MT GENEX CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.10B
• Operating Income: ¥167M
• Net Income: ¥113M
• EPS: ¥99.84

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

Revenue reached ¥2,102 million in FY2026 Q2, up 11.9% YoY, indicating solid top-line momentum. Despite this, operating income declined 6.4% YoY to ¥167 million, pointing to margin compression likely driven by higher SG&A or a less favorable mix. Gross profit was ¥476.9 million, implying a gross margin of 22.7%, while the operating margin settled at 7.9%, a notable gap that highlights meaningful overhead intensity. Ordinary income of ¥183 million exceeded operating income, suggesting healthy non-operating contributions. Net income was ¥107 million, with a net margin of 5.1%, and EPS of 99.84. DuPont analysis shows ROE of 2.55%, driven by modest net margin (5.09%), low asset turnover (0.411x), and conservative leverage (1.22x), implying limited financial gearing. Liquidity appears exceptionally strong: current assets of ¥4,563 million versus current liabilities of ¥631 million yield a current ratio of 7.23x and sizable working capital of ¥3,932 million. Solvency is robust, with total liabilities at ¥993 million and total equity at ¥4,192 million; implied equity ratio is approximately 81.9% (equity/assets), despite a reported 0.0% figure which reflects non-disclosure in XBRL labels rather than the economic reality. Operating cash flow of ¥216.7 million exceeds net income (OCF/NI of 2.03x), indicating good earnings quality and cash conversion in the period. Interest expense is negligible at ¥0.2 million, yielding an excellent interest coverage of ~807x. EBITDA of ¥176.4 million (margin 8.4%) underscores that most of the earnings gap versus gross profit stems from SG&A rather than depreciation burden (D&A only ¥9.4 million). The company reported no dividends (DPS ¥0, payout 0%), and financing cash outflow of ¥103.1 million likely reflects debt reduction or other capital transactions, not dividend payments. Investing cash flow, cash and equivalents, inventories, and share counts are shown as zero, which reflect unreported items rather than actual zeros; this limits certain assessments (e.g., precise free cash flow and per-share balance metrics). Overall, the business shows healthy revenue growth, strong liquidity and solvency, and high cash conversion, offset by softer operating margins and modest ROE due to low asset turnover and conservative leverage. Near-term focus should be on cost discipline to protect margins while sustaining growth. The quality of earnings appears solid, but the sustainability of non-operating gains and the drivers of SG&A inflation warrant monitoring.

Profitability Analysis

ROE_decomposition: ROE 2.55% = Net margin 5.09% × Asset turnover 0.411 × Financial leverage 1.22. The primary constraint on ROE is low asset turnover and conservative leverage; margin is mid-single digit. margin_quality: Gross margin 22.7% (¥476.9m/¥2,102m) and operating margin 7.9% (¥167m/¥2,102m) indicate a ~1,488 bps spread attributable largely to SG&A. Estimated SG&A is ~¥310.0m (~14.7% of sales). EBITDA margin is 8.4%, only ~50 bps above operating margin, consistent with low D&A intensity (¥9.4m). Net margin is 5.1%, helped by positive non-operating income. operating_leverage: Revenue grew 11.9% YoY while operating income fell 6.4% YoY, suggesting negative operating leverage in the period due to rising fixed costs or mix/price pressure. With D&A low, the leverage effect is driven mainly by SG&A scaling.

Growth Assessment

revenue_sustainability: Top-line growth of 11.9% YoY is solid; without order/backlog or segment detail, sustainability cannot be fully assessed, but current momentum appears favorable. profit_quality: Ordinary income (¥183m) exceeds operating income (¥167m), implying reliance on non-operating gains (e.g., financial income). Core operating profitability softened YoY, indicating potential pressure from SG&A or pricing. Tax expense of ¥78.3m versus ordinary income implies a high effective tax burden in practice, though the computed rate metric shows 0.0% due to disclosure limitations. outlook: If cost normalization occurs and revenue momentum persists, operating margins could stabilize; absent cost control, ROE is likely to remain subdued given low asset turnover and conservative leverage.

Financial Health

liquidity: Current assets ¥4,563.2m vs. current liabilities ¥631.0m; current ratio 7.23x and quick ratio 7.23x (inventories unreported). Working capital is ¥3,932.2m, indicating ample short-term liquidity. solvency: Total liabilities ¥992.7m vs. equity ¥4,192.0m; debt-to-equity ~0.24x. Implied equity ratio ≈ 81.9% (¥4,192m/¥5,118m), reflecting a very conservative balance sheet. capital_structure: Low leverage with minimal interest expense (¥0.2m) and very high interest coverage (~807x). The structure favors resilience over ROE enhancement.

Cash Flow Quality

earnings_quality: OCF ¥216.7m vs. net income ¥107.0m yields OCF/NI of 2.03x, indicating strong cash conversion and low accrual risk this period. FCF_analysis: Investing cash flow is unreported (shown as 0), so FCF cannot be reliably calculated; the presented FCF of 0 reflects missing data rather than economic zero. Given positive OCF and modest D&A, underlying FCF generation is likely positive absent large capex. working_capital: Strong current asset base and positive OCF suggest supportive working capital dynamics; detailed drivers (receivables, payables, inventories) are not disclosed, limiting granularity.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is reported at 0% with DPS ¥0. Without a disclosed dividend policy, no assessment of target payout can be made. FCF_coverage: FCF is reported as 0 due to unreported investing cash flows, so coverage cannot be computed. Given positive OCF and low leverage, future capacity to fund dividends appears plausible if capex needs are modest. policy_outlook: With conservative balance sheet and strong liquidity, the company has flexibility, but current emphasis appears to be on balance sheet strength over distributions.

Risk Assessment

Business Risks:

• Margin compression from rising SG&A or pricing pressure despite revenue growth
• Dependence on non-operating income to bridge from operating to ordinary profit
• Potential project/customer concentration risk (not disclosed)
• Macroeconomic sensitivity affecting demand and pricing
• Limited disclosure on inventories, capex, and segment mix complicates assessment

Financial Risks:

• Low asset turnover constraining ROE
• Potential volatility in effective tax expense
• Information gaps on cash and investing flows hinder cash runway and capex visibility
• Small absolute interest expense implies limited hedging if rates rise on any future borrowings

Key Concerns:

• Operating income declined 6.4% YoY despite 11.9% revenue growth
• ROE at 2.55% is modest given the balance sheet strength
• High reliance on SG&A efficiency to protect margins
• Lack of reported investing cash flows and cash balance

Investment Implications

Key Takeaways:

• Top-line growth of 11.9% YoY but negative operating leverage
• Healthy gross margin (22.7%) with operating margin at 7.9%; SG&A ~14.7% of sales
• Strong liquidity (current ratio 7.23x) and low leverage (D/E ~0.24x)
• High earnings quality with OCF/NI at 2.03x
• Modest ROE (2.55%) due to low turnover and conservative leverage
• Ordinary profit exceeds operating profit, indicating non-operating support

Metrics to Watch:

• SG&A-to-sales ratio and operating margin trend
• Gross margin stability and pricing/mix effects
• Asset turnover (sales/assets) and utilization efficiency
• Gap between ordinary and operating income (quality of earnings)
• OCF-to-NI and working capital movements (AR/AP/other current items)
• Disclosure of investing cash flows and capex intensity
• Tax expense trajectory and effective tax rate

Relative Positioning: The company appears defensively positioned with a very strong balance sheet and solid cash conversion, but delivers modest ROE relative to peers that leverage higher asset turnover or moderate gearing; margin discipline will be key to improving profitability without sacrificing financial resilience.

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