ASIAN STAR CO. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥2.74B
• Operating Income: ¥37M
• Net Income: ¥-128M
• EPS: ¥0.42

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

ASIAN STAR reported strong topline growth in FY2025 Q3, with revenue of 2,741,000,000 yen, up 62.7% year over year, indicating robust demand or successful project deliveries. Profitability improved at the operating level, with operating income rising 135.2% YoY to 37,000,000 yen, evidencing operating leverage from higher scale, although absolute profits remain modest. Net income was 10,000,000 yen (+288.9% YoY), yielding a very slim net margin of 0.36%, highlighting that most of the growth has yet to translate into bottom-line strength. DuPont decomposition shows a low ROE of 0.44%, driven by very thin net margin (0.36%), moderate asset turnover (0.676x), and moderate financial leverage (1.77x). Liquidity is strong with a current ratio of 301.8% and quick ratio of 301.1%, supported by minimal inventories of 5,302,000 yen, implying a light-asset or service-heavy model, or simply low inventory needs. The capital structure appears conservative, with total liabilities of 1,043,608,000 yen against equity of 2,286,000,000 yen, implying a debt-to-equity ratio of 0.46x. Based on total assets and equity, the implied equity ratio is approximately 56.3%, despite the reported equity ratio figure of 0.0% (which is likely unreported rather than truly zero). The company’s interest expense was 4,035,000 yen, and interest coverage is comfortable at 9.2x, reflecting low financial risk under current earnings. Gross profit of 446,119,000 yen implies a gross margin of 16.3%, but there is a notable inconsistency: the presented cost of sales (1,239,095,000 yen) does not reconcile with the stated gross profit; we rely on the stated gross profit and margin figures for analysis. Cash flow data (operating, investing, financing, and cash balances) are unreported in this dataset and cannot be used to assess cash flow quality. Depreciation and amortization are also unreported (shown as zero), so EBITDA and related metrics are not meaningful here. The effective tax rate shown as 0.0% is not consistent with the presence of income tax expense (4,053,000 yen) and net income; we treat tax rate analysis as limited due to missing pretax figures. The company paid no dividend (DPS 0), consistent with preserving capital while earnings remain small. EPS was 0.42 yen; back-solving suggests roughly 23.8 million shares outstanding, though share count is unreported. Overall, the quarter shows clear revenue momentum and improving operating leverage, but profitability is still thin and absolute earnings are low. Strong liquidity and moderate leverage provide resilience, but the lack of cash flow disclosure raises uncertainty around earnings quality and cash conversion. Near-term improvement in margins and confirmation of positive operating cash flow will be critical to sustain the growth trajectory.

Profitability Analysis

ROE_decomposition: ROE 0.44% = Net margin 0.36% × Asset turnover 0.676 × Financial leverage 1.77. The primary drag is the low net margin. margin_quality: Gross margin 16.3% (gross profit 446,119,000 yen on revenue 2,741,000,000 yen). Operating margin is 1.35% (operating income 37,000,000 yen). Ordinary margin is roughly 1.02% (28,000,000 yen). Net margin is 0.36% (10,000,000 yen). The spread between gross and operating margins suggests a sizable SG&A burden relative to gross profit, typical for early-scale or project-based revenue. Note: cost of sales does not reconcile with gross profit; we rely on the stated gross profit and gross margin figures. operating_leverage: Operating income grew 135.2% versus revenue growth of 62.7%, indicating positive operating leverage from scale. However, given the small absolute profit base, leverage effects may be volatile quarter to quarter.

Growth Assessment

revenue_sustainability: Revenue grew 62.7% YoY to 2.741 billion yen, suggesting healthy demand and/or improved execution. Sustainability depends on backlog visibility, repeat business, and project timing, which are not disclosed in this dataset. profit_quality: Net income of 10 million yen on 2.741 billion yen revenue implies thin profitability. Interest coverage of 9.2x is solid, but without cash flow data, the conversion of accounting profits to cash cannot be verified. outlook: If revenue momentum persists and SG&A scales more slowly than gross profit, operating margins could trend higher. Confirmation via improving operating margin and consistent ordinary income would support a constructive earnings trajectory.

