YAMAURA CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥19.16B
• Operating Income: ¥2.04B
• Net Income: ¥1.06B
• 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

Yamaura Co., Ltd. (1780) delivered a strong FY2026 Q2 (cumulative) top-line and earnings performance under JGAAP on a consolidated basis, with revenue up 29.1% year over year to ¥19.16bn. Operating income increased 28.9% to ¥2.04bn, indicating that operating profit broadly kept pace with sales growth, and net income rose 48.3% to ¥1.57bn, aided by a solid non-operating result. Gross margin was 15.2% and operating margin 10.6%, suggesting disciplined cost control and favorable project mix. Ordinary income of ¥2.32bn exceeded operating income, implying positive non-operating contributions, while interest expense remained minimal at ¥8.8m, driving an interest coverage ratio of 230x. Net profit margin reached 8.2%, reflecting robust profitability for a construction-oriented business model. DuPont analysis shows an ROE of 6.35% built from an 8.20% net margin, 0.575x asset turnover, and 1.35x financial leverage—moderate returns with conservative balance sheet risk. Total assets stood at ¥33.34bn and equity at ¥24.73bn, indicating low leverage and a healthy capital base. Liquidity appears strong with a current ratio of 328% and sizable working capital of ¥17.02bn. However, operating cash flow was negative at -¥2.21bn, resulting in an OCF/Net Income ratio of -1.41, signaling weak cash conversion during the period, likely due to working capital consumption common in contract-based businesses. Investing cash flow and cash and equivalents were not disclosed in the XBRL (reported as zero), which limits cash flow quality assessments and free cash flow estimation. The reported effective tax rate of 0% likely reflects timing effects or consolidation dynamics rather than a structural tax rate. Dividend information (DPS and payout) was not disclosed despite showing as zero, so dividend policy and distribution capacity cannot be inferred from this dataset. Overall, earnings momentum and margins are solid, leverage is low, and interest burden is negligible, but negative OCF and incomplete cash flow disclosures temper visibility on cash generation. Second-half seasonality, order backlog conversion, and working capital normalization will be critical to sustain full-year profitability and cash flow. Data limitations (several items reported as zero due to non-disclosure) warrant caution when interpreting cash and dividend metrics.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin 8.20% × Asset Turnover 0.575 × Financial Leverage 1.35 = ROE 6.35% (matches reported). Margins: Gross 15.2% (¥2.92bn/¥19.16bn), Operating 10.6% (¥2.04bn/¥19.16bn), Ordinary 12.1% (¥2.32bn/¥19.16bn), Net 8.2% (¥1.57bn/¥19.16bn). Margin quality appears sound with operating margin stability alongside strong revenue growth, indicating effective project execution and cost pass-through. EBITDA was ¥2.20bn (margin 11.5%), providing ample coverage over interest (230x). Operating leverage: Revenue grew 29.1% YoY while operating income grew 28.9% YoY—nearly proportional—suggesting limited incremental operating leverage in this half; efficiency gains are present but tempered by scale effects and potential mix. Non-operating items were a net positive (ordinary > operating), supporting bottom-line growth. Effective tax rate is 0.0% in this period (tax expense unreported), likely timing-related; normalized tax would reduce net margin and ROE ex-timing. Overall profitability is solid for a contractor with conservative leverage and good cost discipline.

Growth Assessment

Revenue expanded 29.1% YoY to ¥19.16bn, a strong acceleration consistent with a healthy order environment and progress on existing projects. Operating income grew 28.9% YoY to ¥2.04bn, suggesting that revenue growth was not achieved at the expense of margin dilution. Net income rose 48.3% YoY to ¥1.57bn, benefiting from supportive non-operating items and minimal interest burden. Sustainability: Construction revenue is typically lumpy and dependent on order backlog and project timing; absent backlog disclosure, durability of the growth rate into H2 is uncertain. Profit quality: Ordinary income outpacing operating income implies non-operating support; recurring operating profitability remains the key determinant for full-year earnings. EPS was ¥83.03 for the period; seasonality could lead to divergence from a simple run-rate annualization. Outlook hinges on backlog conversion, bid pipeline, cost inflation trajectory (materials and labor), and mix of higher-margin projects. Given OCF weakness, near-term growth may require additional working capital, making execution on collections and milestone billings important. Overall, the growth profile is favorable year to date, but maintaining momentum will depend on H2 project delivery and cost control.

Financial Health

Balance sheet strength is a key positive: Total assets ¥33.34bn and total equity ¥24.73bn imply conservative leverage (assets/equity ~1.35x). The reported debt-to-equity ratio is 0.31x, indicating modest reliance on interest-bearing debt relative to equity. Liquidity appears robust with current assets ¥24.48bn versus current liabilities ