JSH Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.19B
• Operating Income: ¥-121M
• Net Income: ¥-109M
• EPS: ¥-17.78

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

For FY2026 Q2, 株式会社JSH delivered strong top-line momentum with revenue of ¥2,191 million, up 24.2% year over year, but profitability remained negative at the operating, ordinary, and net levels. Gross profit was ¥631 million, implying a gross margin of 28.8%, which is healthy for a service-oriented model but not yet sufficient to cover operating expenses. Operating income was a loss of ¥121 million (unchanged YoY), indicating that higher SG&A and/or other operating costs absorbed the incremental gross profit despite robust sales growth. Ordinary income of ¥-120 million was close to operating income, suggesting limited non-operating gains or losses. Net income posted a ¥-100 million loss (EPS ¥-17.78), translating to a net margin of -4.56%. DuPont decomposition indicates that the negative ROE of -5.10% is driven primarily by the weak net margin, with moderate asset turnover (0.603x) and modest financial leverage (1.85x). Liquidity appears solid with a current ratio of 220.5% and working capital of ¥792 million, supported by an implied equity ratio of roughly 54% (equity ¥1,962 million over assets ¥3,633 million). Operating cash flow was ¥-37.7 million, which covers only 38% of the period’s net loss, pointing to working capital outflows despite meaningful non-cash D&A of ¥105.6 million. Financing cash inflows of ¥644 million cushioned the cash burn, indicating reliance on external capital during the investment and scale-up phase. Leverage appears moderate at a debt-to-equity ratio of 0.48x and interest expense of only ¥5.1 million, though interest coverage remains negative given operating losses. EBITDA was slightly negative at ¥-15.4 million, showing that core cash earnings are near breakeven but not yet positive. The negative operating leverage in the half, despite strong revenue growth, suggests either price/mix pressure, elevated hiring/training or delivery costs, or front-loaded operating investments. With no dividend (DPS ¥0.00), the company appears to be prioritizing reinvestment and liquidity preservation. Several fields (e.g., inventories, cash balance, investing cash flows, share counts, equity ratio) are unreported; conclusions rely on the non-zero items provided and internally consistent derivations. Overall, the business demonstrates promising growth but needs to improve cost discipline and working capital efficiency to translate revenue into sustainable profits and cash flow.

Profitability Analysis

ROE_decomposition: DuPont: Net margin -4.56% × Asset turnover 0.603 × Financial leverage 1.85 = ROE -5.10% (matches reported). The primary drag is the negative margin; leverage is modest and turnover is average for the scale. margin_quality: Gross margin at 28.8% (¥631m/¥2,191m) is respectable, but operating margin is -5.5% (¥-121m/¥2,191m) and net margin is -4.56%, indicating SG&A and operating costs offset gross profit gains. Ordinary income (¥-120m) closely tracks operating income, implying minimal non-operating distortion. operating_leverage: Despite +24.2% YoY revenue growth, operating loss was unchanged YoY (¥-121m), evidencing negative operating leverage in this period. EBITDA at ¥-15.4m (EBIT ¥-121m + D&A ¥105.6m) suggests near-breakeven core cash earnings but not sufficient to cover interest and taxes. Sustainably improving SG&A ratio and delivery efficiency will be key to restoring positive operating leverage.

Growth Assessment

revenue_sustainability: Revenue grew 24.2% YoY to ¥2,191m, indicating robust demand and/or successful business development. Sustainability will depend on retention, price/mix integrity, and scalability of delivery capacity without proportionate OPEX growth. profit_quality: Losses at operating and net levels persist, with ordinary results tracking operating results, implying limited reliance on one-offs. The margin profile suggests that incremental revenue is not yet accretive to operating profit due to elevated fixed and semi-fixed costs. outlook: If cost normalization, pricing discipline, and productivity gains materialize in 2H, operating leverage could turn positive. Near-term focus should be on SG&A efficiency, utilization, and working capital discipline to convert growth into cash and profit. External financing in the half provides runway, but progress on margins and OCF will be the critical indicators of trajectory.

Financial Health

liquidity: Current assets ¥1,450m vs current liabilities ¥657m implies a current ratio of 220.5% and working capital of ¥792m. Quick ratio equals current ratio due to inventories being unreported; liquidity looks comfortable on reported non-zero items. solvency: Total liabilities ¥944m and equity ¥1,962m imply an equity ratio of ~54% (the reported equity ratio field is unreported). Debt-to-equity is 0.48x, and interest expense is modest at ¥5.1m. Interest coverage by EBIT is negative (-23.6x), reflecting ongoing operating losses rather than excessive financial leverage. capital_structure: Leverage is moderate with assets/equity at 1.85x. The ¥644m financing inflow indicates proactive balance sheet management to support growth and OCF shortfall.

Cash Flow Quality

earnings_quality: OCF/Net income of 0.38 implies limited cash conversion, even after ¥105.6m of D&A add-back. The gap suggests meaningful working capital outflows or other non-cash items offsetting D&A benefits. FCF_analysis: Operating CF was ¥-37.7m. Investing CF is unreported (0), so headline FCF is shown as 0; absent large unreported investing inflows, underlying FCF is likely negative in the period. working_capital: With a sizeable working capital base (¥792m), swings in receivables/payables are likely driving OCF variability. Tightening collection cycles and supplier terms should improve cash conversion.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00 with a payout ratio of 0.0%, consistent with negative earnings and a growth/investment phase. FCF_coverage: With OCF negative and investing CF unreported, practical FCF coverage of dividends is not applicable; current policy to refrain from dividends aligns with cash preservation. policy_outlook: Resumption of dividends would likely require sustained positive operating margin, positive OCF, and visibility on capital needs. Current financing inflows suggest priority on growth and liquidity.

Risk Assessment

Business Risks:

• Execution risk in scaling operations while restoring positive operating leverage
• Pricing and mix pressure affecting gross margin sustainability
• Cost inflation in labor and service delivery impacting SG&A and COGS
• Client concentration and churn risk affecting revenue durability
• Macroeconomic slowdown reducing demand and utilization

Financial Risks:

• Negative operating cash flow necessitating continued access to external financing
• Interest coverage negative, leaving limited buffer if rates rise or losses widen
• Working capital volatility impacting liquidity despite strong current ratio
• Potential covenant constraints if debt financing increases

Key Concerns:

• Operating loss unchanged YoY despite +24.2% revenue growth
• OCF/NI of 0.38 indicating weak cash conversion
• Reliance on ¥644m financing inflow in the half to support operations

Investment Implications

Key Takeaways:

• Top-line growth is strong (+24.2% YoY) but not yet translating into profit
• Gross margin is solid at 28.8%, yet SG&A intensity keeps operating income negative
• ROE of -5.10% is primarily margin-driven; leverage is moderate
• Liquidity appears adequate (current ratio 220.5%, working capital ¥792m)
• OCF negative at ¥-37.7m; financing inflow of ¥644m provides runway

Metrics to Watch:

• Operating margin progression and SG&A-to-sales ratio
• Gross margin stability and pricing/mix trends
• OCF trajectory and working capital metrics (collection and payment cycles)
• EBITDA turning sustainably positive and interest coverage improvement
• Leverage (debt-to-equity) and sources/uses of financing

Relative Positioning: Versus TSE small/mid-cap service peers, revenue growth is above-average, profitability is below-average with negative operating leverage, and balance sheet strength appears relatively solid with moderate leverage and ample working capital.

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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