Striders Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.91B
• Operating Income: ¥98M
• Net Income: ¥60M
• EPS: ¥6.95

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 mixed quarter with clear profitability improvement but weak cash conversion and sub-par capital efficiency. Revenue grew 2.5% YoY to 39.09, while operating income surged to 0.98 (+257% YoY), lifting operating leverage meaningfully. Net income reached 0.59 (+129.9% YoY), supported by better operating performance and modest non-operating gains (0.35) exceeding non-operating expenses (0.15). Operating margin improved to 2.5%, and net margin reached 1.5%, indicating better cost discipline versus last year. Based on growth rates, we estimate operating margin expanded by roughly 179 bps YoY and net margin by about 84 bps. Gross margin is 28.6%, highlighting an improved mix/price-cost balance, though prior-year gross margin was not disclosed. Earnings quality is a concern: operating cash flow was -0.17 versus net income of 0.59 (OCF/NI -0.29x), implying profit not yet translating into cash. EBITDA was 1.51 with interest expense of 0.14, yielding a healthy coverage of ~6.9x, but Debt/EBITDA implied leverage is high at ~11.9x, reflecting small EBITDA scale against long-term loans (17.58). Liquidity is strong (current ratio 3.84x; quick ratio 3.67x) backed by cash of 22.46, and maturity risk appears contained near term given short-term loans of only 0.30. ROE is low at 2.2% on DuPont, constrained by a thin 1.5% net margin and an asset turnover of 0.68 despite moderate leverage of 2.15x. ROIC is 3.0%, below a 5% warning threshold, implying value-dilutive growth unless returns improve. Non-operating income is a meaningful contributor this quarter, and ordinary income rose 123.5% YoY to 1.19, though PBT is 0.89 after non-recurring items. The effective tax rate is 33.4%, within a normal range. The payout ratio is shown as 82.3%, which looks elevated versus the company’s cash generation this half. Forward-looking, sustaining margin gains and converting earnings into cash will be key, alongside improving ROIC toward cost of capital. We see solid balance sheet liquidity as a buffer, but execution on cash conversion and disciplined capex will determine dividend sustainability and deleveraging capacity.

Profitability Analysis

ROE decomposition (DuPont): ROE 2.2% = Net Profit Margin (1.5%) × Asset Turnover (0.682) × Financial Leverage (2.15x). The biggest driver of YoY improvement is the profit margin, with operating income up +257% YoY on modest +2.5% revenue growth; we estimate operating margin expansion of ~179 bps and net margin expansion of ~84 bps. Business reason: SG&A grew slower than gross profit this half (SG&A 10.20 vs gross profit 11.19), yielding positive operating leverage; non-operating income (0.35, including interest income 0.11) also supported ordinary profit. Sustainability: margin gains appear largely operational (better mix/scale) and could be partly sustainable if cost control holds; however, the cash conversion shortfall and reliance on non-operating items lower confidence in durability. Asset turnover at 0.68 reflects relatively asset-heavy structure (notably long-term loans-financed assets) limiting efficiency; improvement would require either higher throughput or asset rationalization. Financial leverage at 2.15x is moderate and not the main ROE driver; with ROIC at 3.0%, incremental leverage will not help unless margins/turnover improve. Flagged trends: SG&A detail is unreported, but the sharp OI growth versus modest revenue suggests SG&A growth < revenue growth this half; we caution that sustaining this spread may be challenging without continued top-line growth.

Growth Assessment

Revenue growth was modest (+2.5% YoY to 39.09) but translated into strong profit growth as operating income rose to 0.98 (+257% YoY) and ordinary income to 1.19 (+123.5% YoY). Net income increased to 0.59 (+129.9% YoY), with net margin improving to 1.5%. Operating margin is now ~2.5%, up an estimated ~179 bps YoY, reflecting operating leverage from gross profit of 11.19 against SG&A of 10.20. Non-operating income (0.35) contributed materially, indicating that a portion of profit growth is non-core. EBITDA reached 1.51 (margin ~3.9%), showing early operating improvement but still a low absolute margin. With ROIC at 3.0% (below the 5% warning threshold), the quality of growth remains a concern unless returns rise. Forward outlook hinges on sustaining cost discipline, improving cash conversion (OCF was negative), and scaling core businesses to enhance asset turnover. Near-term growth quality is mixed: improved margins are positive, but reliance on non-operating items and negative OCF temper the outlook.

