VISION INC. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥28.91B
• Operating Income: ¥4.75B
• Net Income: ¥2.87B
• EPS: ¥64.78

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

Verdict: Solid quarter with double-digit top- and bottom-line growth and stable margins, underpinned by strong liquidity and minimal leverage. Revenue rose 10.7% YoY to 289.13, with operating income up 10.0% YoY to 47.48 and net income up 10.8% YoY to 31.78. Gross profit reported at 151.82 implies a gross margin of 52.5%, while SG&A was 108.64, yielding an operating margin of 16.4%. Ordinary income was 47.52, broadly in line with operating profit, indicating limited reliance on non-operating gains (net non-operating contribution ~0.56). Net margin printed at 11.0%, supported by a 33.9% effective tax rate and negligible interest burden (~0.08 interest expense; interest coverage ~580x). DuPont-calculated ROE is 16.0% (NPM 11.0% × asset turnover 1.086 × leverage 1.34x), reflecting healthy profitability on a conservative balance sheet. Operating margin appears to have compressed slightly by about 10 bps YoY (from ~16.5% to 16.4%), while the net margin is essentially flat. SG&A intensity stands at ~37.6% of revenue; operating leverage was modest as operating profit grew roughly in line with sales. Earnings quality assessment is constrained because operating cash flow was unreported; OCF/NI and FCF cannot be verified. Liquidity is very strong: current ratio 327.5%, cash and deposits 109.78 cover current liabilities 1.8x, and working capital is 140.04. Leverage is low with D/E of 0.34x and long-term loans of 3.44, materially reducing solvency risk. With cash-rich, low-debt positioning, dividend capacity looks reasonable; the calculated payout ratio is 43.3% though cash-based coverage is unassessable without OCF. Forward-looking, stable margins, high ROE, and ample liquidity support continued investment capacity, but visibility into cash conversion and capex plans remains a key data gap. Monitor AR trends (74.96) relative to sales and any changes in tax rate or SG&A intensity. No signs of heavy dependence on non-operating income or one-off gains this quarter.

Profitability Analysis

ROE decomposition (DuPont): ROE 16.0% = Net Profit Margin 11.0% × Asset Turnover 1.086 × Financial Leverage 1.34x. The mix indicates returns are driven primarily by solid net margins rather than leverage. The biggest observed change YoY appears in operating leverage rather than margin mix: operating profit growth (+10.0%) tracked revenue (+10.7%), implying limited efficiency gains and a slight c. 10 bps compression in operating margin (~16.5% → ~16.4%). Business rationale: SG&A growth likely tracked top line (SG&A ratio at 37.6%), limiting incremental margin expansion despite healthy gross margin. Non-operating items contributed only ~0.56, suggesting core operations were the main driver. Sustainability: With leverage modest at 1.34x, ROE sustainability hinges on maintaining the 11% NPM and asset turnover around 1.1x; absent mix shifts or price pressure, these look broadly sustainable. Watch for trends where SG&A growth outpaces revenue growth; at present, operating profit growth roughly matched revenue, pointing to neutral operating leverage rather than improvement.

Growth Assessment

Top-line grew 10.7% YoY to 289.13, and operating income rose 10.0% to 47.48, indicating growth was volume/mix driven with stable cost structure. Net income increased 10.8% to 31.78, aided by minimal interest expense and a stable tax rate (33.9%). Operating margin at 16.4% was slightly lower by ~10 bps YoY; net margin remained ~11.0% and essentially flat. Gross margin printed 52.5%; without prior-year gross profit detail, the YoY gross margin change is unknown. The SG&A ratio was 37.6%, implying disciplined but not tightening cost control. Ordinary income tracked operating income closely, signaling limited dependency on non-operating items this period. Given robust liquidity and low leverage, the company has capacity to fund growth initiatives; however, absence of OCF and capex data limits our view on reinvestment intensity and cash-backed growth. Near-term outlook hinges on sustaining demand in core service lines and maintaining pricing; monitor AR trajectory (74.96) for signals on billing cycles and customer mix.

