SHO-BOND Holdings Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥20.56B
• Operating Income: ¥4.87B
• Net Income: ¥3.39B
• EPS: ¥66.26

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

Sho-Bond Holdings (14140) reported FY2026 Q1 consolidated results under JGAAP showing resilient profitability despite softer top-line. Revenue decreased 4.7% YoY to ¥20.56bn, but operating income edged up 0.5% to ¥4.87bn as margins expanded. Gross profit was ¥6.10bn, implying a gross margin of 29.7%, and operating margin improved to about 23.7%, highlighting strong cost discipline and project mix. Ordinary income was ¥4.92bn, broadly in line with operating income, indicating limited non-operating noise in the quarter. Net income rose 0.5% YoY to ¥3.38bn, with a net margin of 16.5%, underscoring high profitability for a maintenance-focused contractor. DuPont analysis indicates ROE of 3.24% for the quarter using reported point-in-time balance sheet and period earnings, driven by net margin of 16.46%, asset turnover of 0.168x, and financial leverage of 1.17x. The balance sheet is robust: total assets ¥122.35bn and total equity ¥104.55bn imply an equity ratio of roughly 85.5% (based on reported assets and equity), with liabilities of ¥22.76bn. Liquidity appears ample with current assets of ¥100.24bn and current liabilities of ¥20.54bn, yielding a current ratio of 4.88x and working capital of ¥79.70bn. SG&A (implied at ~¥1.23bn) was about 6.0% of sales, reflecting a lean cost base and healthy operating leverage. The effective tax rate, inferable from income taxes of ¥1.54bn versus pre-tax income near ¥4.92bn, is approximately 31.3%, consistent with Japan’s statutory range. Cash flow statements and several line items (depreciation, interest, cash balance, DPS, shares) were not disclosed in the dataset, limiting cash flow and per-share analyses for the quarter. Nevertheless, the combination of high margins, low leverage, and sizable liquidity points to strong financial resilience. The YoY decline in revenue likely reflects project timing and seasonality typical in repair and maintenance works rather than structural demand weakness. Profitability improvements amidst revenue contraction suggest positive mix and execution, potentially supported by higher-margin specialty repair projects. Strategic outlook remains supported by aging infrastructure needs in Japan, although quarterly volatility should be expected due to completion-based revenue recognition. Overall, fundamentals appear solid, with key watch points around order intake, backlog conversion, and cash collection.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 16.46%
• asset_turnover: 0.168x
• financial_leverage: 1.17x
• calculated_ROE: 3.24% (quarterly, unannualized using point-in-time assets and equity) margin_quality: - Gross margin: 29.7% (¥6.10bn/¥20.56bn), reflecting strong pricing and cost control in maintenance-heavy projects.
• Operating margin: ~23.7% (¥4.87bn/¥20.56bn), improved YoY alongside flat operating income on lower sales, indicating mix benefits and SG&A discipline.
• Ordinary margin: ~23.9% (¥4.92bn/¥20.56bn), minimal gap vs. operating profit suggests limited non-operating drag.
• Net margin: 16.5% (¥3.38bn/¥20.56bn), sustaining high earnings conversion. operating_leverage: - Implied SG&A ~¥1.23bn (gross profit ¥6.10bn minus operating income ¥4.87bn), or ~6.0% of sales, evidencing a lean cost structure.
• Positive operating leverage evident as operating income increased slightly (+0.5% YoY) despite a 4.7% decline in revenue, implying margin expansion through mix/pricing and execution.

Growth Assessment

revenue_sustainability: - Revenue fell 4.7% YoY to ¥20.56bn; quarterly revenues in this sector are sensitive to project timing, weather, and completion schedules.

• Maintenance and repair demand in Japan remains structurally supported by aging infrastructure, suggesting underlying demand stability despite quarterly swings. profit_quality: - Stable ordinary income vs. operating income indicates limited reliance on non-core items.
• Effective tax rate is ~31.3%, consistent with normal operations.
• High net margin (16.5%) and strong gross margin (29.7%) point to quality of earnings driven by core operations. outlook: - Near-term growth hinges on order intake, backlog conversion, and project mix; a recovery in public-sector tendering and steady private maintenance should support volumes.
• Given seasonality and completion-based accounting, single-quarter trends should not be extrapolated; monitor H1 and full-year run-rates for clearer trajectory.

Financial Health

liquidity: - Current assets ¥100.24bn vs. current liabilities ¥20.54bn yields a current ratio of 4.88x and working capital of ¥79.70bn, indicating strong short-term liquidity.

• Quick ratio is indicated as 4.88x; with inventories not disclosed, liquidity likely anchored by cash and receivables typical of the business model. solvency: - Total liabilities ¥22.76bn and equity ¥104.55bn imply modest leverage (liabilities/equity ~0.22x) and an implied equity ratio around 85.5% based on reported balance sheet figures.
• Low financial leverage limits solvency risk and provides flexibility through cycles. capital_structure: - Balance sheet is equity-heavy with limited reliance on interest-bearing debt (interest expense not disclosed in this dataset).

Cash Flow Quality

earnings_quality: - Cash flow statements were not disclosed here; OCF/Net income appears as 0.00 due to missing OCF, so cash conversion cannot be assessed from this dataset.

• Given the project-based nature, working capital swings (receivables and advances) can cause intra-year OCF volatility despite steady profitability. FCF_analysis: - Free cash flow cannot be calculated due to undisclosed OCF and capex. Depreciation was also undisclosed, limiting EBITDA and maintenance capex proxies. working_capital: - High working capital (¥79.70bn) and a strong current ratio suggest capacity to absorb collection cycles, though receivables and retained amounts (retentions) are key to monitor for cash conversion.

Dividend Sustainability

payout_ratio_assessment: - DPS and payout ratio were not disclosed; therefore, we cannot compute payout vs. earnings for the quarter.

• Quarterly net income was ¥3.38bn, indicating earnings capacity, but seasonality and lack of OCF data preclude coverage analysis. FCF_coverage: - FCF coverage cannot be assessed without OCF and capex data. policy_outlook: - Historically, firms in this segment tend to target stable dividends backed by strong balance sheets; with low leverage and high liquidity, capacity for distributions appears sound, but no conclusion can be drawn for this quarter without disclosed DPS.

Risk Assessment

Business Risks:

• Project timing and seasonality impacting quarterly revenue recognition
• Public-sector budget cycles and tendering outcomes (MLIT/local governments)
• Input cost inflation (materials, labor) potentially pressuring margins
• Skilled labor availability and subcontractor capacity constraints
• Execution risk on large or complex repair projects
• Weather and natural disaster disruptions affecting site progress

Financial Risks:

• Working capital collection risk (receivables, retention money)
• Potential OCF volatility despite stable earnings due to project billing schedules
• Limited disclosure this quarter on cash and debt makes short-term cash positioning opaque
• Tax rate variability depending on project geographies and incentives

Key Concerns:

• Sustainability of margin expansion if input costs rise or mix normalizes
• Visibility on order backlog and book-to-bill to underpin revenue trajectory
• Cash conversion timing given high current assets and undisclosed OCF

Investment Implications

Key Takeaways:

• Revenue down 4.7% YoY to ¥20.56bn, but operating income up 0.5% YoY, evidencing margin resilience
• High profitability: gross margin 29.7%, operating margin ~23.7%, net margin 16.5%
• Strong balance sheet with implied equity ratio ~85.5% and current ratio 4.88x
• Low leverage (liabilities/equity ~0.22x) provides downside protection
• Cash flow details undisclosed; cash conversion remains a key watch point
• Quarterly ROE of 3.24% reflects high margins but modest asset turnover typical of the model

Metrics to Watch:

• Order intake and backlog/book-to-bill ratio
• Gross margin by project mix and SG&A ratio
• Cash conversion cycle: receivable days and retention release
• Effective tax rate versus statutory baseline
• Capex and maintenance intensity (when disclosed)
• Ordinary income versus operating income to track non-operating items

Relative Positioning: Within Japanese infrastructure maintenance and repair peers, Sho-Bond typically exhibits above-average margins and a fortress balance sheet, trading off lower asset turnover for stability and strong execution; quarterly volatility is driven more by project timing than by structural shifts.

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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