INNOTECH CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.60B
• Operating Income: ¥1.14B
• Net Income: ¥475M
• EPS: ¥43.79

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

Innotech Co., Ltd. (9880) reported FY2026 Q2 consolidated results under JGAAP showing steady top-line growth and strong operating leverage, but with weaker cash conversion and notable non-operating headwinds. Revenue rose 3.8% YoY to ¥21.6bn, with gross profit of ¥6.36bn (gross margin 29.4%), indicating resilient pricing/mix or cost control. Operating income increased 26.6% YoY to ¥1.14bn, expanding the operating margin to approximately 5.3%, evidencing positive operating leverage. Net income grew 25.1% YoY to ¥0.57bn, while the DuPont-based ROE was 2.24%, restrained by a modest net margin (2.66%) and relatively low asset turnover (0.44x). Ordinary income (¥0.75bn) trailed operating income, implying a sizable non-operating loss (approximately ¥0.39bn), likely from financial, FX, or equity-method items; interest expense was not disclosed. The balance sheet remains sound: current ratio is 155% and quick ratio 123%, with working capital of ¥10.54bn and total liabilities/equity at 0.81x, suggesting moderate leverage. Equity ratio was not disclosed in XBRL; however, assets of ¥49.1bn and equity of ¥25.7bn imply an equity-to-asset ratio around 52%, pointing to a conservative capital structure. Cash flow quality is the key weak point this period: operating cash flow was ¥0.17bn versus net income of ¥0.57bn (OCF/NI ≈ 0.30), likely reflecting a working capital build. Free cash flow was not disclosed, and investing cash flow data were not available; thus, true FCF coverage cannot be assessed. Financing cash outflow of ¥2.12bn suggests material shareholder returns or debt reduction, but the exact components were not disclosed. Depreciation and amortization totaled ¥0.68bn, consistent with asset intensity in distribution/EDA-related businesses. The effective tax burden calculated from disclosed figures is roughly 32–33%, despite a zero figure shown in the provided metrics panel. No dividend information was disclosed for the period (DPS and payout ratio show as zero due to non-disclosure), limiting assessment of capital return policy in this interim snapshot. Overall, fundamentals show improving profitability and ample liquidity, offset by weak cash conversion and non-operating losses. The outlook hinges on sustaining margin gains while normalizing working capital and reducing non-operating drags. Data gaps (cash balance, investing CF, DPS, share count) constrain precision, so conclusions focus on the available non-zero disclosures and internally consistent calculations.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 2.66% (¥574m / ¥21,601m)
• asset_turnover: 0.44x (¥21,601m / ¥49,075m)
• financial_leverage: 1.91x (Assets/Equity = ¥49,075m / ¥25,669m)
• calculated_ROE: ≈2.24% (matches provided DuPont figure) margin_quality:
• gross_margin: 29.4% (¥6,358m / ¥21,601m) — healthy for a technology trading/EDA business, indicating stable pricing and cost control
• operating_margin: ≈5.3% (¥1,137m / ¥21,601m) — improved YoY given 26.6% OI growth vs 3.8% revenue growth
• EBITDA_margin: 8.4% (EBITDA ¥1,816m)
• tax_burden_estimate: Effective tax rate ≈32.5% (¥276.5m / (¥574m + ¥276.5m)); note panel’s 0% is a placeholder
• non_operating_items: Ordinary income ¥752m vs OI ¥1,137m implies ~¥385m net non-operating loss, a notable drag on bottom line operating_leverage: Strong positive operating leverage evidenced by revenue +3.8% YoY vs operating income +26.6% YoY; suggests improved mix, operating efficiency, and/or cost discipline. Sustainability will depend on demand stability and continued SG&A control.

Growth Assessment

revenue_sustainability: Top-line growth of 3.8% YoY is modest but positive; consistent with gradual recovery in semiconductor-related and EDA tool demand. Visibility depends on order backlog and customer capex cycles, which were not disclosed. profit_quality: Margin expansion at gross and operating levels indicates improved mix or cost control. However, ordinary income lagging OI highlights dependence on non-operating swings (e.g., FX, financial income/expenses). outlook: If demand normalizes and non-operating losses abate, earnings growth can outpace sales due to operating leverage. Key watchpoints include inventory normalization, receivable collections, and FX volatility.