Financial Health

Liquidity is strong: current ratio 327.5% and quick ratio 327.5% comfortably exceed benchmarks, with cash and deposits of 109.78 covering current liabilities (61.55) by ~1.8x. Working capital stands at 140.04, and accounts receivable are 74.96; no inventories reported. Solvency is conservative: D/E 0.34x, long-term loans 3.44, and interest coverage ~580x; no warning thresholds breached (Current Ratio > 1.0, D/E < 2.0). Maturity mismatch risk is low, as current assets (201.59) materially exceed current liabilities (61.55). Equity base is substantial at 198.76 (owners’ equity 194.53), supporting resilience. No off-balance sheet obligations were disclosed in the provided data; absence of disclosure does not rule out leases or guarantees under JGAAP.

Cash Flow Quality

OCF, FCF, and capex were unreported, so cash conversion and FCF sustainability cannot be verified. As such, OCF/Net Income cannot be assessed versus the 0.8 threshold. Balance sheet indicators are supportive: cash 109.78 is significant, and leverage is minimal, which buffers timing swings in working capital. Receivables at 74.96 appear reasonable relative to sales, but without cash flow statements we cannot confirm working capital releases or build-ups, seasonality, or potential collection delays. No clear signs of working capital manipulation can be inferred from the limited dataset.

Dividend Sustainability

Calculated payout ratio is 43.3%, within a generally sustainable range (<60%) if earnings are cash-generative. However, with OCF and FCF unreported, we cannot confirm cash coverage of dividends or capex. The strong net cash position (cash 109.78 vs low debt) and retained earnings of 156.52 provide balance sheet capacity to sustain dividends in the near term. Dividend policy detail and DPS were unreported; monitor for guidance on payout framework and any link to earnings or FCF.

Risk Assessment

Business Risks:

• Margin pressure risk if SG&A growth outpaces revenue growth, given current SG&A ratio of 37.6%.
• Customer demand variability affecting utilization and pricing, with operating margin slightly compressing (~10 bps YoY).
• Execution risk in collections and billing cycles as AR stands at 74.96 with limited visibility into DSO trends.
• Industry-specific: exposure to telecom/service pricing dynamics and competitive intensity that could impact gross margin (52.5%).
• Potential tax-rate volatility (current effective tax rate 33.9%) affecting net margin.

Financial Risks:

• Cash flow visibility risk due to unreported OCF/FCF, limiting assessment of earnings quality.
• Potential working capital swings (AR-heavy model) that could temporarily pressure cash even with strong liquidity.
• Limited disclosure on lease liabilities or other off-balance sheet commitments under JGAAP.

Key Concerns:

• Inability to validate OCF/NI and FCF coverage for dividends and capex.
• Slight operating margin compression despite double-digit revenue growth.
• Dependence on maintaining high gross margin to support a 16.4% operating margin.

Investment Implications

Key Takeaways:

• Healthy growth with revenue +10.7% and net income +10.8% YoY; core operations drove results.
• Margins stable-to-slightly lower: OPM ~16.4% (-~10 bps YoY), NPM ~11.0% (flat).
• ROE strong at 16.0% on modest leverage (1.34x), indicating quality returns without balance sheet stretch.
• Liquidity and solvency are robust: current ratio 327.5%, D/E 0.34x, interest coverage ~580x.
• Earnings quality unverified due to missing OCF/FCF; monitor cash conversion closely.
• Dividend affordability looks reasonable at a 43.3% payout, but cash-based coverage is unknown.

Metrics to Watch:

• Operating cash flow and FCF (OCF/NI > 1.0 target).
• SG&A ratio versus revenue growth for operating leverage gains.
• Gross margin stability around 52.5%.
• Accounts receivable trend and implied DSO.
• Effective tax rate trajectory (currently 33.9%).
• Capex and any M&A/lease commitments affecting cash needs.

Relative Positioning: Within its services niche, the company combines double-digit growth, stable margins, and low leverage, positioning it favorably on profitability and balance sheet strength; the principal relative gap is disclosure on cash flows, which tempers confidence in earnings quality versus peers with fuller CF transparency.

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