Bell-Park Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥96.27B
• Operating Income: ¥4.50B
• Net Income: ¥2.58B
• EPS: ¥183.67

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

Verdict: Solid Q3 with double-digit top-line growth and stronger operating leverage, translating into higher profitability and robust returns. Revenue rose 12.4% YoY to 962.68, with gross profit at 203.40 and operating income up 25.4% YoY to 45.00. Net income increased 20.1% YoY to 30.95, and ordinary income climbed 25.5% YoY to 46.06. Operating margin improved to approximately 4.68%, supported by a modest increase in net margin to 3.21%. Based on growth math, operating margin expanded by roughly 49 bps YoY (from ~4.19% to ~4.68%), and net margin expanded by about 20 bps (from ~3.01% to ~3.21%). SG&A ratio stands at 17.4% of revenue, indicating disciplined overhead relative to sales growth. Non-operating items were small (income 0.90; expenses 0.08), with dividend income of 0.46; core operations drove results. Ordinary income exceeded operating income modestly, but profit before tax (38.43) suggests the presence of extraordinary losses (~7.6) that reduced pre-tax profits—likely one-time in nature under JGAAP. ROE is a healthy 11.9%, enabled by a 3.2% net margin, 2.22x asset turnover, and 1.68x financial leverage. Liquidity is strong (current ratio 205%, quick ratio 168%) with ample cash (129.64) and manageable payables (110.31); interest-bearing debt is minimal (long-term loans 0.55). Cash flow data are unreported, limiting earnings quality assessment; the OCF/NI ratio is not calculable. The payout ratio is a conservative 19.8%, implying headroom for dividends, though FCF coverage cannot be verified. Forward-looking, the combination of higher margins, strong balance sheet, and low financial risk supports resilience into Q4, but the lack of cash flow disclosure and the presence of extraordinary losses warrant monitoring. Mix improvements and scale efficiencies likely underpinned the margin gains, but sustainability will hinge on store-level productivity, commission environment, and inventory management.

Profitability Analysis

ROE decomposition (DuPont): ROE 11.9% = Net Profit Margin 3.2% × Asset Turnover 2.217 × Financial Leverage 1.68x. Among the components, the most notable change YoY appears to be net profit margin, inferred from operating income growth (+25.4%) outpacing revenue growth (+12.4%) and the estimated ~49 bps operating margin expansion; asset turnover also likely improved given double-digit sales growth and stable balance sheet size, but prior period assets are not disclosed. Business drivers: higher operating leverage (SG&A discipline relative to sales), potential improvement in sales mix (higher-value services/commissions), and controlled non-operating items. Sustainability: margin gains look partly structural (scale and cost discipline) but may include cyclical/tactical elements (promotion intensity, carrier commission terms), while the extraordinary loss in the quarter is likely non-recurring. Watchpoints: ensure SG&A growth does not re-accelerate above revenue growth in subsequent quarters, and monitor gross margin stability given handset/commission volatility.

Growth Assessment

Revenue grew 12.4% YoY to 962.68, outpacing the mobile retail peer average in recent quarters (qualitative benchmark). Operating income rose 25.4% to 45.00, evidencing positive operating leverage. Net income increased 20.1% to 30.95, despite extraordinary losses that pulled profit before tax below ordinary income. Gross margin stands at 21.1%; while prior gross margin is not disclosed, operating margin expansion implies better mix or cost efficiency. Non-operating contribution is minimal (non-operating income ratio 2.9%), indicating growth is primarily operational rather than financial. With ROE at 11.9% and calculated ROIC (provided metric) at 23.2%, returns are attractive; however, methodology for ROIC is not disclosed, so treat as an indicator rather than a strict KPI. Outlook drivers: store productivity, carrier commission frameworks, accessory and service attach rates, and inventory velocity into year-end. The trajectory suggests sustainable mid-teens profit growth if margin discipline holds, but absent OCF/FCF data, durability of growth cannot be fully validated.

