Agratio Urban Design Inc

Agratio Urban Design Inc maintains a capital structure with a debt-to-equity ratio of 2.86, indicating a significant reliance on debt financing. The company's liquidity position is characterized as medium, with a current ratio of 1.66, suggesting it can cover short-term obligations but with limited buffer. Despite holding JPY 6.25 billion in cash and equivalents, the firm's long-term debt of JPY 17.12 billion results in a negative net cash position, raising concerns about long-term solvency.

Profitability metrics show a return on equity (ROE) of 13.75%, which is strong, but the return on assets (ROA) of 3.29% is relatively modest, indicating that the company is not efficiently utilizing its asset base to generate returns. The operating margin of 9.67% (calculated from operating income of JPY 1.29 billion on revenue of JPY 13.37 billion) is in line with industry norms, but the net profit margin of 6.16% (net income of JPY 824.39 million) suggests some pressure from operating expenses or interest costs.

The company's revenue is concentrated in a single business segment, with no disclosed geographic diversification. This lack of diversification increases exposure to regional economic downturns or regulatory changes. The absence of segment-specific data limits the ability to assess the performance of individual business lines or geographic regions.

Looking ahead, the company's revenue is projected to grow, with the current fiscal year expected to see a significant increase. However, the exact growth rate is not specified in the available data. The capital expenditure of JPY 2.55 million is minimal, suggesting a conservative approach to reinvestment. The company's operating cash flow is negative at JPY 588.5 million, which may necessitate continued reliance on financing activities to fund operations.

Risk factors include the company's high debt load and the resulting interest burden, which could limit financial flexibility. The risk assessment indicates a low probability of dilution, but the negative net cash position and high debt-to-equity ratio suggest potential refinancing risks. The company's liquidity risk is moderate, but the credit risk is elevated due to the high leverage.

Recent events, as reflected in the latest financial filings, show a strong EPS of 274.64 JPY and a revenue of 30.74 billion JPY, which are in line with analyst estimates. These figures suggest that the company is performing well in the current fiscal year.

Net income grew at a 10.3% CAGR over four years, indicating consistent profitability expansion despite revenue volatility.

Capex intensity is minimal at -0.02% of revenue, well above the 75th percentile of peers, preserving capital.

The debt-to-equity ratio of 2.86 places Agratio in the bottom quartile, signaling severe leverage risk versus peers.

High credit risk flags suggest potential solvency concerns, exacerbated by long-term debt rising to 22.9 billion JPY.

Cash conversion of -0.71 is significantly below the 0.29 cohort median, reflecting poor earnings quality.

Revenue ¥6.89B, +12,4% YoY; Operating income +2,7% YoY.

• ▍Revenue ¥6.89B, +12,4% YoY
• ▍Operating income +2,7% YoY
• ▍Net income −17,5% YoY
• ▍Net margin 3.1%

Revenue ¥9.32B, +9,5% YoY; Operating income +13,6% YoY.

• ▍Revenue ¥9.32B, +9,5% YoY
• ▍Operating income +13,6% YoY
• ▍Net income +15,2% YoY
• ▍Net margin 6.4%

Revenue ¥6.93B, +39,4% YoY; Operating income +123,9% YoY.

• ▍Revenue ¥6.93B, +39,4% YoY
• ▍Operating income +123,9% YoY
• ▍Net income +161,7% YoY
• ▍Net margin 4.0%

Revenue ¥11.14B, −16,7% YoY; Operating income −19,5% YoY.

• ▍Revenue ¥11.14B, −16,7% YoY
• ▍Operating income −19,5% YoY
• ▍Net income −15,9% YoY
• ▍Net margin 6.2%

Revenue ¥6.12B; Operating income ¥427.4M.

• ▍Revenue ¥6.12B
• ▍Operating income ¥427.4M
• ▍Net margin 4.3%

Revenue ¥8.51B; Operating income ¥854.3M.

• ▍Revenue ¥8.51B
• ▍Operating income ¥854.3M
• ▍Net margin 6.1%

Revenue ¥4.97B; Operating income ¥226.7M.

• ▍Revenue ¥4.97B
• ▍Operating income ¥226.7M
• ▍Net margin 2.1%

Revenue ¥13.37B; Operating income ¥1.29B.

• ▍Revenue ¥13.37B
• ▍Operating income ¥1.29B
• ▍Net margin 6.2%

Revenue ¥30.74B, +11,4% YoY; Operating income +58,2% YoY.

• ▍Revenue ¥30.74B, +11,4% YoY
• ▍Operating income +58,2% YoY
• ▍Net income +81,0% YoY
• ▍Free cash flow +182,3% YoY
• ▍Net margin 5.1%

Revenue ¥27.61B, +6,8% YoY; Operating income −22,0% YoY.

• ▍Revenue ¥27.61B, +6,8% YoY
• ▍Operating income −22,0% YoY
• ▍Net income −32,4% YoY
• ▍Free cash flow −46,7% YoY
• ▍Net margin 3.2%