| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥6247.9B | ¥6351.1B | -1.6% |
| Operating Income | ¥202.8B | ¥203.9B | -0.5% |
| Ordinary Income | ¥214.6B | ¥208.3B | +3.0% |
| Net Income | ¥175.0B | ¥184.0B | -4.1% |
| ROE | 7.3% | 8.5% | - |
Inabata & Co., Ltd.'s FY2026 Q3 consolidated results show revenue of 624.8B yen (YoY -1.6%) and operating income of 20.3B yen (YoY -0.5%), reflecting relatively stable operations despite modest top-line contraction. Ordinary income reached 21.5B yen (YoY +3.0%), supported by non-operating income including investment securities gains. Net income attributable to owners was 17.5B yen (YoY -4.9%), with EPS of 312.00 yen compared to 320.29 yen in the prior year period. The company maintains full-year guidance of 870.0B yen in revenue (+3.8% YoY) and 19.5B yen in net income (-13.0% YoY), with a planned annual dividend of 65 yen per share.
[Profitability] ROE stands at 7.0% based on net profit margin of 2.7%, asset turnover of 1.265, and financial leverage of 2.06x, representing a level that warrants monitoring relative to shareholder expectations. Operating margin of 3.2% remains consistent with the prior year at 3.2%, while net profit margin compressed to 2.7% from 2.9% YoY. Gross profit margin of 10.0% on gross profit of 62.8B yen indicates the low-margin trading business model characteristic of the company. Segment performance shows Information Technology generating 18.2B yen in sales with 5.5B yen operating income (30.5% margin), Life Industry contributing 4.5B yen in sales with 1.8B yen operating income (41.2% margin), Plastics recording 30.5B yen in sales with 1.0B yen operating income (3.3% margin), and Chemicals posting 9.3B yen in sales with 2.6B yen operating income (28.1% margin). [Cash Quality] Cash and deposits totaled 71.9B yen, providing coverage of 2.55x against short-term borrowings of 28.2B yen. Working capital efficiency shows room for improvement with receivables turnover at approximately 109 days, exceeding efficient collection cycles. Inventory holdings of 86.4B yen represent a significant portion of current assets. [Investment Efficiency] Asset turnover of 1.265 reflects moderate utilization of the expanded asset base, which grew to 493.9B yen from 441.9B yen YoY. Property, plant and equipment increased 42.0% YoY to 28.0B yen from 19.7B yen, indicating substantial capital investment activity. [Financial Health] Equity ratio of 48.7% (equity of 240.3B yen against total assets of 493.9B yen) demonstrates solid capitalization. Current ratio of 211.4% and quick ratio of 164.9% indicate strong liquidity buffers. Total interest-bearing debt of 55.9B yen against equity results in a debt-to-equity ratio of 0.24x. However, short-term liabilities represent 50.3% of total liabilities, requiring attention to refinancing management. Long-term borrowings increased 36.8% to 27.8B yen from 20.3B yen YoY, reflecting funding for capital investments.
Cash and deposits increased 20.8B yen YoY to 71.9B yen, reflecting cash accumulation during the nine-month period despite modest earnings decline. The operating profit of 20.3B yen combined with non-cash depreciation and investment income contributed to cash generation, though the quality is partially supported by investment securities sales generating 2.6B yen in special gains. Working capital movements show trade receivables expanding to 185.7B yen while inventories reached 86.4B yen, suggesting higher working capital requirements that may constrain operating cash conversion. Accounts payable of 128.9B yen represents effective utilization of supplier credit terms. The significant increase in property, plant and equipment of 8.3B yen YoY indicates capital expenditure deployment, funded partly by the 7.5B yen increase in long-term borrowings. Short-term borrowings of 28.2B yen provide additional liquidity management flexibility. The cash coverage ratio of 2.55x against short-term debt and strong current ratio of 211.4% support adequate near-term liquidity positioning, though the extended receivables collection cycle of approximately 109 days represents a key area for cash flow optimization.
