As Partners CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥13.61B
• Operating Income: ¥1.53B
• Net Income: ¥1.09B
• EPS: ¥305.26

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

Azpartners Co., Ltd. (160A0) reported strong topline momentum in FY2026 Q2 under JGAAP (non-consolidated), with revenue of ¥13.61bn, up 28.5% YoY, indicating robust demand and/or capacity expansion. Operating income rose 17.3% YoY to ¥1.528bn, implying some negative operating leverage as cost growth outpaced revenue growth. Net income increased 20.8% YoY to ¥1.092bn, supported by positive non-operating contributions that offset interest expense. Profitability remains solid: operating margin is approximately 11.2% and net margin is 8.0%, while gross margin stands at 18.9%. DuPont analysis indicates ROE of 21.53%, driven by an 8.02% net margin, 0.643x asset turnover, and 4.17x financial leverage, suggesting high return on equity partly amplified by leverage. Ordinary income of ¥1.603bn exceeds operating income by roughly ¥75m; given reported interest expense of ¥39.6m, this implies net non-operating gains of about ¥115m. Cash generation is a highlight: operating cash flow (OCF) of ¥2.202bn is roughly 2.0x net income, evidencing strong earnings quality and favorable working capital dynamics. Liquidity appears comfortable with current assets of ¥16.35bn versus current liabilities of ¥8.93bn, resulting in a current ratio of 183% and working capital of ¥7.42bn. The capital structure is moderately leveraged, with total liabilities of ¥17.24bn and total equity of ¥5.07bn (liabilities-to-equity of 3.40x). While the XBRL ‘equity ratio’ item is shown as 0.0% (unreported), a simple estimate from the balance sheet implies an equity ratio around 24% (¥5.07bn/¥21.15bn). EBITDA is ¥1.621bn and the EBITDA margin is 11.9%, with low D&A of ¥92.5m, suggesting an asset-light or low-depreciation base relative to earnings. Interest coverage is very strong at 38.6x (operating income to interest expense), implying low financial stress from borrowing costs. The company paid no dividend in the period (DPS ¥0; payout ratio 0%), consistent with undisclosed free cash flow due to missing investing cash flows. Multiple items (e.g., cash & equivalents, inventories, investing CF, equity ratio, share count) are reported as zero, which indicates non-disclosure rather than actual zero values; conclusions therefore rely on the available non-zero data. Overall, the quarter shows healthy growth, resilient margins, strong cash conversion, and manageable leverage, but the slower growth of operating income versus revenue hints at cost pressures that bear monitoring. Outlook hinges on sustaining demand, maintaining occupancy/utilization, and controlling labor and other operating costs amid a leveraged balance sheet. Data limitations constrain full assessment of free cash flow, cash liquidity, and per-share metrics, so future disclosures will be important for validation.

Profitability Analysis

• ROE decomposition (DuPont): Net margin 8.02% x asset turnover 0.643x x financial leverage 4.17x = ROE 21.53%, validating the reported figure. Leverage is a meaningful contributor to high ROE.
• Margin profile: Gross margin 18.9%, operating margin ~11.2% (¥1,528m / ¥13,610m), EBITDA margin 11.9%, and net margin 8.0% indicate good cost control overall but some compression vs revenue growth (OI +17.3% vs revenue +28.5%).
• Operating leverage: Negative in this period, as operating income growth lagged revenue growth by ~11.2pp, suggesting rising labor/operating costs or mix effects.
• Non-operating items: Ordinary income exceeds operating income by ¥75m; with ¥39.6m interest expense, non-operating gains (¥115m) provided a tailwind.
• Taxation: The provided “effective tax rate” is shown as 0.0% (unreported). Using income tax (¥424m) and ordinary income (¥1,603m) as a proxy, the implied rate is roughly 26–27%, acknowledging potential differences between ordinary and taxable income.
• Depreciation intensity: D&A of ¥92.5m is modest relative to EBITDA, indicating low depreciation drag and supporting operating margins.

Growth Assessment

• Revenue sustainability: +28.5% YoY to ¥13.61bn suggests strong volume/price/mix and/or footprint expansion; durability will depend on maintaining utilization/occupancy and pricing amid cost inflation.
• Profit growth: Operating income grew +17.3% YoY to ¥1.528bn and net income +20.8% to ¥1.092bn, solid but lagging revenue at the operating line, pointing to cost headwinds.
• Mix and non-operating support: Ordinary income outperformance versus operating income indicates some reliance on non-operating gains this quarter, which may not be recurring.
• Outlook: If cost pressures are contained and demand holds, mid-teens profit growth is achievable; however, sustained negative operating leverage would cap margin expansion.
• Capacity and scalability: Low D&A may imply an asset-light model with room to scale, but additional staffing and service quality investments could temper incremental margins.

Financial Health

• Liquidity: Current assets ¥16.35bn vs current liabilities ¥8.93bn; current ratio 183% and working capital ¥7.42bn denote solid near-term liquidity. Quick ratio equals current ratio in the dataset due to inventories shown as 0 (unreported), so the true quick ratio may differ.
• Solvency: Total liabilities ¥17.24bn and equity ¥5.07bn imply debt-to-equity (broadly liabilities-to-equity) of 3.40x. Estimated equity ratio ~24% (vs ‘reported’ 0.0% item, which is unreported), indicating moderate leverage.
• Interest serviceability: Interest coverage 38.6x (¥1,528m/¥39.6m) is strong, suggesting low immediate refinancing risk.
• Asset structure: Current assets represent about 77% of total assets, supporting liquidity but raising sensitivity to working capital swings.
• Cash position: Cash & equivalents is shown as 0 (unreported); actual cash levels are not disclosed, limiting assessment of on-hand liquidity.

Cash Flow Quality

• Earnings quality: OCF of ¥2,202m vs net income of ¥1,092m yields an OCF/NI ratio of ~2.0x, indicating strong conversion and likely favorable working capital or non-cash add-backs.
• Free cash flow: Reported FCF is 0 in the dataset because investing cash flows are shown as 0 (unreported). Without capex and investment data, true FCF cannot be determined.
• Working capital: With current assets at ¥16.35bn and current liabilities at ¥8.93bn, net working capital is sizable at ¥7.42bn; OCF strength suggests effective working capital management this period.
• Depreciation vs EBITDA: Low D&A (¥92.5m) supports cash earnings, but absence of capex data prevents assessment of maintenance investment needs.

Dividend Sustainability

• Policy and payout: DPS is ¥0 and payout ratio 0% for the period. This may reflect a reinvestment stance or timing of declarations rather than a structural policy shift.
• Coverage: FCF coverage cannot be assessed because investing cash flows are undisclosed; the 0.00x figure is not meaningful in this context.
• Capacity: Strong OCF (¥2.20bn) versus modest interest expense (¥39.6m) suggests capacity to fund some shareholder returns over time, subject to capex and growth needs. Absent capex and cash data, sustainability conclusions are limited.
• Outlook: Dividend initiation or increases would depend on visibility into recurring OCF, maintenance capex, and balance-sheet targets given moderate leverage.

Risk Assessment

Business Risks:

• Labor cost inflation and staffing shortages pressuring margins and service quality
• Regulatory/reimbursement changes affecting pricing and profitability
• Utilization/occupancy volatility impacting revenue leverage
• Competition and pricing pressure in care and related services
• Quality and compliance risks in service delivery

Financial Risks:

• Moderate leverage (liabilities/equity 3.40x) increases sensitivity to earnings volatility
• Working capital concentration in current assets raises cash flow swing risk
• Interest rate increases could erode interest coverage from 38.6x, albeit from a high base
• Limited disclosure of cash and investing cash flows obscures liquidity and FCF assessment

Key Concerns:

• Negative operating leverage this period (OI growth +17.3% vs revenue +28.5%)
• Dependence on non-operating gains (~¥115m) to support ordinary income
• Insufficient disclosure on cash, capex, and share count hindering per-share and FCF analyses

Investment Implications

Key Takeaways:

• Strong topline growth (+28.5% YoY) with solid profitability (operating margin ~11.2%, net margin 8.0%)
• High ROE (21.53%) driven by decent margins, moderate asset turnover (0.643x), and leverage (4.17x)
• Excellent cash conversion (OCF/NI ~2.0x) supports earnings quality
• Moderate leverage (liabilities/equity 3.40x) is manageable given 38.6x interest coverage
• Operating leverage turned negative; cost discipline is key to sustaining margin
• Data gaps (cash, investing CF, equity ratio item, share count) limit FCF and per-share visibility

Metrics to Watch:

• Operating margin trend vs revenue growth (cost inflation, staffing, and mix effects)
• OCF/Net income and working capital days
• Capex and investing cash flows to evaluate true FCF and reinvestment needs
• Equity ratio (target ~24% by our estimate) and liabilities/equity leverage
• Interest expense trajectory and coverage as rates evolve
• Utilization/occupancy and pricing indicators in core services

Relative Positioning: Versus domestic care/service peers, Azpartners exhibits strong revenue growth and a solid double-digit operating margin with high ROE, underpinned by leverage and robust cash conversion; however, moderate leverage and emerging cost pressure place a premium on execution and cost control.

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
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis