Japan M&A Solution Incorporated FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥654M
• Operating Income: ¥-56M
• Net Income: ¥-85M
• EPS: ¥-56.62

Income Statement

Balance Sheet

Cash Flow Statement

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

Japan M&A Solution Co., Ltd. (TSE: 92360) reported FY2025 Q4 standalone results under JGAAP indicating modest top-line growth but negative earnings and thin profitability. Revenue was 6.54 (hundred million JPY), up 8.6% YoY, demonstrating some momentum in deal activity. Gross profit was 1.85, implying a gross margin of 28.3%, which is modest for a fee-based advisory model and suggests either higher cost of sales recognition or revenue mix impacting take rates. SG&A was 2.00, resulting in operating income of -0.56 as disclosed; the arithmetic from gross profit minus SG&A would imply -0.15, indicating there may be other operating items (e.g., impairment, one-offs, provisions) not itemized here. Ordinary income came in at -0.52, roughly in line with operating loss given negligible disclosed non-operating items. Net income was -0.85 (EPS -56.62 JPY), a materially larger loss than the -0.15 profit before tax shown; this suggests below-the-line or reconciliation items not captured in the summarized line items, or classification differences in tax/extraordinary items. The DuPont bridge yields a net margin of -13.0%, asset turnover of 0.979x, and leverage of 1.14x, for a calculated ROE of -14.6%, consistent with the reported figure. Despite the loss, operating cash flow was positive at 0.07, with free cash flow (defined here as OCF + investing CF) at 0.01, indicating cash discipline and limited capex requirements. The balance sheet shows a substantial cash position of 6.50 against total liabilities of 0.68, supporting ample liquidity; the current ratio stands at 1012%, and working capital is 6.20. Leverage appears minimal with a debt-to-equity ratio of 0.12x, consistent with a cash-rich advisory business model. Equity was 5.84, translating into a BVPS of roughly 384–395 JPY depending on the calculation basis. Financing cash outflow of -0.47 suggests distributions or listing/issuance-related costs, though dividends are not disclosed. Several data inconsistencies exist (e.g., current assets exceeding total assets, PBT vs net income mismatch), so conclusions should be interpreted with caution. Overall, the company exhibits strong liquidity and low leverage but faces profitability pressure and operating leverage in a small revenue base, which elevates earnings volatility. Near-term performance will hinge on deal conversion, fee rates, and SG&A discipline while preserving cash. Given the single-entity basis and unreported details, the analysis focuses strictly on disclosed non-zero values and recognizes potential classification differences under JGAAP.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -13.0%
• asset_turnover: 0.979x
• financial_leverage: 1.14x
• calculated_ROE: -14.6%
• comments: Negative ROE is driven primarily by a negative net margin; low leverage provides little ROE amplification, which is prudent but limits upside when margins are weak. margin_quality: Gross margin of 28.3% is relatively low for an advisory model, implying higher direct costs or lower take rates. Operating margin (reported) is negative; the variance between GP - SG&A and reported operating loss suggests additional operating costs (e.g., other operating expenses or impairments) not shown in the SG&A breakdown. operating_leverage: SG&A of 2.00 versus revenue of 6.54 implies a high fixed-cost burden relative to scale. Small revenue base means margins are highly sensitive to deal throughput and fee rates. EBITDA was -0.54 with an EBITDA margin of -8.3%, reinforcing unfavorable operating leverage in the period.

Growth Assessment

revenue_sustainability: Revenue grew 8.6% YoY to 6.54, indicating some dealflow resilience. Given the small base, growth likely reflects a handful of mandates closing in the period; sustainability depends on pipeline conversion and market conditions for SME succession/M&A in Japan. profit_quality: Ordinary income (-0.52) and net loss (-0.85) indicate that growth has not translated to operating leverage yet. The discrepancy between PBT (-0.15) and net income (-0.85) suggests non-recurring or classification items; without detail, profit quality assessment is constrained. outlook: With strong cash and low leverage, the company can support business development and hiring; however, maintaining fee rates and controlling SG&A will be critical to restoring profitability. Near-term growth will be tied to M&A market volume, succession trends, and competitive intensity in mid-to-small cap advisory.