Ordinary income of 21.5B yen compared to operating income of 20.3B yen reflects net non-operating contribution of approximately 1.2B yen, supplemented by special gains. Non-operating income composition includes dividend income of 0.9B yen, interest income of 0.7B yen, and equity method investment gains, partially offset by interest expenses of 1.1B yen. The net non-operating impact represents 0.2% of revenue, indicating limited dependence on financial activities for earnings. Special gains of 2.6B yen from investment securities sales represent 12.1% of pretax profit of 24.0B yen, highlighting material non-recurring contribution to bottom-line results. This positions recurring operating performance as the more sustainable earnings foundation. The effective tax rate of approximately 27.1% applied to pretax profit resulted in net income of 16.7B yen. While comprehensive income expanded significantly to 33.3B yen in the nine-month period, reflecting valuation gains and foreign exchange impacts, the core earnings derived from business operations remained under modest pressure. The low gross margin structure of 10.0% inherent to the trading business model limits operating leverage, requiring volume growth or product mix enhancement to drive margin expansion. The relationship between operating profit generation and working capital efficiency suggests that receivables collection acceleration could enhance earnings quality through improved cash conversion characteristics.
Low profitability structure with gross margin of 10.0% and operating margin of 3.2% limits resilience to volume declines or cost increases, with minimal operating leverage to absorb margin pressure. The company's ROE of 7.0% and EBIT margin of 3.2% indicate constrained return generation that may challenge value creation objectives. Extended receivables turnover of approximately 109 days compared to industry collection cycles exposes the company to customer credit risk and working capital strain, with 185.7B yen in trade receivables representing substantial capital tied in customer credit. The short-term liability ratio of 50.3% creates refinancing risk, requiring continuous access to credit facilities and exposing the company to interest rate fluctuation impacts, particularly as interest-bearing debt reaches 55.9B yen.
[Industry Position - Trading Sector] (Reference - Proprietary Analysis) The company's operating margin of 3.2% aligns precisely with the trading industry median of 3.2% (IQR: 1.3%-4.6%, n=15 companies) for 2025-Q3, indicating competitive positioning within typical sector ranges. Net profit margin of 2.7% exceeds the industry median of 2.0% (IQR: 1.0%-3.9%), suggesting relative efficiency in bottom-line conversion. ROE of 7.0% surpasses the industry median of 3.7% (IQR: 2.2%-8.4%), reflecting superior equity returns within the sector context. The equity ratio of 48.7% compares favorably to the industry median of 47.8% (IQR: 43.0%-55.5%), indicating solid capitalization aligned with peer standards. Asset turnover of 1.265 exceeds the industry median of 1.06 (IQR: 0.70-1.32), demonstrating relatively efficient asset utilization. However, receivables turnover of approximately 109 days significantly exceeds the industry median of 73.6 days (IQR: 64.8-91.1 days), highlighting an area requiring operational improvement. Inventory turnover positioning and payables management warrant evaluation against the industry median inventory days of 51.0 (IQR: 30.5-74.7) and payables days of 64.1 (IQR: 62.3-80.2). The revenue decline of -1.6% compares unfavorably to the industry median growth of +2.6% (IQR: -5.3% to +10.8%), indicating below-median top-line momentum. Current ratio of 211.4% substantially exceeds the industry median of 1.88x (IQR: 1.64x-2.38x), reflecting conservative liquidity management. (Industry: Trading Sector, N=15 companies, Comparison: 2025-Q3, Source: Proprietary Analysis)
Operational stability amid modest revenue contraction demonstrates the company's ability to maintain profit levels through cost discipline, with operating income declining only -0.5% despite -1.6% revenue decline, though the low operating margin of 3.2% provides limited cushion for future volatility. The substantial capital investment program evidenced by 42.0% YoY increase in property, plant and equipment to 28.0B yen, funded by 36.8% increase in long-term borrowings to 27.8B yen, signals strategic growth initiatives that require monitoring for return realization, as current ROE of 7.0% and asset turnover improvement will determine investment success. Balance sheet strength characterized by 48.7% equity ratio, 2.55x cash coverage of short-term debt, and current ratio of 211.4% provides financial flexibility, though the 109-day receivables collection cycle and 50.3% short-term liability ratio represent operational efficiency opportunities that could unlock working capital and enhance cash generation quality.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.