Sumasapo Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥2.82B
• Operating Income: ¥190M
• Net Income: ¥130M
• EPS: ¥54.15

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

Verdict: A solid Q4 finish with strong operating leverage and high-quality cash conversion, despite some reporting artifacts in XBRL-mapped ratios. Revenue grew 5.3% YoY to 28.16, while operating income surged 75.6% YoY to 1.90, driving a meaningful uplift in profitability. Calculated operating margin expanded to 6.8% (1.90/28.16) from an estimated 4.0% last year, a roughly 270 bps improvement. Net income rose 22.7% YoY to 1.30, lifting net margin to 4.6% from an estimated 4.0% last year (about +60–70 bps). Gross profit was 8.83 with a gross margin of 31.3%, indicating controlled cost of sales alongside top-line growth. Cash generation outpaced accounting profit, with operating cash flow of 1.94 exceeding net income of 1.30 (OCF/NI = 1.49x), and free cash flow of 0.87 after 1.07 of investing outflow. Liquidity remains robust with a current ratio of 180% and quick ratio of 180%, supported by cash and deposits of 2.86 against current liabilities of 2.44. Leverage is conservative, with total liabilities of 2.48 against equity of 5.71 (D/E ~0.43x) and an exceptional interest coverage of 363x given minimal interest expense. ROE stands at a healthy 22.8%, driven by a 4.6% net margin, 3.39x asset turnover, and modest leverage of 1.45x. Equity method income is small at 0.08 (about 7% of ordinary income), indicating limited dependence on affiliates. Reported XBRL ratios such as operating margin (0.1%) and the low effective tax rate (6.1%) appear inconsistent with calculated values, suggesting mapping artifacts rather than true economic signals. The balance sheet is asset-light but intangibles-heavy (1.83, roughly 22% of total assets), consistent with a software/service model, which requires attention to capitalization and amortization policies. Working capital discipline looks strong with accounts receivable of 0.60 relative to annual revenue, implying fast collection. Forward-looking, the operating momentum and cash conversion provide headroom to fund growth investments and potentially dividends, but the low reported tax burden and several unreported line items introduce uncertainty. Overall, the quarter reflects improving profitability and sound financial health, with a bias to sustainable performance if cost discipline and revenue growth continue.

Profitability Analysis

ROE decomposition (DuPont): ROE 22.8% = Net Profit Margin (4.6%) × Asset Turnover (3.393x) × Financial Leverage (1.45x). The largest driver of improvement appears to be the profit margin: operating income +75.6% YoY on revenue +5.3% implies stronger operating leverage and cost control. Operating margin improved to ~6.8% from an estimated ~4.0% last year (+~270 bps), while net margin improved to ~4.6% from ~4.0% (+~60–70 bps), indicating some drag from below-the-line items relative to operating gains. Asset turnover is high at 3.39x, consistent with an asset-light model; this likely improved modestly as revenue grew while assets remained compact (8.30). Financial leverage is modest at 1.45x and broadly stable; leverage was not the key driver of ROE. Business reasons: scaling benefits in SG&A relative to revenue (SG&A 7.74 vs gross profit 8.83) and minimal interest burden (interest expense 0.01) supported operating profit expansion; equity-method contributions were small (0.08) and not a major swing factor. Sustainability: margin gains look partly structural (scale, mix), but require continued revenue growth and disciplined SG&A; any increase in amortization of intangibles or wage inflation could cap upside. Watch for cost creep: although SG&A details are unreported, the absolute SG&A level implies a narrow operating spread (OP 1.90 vs SG&A 7.74), leaving limited cushion if growth slows. Also note the low effective tax rate (6.1%) may normalize, tempering net margin sustainability. No signs of negative operating leverage in this period; operating profit grew much faster than revenue, which is a positive trend.

Growth Assessment

Top-line growth of 5.3% YoY to 28.16 is moderate and appears organic given the small equity-method contribution (0.08) and negligible interest income. Profit growth is outsized: operating income +75.6% YoY to 1.90 and ordinary income +69.2% to 1.91, indicating strong operating leverage. Net income grew 22.7% YoY to 1.30; the slower growth vs operating profit suggests below-the-line and tax effects partly offsetting operating gains. Margin expansion (OPM ~6.8% from ~4.0%) signals improved cost efficiency or favorable revenue mix, likely in higher-margin services. Revenue quality looks solid with fast cash conversion (OCF/NI 1.49x) and low receivables relative to sales. Investment outflows of 1.07 (vs small capex 0.03) imply continued spending on intangibles or business development, which could support future growth. With high asset turnover and ample liquidity, the company has capacity to pursue selective growth investments without leveraging the balance sheet. Risks to growth include potential normalization of the tax rate, possible wage and subcontracting cost pressures, and dependence on continued demand momentum. Outlook: if revenue grows mid-single digits and OPM holds in the mid-6% range, earnings growth can continue; further margin expansion may require product mix upgrades or automation/scale benefits.

