KANAMOTO CO.,LTD. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥213.27B
• Operating Income: ¥17.37B
• Net Income: ¥9.74B
• EPS: ¥314.15

Income Statement

Balance Sheet

Cash Flow Statement

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

Kanamoto (9678) delivered solid FY2025 Q4 full-year results under JGAAP, with revenue of ¥213.3bn (+2.9% YoY) and operating income of ¥17.37bn (+19.2% YoY), evidencing strong operating leverage. Gross profit reached ¥60.23bn, implying a gross margin of 28.2%, while operating margin improved to 8.1% from roughly 7.0% last year, a c.110 bps expansion. Ordinary income was ¥17.95bn and net income was ¥10.98bn (+21.8% YoY), translating to a net margin of 5.15%. EBITDA was ¥52.99bn (margin 24.8%), supported by sizable D&A of ¥35.63bn typical for a rental-heavy asset base. DuPont analysis shows ROE at 6.97% driven by a 5.15% net margin, 0.658x asset turnover, and 2.06x financial leverage. ROA (NI/Assets) is approximately 3.4%, consistent with a capital-intensive model. Cash generation was notably strong: operating cash flow (OCF) ¥47.42bn equates to 4.32x net income, with free cash flow (FCF) of ¥42.68bn after investing cash outflows of ¥4.73bn. The balance sheet appears healthy with total assets of ¥324.09bn and total equity of ¥157.46bn, implying an equity ratio of about 48.6% despite the reported 0.0% metric being undisclosed rather than zero. Liquidity is sound, with a current ratio of 136.5% and a quick ratio of 134.7%, underpinned by low inventories given the nature of the business. Solvency indicators are strong: debt-to-equity is 1.10x (liabilities/equity), and interest coverage is 101.6x, reflecting minimal interest burden (¥0.17bn). The implied effective tax rate, based on income tax of ¥5.26bn and net income of ¥10.98bn, is approximately 32–33%, indicating the 0.0% metric shown is an undisclosed placeholder. Cash & equivalents and share-related figures are not disclosed in this set and should not be interpreted as zero values. From a quality-of-earnings perspective, cash conversion is excellent and supported by non-cash D&A and working capital discipline. Operating momentum appears underpinned by demand resilience in construction/rental, with improved profitability outpacing top-line growth. While dividends are shown as zero (undisclosed), FCF coverage would be ample for a modest payout based on this year’s cash generation. Overall, Kanamoto’s FY2025 profile combines margin expansion, robust OCF, and moderate leverage, but the analysis is constrained by several undisclosed items (equity ratio metric, cash, DPS, and share data).

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.15%
• asset_turnover: 0.658
• financial_leverage: 2.06
• calculated_ROE: 6.97%
• commentary: ROE of 6.97% is chiefly driven by improved operating efficiency and stable leverage. Asset turnover of 0.658x is reasonable for an equipment rental model, while a 5.15% net margin marks improved underlying profitability. margin_quality:
• gross_margin: 28.2%
• operating_margin: 8.1%
• EBITDA_margin: 24.8%
• net_margin: 5.15%
• drivers: ['YoY operating margin expansion of ~110 bps (from ~7.0% to 8.1%) on better mix, pricing/utilization, and cost control.', 'Low interest burden (¥171m) supports ordinary and net margins.', 'Tax expense normalized (~32–33% implied ETR), suggesting limited one-offs at the bottom line.'] operating_leverage:
• evidence: Operating income grew +19.2% vs revenue +2.9%, indicating meaningful operating leverage.
• interpretation: Fixed-cost absorption and scale benefits in SG&A likely contributed. High D&A reflects capital intensity but does not impede EBITDA growth.

Growth Assessment

revenue_sustainability: Top-line grew 2.9% to ¥213.3bn, indicating stable demand in core rental markets. Given the macro sensitivity of construction activity, growth appears modest but resilient. profit_quality: Operating income growth of 19.2% outpaced revenue, and EBITDA margin is strong at 24.8%. Limited interest expense and a normalized tax burden support the quality of bottom-line growth. outlook: Assuming steady construction activity and maintained fleet utilization/pricing, mid-single-digit revenue growth with continued focus on cost efficiency can sustain margins. Watch for capex cycles and resale markets for used equipment, which can influence near-term growth and profitability.

