ASEED HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥13.55B
• Operating Income: ¥701M
• Net Income: ¥569M
• EPS: ¥46.19

Income Statement

Balance Sheet

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

Verdict: Aseed Holdings (9959) delivered a solid FY2026 Q2 with double-digit profit growth on modest top-line expansion, but liquidity remains tight and ROIC is below target. Revenue rose 5.1% YoY to 135.48, while operating income increased 12.2% to 7.01, demonstrating operating leverage. Ordinary income grew 14.4% to 8.36, aided by 1.74 of non-operating income, and net income advanced 16.7% to 5.69. Gross margin printed at 37.8%, operating margin at 5.2%, ordinary margin at 6.2%, and net margin at 4.2%. With revenue up 5.1% and operating profit up 12.2%, operating margin directionally expanded YoY, though precise basis point changes cannot be calculated from the provided data. The effective tax rate was 30.7%, consistent with a normalized burden. ROE stands at 7.5% based on a DuPont mix of 4.2% net margin, 0.667x asset turnover, and 2.69x financial leverage. Non-operating income accounted for a meaningful 30.6% ratio (as reported), supporting ordinary income beyond pure operations. On the balance sheet, equity was 75.65 versus total assets of 203.18, implying an equity ratio of roughly 37.3%. Liquidity is a key weak point: current ratio 0.86, quick ratio 0.75, and working capital negative at -13.38, reflecting reliance on short-term funding (short-term loans 25.30). Leverage is moderate-to-elevated with D/E at 1.69x, but interest coverage is strong at 26x, indicating manageable near-term serviceability. Cash flow data were not disclosed, so earnings-to-cash conversion cannot be assessed this quarter. ROIC is 4.4%, below the 5% warning threshold and well under a typical 7–8% target, suggesting capital efficiency improvement remains a priority. The calculated payout ratio is 42.7%, seemingly sustainable absent cash flow pressures, but confirmation awaits OCF/FCF disclosure. Forward-looking, continued cost control and mix improvements could sustain margin gains, yet liquidity management, working capital discipline, and ROIC enhancement are essential to underpin growth and dividends.

Profitability Analysis

ROE (7.5%) = Net Profit Margin (4.2%) × Asset Turnover (0.667x) × Financial Leverage (2.69x). The key contributor to YoY improvement appears to be net profit margin expansion, inferred from operating income (+12.2%) and net income (+16.7%) outpacing revenue (+5.1%), while no evidence suggests a step-change in asset turnover this quarter. Margin improvement likely stems from operating leverage (SG&A growth below gross profit growth) and support from non-operating income (1.74), which lifted ordinary income. Asset turnover at 0.667x reflects a relatively asset-heavy structure (noncurrent assets 123.14) and likely stable utilization; no direct evidence of acceleration or deceleration is provided. Financial leverage at 2.69x (assets/equity) provided a consistent tailwind to ROE but also raises balance-sheet risk if earnings volatility rises. Sustainability: operational margin gains can persist if pricing, product mix, and efficiency initiatives continue, but the contribution from non-operating income may be less predictable. Watch for SG&A discipline—only partial SG&A detail is disclosed, but with operating profit growth > revenue growth, implied operating leverage is positive; ensure SG&A growth does not re-accelerate beyond revenue in future quarters.

Growth Assessment

Top line expanded 5.1% to 135.48, a steady pace for a mid-sized consumer/food-beverage oriented operator. Operating income growth of 12.2% (to 7.01) and net income growth of 16.7% (to 5.69) indicate improved efficiency and/or mix, plus non-operating support. Gross profit was 51.15, implying solid absorption and possibly favorable procurement or pricing. Ordinary income rose to 8.36 with 1.74 non-operating income, suggesting a non-negligible contribution outside core operations. With margin expansion implied, the growth appears partly structural (cost control) and partly aided by non-operating items. Outlook hinges on sustaining demand, maintaining gross margin, and controlling SG&A in the face of wage and utility cost pressures. Given ROIC at 4.4%, incremental investments should be scrutinized for higher returns; organic productivity gains may be the safer growth lever near term. No guidance was provided in the data; absent OCF/FCF disclosure, growth quality cannot be fully validated.

Financial Health

Liquidity is weak: current ratio 0.86 (<1.0 warning) and quick ratio 0.75, with negative working capital of -13.38, implying reliance on short-term liabilities for funding operations. There is a maturity mismatch risk: current liabilities 93.41 exceed current assets 80.03, and short-term loans at 25.30 are sizable versus cash of 19.41. Solvency: total equity 75.65 vs total assets 203.18 implies an equity ratio ~37.3%; D/E is 1.69x—above a conservative 1.5x but below the explicit 2.0x warning threshold. Long-term loans are 28.36, indicating a balanced mix of short and long-term debt, but the bias to short-term financing heightens rollover risk. Interest coverage is strong at 25.96x (EBIT/interest), supporting near-term debt service. No off-balance-sheet obligations were disclosed in the provided data.

Cash Flow Quality

Operating cash flow, investing cash flow, financing cash flow, and capex were not reported, so OCF/Net Income and FCF cannot be assessed. Accordingly, earnings quality is unverified this quarter; we cannot confirm whether working capital consumed or released cash. Given negative working capital and elevated short-term borrowings, monitor for potential quarter-end working capital timing effects (e.g., payables management, receivable collection). Without OCF, we cannot judge FCF coverage of dividends or capex; this is a critical data gap.

Dividend Sustainability

The calculated payout ratio is 42.7%, which is within the generally sustainable range (<60%). However, OCF and FCF are unreported, preventing verification of cash coverage. With current ratio below 1.0 and reliance on short-term loans, dividend sustainment depends on stable operating cash generation and continued access to short-term funding. If ROIC remains at 4.4%, capital allocation should prioritize projects that lift returns before dividend growth. Policy signals were not disclosed; absent changes, the current payout looks manageable, contingent on cash flow delivery.

Risk Assessment

Business Risks:

• Margin pressure from input cost inflation (raw materials, utilities) and wage increases
• Competitive intensity in food/beverage distribution and vending/retail channels impacting pricing power
• Demand variability in consumer-facing channels that can affect volume and mix
• Execution risk on cost controls and SG&A efficiency sustaining margin gains
• Reliance on non-operating income components to support ordinary income

Financial Risks:

• Liquidity risk: current ratio 0.86 and negative working capital (-13.38)
• Rollover/refinancing risk due to short-term loans of 25.30
• Interest rate risk on floating-rate borrowings despite current high interest coverage
• Moderate-to-elevated leverage (D/E 1.69x) increases sensitivity to earnings shocks

Key Concerns:

• ROIC at 4.4% is below the 5% warning threshold, indicating weak capital efficiency
• Non-operating income (1.74) plays a material role (30.6% ratio), adding volatility to ordinary income
• Lack of cash flow disclosure prevents assessment of earnings quality and dividend coverage

Investment Implications

Key Takeaways:

• Solid profit growth: revenue +5.1%, operating income +12.2%, net income +16.7%
• Margins improved directionally; operating margin ~5.2%, net margin 4.2%
• Strong interest coverage (26x) offsets some leverage concerns
• Liquidity is the primary weak point: current ratio 0.86, working capital negative
• ROE 7.5% aided by leverage; ROIC 4.4% highlights need for better capital efficiency
• Non-operating income support is meaningful; quality and repeatability should be monitored

Metrics to Watch:

• Operating cash flow and free cash flow trends (OCF/NI >1.0 target)
• Working capital turns (AR and AP days, inventory days) and current ratio recovery toward >1.2
• Gross margin resilience and SG&A growth versus revenue growth
• ROIC trajectory toward >7% through margin and capital turnover improvements
• Debt mix and tenor (short-term vs long-term) and sensitivity to interest rates
• Shareholder returns policy (dividends and any buybacks) versus FCF

Relative Positioning: Versus domestic small-mid cap consumer/food-beverage peers, Aseed shows decent margin progress and strong interest coverage but lags on liquidity and ROIC. The balance sheet is serviceable yet dependent on short-term funding, and profitability quality would be better established with consistent operating cash flow generation.

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
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