment. The effective tax rate reported as 0.0% is not meaningful; implied tax burden is roughly 33% (¥1.09bn tax on ~¥3.29bn pre-tax). Dividend per share and payout ratio are also undisclosed, so dividend sustainability cannot be directly measured from this dataset. Overall, the company shows healthy profitability, very low financial risk, and clear operating leverage, but weaker cash conversion and incomplete cash flow disclosures constrain assessment of free cash flow and dividend capacity. Near-term outlook appears supported by steady demand and cost discipline, with risks centered on working capital intensity, capex needs, and cyclical end-markets. Monitoring cash conversion, capex, and order trends will be important into FY2025 year-end.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.59%
• asset_turnover: 0.481
• financial_leverage: 1.18
• calculated_ROE: 4.32%
• interpretation: ROE is constrained primarily by low leverage (equity-heavy balance sheet) and moderate asset turnover, while margins are solid. margin_quality:
• gross_margin: 39.8%
• operating_margin: 10.2%
• ordinary_margin: 10.6%
• net_margin: 7.59%
• EBITDA_margin: 13.0%
• commentary: Margin expansion versus sales growth indicates positive mix/pricing and cost control. Non-operating items were modestly positive (ordinary > operating). Effective tax burden is approximately one-third of pre-tax profit despite the reported 0.0% field. operating_leverage: Revenue grew 3.7% YoY while operating income grew 7.5% YoY, indicating favorable operating leverage. Fixed cost absorption appears supportive; sustaining this depends on volume/mix and disciplined SG&A.

Growth Assessment

revenue_sustainability: Top-line growth of 3.7% YoY suggests steady demand in core blinds/interior fittings. Sustainability hinges on housing/renovation and non-residential fit-out cycles, pricing retention, and backlog/order intake (not disclosed). profit_quality: Profit growth outpaced sales, supported by margin resilience and negligible financing costs. However, cash conversion (OCF/NI 0.50x) lags, pointing to working capital investments or timing effects that reduce the quality of earnings on a cash basis. outlook: With healthy margins and minimal leverage, near-term earnings should be resilient if volumes hold and input cost inflation remains manageable. Key swing factors are price-cost spread, procurement costs for materials, and project timing affecting receivables and inventories.

Financial Health

liquidity:

• current_ratio: 499.7%
• quick_ratio: 488.8%
• working_capital: ¥31,646,723,000
• assessment: Extremely strong liquidity; short-term obligations are well covered by current assets. The undisclosed cash balance limits precision, but ratios indicate ample buffers. solvency:
• total_assets: ¥64,622,000,000
• total_equity: ¥54,580,000,000
• total_liabilities: ¥10,854,049,000
• implied_equity_ratio: ≈84.5%
• debt_to_equity: 0.20x
• interest_coverage: 11,205.7x
• assessment: Very conservative capital structure with negligible interest burden. Solvency risk is low. capital_structure: Equity-heavy balance sheet suppresses ROE but provides high resilience. Financing CF outflow suggests some cash returns or repayments; no new leverage evident.

Cash Flow Quality

earnings_quality: OCF/Net income at 0.50x indicates weaker cash conversion for the period, likely due to working capital build (receivables and/or inventories) or timing. D&A of ¥880m supports EBITDA-to-cash bridge, but the OCF shortfall deserves monitoring. FCF_analysis: Investing CF is undisclosed (reported as 0), so free cash flow cannot be reliably calculated despite a reported FCF of 0. The directionally positive OCF suggests underlying cash generation, but capex intensity is unknown. working_capital: Working capital stands at ¥31.65bn; inventories disclosed at ¥0.87bn may be incomplete or classified differently. The cash conversion cycle cannot be computed without AR/AP details. Cash and equivalents were not disclosed.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥117.35, but DPS and payout ratio are undisclosed (reported zeros). Hence, payout sustainability cannot be quantified from this dataset. FCF_coverage: Not assessable due to undisclosed investing cash flows and cash balance. OCF is positive, suggesting potential capacity, but capex and working capital needs are the key unknowns. policy_outlook: With a strong balance sheet and low leverage, the company has room for distributions; however, policy visibility is limited without disclosed dividends and longer-term FCF history.

Risk Assessment

Business Risks:

• Cyclical exposure to residential/non-residential construction and renovation demand in Japan.
• Input cost volatility (metals, resins, textiles) affecting gross margin if pricing lags.
• Project timing and mix risk impacting quarter-to-quarter margins and cash conversion.
• Competitive pricing pressure in blinds/interior fittings, including private-label and imports.
• Supply chain and logistics disruptions that could affect delivery times and inventories.

Financial Risks:

• Working capital intensity causing OCF volatility (OCF/NI at 0.50x this quarter).
• Potential capex requirements not visible due to undisclosed investing cash flows.
• Currency exposure on imported materials if not fully hedged (FX impacts margins).
• Low leverage limits ROE; pressure from shareholders for higher returns could lead to policy shifts.

Key Concerns:

• Subpar cash conversion relative to earnings in FY2025 Q3.
• Insufficient disclosure on investing cash flows and cash balance, constraining FCF analysis.
• Sustainability of operating leverage if volumes slow or input costs rise.

Investment Implications

Key Takeaways:

• Solid revenue growth (+3.7% YoY) with stronger operating profit growth (+7.5% YoY) indicates positive operating leverage.
• Healthy profitability profile: 39.8% gross margin and ~10.2% operating margin.
• ROE at 4.32% is modest due to low leverage and moderate asset turnover despite good margins.
• Very strong balance sheet (implied equity ratio ~84.5%) and minimal interest burden (coverage >11,000x).
• Cash conversion is weak this quarter (OCF/NI 0.50x), requiring monitoring of working capital.
• Dividend details are undisclosed; financing CF outflow suggests some returns or repayments but visibility is limited.

Metrics to Watch:

• OCF/Net income ratio and changes in receivables, inventories, and payables.
• Capex and investing cash flows to gauge true free cash flow.
• Order intake/backlog and book-to-bill for demand visibility.
• Price-cost spread and gross margin resilience amid input cost changes.
• Asset turnover improvements and utilization to support ROE.
• Any updates on capital allocation policy (dividends/buybacks).

Relative Positioning: Within Japan-listed building materials/interior fittings peers, Tachikawa exhibits above-average balance sheet strength, solid operating margins, and low financial risk, offset by currently weaker cash conversion and modest ROE driven by conservative leverage.

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