Financial Health

Liquidity is strong: current assets 4.39 vs current liabilities 2.44 yield a current ratio of 179.9% (healthy) and quick ratio of 179.9% given no inventories reported. No warning thresholds breached (Current Ratio well above 1.0). Solvency: total liabilities 2.48 vs equity 5.71 result in D/E ~0.43x, a conservative structure; interest coverage is extremely high at 363x, indicating minimal refinancing risk. Maturity mismatch risk appears low: cash and deposits of 2.86 alone cover 117% of current liabilities (2.44), and total current assets comfortably exceed short-term obligations. Noncurrent liabilities are negligible at 0.04, limiting long-term repayment risk. Interest-bearing debt details are unreported, but overall liabilities are small and serviceable. Asset composition is skewed to intangibles (1.83, about 22% of total assets), which entails non-cash amortization and potential impairment sensitivity but does not threaten near-term liquidity. No off-balance sheet obligations were reported in the provided data.

Cash Flow Quality

OCF/Net Income is 1.49x, signaling high-quality earnings with cash conversion exceeding profit. Operating cash flow of 1.94 comfortably funds modest capital expenditures (0.03) and still yields positive free cash flow of 0.87 after total investing outflows of 1.07. The bulk of investing outflow appears to be intangible investments or acquisitions (given small capex), which should be monitored for return on investment and capitalization policy. Working capital appears well managed: accounts receivable 0.60 vs annual revenue 28.16 implies a short collection cycle, and OCF strength suggests no aggressive working capital pull-forward. No signs of manipulation such as OCF trailing net income, large receivable build, or inventory swelling (inventory not reported). With financing cash flows unreported and dividends unreported, we cannot fully assess external cash needs, but current cash levels and OCF suggest self-funding capacity for operations and small-scale investments.

Dividend Sustainability

Dividend data are unreported; thus payout ratio and DPS cannot be assessed from the inputs. From a capacity standpoint, free cash flow of 0.87 and a strong cash position (2.86) suggest room to consider dividends while funding ongoing investment, assuming a conservative payout policy. Given retained earnings are modest at 0.24 and the company may be prioritizing growth investments (intangible-heavy model), management could favor reinvestment over high payouts. Without stated dividend policy or historical DPS, sustainability cannot be judged; we note that a payout ratio below 60% would likely be sustainable given current FCF generation if adopted.

Risk Assessment

Business Risks:

• Margin sensitivity to wage/subcontractor cost inflation given a services/software-heavy cost structure
• Dependence on continued mid-single-digit revenue growth to sustain operating leverage
• Intangible asset amortization and potential impairment risk impacting profitability
• Customer concentration or contract renewal risk typical for B2B service providers (details not disclosed)

Financial Risks:

• Low reported effective tax rate (6.1%) could normalize, reducing net margin
• Data gaps on interest-bearing debt and financing cash flows limit full leverage assessment
• Potential cash flow volatility if working capital seasonality emerges (limited visibility due to unreported items)

Key Concerns:

• Inconsistencies in reported PBT (1.13) vs NI (1.30) and reported operating margin (0.1%) suggest XBRL mapping artifacts; true economics should be tracked via calculated margins
• High proportion of intangibles (1.83, ~22% of assets) requires careful monitoring of capitalization policy and ROI on development
• Equity-method income is small but positive (0.08); affiliate performance volatility is a minor factor but should be tracked

Investment Implications

Key Takeaways:

• Strong operating leverage: OPM ~6.8% vs ~4.0% last year; OP +75.6% on +5.3% revenue
• High-quality earnings: OCF/NI 1.49x and FCF positive at 0.87
• Robust balance sheet: current ratio ~180%, D/E ~0.43x, interest coverage ~363x
• Healthy ROE 22.8% driven by high asset turnover (3.39x) and improved margins
• Intangible-heavy asset base warrants scrutiny of amortization and capitalization practices

Metrics to Watch:

• Operating margin trajectory and SG&A intensity vs revenue
• OCF/NI ratio and FCF after intangible investments
• AR days and any changes in billing or collection terms
• Effective tax rate normalization and its impact on net margin
• Retention vs payout policy once dividend information becomes available

Relative Positioning: Within small-cap, asset-light service/software peers, the company exhibits above-average asset turnover, improving operating margins, strong cash conversion, and conservative leverage, positioning it favorably on quality and balance sheet strength; however, reliance on intangibles and data-reporting inconsistencies necessitate closer monitoring.

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