KAMEI CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥268.31B
• Operating Income: ¥7.11B
• Net Income: ¥4.72B
• EPS: ¥155.12

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

Kamei Co., Ltd. reported FY2026 Q2 consolidated results showing steady top-line growth and solid operating leverage under JGAAP. Revenue rose 4.5% year over year to ¥268.3bn, while operating income increased 11.3% to ¥7.1bn, indicating improving cost discipline and scale benefits. Gross profit reached ¥43.7bn, translating to a gross margin of 16.3%, which, combined with a 2.65% operating margin, suggests a thin but stable trading-style margin structure. Ordinary income of ¥7.7bn exceeded operating income, reflecting positive non-operating contributions net of interest expense (¥276m). Net income grew 8.5% to ¥4.75bn, with EPS at ¥155.12, and net margin at 1.77%. DuPont decomposition shows ROE at 2.81%, driven by a 1.77% net margin, 0.867x asset turnover, and 1.83x financial leverage—consistent with a low-margin, asset-turnover-driven business model. Operating cash flow was strong at ¥19.0bn, resulting in an OCF/Net Income ratio of 4.01x, which signals high cash conversion and good earnings quality for the period. Liquidity appears healthy with a current ratio of 153.6% and quick ratio of 127.4%, underpinned by ¥65.5bn of working capital and inventories of ¥32.0bn. Balance sheet strength is notable: based on disclosed totals, equity is ¥169.1bn against assets of ¥309.4bn, implying an equity ratio around 54.7% (despite the equity ratio field being unreported). Interest coverage of 25.8x indicates comfortable debt service capacity. Financing cash flow was negative (¥-9.93bn), suggesting net debt reduction or shareholder returns, but underlying details are not disclosed. Investing cash flow and cash balance were unreported, limiting free cash flow and liquidity granularity; thus, FCF was shown as zero solely due to disclosure gaps, not economics. Dividend data were unreported (DPS and payout shown as zero), so dividend policy and coverage cannot be assessed from this dataset. Overall, Kamei delivered incremental growth with improved profitability, strong operating cash generation, and a conservative capital structure, though several items (D&A, EBITDA, cash, investing flows, DPS) were unreported and constrain depth of analysis.

Profitability Analysis

ROE_decomposition: ROE 2.81% = Net margin 1.77% × Asset turnover 0.867 × Financial leverage 1.83. This profile indicates returns are primarily driven by asset efficiency rather than leverage, consistent with a trading/distribution model. margin_quality: Gross margin 16.3% and operating margin 2.65% (¥7.11bn/¥268.31bn) reflect tight cost control amid a low-margin industry structure. Ordinary margin of 2.86% (¥7.68bn/¥268.31bn) benefited from non-operating items exceeding interest expense. Using income tax (¥2.59bn) and ordinary income as a proxy, the implied tax rate is roughly mid-30s %, though the reported effective tax rate metric is unreported. operating_leverage: Revenue grew +4.5% YoY while operating income rose +11.3% YoY, indicating positive operating leverage. This suggests fixed cost absorption or mix effects improved period profitability despite modest top-line growth.

Growth Assessment

revenue_sustainability: Top-line growth of +4.5% YoY appears steady for a diversified trading model. With asset turnover at 0.867x, growth is likely supported by volume and stable pricing rather than outsized mix shifts. profit_quality: Operating income growth outpaced revenue, implying efficiency gains. The 1.77% net margin remains thin but typical for the sector; ordinary income outperformance versus operating income points to supportive non-operating items. outlook: If cost discipline and mix hold, mid-single-digit revenue growth could translate into higher single-digit operating profit growth. Sustainability hinges on maintaining inventory efficiency (¥32.0bn), managing interest costs (¥276m), and avoiding adverse commodity or FX swings. Lack of segment detail limits visibility on drivers.

Financial Health

liquidity: Current ratio 153.6% and quick ratio 127.4% indicate strong near-term liquidity. Working capital stands at ¥65.51bn, providing a buffer against seasonal volatility. solvency: Based on disclosed totals, equity of ¥169.1bn versus assets of ¥309.4bn implies an equity ratio of ~54.7% (the reported equity ratio field is unreported). Interest coverage is robust at 25.8x, indicating ample capacity to service debt. capital_structure: Financial leverage at 1.83x (Assets/Equity) is moderate. The reported Debt-to-Equity of 0.91x likely reflects total liabilities to equity rather than strictly interest-bearing debt; nevertheless, the balance sheet appears conservative.

Cash Flow Quality

earnings_quality: OCF/Net Income at 4.01x (¥19.04bn/¥4.75bn) is strong, suggesting earnings are well-backed by cash and/or working capital release. D&A was unreported, so non-cash expense contributions cannot be quantified. FCF_analysis: Investing cash flow was unreported; thus, free cash flow shown as zero is a disclosure artifact, not a reflection of actual FCF. Absent capex data, we cannot determine true FCF, but strong OCF provides capacity to fund investments and returns. working_capital: Inventories are ¥32.01bn; combined with healthy working capital of ¥65.51bn, this suggests manageable inventory risk. The positive OCF implies either efficient receivables collection, inventory discipline, or payable management.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are unreported (displayed as zero). Given EPS of ¥155.12 for the period, there appears to be earnings capacity for distributions, but we cannot assess historical payout behavior or target ranges from this dataset. FCF_coverage: With investing cash flows unreported, FCF coverage cannot be reliably computed. The strong OCF suggests potential coverage, but lack of capex data precludes a definitive view. policy_outlook: No disclosed guidance or policy in the provided data. Future distributions will depend on capex intensity, working capital needs, and leverage management; currently robust liquidity and solvency are supportive, but disclosure gaps limit conclusions.

Risk Assessment

Business Risks:

• Thin net margins (1.77%) increase sensitivity to input price and FX volatility.
• Potential commodity exposure in trading segments could pressure gross margins.
• Inventory management risk (¥32.0bn) amid demand or supply chain fluctuations.
• Dependence on non-operating items to support ordinary income in some periods.
• Limited segment disclosure in this dataset reduces visibility on profit drivers.

Financial Risks:

• Rising interest rates could increase interest expense from ¥276m and reduce coverage.
• Working capital swings may introduce OCF volatility despite current strength.
• Potential refinancing or liquidity concentration risk cannot be assessed given unreported cash balance.
• Capex needs unknown due to unreported investing cash flows, creating uncertainty on future FCF.

Key Concerns:

• Unreported items (D&A, EBITDA, investing CF, cash, DPS) constrain full assessment.
• Sustainability of positive operating leverage if revenue growth moderates.
• Exposure to macro conditions affecting volume-driven, low-margin businesses.

Investment Implications

Key Takeaways:

• Steady revenue growth (+4.5% YoY) with stronger operating profit growth (+11.3% YoY) indicates positive operating leverage.
• Margins remain thin but stable: gross 16.3%, operating 2.65%, net 1.77%.
• Strong cash conversion (OCF/NI 4.01x) supports earnings quality.
• Solid balance sheet with implied equity ratio ~54.7% and interest coverage 25.8x.
• Disclosure gaps (D&A, EBITDA, investing CF, cash, DPS) limit precision on FCF and dividends.

Metrics to Watch:

• Operating margin trajectory versus gross margin (cost control and mix).
• Ordinary income versus operating income (non-operating dependence).
• Inventory levels and turnover (¥32.0bn) and their impact on OCF.
• Interest expense and coverage as rates evolve.
• Capex and investing cash flows to assess true FCF.
• Asset turnover (0.867x) as a driver of ROE.

Relative Positioning: Within Japan’s diversified regional trading/distribution space, Kamei exhibits characteristic low margins but solid asset efficiency and conservative leverage, with current-period cash generation comparing favorably; however, limited disclosure on investing flows and dividends tempers visibility relative to best-disclosed peers.

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