SENSHU ELECTRIC CO.,LTD. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥135.59B
• Operating Income: ¥8.95B
• Net Income: ¥7.61B
• EPS: ¥387.63

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

Sensen Denyo Co., Ltd. (TSE: 9824) delivered FY2025 Q4 (full-year) results with resilient cash generation amid modest top-line softness and margin compression. Revenue was 1,355.91, down 0.4% YoY, reflecting a largely flat demand backdrop. Gross profit reached 211.45, yielding a gross margin of 15.6%, while SG&A was 107.95 (7.96% of sales), resulting in operating income of 89.52, down 13.5% YoY and an operating margin of approximately 6.6%. Ordinary income was 92.72 (-13.8% YoY), with net non-operating income modestly positive; interest burden remains de minimis. Profit before tax rose to 111.10, implying notable extraordinary gains (~18.4), while net income was 67.17 (-11.4% YoY). The effective tax rate was 31.5%, broadly consistent with statutory norms. On balance sheet strength, total assets were 1,110.02 and total equity was 589.23, implying a calculated equity ratio of about 53.1% despite the equity ratio being unreported in XBRL. Liquidity is strong with current assets of 794.42 against current liabilities of 539.20 (current ratio 147.3%); cash and deposits of 305.13 exceed reported short-term loans of 3.81 by a large margin, indicating a solid net cash position. Operating cash flow was robust at 94.36, with investing outflows of 38.59 and financing outflows of 37.55; free cash flow (OCF + investing) was 55.77, well covering shareholder returns including 13.65 in share repurchases. DuPont-calculated ROE was 11.4% (net margin 5.0%, asset turnover 1.222x, financial leverage 1.88x), consistent with the reported ROE figure. EBITDA was 95.78, with an EBITDA margin of 7.1%, and interest coverage was exceptionally high at 2,238x, underscoring low financial risk. Comprehensive income of 70.09 exceeded net income, likely due to valuation gains in OCI (e.g., on investment securities), which are non-cash. Reported XBRL ratios for operating margin and ROA-ordinary income appear anomalously low relative to calculated figures, suggesting tagging or definition differences; we rely on calculated metrics where available. Overall, the company shows steady revenue resilience, pressured operating margins, but excellent cash generation and a fortress balance sheet supportive of ongoing shareholder returns. Data gaps remain in inventory, detailed SG&A components, and dividends, which constrain granularity in cost and payout analysis. We interpret zeros as unreported per the provided instruction and analyze only disclosed non-zero metrics.

Profitability Analysis

ROE_decomposition: Calculated ROE is 11.4% from DuPont: net profit margin 5.0% x asset turnover 1.222 x financial leverage 1.88x. This indicates moderate profitability driven by efficient asset use and moderate leverage, with margin compression being the primary headwind YoY. margin_quality: - Gross margin: 15.6% (211.45 / 1,355.91). - SG&A ratio: 7.96% (107.95 / 1,355.91). - Operating margin: ~6.6% (89.52 / 1,355.91), down YoY (operating income -13.5% vs. sales -0.4%), implying negative operating leverage and/or mix/price pressure. - EBITDA margin: 7.1%. - Net margin: 5.0%. Ordinary income and net income were supported by modest non-operating gains and significant extraordinary gains, implying core margin is lower than pretax margin suggests. operating_leverage: With revenue down 0.4% and operating income down 13.5%, decremental operating leverage was high, indicating fixed cost drag and/or gross margin pressure. D&A is small (6.26), so margin moves largely reflect gross profit and SG&A dynamics rather than depreciation swings.

Growth Assessment

revenue_sustainability: Revenue was essentially flat (-0.4% YoY), suggesting stable underlying demand despite sectoral cyclicality. Given the company’s exposure to electrical components and distribution, volumes may have been steady while pricing/mix softened. profit_quality: Core profit (operating income 89.52) declined faster than sales, pointing to margin headwinds. Ordinary income benefited from non-operating income (net +4.1) and pretax profit included sizeable extraordinary gains (+18.4), which are non-recurring and inflate headline growth. outlook: Absent a visible recovery in gross margin or fixed cost absorption, earnings growth will depend on demand normalization in key end-markets and disciplined pricing. Strong cash and negligible interest burden provide flexibility, but near-term profit trajectory hinges on mix and gross spread recovery rather than volume alone.

