KUDO CORPORATION FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥6.34B
• Operating Income: ¥345M
• Net Income: ¥175M
• EPS: ¥155.02

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

Kudo Kensetsu (17640) reported solid topline and earnings momentum in FY2026 Q1 under JGAAP on a consolidated basis. Revenue grew 27.8% YoY to ¥6,342 million, indicating strong order execution and/or favorable mix in the quarter. Operating income rose 73.8% YoY to ¥345 million, demonstrating expanding operating leverage as costs grew slower than sales. Net income increased 10.0% YoY to ¥192 million, held back relative to operating growth by higher non-operating items and taxes. Gross profit is disclosed at ¥760 million, consistent with a gross margin of roughly 12.0%, which suggests pricing and cost discipline improved versus a typical low-teens margin profile in general contracting. Ordinary income of ¥327 million sits below operating income, implying net non-operating expenses (notably interest expense of ¥23.8 million). The DuPont bridge indicates: net margin 3.03%, asset turnover 0.322x, and financial leverage 3.61x, yielding an ROE of 3.51% for the quarter on a trailing or point-in-time basis provided. Liquidity is moderate with a current ratio of 116%, and working capital of approximately ¥1,073 million. The capital structure shows liabilities to equity of 2.12x and an equity ratio inferred at roughly 27.7% (equity of ¥5,463 million over assets of ¥19,695 million), which is typical for mid-sized contractors. Interest coverage is comfortable at 14.5x (operating income to interest expense), indicating manageable debt service. Cash flow data are not disclosed in this snapshot, so free cash flow and OCF-based quality assessments are constrained. Depreciation is also undisclosed; therefore, EBITDA and cash earnings proxies cannot be derived here. Dividends are reported as zero with a 0% payout, suggesting either a non-dividend quarter or policy anchored to full-year adjustments rather than Q1. Some line items show zeros due to non-disclosure in XBRL (e.g., cash, OCF, D&A, inventories), and should not be interpreted as actual zero balances. There is also an apparent inconsistency between reported cost of sales and gross profit; given the gross margin disclosure (12.0%), the gross profit figure appears more reliable for margin interpretation. Overall, the quarter reflects improved profitability on strong revenue growth, stable financial resilience, and adequate coverage ratios, with limited visibility on cash conversion due to missing cash flow disclosures.

Profitability Analysis

ROE_decomposition: Net margin 3.03% x asset turnover 0.322x x financial leverage 3.61x = ROE 3.51% (as provided). This indicates modest profitability improved by leverage and asset utilization. margin_quality: Revenue ¥6,342m with gross profit ¥760m implies a gross margin ~12.0%. Operating margin is ~5.4% (¥345m/¥6,342m), and net margin is 3.03% (¥192m/¥6,342m). The sequential uplift in operating income (+73.8% YoY) relative to revenue suggests favorable mix, better cost pass-through, or timing of high-margin projects. operating_leverage: Operating income growth outpaced revenue growth (73.8% vs 27.8%), evidencing positive operating leverage. Non-operating expenses (including interest) reduced ordinary income to ¥327m from operating income of ¥345m, partially diluting flow-through to net. With D&A not disclosed, fixed-cost absorption cannot be precisely gauged, but leverage appears supportive this quarter.

Growth Assessment

revenue_sustainability: The 27.8% YoY revenue increase implies strong backlog execution or improved order intake; sustainability depends on project pipeline and construction market demand in Kudo Kensetsu’s served regions and segments. profit_quality: Operating margin expansion and interest coverage at 14.5x point to improved core profit quality. However, absent OCF data, conversion of accounting profits to cash cannot be verified this quarter. outlook: Assuming a stable order environment and no unusual one-offs, operating momentum can continue near-term. Watch for normalization of margins as project mix changes and as materials/labor cost dynamics evolve. Non-operating items (interest, other) and tax normalization could temper net profit growth relative to operating growth.

Financial Health

liquidity: Current assets ¥7,851m vs current liabilities ¥6,779m yields a current ratio ~1.16x and working capital ~¥1,073m. Quick ratio is shown equal to current ratio due to undisclosed inventories; liquidity appears adequate but not abundant. solvency: Total liabilities ¥11,591m vs equity ¥5,463m yields a liabilities-to-equity ratio of 2.12x. The implied equity ratio is ~27.7% (equity/assets), a moderate capital buffer consistent with the sector. capital_structure: Interest expense ¥23.8m is well-covered by operating income (14.5x). Financial leverage (assets/equity) of 3.61x supports ROE but introduces sensitivity to downturns. No information on debt maturity profile is provided.

Cash Flow Quality

earnings_quality: With operating CF undisclosed, OCF/NI cannot be assessed; the reported 0.00 ratio reflects non-disclosure rather than true zero. Earnings quality inference relies on accrual metrics; the ordinary-to-operating income gap is small, supportive of core earnings quality. FCF_analysis: Free cash flow is not available due to missing OCF and capex/D&A data. Construction working capital swings can be material; absence of data limits assessment. working_capital: Working capital is ~¥1,073m. Inventories are undisclosed (shown as zero), so the composition of current assets (receivables vs advances paid) and liabilities (advances received) cannot be parsed; cash conversion risk remains unassessed this quarter.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are reported as 0; this likely reflects lack of interim dividend or undisclosed policy in Q1. With net income at ¥192m for the quarter, capacity for dividends would depend on full-year earnings and cash generation. FCF_coverage: FCF is undisclosed, so coverage cannot be evaluated. Historically for contractors, dividend coverage is best assessed on full-year cash flows due to project timing effects. policy_outlook: Absent stated guidance, expect dividends (if any) to align with full-year profitability and balance sheet conservatism, considering leverage of 2.12x and implied equity ratio ~28%.

Risk Assessment

Business Risks:

• Project execution risk and cost overruns amid volatile materials and labor costs
• Order intake cyclicality tied to private and public construction demand
• Margin sensitivity to project mix and competitive bidding pressure
• Supply chain and subcontractor availability constraints
• Regional concentration risk if operations are geographically focused

Financial Risks:

• Moderate leverage (liabilities/equity 2.12x) amplifies earnings volatility
• Cash conversion risk from large receivables and advances typical in construction
• Interest rate exposure affecting financing costs and discount rates
• Limited visibility on liquidity buffers due to undisclosed cash and OCF data

Key Concerns:

• Inability to validate cash flow generation and working capital trends this quarter
• Potential normalization of operating margins from current elevated levels
• Data inconsistency between cost of sales and gross profit; reliance on disclosed gross margin for analysis

Investment Implications

Key Takeaways:

• Strong topline growth (+27.8% YoY) with outsized operating income growth (+73.8% YoY) indicates positive operating leverage
• Net margin at 3.03% and ROE at 3.51% reflect moderate profitability supported by leverage
• Interest coverage of 14.5x suggests comfortable debt service capacity
• Liquidity is adequate (current ratio ~1.16x), equity ratio inferred at ~27.7%
• Cash flow and inventory data are undisclosed; earnings-to-cash conversion remains a key unknown

Metrics to Watch:

• Order backlog and new orders to gauge revenue sustainability
• Gross and operating margins for signs of cost pressure or mix changes
• Operating cash flow, capex, and free cash flow once disclosed
• Receivables, contract assets/liabilities, and advances to assess working capital intensity
• Debt levels, interest expense, and coverage ratios amid interest rate shifts

Relative Positioning: Within Japanese general contractors of similar scale, Kudo Kensetsu exhibits stronger near-term operating momentum and adequate interest coverage, with a moderate equity buffer; however, visibility on cash conversion and working capital discipline is currently limited due to disclosure gaps.

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