Financial Health

liquidity: Current ratio 301.8% and quick ratio 301.1% indicate strong short-term liquidity. Working capital stands at 1,470,737,000 yen. Inventories are minimal (5,302,000 yen), reducing risk of inventory obsolescence. solvency: Total liabilities of 1,043,608,000 yen vs equity of 2,286,000,000 yen yield a debt-to-equity ratio of 0.46x. Implied equity ratio is approximately 56.3% (equity/assets), despite the reported equity ratio of 0.0% likely being unreported. capital_structure: Moderate leverage and good interest coverage (9.2x) suggest manageable financial risk. Balance sheet flexibility appears adequate to support ongoing operations and selective growth initiatives.

Cash Flow Quality

earnings_quality: Unable to assess fully due to unreported operating cash flow and D&A. The displayed OCF/Net Income ratio of 0.00 is not meaningful here. FCF_analysis: Free cash flow is unreported. Capex and working capital investments cannot be evaluated, limiting visibility into cash generation. working_capital: Working capital is ample at 1.471 billion yen, with low inventories. However, receivables and payables dynamics are not disclosed, so cash conversion cycle cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: No dividend declared (DPS 0; payout ratio 0%). Given small net income (10 million yen), retention supports balance sheet strength. FCF_coverage: Not assessable; FCF is unreported. Any dividend policy should ideally be benchmarked to sustainable OCF once disclosed. policy_outlook: With thin margins and limited visibility on cash flow, maintaining a conservative payout stance appears consistent with preserving financial flexibility.

Risk Assessment

Business Risks:

• Execution risk in scaling operations while controlling SG&A and COGS.
• Margin volatility due to project timing or mix effects.
• Potential customer or project concentration (not disclosed).
• Dependence on macro conditions in core markets, including interest rate and demand cycles.
• Supply chain or subcontractor availability and cost inflation risks.
• Regulatory and accounting treatment under JGAAP affecting revenue recognition timing.

Financial Risks:

• Thin net margins (0.36%) leave limited buffer against shocks.
• Small absolute earnings increase sensitivity to one-off items.
• Cash flow visibility is low due to unreported OCF/FCF; working capital swings could be material.
• Interest rate risk on any floating-rate debt despite current coverage being comfortable.
• Data inconsistencies (e.g., gross profit vs. cost of sales) complicate analysis and may signal reporting classification differences.

Key Concerns:

• Sustaining revenue growth while lifting operating and net margins.
• Converting earnings to positive, repeatable operating cash flow.
• Clarifying the cost structure and resolving line-item inconsistencies for accurate margin analysis.

Investment Implications

Key Takeaways:

• Strong revenue growth (+62.7% YoY) with improving operating leverage (+135.2% YoY operating income).
• Profitability remains thin: operating margin 1.35%, net margin 0.36%, ROE 0.44%.
• Balance sheet appears healthy with an implied equity ratio of ~56% and debt-to-equity of 0.46x.
• Interest coverage is comfortable at 9.2x, indicating manageable financial risk.
• Cash flow unreported; earnings quality and cash conversion cannot be validated.
• Data inconsistencies (gross profit vs. cost of sales; equity ratio) necessitate caution in line-item interpretation.

Metrics to Watch:

• Gross margin trend and SG&A-to-revenue ratio.
• Operating margin and ordinary income progression.
• Order backlog or pipeline (if disclosed) to gauge revenue sustainability.
• Operating cash flow, free cash flow, and cash conversion cycle.
• Net debt, interest coverage, and equity ratio (company-reported).
• EPS and ROE trajectory as margins normalize.

Relative Positioning: Versus typical small/mid-cap peers, ASIAN STAR exhibits stronger liquidity and moderate leverage but weaker profitability, with notable growth momentum offset by limited transparency on cash flows and some reported data inconsistencies.

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