YAMAURA CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥19.16B
• Operating Income: ¥2.04B
• Net Income: ¥1.57B
• EPS: ¥83.03

Income Statement

Balance Sheet

Cash Flow Statement

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

Verdict: Strong topline and profit growth with resilient margins, but earnings quality is weakened by a large operating cash outflow in the half. Revenue rose 29.1% YoY to 191.59, supported by robust project execution and volume gains. Operating income increased 28.9% YoY to 20.37, keeping pace with revenue growth. Ordinary income outpaced operating growth at +43.8% YoY to 23.17, aided by higher non-operating income (2.85) and minimal non-operating costs (0.05). Net income surged 48.3% YoY to 15.71, underscoring strong bottom-line leverage. Gross margin printed at 17.8% and the operating margin at roughly 10.6%, implying margin resilience despite cost pressures typical in construction. With operating and revenue growth nearly matched, operating margin appears broadly flat YoY; the exact basis-point change cannot be confirmed due to limited prior-period detail. The SG&A ratio was 7.2% of revenue (13.82/191.59), suggesting controlled overhead amid scale benefits. Non-operating items contributed meaningfully; net non-operating income of about 2.80 made up roughly 12% of ordinary income, adding a helpful tailwind this quarter. ROE was 6.3% on a conservative leverage base (assets/equity 1.35x), while ROIC of 8.9% exceeds typical 7–8% targets for industrials, indicating healthy invested capital efficiency. Liquidity is robust with a current ratio of 308% and cash/deposits of 87.13, supporting near-term commitments. However, operating cash flow was -27.62 (OCF/NI = -1.76x), indicating a notable divergence between accrual earnings and cash generation, likely from working capital build tied to growth and project timing. Financing cash flow was -3.11, including share repurchases of -0.67, while capex was modest at -4.52. Dividend affordability looks comfortable on earnings (calculated payout ratio 32.2%), but near-term cash coverage is thin given negative OCF in H1. Forward-looking, the combination of strong order execution and margin stability is encouraging, yet the business must convert H2 collections and working capital unwinds to normalize cash flow and sustain capital returns. Overall, performance quality hinges on cash conversion in the back half; monitoring backlog conversion, receivables/WIP, and cost discipline is key.

Profitability Analysis

ROE decomposition: 6.3% ROE = 8.2% Net Profit Margin × 0.575 Asset Turnover × 1.35x Financial Leverage. The largest positive driver in the period appears to be margin improvement at the net level, as NI growth (+48.3% YoY) outpaced revenue growth (+29.1%), implying higher net margin YoY. Non-operating tailwinds (net +2.80) also supported ordinary profit growth above operating profit growth, enhancing bottom-line margin. Asset turnover at 0.575 reflects better utilization relative to the sizable asset base; with assets not disclosed YoY, turnover change cannot be precisely quantified, but revenue expansion points to at least stable or improving efficiency. Financial leverage remains conservative at 1.35x (assets/equity), limiting ROE amplification but reducing risk. Business drivers: controlled SG&A (7.2% of revenue) and steady gross margin (17.8%) underpinned operating margin (~10.6%), while dividend and interest income within non-operating (2.85) provided incremental lift. Sustainability: operating margin appears structurally supported by scale and SG&A discipline, while non-operating contributions (e.g., dividends, interest) are recurring but variable and should not be over-relied upon. Watch-outs: if SG&A growth accelerates above revenue, or if input cost inflation compresses gross margins, operating leverage would reverse. Current signs do not show SG&A growth exceeding revenue growth, but lack of detailed SG&A breakdown limits deeper diagnostics.

Growth Assessment

Topline growth was strong at +29.1% YoY, likely driven by higher volumes and project progress. Operating profit rose +28.9% YoY, broadly matching revenue and indicating stable core margin dynamics. Ordinary profit growth of +43.8% YoY benefited from improved non-operating income (notably dividend income 0.43 and interest income 0.16), lifting total profitability. Net income +48.3% YoY demonstrates enhanced net margin, possibly aided by mix and financial income; effective tax rate detail is unavailable. EBITDA of 22.00 implies an EBITDA margin of 11.5%, consistent with the operating margin profile. Growth quality is mixed: profit growth is solid, but cash conversion was weak in H1 (OCF -27.62), suggesting working capital absorption tied to growth and construction progress timing. Sustainability will depend on order backlog conversion, input cost pass-through, and H2 collections. Near-term outlook: if H2 normalizes collections (typical seasonality in construction), cash flow should converge toward earnings; otherwise, continued working capital build could constrain capital allocation flexibility. Non-operating gains are supportive but should be treated as ancillary rather than core drivers. ROIC at 8.9% indicates growth is currently value-accretive.

