NJ Holdings Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥2.50B
• Operating Income: ¥18M
• Net Income: ¥-16M
• EPS: ¥0.78

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

For FY2026 Q1, NJ Holdings (9421) delivered solid top-line growth with revenue of ¥2,500 million, up 18.0% YoY, but profitability remained thin. Gross profit was reported at ¥398 million, implying a gross margin of 15.9%, which leaves limited room to absorb operating costs. Operating income improved to ¥18 million (+193.5% YoY), evidencing operating leverage from higher scale, yet the operating margin remains low at 0.7%. Ordinary income was ¥13 million, reflecting the drag of interest expense (¥4.1 million) on already slender operating profit. Net income was ¥4 million (+245.4% YoY), translating to a net margin of 0.16%, in line with the provided DuPont component. The effective tax line shows a tax benefit (income tax of -¥27.4 million), which supported the bottom line; however, the calculated “effective tax rate 0.0%” suggests disclosure limitations rather than a normalized rate. Balance sheet strength is moderate: total assets are ¥3,744 million and equity is ¥1,709 million, implying an equity ratio of roughly 45.7% (the reported 0.0% equity ratio appears to be unreported rather than a true zero). Liquidity is adequate with a current ratio of 157.6% and working capital of ¥951 million, providing a buffer for operations. Leverage is manageable with debt-to-equity of 1.19x, but interest expense remains meaningful relative to operating profit, with interest coverage at 4.3x. The DuPont framework yields a low ROE of 0.23% (0.16% net margin × 0.668 asset turnover × 2.19 financial leverage), indicating that current returns do not yet cover the cost of equity. Reported cash flow figures (OCF, investing CF, financing CF, and cash balance) are all zero, which indicates non-disclosure for this quarter rather than actual zeros; therefore, free cash flow and cash conversion cannot be evaluated from the provided data. Dividend disclosure shows DPS 0.00 and payout 0.0%, likely reflecting non-disclosure or a no-dividend stance this quarter; sustainability cannot be assessed without cash flow data. Overall, Q1 shows healthy revenue momentum and improving operating profit from a low base, but earnings quality and sustainability are difficult to judge without cash flow details. The key to margin expansion will be controlling SG&A relative to gross profit. Monitoring the normalization of the tax rate and interest coverage will be important for assessing steady-state profitability. Given the low ROE and thin margins, execution on cost discipline and mix improvement are critical for improving shareholder returns.

Profitability Analysis

roe_decomposition:

• net_profit_margin: 0.16% (Net income ¥4m on revenue ¥2,500m)
• asset_turnover: 0.668x (Revenue ¥2,500m / Assets ¥3,744m)
• financial_leverage: 2.19x (Assets ¥3,744m / Equity ¥1,709m)
• calculated_roe: 0.23% (matches reported ROE 0.23%) margin_quality: Gross margin is 15.9% (reported). Operating margin is 0.7% (OI ¥18m / revenue ¥2,500m). Net margin is 0.16%. The tax line shows a benefit (income tax -¥27.4m), which flatters net margin for the quarter; a normalized tax rate would likely lower net margin absent further operational improvement. operating_leverage: YoY operating income grew +193.5% on +18.0% revenue growth, indicating positive operating leverage off a low base. SG&A intensity remains high: with gross profit of ¥398m and OI of ¥18m, implied SG&A is ~¥380m (~95% of gross profit), leaving limited margin for error. Further scale or cost control is needed to convert gross profit into operating profit.

Growth Assessment

revenue_sustainability: Top-line growth of +18.0% YoY suggests healthy demand and/or successful business development. Sustainability will depend on order pipeline, customer retention, and pricing power—data not disclosed this quarter. profit_quality: Profit improvement was achieved but remains thin and partially supported by a tax benefit. Interest expense is meaningful relative to operating profit, which caps ordinary income growth. Without cash flow disclosures, we cannot confirm cash conversion or the durability of earnings. outlook: If revenue momentum continues and SG&A is contained, operating margin can expand. However, normalization of the tax rate and continued interest burden may offset some gains. Priorities should include mix improvement to lift gross margin and ongoing cost discipline to enhance OPM.

Financial Health

liquidity: Current assets ¥2,603m vs. current liabilities ¥1,652m yield a current ratio of 157.6% and quick ratio of 157.6% (inventories unreported). Working capital is ¥951m, indicating a comfortable short-term buffer. solvency: Total liabilities ¥2,036m vs. equity ¥1,709m imply debt-to-equity of 1.19x. Interest coverage is 4.3x (OI ¥18m / interest ¥4.1m), acceptable but leaves little cushion if operating income softens. capital_structure: Equity ratio is approximately 45.7% (calculated from balance sheet), reflecting a balanced structure for a small-cap. Financial leverage at 2.19x is moderate.

Cash Flow Quality

earnings_quality: OCF, FCF, and cash balances are undisclosed this quarter (reported as 0 by the dataset). As such, we cannot assess accrual intensity, cash conversion, or sustainability of earnings. fcf_analysis: Free cash flow is not calculable due to missing OCF and capex (D&A not disclosed and EBITDA metrics are unreported). working_capital: Receivables/payables and inventory details are not provided; however, the positive working capital position suggests capacity to support operations. Monitoring AR days and AP terms is necessary to validate cash conversion.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0%, consistent with DPS 0.00, but these may reflect non-disclosure. With quarterly net income of ¥4m and no cash flow data, payout capacity cannot be reliably assessed. fcf_coverage: FCF coverage is unassessable this quarter due to undisclosed OCF and capex (reported 0 indicates missing data). policy_outlook: Given thin profitability and reliance on continued margin improvement, the company may prioritize reinvestment and balance sheet stability. Confirmation of dividend policy requires management disclosure in subsequent quarters.

Risk Assessment

Business Risks:

• Low operating margin leaves limited buffer against revenue or cost shocks
• Potential normalization of tax rate could reduce net income from the current level
• Competitive pressures could constrain pricing and gross margin
• Execution risk in SG&A control and mix improvement needed for margin expansion

Financial Risks:

• Interest coverage at 4.3x is sensitive to fluctuations in operating income
• Leverage of 1.19x debt-to-equity requires discipline if earnings volatility persists
• Cash flow visibility is limited due to non-disclosure of OCF and capex, complicating liquidity planning

Key Concerns:

• Sustainability of earnings without tax benefits
• Conversion of reported profits into operating cash flow
• Ability to raise operating margin from a low base through cost control and mix

Investment Implications

Key Takeaways:

• Strong revenue growth (+18% YoY) but profitability remains thin (OPM 0.7%, NPM 0.16%)
• ROE is low at 0.23% due to slim margins despite moderate leverage and reasonable asset turnover
• Interest expense is meaningful relative to operating income; maintaining coverage is crucial
• Equity ratio is healthy at ~45.7%, providing balance sheet resilience
• Cash flow and dividend visibility are limited due to undisclosed cash flow data

Metrics to Watch:

• Gross margin and SG&A-to-sales ratio (for operating leverage)
• Operating margin and ordinary income progression
• Interest coverage and debt-to-equity
• Operating cash flow, free cash flow, and AR/AP days once disclosed
• Effective tax rate normalization and impacts on net income

Relative Positioning: Versus small-cap peers, balance sheet strength (calculated equity ratio ~45.7%) and liquidity (current ratio ~1.58x) are adequate, but profitability and ROE lag due to low margins; sustained revenue growth and cost discipline are required to converge toward peer-level returns.

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