Financial Health

liquidity:

• current_ratio: 136.5%
• quick_ratio: 134.7%
• working_capital: ¥33.86bn
• commentary: Strong near-term liquidity with minimal inventory reliance; receivables collection and payables discipline likely aided OCF. solvency:
• debt_to_equity: 1.10x (liabilities/equity)
• interest_coverage: 101.6x
• equity_ratio_inferred: 48.6% (equity/assets), despite reported 0.0% being undisclosed
• commentary: Balance sheet appears conservatively financed with ample debt service capacity. capital_structure: Assets ¥324.09bn vs equity ¥157.46bn and liabilities ¥173.14bn indicate moderate leverage. Low interest expense implies favorable funding terms or a greater mix of non-interest-bearing liabilities.

Cash Flow Quality

earnings_quality: OCF/Net Income of 4.32x (¥47.42bn/¥10.98bn) denotes strong cash conversion, supported by sizeable non-cash D&A (¥35.63bn) and likely positive working capital movements. FCF_analysis: FCF of ¥42.68bn (OCF ¥47.42bn + Investing CF -¥4.73bn) is robust. Given the capital-intensive nature of rental fleets, the modest net investing outflow suggests either disciplined capex, asset disposals offsetting purchases, or timing effects. working_capital: Inventories are minimal (¥1.63bn), implying most capital is in PP&E. Continued monitoring of receivables turnover and payables terms is important for sustaining OCF.

Dividend Sustainability

payout_ratio_assessment: The reported DPS and payout ratio are undisclosed placeholders (0.00). On fundamentals, a payout would be well covered by earnings given net income of ¥10.98bn. FCF_coverage: With FCF at ¥42.68bn, potential dividends would have strong coverage if initiated or continued. However, fleet renewal capex requirements can be lumpy and should be considered before committing to higher payouts. policy_outlook: No policy disclosed in this dataset. For a capital-intensive rental business, a balanced approach between reinvestment (fleet refresh/expansion) and shareholder returns is typical; visibility depends on capex plans and demand outlook.

Risk Assessment

Business Risks:

• Cyclical exposure to construction and civil engineering activity in Japan and offshore markets.
• Rental rate pressure and competitive intensity affecting utilization and pricing.
• Capex cyclicality for fleet expansion/renewal and potential mismatch with demand.
• Residual value risk on used equipment and secondary market pricing.
• Supply chain constraints for equipment procurement and parts.
• Labor availability and safety/compliance requirements on job sites.
• Project delays or cancellations due to weather, disasters, or public budget shifts.

Financial Risks:

• Potential increase in interest rates raising funding costs from currently low levels.
• Working capital swings tied to receivables collection from contractors.
• Capex spikes reducing FCF in certain years despite healthy EBITDA.
• Impairment risk if utilization declines, affecting PP&E and margins.
• Tax rate variability relative to implied ~32–33% depending on credits/one-offs.

Key Concerns:

• Sustainability of margin gains if demand softens or pricing competition intensifies.
• Visibility on capex plans and net investing needs given modest reported investing outflow this year.
• Data gaps on cash position, share count, and dividend details limiting per-share and payout analysis.

Investment Implications

Key Takeaways:

• Solid top-line growth (+2.9% YoY) with outsized operating income growth (+19.2%), demonstrating operating leverage.
• Healthy profitability: operating margin 8.1%, EBITDA margin 24.8%, net margin 5.15%.
• Strong cash generation: OCF ¥47.42bn (4.32x NI) and FCF ¥42.68bn.
• Conservative balance sheet: inferred equity ratio ~48.6%, interest coverage >100x.
• ROE 6.97% supported by improved margins and moderate leverage; ROA ~3.4%.
• Dividend metrics undisclosed; fundamentals suggest capacity for distributions subject to capex needs.

Metrics to Watch:

• Utilization rates and rental pricing trends.
• Capex vs. depreciation (fleet growth/refresh), and net investing cash flows.
• OCF/Net income ratio and working capital days (DSO/DPO).
• EBITDA and operating margin trajectory vs. peers.
• Leverage (liabilities/equity) and interest coverage amid rate shifts.
• Effective tax rate normalization and any extraordinary gains/losses.

Relative Positioning: Within Japan’s equipment rental landscape, Kanamoto exhibits robust cash generation and conservative leverage, which position it favorably to weather cycles and invest in fleet, though sustaining margin gains will hinge on utilization and pricing discipline.

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