Ryoyo Ryosan Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥172.25B
• Operating Income: ¥3.87B
• Net Income: ¥5.72B
• EPS: ¥92.76

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

Ryosan Ryoyo Holdings Co., Ltd. (167A0) reported FY2026 Q2 consolidated results under JGAAP showing resilient operating execution amid a softer topline. Revenue declined 4.3% YoY to ¥172.2bn, reflecting a slower demand environment likely tied to the semiconductor and industrial electronics cycle. Despite the revenue contraction, operating income increased 13.5% YoY to ¥3.87bn, indicating improved gross margin mix and/or tighter SG&A control. Gross profit of ¥16.64bn translates to a 9.7% gross margin, which is thin but typical for an electronics trading and solutions business. EBITDA came in at ¥4.69bn, implying a 2.7% EBITDA margin and modest operating leverage. Ordinary income (¥3.25bn) was below operating income, suggesting net non-operating expenses (notably interest expense of ¥0.85bn). Net income was ¥3.72bn, down 35.0% YoY, implying the prior period benefited from larger non-operating/extraordinary gains or lower tax/interest costs; current-period recognition of taxes (¥1.70bn) also weighed on bottom line. DuPont analysis indicates a low but positive ROE of 2.80%, driven by slim net margin (2.16%) and moderate asset turnover (0.749x), with financial leverage of 1.73x. Liquidity is strong, with current and quick ratios of 218% and 158%, respectively, and working capital of ¥103.2bn supporting operations. The balance sheet shows total assets of ¥229.9bn and equity of ¥132.6bn; this implies an equity ratio of roughly 57.7% despite the reported 0.0% indicator, which appears undisclosed rather than truly zero. Operating cash flow was negative (¥-1.57bn), pointing to working capital absorption, likely inventory and/or receivables build in a softer revenue environment. Financing cash inflow of ¥15.13bn suggests the company tapped external funding, likely to support working capital and integration needs; investing cash flow was not disclosed. Interest coverage is 4.5x on an operating income basis, which is adequate but warrants monitoring if rates rise or margins compress. Dividend data were not disclosed (0 entries), so payout and coverage cannot be assessed this quarter. Overall, the company is managing profitability better than the topline trajectory would suggest, but earnings quality is tempered by negative OCF and reliance on financing inflows. With a low ROE and thin margins, the path to value creation likely hinges on inventory normalization, improved cash conversion, synergy extraction from integration, and stabilization in end-markets.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 2.16%
• asset_turnover: 0.749
• financial_leverage: 1.73
• calculated_ROE: 2.80%
• commentary: ROE is driven primarily by modest asset turnover and slim net margins; leverage is not excessive and contributes moderately. The YoY rise in operating income despite lower revenue indicates margin discipline, but net income was pressured by non-operating items and taxes. margin_quality: Gross margin at 9.7% is in line with electronics distribution norms but leaves little buffer for shocks. EBITDA margin of 2.7% and operating margin of roughly 2.2% (¥3.87bn/¥172.25bn) show tight cost control. Ordinary income lagging operating income points to non-operating burden (interest and other items), while the net profit decline suggests fewer extraordinary gains vs. prior year. operating_leverage: Positive operating leverage is evident: operating income rose 13.5% YoY against a 4.3% revenue decline, implying better product mix/pricing and SG&A containment. However, at low single-digit margins, incremental shocks to gross profit can quickly compress EBIT, so leverage cuts both ways.

Growth Assessment

revenue_sustainability: Revenue decreased 4.3% YoY to ¥172.25bn, consistent with a mixed macro/semiconductor demand backdrop. The inventory level of ¥52.27bn suggests the company is positioned for recovery but also faces demand risk if sell-through lags. profit_quality: Operating income improved to ¥3.87bn, pointing to solid execution. However, ordinary income (¥3.25bn) was lower than operating income due to non-operating costs, and net income fell 35% YoY, indicating less support from extraordinary items and a normalized tax burden. outlook: Near-term growth hinges on normalization of the electronics cycle, inventory digestion, and maintaining pricing/mix. Integration synergies from the formation of the holding company could provide incremental operating efficiencies. A gradual recovery in factory automation, auto electronics, and cloud/edge segments would be supportive, but visibility remains moderate.

Financial Health

liquidity: Strong liquidity with current ratio 218.3% and quick ratio 158.3%; working capital of ¥103.17bn provides ample operating cushion. Operating cash flow was negative this period, so the near-term liquidity stance leans on cash on hand (not disclosed) and available financing. solvency: Debt-to-equity of 0.75x indicates moderate leverage. Interest coverage at 4.5x (operating income/interest) is adequate, but rising interest expense (¥0.85bn) deserves monitoring. Equity ratio is approximately 57.7% (¥132.63bn/¥229.95bn), evidencing a solid capital base despite the undisclosed reported figure. capital_structure: Balanced structure with meaningful equity and manageable debt. The ¥15.13bn financing inflow suggests proactive funding for working capital or integration; absent investing CF data, incremental debt is the likely source.

Cash Flow Quality

earnings_quality: OCF/Net Income ratio of -0.42 indicates earnings did not convert to cash this period, likely due to working capital absorption (inventories/receivables). Net income benefited from items below operating income (e.g., extraordinary gains), which can increase volatility. FCF_analysis: Free cash flow was not disclosed (reported as 0). With OCF negative and investing CF undisclosed, FCF cannot be reliably assessed. Given typical capex-light profiles in distribution, sustained negative OCF would still be a concern if prolonged. working_capital: Inventories of ¥52.27bn are substantial; inventory turns and obsolescence risk need monitoring. Working capital expanded, pressuring OCF; as demand normalizes, cash conversion should improve if inventory and receivables roll down.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio were not disclosed this quarter (0 entries indicate non-reporting). EPS is ¥92.76, but without DPS, payout cannot be assessed. FCF_coverage: Not assessable due to undisclosed FCF and investing cash flows. Negative OCF in the period suggests coverage would be tight if dividends were paid, absent draw on cash or financing. policy_outlook: No dividend information provided. As a newly integrated holding company, management may revisit capital allocation once cash conversion stabilizes and synergy trajectory clarifies.

Risk Assessment

Business Risks:

• Semiconductor and industrial electronics cycle volatility affecting demand and pricing
• Inventory obsolescence risk amid rapid product cycles
• Customer concentration and order push-outs
• Supplier allocation and lead-time variability
• FX exposure (USD/JPY and CNY/JPY) impacting margins
• Integration execution risk following corporate reorganization
• Competitive pressure compressing gross margins

Financial Risks:

• Negative operating cash flow from working capital build
• Interest rate and refinancing risk given ¥15.13bn financing inflow
• Potential increase in credit risk on receivables during downturns
• Thin operating margin leaves limited buffer for shocks

Key Concerns:

• Low ROE at 2.8% relative to typical target levels
• Ordinary income below operating income due to non-operating costs
• OCF/NI at -0.42 signaling weak cash conversion in the period
• Dependence on financing inflows to support operations during inventory build

Investment Implications

Key Takeaways:

• Operating execution improved margins despite a 4.3% revenue decline
• Net income declined 35% YoY likely due to fewer extraordinary gains and higher non-operating/tax burden
• Liquidity is strong; equity ratio roughly 57.7% indicates a solid capital base
• Cash conversion is weak this quarter with OCF negative; financing bridged the gap
• ROE at 2.8% is low; improving cash conversion and margin mix are critical to value creation

Metrics to Watch:

• Book-to-bill, backlog trends, and segment mix
• Inventory days and obsolescence provisions
• Receivable days and credit losses
• Gross and operating margin progression
• Operating cash flow and OCF/NI conversion ratio
• Interest expense trend and interest coverage
• Leverage (net debt/EBITDA) once cash is disclosed
• Extraordinary items impacting net income volatility

Relative Positioning: As a scale electronics trading/solutions group, the company exhibits typical low-margin profile with solid liquidity and moderate leverage; current ROE and cash conversion trail best-in-class peers, suggesting execution on integration synergies and working capital normalization will be key to narrowing the 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
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