HOB Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥315M
• Operating Income: ¥-55M
• Net Income: ¥-33M
• EPS: ¥-70.75

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

Hob Co., Ltd. (TSE: 1382) reported FY2026 Q1 consolidated results under JGAAP with revenue of ¥315.0m, down 3.3% YoY, reflecting a modest top-line contraction. Gross profit was ¥93.492m, implying a gross margin of 29.7%, which suggests reasonable pricing and cost control at the gross level despite weaker sales. Operating income was a loss of ¥55.0m (operating margin −17.5%), indicating that fixed costs and/or SG&A absorption remain a pressure point at current volume levels. Ordinary income was a loss of ¥54.0m, with minimal financial burden as interest expense was only ¥9k, signifying a light debt service profile. Net loss was ¥53.0m, an improvement of 14.2% YoY, signaling progress in cost discipline or mix despite revenue softness. DuPont analysis yields a net margin of −16.83%, asset turnover of 0.299x, and financial leverage of 1.59x, resulting in ROE of −7.98%. The ROE print is driven primarily by the negative margin; leverage is modest and not the source of volatility. The balance sheet appears conservatively structured: total assets are ¥1,053.0m, liabilities ¥313.482m, and reported total equity ¥664.0m, implying low leverage and strong solvency. Liquidity looks robust with current assets at ¥936.566m versus current liabilities of ¥158.516m, producing a current ratio of 590.8% (≈5.9x) and working capital of ¥778.05m. Inventories of ¥44.76m are a small slice of current assets, suggesting ample liquid resources to meet near-term obligations. Despite the loss, an income tax expense of ¥1.058m was recognized, likely reflecting non-deductible items or timing effects under JGAAP. Cash flow statements, depreciation and amortization, and cash balances are unreported in the provided XBRL snapshot (zeros denote undisclosed, not true zeros), limiting assessment of earnings-to-cash conversion and capital intensity. The equity ratio shown as 0.0% appears undisclosed; based on available figures, equity-to-assets is approximately 63%, indicating a strong capital base. Dividend per share is reported as zero for the period, consistent with loss-making conditions and the need to preserve cash. Operationally, the combination of a relatively healthy gross margin and a sizable operating loss suggests operating leverage and fixed costs are the key swing factors; incremental revenue recovery could materially improve earnings. Overall, the quarter shows improving bottom-line trajectory on a slightly smaller revenue base, underpinned by a solid balance sheet and low financial risk. Data limitations around cash flows and D&A temper confidence in evaluating cash generation, but available balance sheet metrics imply flexibility to navigate near-term volatility.

Profitability Analysis

ROE_decomposition: ROE (−7.98%) = Net Margin (−16.83%) × Asset Turnover (0.299x) × Financial Leverage (1.59x). The negative margin is the primary driver of the negative ROE; asset turnover is modest and leverage is moderate. margin_quality: Gross margin is 29.7% (¥93.492m/¥315.0m), indicating reasonable unit economics. Operating margin is −17.5% (¥−55.0m/¥315.0m), pointing to inadequate scale to cover fixed SG&A and overhead. Ordinary loss (¥−54.0m) is close to operating loss, confirming minimal financial drag (interest ¥9k). Net margin is −16.83% with a small tax expense despite losses, likely due to non-deductible or deferred tax effects. operating_leverage: Revenue declined 3.3% YoY while the operating loss remained sizable (−¥55.0m), indicating high operating leverage. Small volume changes materially affect operating income. A return to modest top-line growth or incremental efficiency gains could narrow losses meaningfully, given the healthy gross margin base.

Growth Assessment

revenue_sustainability: Revenue of ¥315.0m decreased 3.3% YoY, suggesting soft demand or seasonal/market headwinds. The modest decline implies the underlying customer base remains relatively intact, but sensitivity to seasonality and agriculture-related variability is likely. profit_quality: Gross profit held at 29.7% margin, but negative operating income indicates fixed cost absorption issues. Ordinary income closely tracks operating performance, implying core operations, not financing, drive bottom-line outcomes. outlook: With intact gross margins, modest leverage, and strong liquidity, the company has runway to execute efficiency measures and pursue mix/pricing improvement. Near-term earnings trajectory will hinge on restoring throughput and managing fixed costs; incremental revenue recovery could disproportionally improve operating income given the cost structure.