Financial Health

liquidity: Current assets 794.42 vs current liabilities 539.20 yields a 147.3% current ratio. Quick liquidity using disclosed components (cash + AR) is approximately 1.06x (569.64 / 539.20), though true quick ratio is uncertain due to unreported inventories; liquidity is nonetheless sound given 305.13 in cash. solvency: Total liabilities 568.56 vs equity 589.23 implies a liabilities-to-equity ratio of 0.96x and a calculated equity ratio near 53.1% (589.23 / 1,110.02). Interest-bearing debt disclosure is incomplete, but at least 3.81 in short-term loans suggests a net cash position of roughly 301+ excluding any unreported long-term debt. capital_structure: Financial leverage from DuPont is 1.88x (assets-to-equity), reflecting moderate leverage primarily from operating liabilities (not debt). Interest expense is minimal (0.04), and interest coverage is extremely high (2,238x), indicating very low financial risk.

Cash Flow Quality

earnings_quality: OCF/Net income is 1.40x, indicating earnings are well-supported by cash conversion. Comprehensive income exceeded net income (70.09 vs 67.17), likely due to OCI gains, which are non-cash and do not detract from core cash quality. FCF_analysis: Operating CF of 94.36 and investing CF of -38.59 yield free cash flow of 55.77. Capex was 18.82, implying the bulk of investing CF was capex plus additional investments (e.g., securities or M&A). FCF was more than sufficient to fund buybacks of 13.65 and likely dividends. working_capital: Working capital is 255.22. Accounts receivable is 264.51; inventory is unreported, limiting DSO/DIO analysis. Given the positive OCF, working capital management appears disciplined despite the flat revenue environment.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 34.8%, consistent with a balanced distribution policy; reported payout (0.3%) appears to reflect tagging differences and is not relied upon. FCF_coverage: FCF coverage of dividends is 2.38x, indicating strong headroom. Cash on hand (305.13) further underpins sustainability. policy_outlook: While DPS is unreported, the combination of stable earnings, robust OCF, and net cash suggests capacity to maintain distributions; however, near-term dividend growth would sensibly track recovery in core operating margin.

Risk Assessment

Business Risks:

• End-market cyclicality in factory automation, electronics, and automotive wiring demand impacting volumes and pricing.
• Commodity price volatility (e.g., copper) affecting input costs and reported sales values for cables.
• Mix and pricing pressure compressing gross margin, as evidenced by operating income decline despite flat sales.
• Supply chain disruptions and lead-time variability affecting availability and working capital.
• Customer concentration risk typical for distribution models (specific exposure not disclosed).
• Competitive intensity among electrical component distributors leading to price-based competition.

Financial Risks:

• Potential inventory risk (levels unreported) if demand softens further, impacting cash conversion.
• Reliance on extraordinary gains in FY for pretax boost; these are non-recurring and could reverse.
• Valuation fluctuations in investment securities (31.39) affecting OCI and comprehensive income.
• Incomplete visibility on long-term debt (unreported), though current data imply net cash.

Key Concerns:

• Negative operating leverage with operating profit down 13.5% on a 0.4% sales decline.
• Dependence on extraordinary gains to lift pretax profit, masking core margin pressure.
• Unreported inventory and SG&A detail limit insight into cost structure and working capital risk.

Investment Implications

Key Takeaways:

• Core profitability weakened: operating margin ~6.6% with operating income -13.5% YoY on flat sales.
• Cash generation strong: OCF 94.36 and FCF 55.77 support shareholder returns and balance sheet strength.
• Balance sheet robust: equity ratio ~53%, large net cash, negligible interest burden.
• ROE a solid 11.4% driven by reasonable asset turnover (1.222x) and moderate leverage (1.88x).
• Extraordinary gains (~18.4) inflated pretax profit; underlying run-rate earnings are lower.
• Shareholder returns ongoing with 13.65 in buybacks; payout ratio ~35% appears manageable.

Metrics to Watch:

• Gross margin trajectory and price/mix in core cable and components lines.
• Operating margin and decremental margins vs. sales movements.
• Working capital intensity: AR and (when disclosed) inventory levels and turnover.
• Order trends and backlog as indicators of demand normalization.
• OCF/Net income ratio to confirm earnings quality durability.
• Extraordinary and non-operating items to isolate core earnings trend.
• Capital allocation: capex vs. buybacks/dividends given ample cash.

Relative Positioning: Within Japanese electrical component distributors, the company exhibits above-average balance sheet strength and cash conversion, with mid-teens gross margins and solid ROE, but is currently facing margin headwinds and negative operating leverage relative to peers with improving mix or stronger pricing power.

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