Financial Health

Liquidity is strong: current ratio 205.0% and quick ratio 168.2%, well above benchmarks; no warning triggers (both >1.0). Solvency is conservative: total liabilities/equity is 0.68x, and interest-bearing debt is de minimis (long-term loans 0.55), with interest expense effectively zero, yielding an extremely high interest coverage ratio. Working capital is robust at 176.48, with current assets (344.57) comfortably exceeding current liabilities (168.09); cash (129.64) and receivables (145.92) more than cover payables (110.31), indicating low maturity mismatch risk. Equity is 258.99 (owners’ equity 100%), implying an equity ratio near 59.6% (Equity/Assets), consistent with low leverage. No off-balance sheet obligations are disclosed in the provided data.

Cash Flow Quality

OCF/Net Income is not calculable due to missing cash flow statements, limiting assessment of earnings conversion quality. Free cash flow and capex are unreported, so dividend and capex coverage from internal cash cannot be confirmed. Balance sheet composition (high cash, substantial receivables and inventories) suggests working capital swings can materially affect OCF; without period-to-period working capital details, detection of timing-related boosts (e.g., slower payables or faster receivables) is not possible. Given extraordinary losses this quarter, we note potential non-recurring impacts on PBT; however, non-operating cash implications are unclear. Overall, cash flow quality cannot be assessed; monitor OCF/NI (>1.0 desired) when disclosed.

Dividend Sustainability

The calculated payout ratio is 19.8%, comfortably below the 60% benchmark, indicating room for distribution while retaining earnings for growth. Cash reserves are ample (129.64) relative to minimal debt, supporting flexibility. However, DPS, dividends paid, and FCF coverage are unreported; thus, we cannot validate coverage from free cash flow. Retained earnings are substantial at 232.86, suggesting cumulative capacity to sustain dividends through cyclical volatility. Policy outlook: with ROE at 11.9% and low leverage, the company has capacity for stable or modestly rising dividends, contingent on OCF generation and working capital needs.

Risk Assessment

Business Risks:

• Carrier commission and pricing policy changes that can compress gross and operating margins
• Handset demand volatility and inventory obsolescence risk affecting gross profit
• Labor cost inflation and staffing constraints impacting SG&A efficiency at retail stores
• Sales mix shifts (devices vs. services/accessories) influencing gross margin
• Potential extraordinary items (impairments/one-offs) under JGAAP impacting earnings volatility

Financial Risks:

• Working capital volatility given high receivables (145.92) and inventories (61.89) could pressure OCF
• Limited visibility on cash flow (OCF/FCF unreported) constrains assessment of earnings quality
• Tax rate variability (effective 32.9%) can affect net margin if tax items fluctuate

Key Concerns:

• Extraordinary losses (~7.6) reduced profit before tax below ordinary income this quarter
• Absence of cash flow disclosure prevents validation of earnings-to-cash conversion
• Dependence on a few major carriers’ terms introduces margin sensitivity

Investment Implications

Key Takeaways:

• Strong topline growth (+12.4% YoY) with superior operating leverage (+25.4% OI)
• Margin expansion evidenced by ~49 bps improvement in operating margin and ~20 bps in net margin
• Healthy ROE at 11.9% with efficient asset use (2.22x turnover) and moderate leverage (1.68x)
• Balance sheet strength: current ratio 205%, minimal interest-bearing debt, ample cash
• One-time extraordinary losses present but core profitability remains intact
• Dividend capacity appears sound with a conservative ~20% payout, pending FCF confirmation

Metrics to Watch:

• OCF/Net Income and Free Cash Flow once disclosed
• Gross and operating margin trajectory by quarter
• SG&A ratio vs sales growth (operating leverage sustainability)
• Inventory turns and receivables days (working capital efficiency)
• Extent and nature of extraordinary items
• Effective tax rate stability

Relative Positioning: Within Japan’s mobile device retail/agency peer set, the company demonstrates above-peer balance sheet conservatism, improving operating leverage, and mid-teens ROE potential, positioning it favorably on quality and resilience; confirmation via cash flow disclosure would further strengthen the case.

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