Financial Health

liquidity:

• current_ratio: 155.0%
• quick_ratio: 123.4%
• working_capital: ¥10,544,579,000
• commentary: Liquidity appears ample; current assets comfortably exceed current liabilities, supporting near-term obligations. solvency_capital_structure:
• total_assets: ¥49,075,000,000
• total_liabilities: ¥20,875,791,000
• total_equity: ¥25,669,000,000
• debt_to_equity: 0.81x (using total liabilities/equity as a proxy)
• equity_ratio_proxy: ≈52% (Equity/Assets), as equity ratio figure was not disclosed
• commentary: Moderate leverage and a strong equity buffer support solvency. Ordinary income shortfall vs OI suggests sensitivity to non-operating items rather than balance-sheet stress.

Cash Flow Quality

earnings_quality: OCF/Net income ≈0.30 (¥173m / ¥574m) is weak, indicating low cash conversion in the half. This likely stems from working capital investment (receivables and/or inventories) rather than earnings quality issues per se. FCF_analysis: Investing CF was not disclosed; therefore, FCF cannot be reliably computed despite a placeholder ‘0’. EBITDA (¥1.82bn) comfortably exceeds OCF, reinforcing the view that WC movements suppressed cash. working_capital_dynamics: Inventories at ¥6.05bn are significant; with sales growth modest, inventory management and receivable collections are critical to restoring cash conversion in H2.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio were not disclosed (zeros are placeholders). As such, payout sustainability cannot be assessed from this dataset. FCF_coverage: Not assessable given undisclosed investing cash flows; the reported ‘0.00x’ should not be interpreted as actual. policy_outlook: Financing cash outflow of ¥2.12bn may indicate shareholder returns (e.g., buybacks) or debt repayment, but composition is undisclosed. Clarity on capital allocation policy is required to evaluate long-term payout capacity.

Risk Assessment

Business Risks:

• Cyclical exposure to semiconductor end-markets and EDA-related spending
• Inventory obsolescence risk amid rapid technology cycles
• Supplier concentration and licensing dependencies with global semiconductor/EDA principals
• Customer credit risk in a slowing macro or sector downturn
• FX volatility (USD/JPY, EUR/JPY) affecting procurement and non-operating items

Financial Risks:

• Weak cash conversion this period (OCF/NI ≈0.30), indicating working capital sensitivity
• Non-operating losses reducing ordinary income and masking operating improvements
• Potential refinancing or liquidity risk if working capital needs spike (mitigated by strong current ratio)
• Data gaps on cash balance and investing CF limit transparency on funding flexibility

Key Concerns:

• Sustainability of operating margin gains if demand moderates
• Normalization of working capital to improve OCF in H2
• Reducing non-operating losses (FX, financial items) that weighed on ordinary income

Investment Implications

Key Takeaways:

• Solid operating leverage with operating income up 26.6% on 3.8% revenue growth
• Healthy gross and operating margins for the business model; EBITDA margin at 8.4%
• ROE at 2.24% remains subdued due to low net margin and asset turnover
• Liquidity is strong; leverage moderate with an implied equity ratio around 52%
• Cash flow conversion is weak this half; OCF only ~30% of net income
• Ordinary income materially below operating income due to non-operating losses
• Dividend and FCF data not disclosed, limiting capital return assessment

Metrics to Watch:

• OCF/Net income and operating cash flow trends
• Inventory and receivable turnover (days on hand, DSO)
• Ordinary income bridge (FX gains/losses, interest, equity-method results)
• Operating margin sustainability and SG&A efficiency
• Order/backlog trends and customer capex indicators
• Equity ratio and net cash position once cash and debt details are disclosed

Relative Positioning: Within Japan’s semiconductor trading/EDA distribution space, Innotech’s margins appear respectable with improving operating efficiency, but ROE trails peers that typically deliver mid to high single-digit ROE in upcycles. Balance sheet strength is a positive differentiator, while cash conversion and non-operating volatility are comparatively weaker points this period.

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