| Metric | Current Period | YoY Comparable Period | YoY |
|---|---|---|---|
| Revenue | ¥413.3B | ¥278.2B | - |
| Operating Income | ¥-7.4B | ¥-4.2B | - |
| Ordinary Income | ¥132.1B | ¥116.0B | +13.9% |
| Net Income | ¥110.9B | ¥93.4B | +19.5% |
| ROE | 11.9% | 10.8% | - |
In FY2026 Q3, Revenue was ¥413.3B (+¥135.1B, +48.6% from ¥278.2B in the YoY comparable period), Operating Income was ¥-7.4B (down ¥-3.2B), Ordinary Income was ¥132.1B (+¥16.1B, +13.9% from ¥116.0B), and Net Income was ¥110.9B (+¥17.5B, +18.7% from ¥93.4B). Although an operating loss of ¥7.4B was recorded at the operating level, Non-operating income of ¥140.2B, including Equity in earnings of affiliates of ¥125.2B, underpinned results, resulting in double-digit growth at the Ordinary Income and Net Income levels. The Net profit margin remained high at 26.9%, but the structure reveals insufficient profitability in the core business and a marked dependence on non-operating income.
[Profitability] ROE 11.9% (DuPont three-factor decomposition: Net profit margin 26.9% × Total asset turnover 0.340 × Financial leverage 1.30x), Operating margin -1.8%, EBIT margin -1.8%. Profitability at the operating level remains an issue, but Net profit margin is elevated due to Equity in earnings of affiliates and other factors. [Cash Quality] Cash and deposits ¥178.9B; cash coverage of short-term liabilities exceeds 1626x, indicating extremely abundant liquidity. With no disclosure of Operating Cash Flow, the cash backing of earnings is unconfirmed. [Investment Efficiency] Total asset turnover 0.340x indicates low asset efficiency. The increase in Goodwill to ¥46.7B (+159.9% from ¥18.0B in the prior year) is presumed to reflect M&A and warrants monitoring for impairment risk. [Financial Soundness] Equity Ratio 76.8%, Current ratio 350.6%, Quick ratio 309.6%, Interest-bearing debt ¥19.8B (1.6% of total assets), and a debt-to-equity ratio of 0.30x indicate ample financial flexibility.
Cash and deposits increased by ¥74.4B YoY to ¥178.9B, accounting for 14.7% of total assets. Increased earnings and balance sheet expansion are presumed to have contributed to capital accumulation. In working capital, Accounts receivable expanded significantly from ¥4.8B to ¥12.0B (+150.9%), and Inventories from ¥23.5B to ¥48.7B (+107.7%), suggesting increased working capital needs accompanying higher sales. Meanwhile, Accounts payable remained roughly flat, indicating room to improve working capital efficiency. Goodwill increased by ¥28.8B, implying potential cash outflows from investing activities, while Investment securities decreased by ¥18.1B, indicating monetization. Long-term borrowings increased by ¥7.3B to ¥19.8B, indicating some funding activity, but the total amount remains small and its impact on financing cash flow is limited. Cash coverage of short-term liabilities is extremely high, and liquidity risk is virtually nonexistent.
While Ordinary Income was ¥132.1B, Operating Income was ¥-7.4B, resulting in a net non-operating increase of approximately ¥139.5B. The core component is Equity in earnings of affiliates of ¥125.2B, supplemented by financial income such as interest and dividends received and gains on sale of investment securities. Non-operating income accounts for 33.9% of Revenue, indicating a structure with an extremely high dependence on income sources outside the core business. The operating loss is attributable to the sum of Cost of goods sold of ¥328.1B and SG&A expenses of ¥87.4B exceeding Revenue. In the absence of Operating Cash Flow disclosure, the alignment between earnings and cash cannot be verified; however, as indicated by the substantial increases in Accounts receivable and Inventories, the rise in working capital may be constraining cash generation. From a quality of earnings perspective, attention is needed to the sustainability and volatility risks of Equity in earnings of affiliates and financial income, and improving core operating profitability remains a key challenge.
[Industry Positioning] (Reference information; our estimates) Profitability: A Net profit margin of 26.9% significantly exceeds the industry median of 6.6% (FY2025 Q3, n=3) and ranks high within the industry. However, an Operating margin of -1.8% is below the industry median of 8.6% (same period), indicating below-average core operating profitability. The elevated Net profit margin is attributable to non-operating income (e.g., Equity in earnings of affiliates). Soundness: With an Equity Ratio of 76.8% and a Current ratio of 350.6%, financial soundness indicators are strong, placing the company in a favorable position within the Utilities sector, which typically requires capital-intensive and stable finances. Efficiency: The Operating margin is negative, falling short of the industry-average operating efficiency. Total asset turnover of 0.340x is also low, leaving considerable room for improvement in asset efficiency. Industry: Utilities (3 companies), Comparables: FY2025 Q3, Source: our aggregation
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information aggregated by our firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as necessary before making any decisions.