SEYFERT LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.43B
• Operating Income: ¥-93M
• Net Income: ¥17M
• EPS: ¥-96.94

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Seifert Co., Ltd. (TSE: 9213) reported FY2025 Q3 consolidated results under JGAAP showing a revenue decline and an operating loss amid otherwise solid liquidity and a moderate leverage profile. Revenue was ¥1,429m, down 10.2% YoY, indicating a softer demand environment or reduced client activity. Despite top-line pressure, the company’s reported gross margin remains high at 65.6%, consistent with a service-oriented model with relatively low direct costs. Operating income was a loss of ¥93m (operating margin -6.5%), and net income was a loss of ¥128m (net margin -9.0%), both down roughly 80% YoY, signaling deteriorating operating leverage as the cost base did not flex proportionately with revenue. Ordinary loss of ¥94m and interest expense of ¥3.0m resulted in a negative interest coverage ratio of -30.7x, underscoring the pressure from operating losses rather than financing costs. DuPont analysis shows ROE of -14.22%, driven by a -8.96% net margin, asset turnover of 0.932x, and financial leverage of 1.70x. Balance sheet quality appears adequate: total assets ¥1,534m, total liabilities ¥663m, equity ¥900m, implying an equity ratio of about 58.7% (the reported 0.0% appears unreported rather than actual). Liquidity is strong with a current ratio of 268% and quick ratio of 267%, supported by low inventories (¥8.6m) and sizable working capital (¥825m). The company paid no dividend (DPS ¥0) in the period, which is consistent with loss-making conditions and the need to preserve cash. Cash flow statement items are unreported (shown as zero), limiting assessment of earnings-to-cash conversion and free cash flow. There is a minor internal inconsistency between reported cost of sales and gross profit; for margin analysis, we rely on the provided calculated gross margin figure (65.6%). Overall, the quarter reflects negative operating leverage from a mid-teens revenue contraction and underscores the need for either revenue stabilization or cost base recalibration. The balance sheet provides a buffer to navigate near-term weakness, but sustained losses would erode equity and flexibility over time. Key watchpoints include revenue trajectory into Q4, utilization and placement activity (implied by turnover), selling and administrative cost discipline, and any signals on demand recovery. Given data gaps (especially OCF/FCF) and the mismatch in COGS vs. gross profit, conclusions are subject to revision upon full disclosures. Management’s stance on cost measures and pipeline indicators will be critical for the near-term outlook.

Profitability Analysis

ROE_decomposition: ROE -14.22% = Net margin (-8.96%) × Asset turnover (0.932x) × Financial leverage (1.70x). The negative ROE is primarily a function of the net loss; asset efficiency is reasonable for a services business and leverage is moderate. margin_quality: Gross margin at 65.6% suggests a high value-add service mix with low direct costs. Operating margin at -6.5% indicates SG&A and fixed costs outweighed gross profit given revenue contraction. Ordinary margin (-6.6%) is similar to operating margin, reflecting limited non-operating distortions. operating_leverage: With revenue down 10.2% YoY, operating income declined to a ¥93m loss, indicating significant negative operating leverage. Small revenue shortfalls translate into outsized profit swings, highlighting sensitivity to top-line. Interest expense is low (¥3.0m), so bottom-line sensitivity is mostly operational, not financial.

Growth Assessment

revenue_sustainability: Revenue of ¥1,429m fell 10.2% YoY, signaling softness in client demand or lower activity levels. Asset turnover at 0.932x is decent, but sustaining or improving turnover will depend on stabilizing volumes and pricing. profit_quality: Net margin of -8.96% reflects operating losses rather than financial or tax effects (effective tax rate ~0% due to losses). Limited non-operating items imply underlying operations drove the result. outlook: Near-term recovery hinges on re-acceleration in placements/services delivered and SG&A discipline. Given high gross margin, even modest revenue improvement or cost right-sizing could materially improve operating income. However, absent evidence of demand recovery (data not provided), a cautious stance on near-term growth is warranted.

Financial Health

liquidity: Strong liquidity with current ratio 268.3% (¥1,315.7m CA vs. ¥490.4m CL), quick ratio 266.6%, and working capital of ¥825.4m. Inventories are minimal at ¥8.6m, typical for services. solvency: Total liabilities of ¥663.1m vs. equity of ¥900.0m suggests an equity ratio around 58.7% and debt-to-equity of 0.74x. Interest expense is modest (¥3.0m), but coverage is negative due to operating losses. capital_structure: Moderate leverage (financial leverage 1.70x) provides some cushion. Prolonged losses would reduce equity and could tighten headroom; maintaining liquidity is key.

Cash Flow Quality

earnings_quality: Operating CF was unreported (shown as zero), so earnings-to-cash conversion cannot be evaluated this quarter. Negative operating income raises risk of weaker cash generation absent working capital releases. FCF_analysis: Free cash flow is unreported. With limited capex visibility (D&A unreported) and no OCF data, FCF sustainability cannot be determined from this dataset. working_capital: Working capital is sizable at ¥825.4m; inventories are negligible, suggesting receivables and cash dominate current assets. Without the cash flow statement, we cannot assess collection efficiency or period-end timing effects.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio 0.0%, appropriate given net losses (EPS -¥96.94). FCF_coverage: FCF coverage is unreported; with OCF/FCF data unavailable, coverage of any potential dividend cannot be assessed. policy_outlook: Near-term distributions are unlikely while loss-making. Liquidity and moderate leverage provide optionality to resume dividends once profitability normalizes, but visibility depends on revenue recovery and cost actions.

Risk Assessment

Business Risks:

• Revenue contraction (-10.2% YoY) indicating demand softness or client activity slowdown
• High operating leverage leading to outsized profit swings on small revenue changes
• Potential pricing pressure or mix shifts that could erode gross margin from the current high level
• Execution risk around cost control and SG&A flexibility in a weakening top-line environment
• Customer concentration or exposure to cyclical hiring activity (not disclosed, but typical risk for service businesses)

Financial Risks:

• Sustained operating losses driving negative interest coverage (-30.7x)
• Equity erosion if losses persist, reducing solvency headroom
• Cash flow uncertainty due to unreported OCF/FCF and timing effects in working capital
• Potential covenant or refinancing risk if leverage increases (no specifics disclosed)

Key Concerns:

• Continuation of revenue decline into Q4 and FY close
• Insufficient SG&A flexibility to restore operating margin
• Limited visibility on cash generation due to absent cash flow statements
• Data inconsistency between COGS and gross profit, complicating margin diagnostics

Investment Implications

Key Takeaways:

• Top-line down 10.2% YoY to ¥1,429m with high gross margin (65.6%) intact
• Operating loss of ¥93m (margin -6.5%) and net loss of ¥128m (margin -9.0%) reflect negative operating leverage
• ROE -14.22% driven by net losses; asset turnover and leverage are within typical ranges
• Strong liquidity (current ratio 268%) and moderate leverage (D/E 0.74x) provide near-term resilience
• Cash flow visibility is limited due to unreported OCF/FCF; dividend is suspended (DPS ¥0)

Metrics to Watch:

• Quarterly revenue trend and order/pipeline indicators
• Operating margin trajectory and SG&A run-rate
• Asset turnover (sales/assets) and receivables collection metrics
• Cash and OCF once disclosed; FCF after working capital
• Interest coverage as profitability normalizes
• Equity ratio and net leverage if losses persist

Relative Positioning: Within Japan small-cap services, Seifert combines high gross margins with currently negative operating leverage; balance sheet strength is a mitigating factor versus peers facing similar demand softness, but near-term profitability lags until revenue stabilizes or costs flex.

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
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