Financial Health

Liquidity is strong: current ratio 307.7% and quick ratio 307.7%, with current assets 262.24 vs current liabilities 85.22 and cash/deposits of 87.13. There is no warning for Current Ratio (<1.0): the company is well above that threshold. Solvency is conservative: debt-to-equity is 0.35x and interest coverage is 585x, indicating minimal financial stress; detailed interest-bearing debt is unreported, but low interest expense (0.03) corroborates light leverage. Maturity mismatch risk appears low, as sizable current assets more than cover current liabilities, though receivables/WIP details are unreported and could introduce timing risk typical of project businesses. Noncurrent liabilities are minimal (0.87), limiting long-dated refinancing pressures. Off-balance sheet obligations are not disclosed; given industry norms, guarantees and performance bonds may exist but are not visible in the data provided.

Cash Flow Quality

Earnings quality is a concern this half: OCF/Net Income is -1.76x (<0.8 threshold), driven likely by working capital build (receivables/WIP/advance payments timing), as capex is modest at -4.52. On an estimated basis, FCF (OCF - capex) is around -32.14, indicating cash burn in H1 despite accounting profits; this may normalize if H2 collections convert backlog. Interest coverage is extremely high (585x), suggesting cash interest is not the issue; rather, it is operating cash timing. Potential manipulation signs are not evident, but monitoring shifts in receivables, contract assets, and advances is important; lack of line-item disclosure limits a deeper forensic check. For dividend and buyback sustainability, the company will need improved OCF in H2.

Dividend Sustainability

The calculated payout ratio is 32.2%, comfortably below the 60% benchmark, indicating headroom on an earnings basis. However, cash coverage is weak this half due to negative OCF; FCF (estimated) is negative, which cannot fund dividends and buybacks without drawing on cash balances. Given a high cash balance (87.13) and low leverage, near-term dividend continuity is supported, but medium-term sustainability depends on OCF normalization and stable capex. Policy details and DPS are unreported; absent guidance, a stable-to-modest growth stance is plausible if H2 cash improves. Share repurchases of -0.67 were modest and manageable against cash on hand.

Risk Assessment

Business Risks:

• Project execution and timing risk leading to volatility in revenue recognition and cash collections
• Input cost inflation (materials, subcontracting) potentially compressing gross margins
• Labor availability constraints and wage inflation impacting SG&A and project scheduling
• Demand cyclicality in construction/real estate-related end markets

Financial Risks:

• Negative operating cash flow in H1 and potential working capital build creating cash conversion risk
• Dependence on non-operating income to lift ordinary profit in some periods (roughly 12% of ordinary income this half)
• Limited visibility into interest-bearing debt composition due to unreported details (though interest expense is low)

Key Concerns:

• OCF/NI ratio at -1.76x flags earnings quality risk
• Receivables/contract assets and inventories not disclosed, obscuring working capital dynamics
• Potential for margin pressure if cost pass-through weakens or project mix shifts unfavorably

Investment Implications

Key Takeaways:

• Strong H1 growth: revenue +29.1%, OP +28.9%, NI +48.3%
• Margins resilient: GM 17.8%, OP margin ~10.6%, SG&A ratio 7.2%
• Ordinary income buoyed by non-operating gains; net non-op ~12% of OI
• ROE 6.3% on low leverage; ROIC 8.9% indicates value-accretive growth
• Liquidity robust (current ratio ~308%, cash 87.13) and leverage light (interest expense 0.03)
• Earnings quality weak in H1 with OCF -27.62; cash conversion is the swing factor for H2
• Capex modest (4.52) and buybacks small (0.67), manageable against cash
• Dividend affordability fine on earnings (payout ~32%), but watch cash coverage

Metrics to Watch:

• Order backlog and book-to-bill
• Receivables days, contract assets/WIP, and advances from customers
• H2 operating cash flow and FCF
• Gross margin and cost pass-through on materials/subcontracting
• SG&A growth vs revenue growth
• Non-operating income stability (dividends/interest) and its share of ordinary income
• ROIC vs WACC to confirm value creation

Relative Positioning: Within domestic mid-cap contractors, Yamauara shows above-average liquidity, conservative leverage, and solid operating margins with improving ROIC, but trails best-in-class peers on ROE due to low leverage and faces a notable near-term cash conversion gap that it must close in H2.

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