Financial Health

liquidity: Current assets ¥936.566m vs current liabilities ¥158.516m yield a current ratio of 590.8% (~5.9x) and working capital of ¥778.05m. Quick ratio of 562.6% indicates ample near-term coverage even excluding inventories (¥44.76m). solvency: Total liabilities of ¥313.482m versus total equity of ¥664.0m imply low leverage (liabilities/equity ~0.47x). Based on provided assets and equity, equity-to-assets is ~63% (notwithstanding the equity ratio field being undisclosed). Interest expense is negligible (¥9k), reducing solvency risk. capital_structure: Leverage is modest with financial leverage of ~1.59x (assets/equity). The structure prioritizes equity funding, providing resilience during loss-making periods.

Cash Flow Quality

earnings_quality: Cash flow data (OCF/Investing/Financing) and depreciation are undisclosed in the provided dataset (zeros indicate unreported). As a result, we cannot reconcile earnings to cash or assess non-cash components and working capital-driven volatility. FCF_analysis: Free cash flow cannot be computed from the provided figures due to missing OCF and capex. Given the negative operating income, near-term FCF likely depends on working capital movements and any non-cash charges (e.g., depreciation) not disclosed. working_capital: Working capital is strong at ¥778.05m. Inventories are modest at ¥44.76m, indicating limited inventory risk relative to liquid assets; however, without cash and receivables disclosure breakdowns, intra-quarter cash conversion dynamics remain unclear.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is reported at ¥0.00 with payout ratio 0.0%, consistent with a net loss. Maintaining a dividend would not be prudent absent positive earnings and cash flow. FCF_coverage: FCF coverage is not assessable due to undisclosed cash flows; accordingly, dividend capacity should be evaluated once OCF and capex data are available. policy_outlook: Given negative earnings and a conservative balance sheet, management may prioritize liquidity and reinvestment over distributions until profitability normalizes.

Risk Assessment

Business Risks:

• High operating leverage with fixed cost base leading to earnings sensitivity to revenue swings
• Agricultural/seasonal exposure impacting yields, pricing, and demand
• Input cost inflation (energy, fertilizers, labor) pressuring gross-to-operating margin conversion
• Customer concentration or channel risk typical in niche agri/food businesses
• Weather and biological risks affecting production volumes and quality

Financial Risks:

• Sustained operating losses could erode equity over time if not offset by improvements
• Limited visibility on cash generation due to undisclosed OCF/Capex
• Tax expense despite losses may continue due to non-deductible items or deferred tax valuation allowances

Key Concerns:

• Negative operating margin (−17.5%) despite acceptable gross margin (29.7%)
• Dependence on revenue recovery to absorb fixed costs
• Insufficient disclosure on cash flows and depreciation, limiting assessment of capital intensity and FCF

Investment Implications

Key Takeaways:

• Revenue declined 3.3% YoY to ¥315.0m, but net loss improved 14.2% YoY
• Gross margin of 29.7% indicates sound unit economics; losses stem from overhead absorption
• ROE at −7.98% is driven by negative margin; leverage is moderate (1.59x assets/equity)
• Balance sheet strength with ~63% equity-to-assets and very low interest burden (¥9k)
• Robust liquidity (current ratio ~5.9x; working capital ¥778m) provides operational flexibility
• Cash flow data are undisclosed, constraining FCF assessment

Metrics to Watch:

• Operating margin trajectory and SG&A-to-sales ratio
• Revenue run-rate and order/bookings visibility across seasons
• Gross margin resilience amid input cost changes
• Cash conversion (OCF), capex, and inventory turns once disclosed
• Tax items impacting effective tax rate during loss periods

Relative Positioning: Within agriculture/food producers, the company appears conservatively capitalized with stronger liquidity than many small-cap peers, but exhibits weaker operating profitability due to scale and fixed-cost absorption challenges; improvement in utilization and cost discipline is key to closing the profitability gap.

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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