Financial Health

liquidity: Cash and deposits of 6.50 against current liabilities of 0.68 yield a current ratio of 1012% and quick ratio of 1012%. Working capital is 6.20. Liquidity is very strong. solvency: Total liabilities are 0.68 versus equity of 5.84, producing low leverage (debt-to-equity 0.12x). Interest-bearing debt is not disclosed; given high cash, balance-sheet risk appears low. capital_structure: Assets 6.68 funded by equity 5.84 and liabilities 0.68; leverage 1.14x assets/equity. Cash dominates assets, which is typical for advisory firms with low fixed assets. Note: reported current assets exceed total assets, indicating possible reporting/classification issues; analysis relies on provided totals.

Cash Flow Quality

earnings_quality: OCF of 0.07 versus net loss of -0.85 yields an OCF/NI ratio of -0.08x as reported. Positive OCF despite an accounting loss suggests working capital releases and low non-cash charges (D&A 0.02) helped cash. Given the small scale, quarter-to-quarter cash conversion can be volatile. FCF_analysis: Free cash flow (defined here as OCF + investing CF) was 0.01, supported by minimal capex (-0.02). This indicates that cash burn is limited even with negative earnings. working_capital: Accounts receivable of 0.01 against revenue implies limited outstanding billings at period-end; cash is the predominant current asset. Changes in deferred revenue/contract liabilities are not disclosed; caution in interpreting OCF components.

Dividend Sustainability

payout_ratio_assessment: Dividends are unreported; payout ratios are not calculable. With a net loss, a theoretical payout ratio would not be meaningful. FCF_coverage: Given positive FCF (0.01) and lack of disclosed dividends, coverage cannot be assessed. Balance sheet cash offers theoretical capacity, but sustainability depends on restoring profitability. policy_outlook: Absent disclosure, assume a conservative stance; management may prioritize reinvestment and cash preservation until profitability normalizes.

Risk Assessment

Business Risks:

• Deal-driven revenue volatility intrinsic to M&A advisory.
• Fee rate pressure and competitive intensity in SME succession/M&A market.
• Small revenue base increases operating leverage and earnings volatility.
• Client concentration risk if revenue depends on a few mandates.
• Macroeconomic and sentiment risk impacting deal closures and valuations.

Financial Risks:

• Negative margins and ROE (-14.6%) if deal execution slows.
• Data/classification inconsistencies (e.g., PBT vs net income; current assets vs total assets) complicate monitoring.
• Potential one-off or non-operating items not disclosed could swing earnings.
• Limited disclosure on debt and interest costs; interest coverage not calculable.

Key Concerns:

• Reconciling operating income (-0.56) with GP-SG&A arithmetic suggests unitemized operating costs.
• Net income (-0.85) materially below PBT (-0.15), implying undisclosed adjustments.
• Gross margin at 28.3% may be low for an advisory model, pressuring profitability.

Investment Implications

Key Takeaways:

• Top-line grew 8.6% YoY to 6.54 but profitability remained negative.
• ROE -14.6% driven by -13.0% net margin; low leverage limits ROE variability.
• Very strong liquidity with cash 6.50 and current ratio ~10x; low solvency risk.
• Positive OCF (0.07) and near-flat FCF (0.01) despite accounting loss.
• High operating leverage from SG&A relative to scale; margin recovery hinges on revenue growth and cost control.

Metrics to Watch:

• Deal pipeline conversion and quarterly revenue per mandate.
• Gross margin trends and realized fee rates.
• SG&A trajectory versus revenue (operating leverage inflection).
• Reconciliation items between operating income, PBT, and net income.
• Cash balance and working capital movements (OCF consistency).

Relative Positioning: As a small, cash-rich M&A advisory focused on the Japanese SME market, the company exhibits strong balance-sheet resilience but lags larger peers on margin stability and scale efficiency; results are more sensitive to deal timing and fee mix.

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