Financial Health

Liquidity is strong: current ratio 3.84x and quick ratio 3.67x, with cash and deposits of 22.46 comfortably exceeding current liabilities of 10.10; no warning on Current Ratio (<1.0) or D/E (>2.0). Capital structure: Debt-to-Equity 1.15x is moderate; long-term loans total 17.58 while short-term loans are 0.30, limiting near-term refinancing pressure. Maturity mismatch risk appears low given high cash and limited short-term debt; however, the heavy tilt to long-term debt coupled with low EBITDA implies sensitivity to earnings volatility. Interest coverage is solid at ~6.9x (OI 0.98 / interest 0.14), but Debt/EBITDA is high (~11.9x), suggesting leverage risk if EBITDA weakens. Off-balance sheet obligations were not disclosed; no information on guarantees, leases by type, or contingent liabilities in the provided data.

Cash Flow Quality

OCF was -0.17 against net income of 0.59, yielding OCF/NI of -0.29x, which is a clear quality flag (<0.8). Working capital dynamics are not disclosed in detail, but negative OCF alongside rising earnings suggests possible increases in receivables/inventories or timing effects; we cannot confirm manipulation without detail. Capex was -0.61; while total investing CF is unreported, the combination of negative OCF and capex indicates likely negative pre-financing FCF this half. Financing inflows of 2.31 funded cash needs, implying reliance on external capital. Sustainability: without improved cash conversion, the company may need continued financing to support operations and investments, which could constrain shareholder returns.

Dividend Sustainability

The calculated payout ratio is 82.3%, which is high versus the benchmark (<60%) and not well covered by operating cash flow (OCF negative). Total dividend paid and DPS are unreported, limiting precision; however, with likely negative pre-financing FCF (OCF -0.17 and capex -0.61), near-term dividend coverage from internal cash generation appears thin. Balance sheet cash (22.46) and strong liquidity provide a buffer, but maintaining a high payout alongside investment needs would require a swift improvement in cash conversion or lower capex. Policy outlook cannot be inferred from disclosures; watch for management guidance on payout and buybacks (small buyback of -0.01 this half).

Risk Assessment

Business Risks:

• Thin operating margin (2.5%) and low ROIC (3.0%) increase sensitivity to small revenue or cost shocks.
• Dependence on non-operating income (0.35) to supplement profits, indicating volatile profit composition.
• Execution risk in converting earnings into cash (OCF/NI -0.29x).
• Potential impairment risk associated with goodwill (0.71) and intangibles (0.89) if performance weakens.

Financial Risks:

• High Debt/EBITDA (~11.9x) despite solid interest coverage, exposing the company to earnings downturns.
• Reliance on financing cash inflows (2.31) to offset negative operating and investment cash flows.
• Interest rate risk on 17.58 of long-term loans; rising rates could compress coverage.
• Refinancing risk medium-term due to sizable long-term debt, albeit near-term liquidity is strong.

Key Concerns:

• Earnings quality flagged: OCF/NI -0.29x.
• Capital efficiency below threshold: ROIC 3.0% (<5%).
• Dividend sustainability at risk given an 82.3% payout ratio and weak cash generation.
• Limited disclosure granularity (SG&A breakdown, investing CF, dividend payments) constrains transparency.

Investment Implications

Key Takeaways:

• Profitability inflected positively with estimated ~179 bps operating margin expansion YoY on modest top-line growth.
• Cash conversion is weak (OCF negative), and pre-financing cash generation likely negative.
• Leverage looks heavy on an EBITDA basis (~11.9x), though liquidity and coverage are currently sound.
• ROE remains low at 2.2% due to a 1.5% net margin and modest asset turnover; ROIC at 3.0% underscores efficiency issues.
• Dividend capacity appears tight unless operating cash flow improves or capex eases.

Metrics to Watch:

• Operating cash flow and working capital movements (AR 1.25, inventory 1.74) for normalization.
• Operating margin and SG&A trajectory relative to gross profit.
• ROIC progression toward >5% and ideally toward cost of capital.
• Debt/EBITDA and interest coverage amid rate environment, and loan maturity profile.
• Non-operating income reliance and mix of recurring vs. one-off items.

Relative Positioning: Versus small-cap peers with similar multi-segment profiles, liquidity is stronger than average and interest coverage is adequate, but operating scale is small, leverage vs EBITDA is high, cash conversion is weaker, and ROIC is below peer medians—placing the company in a cautious middle-to-lower tier on quality pending improvement in cash generation and 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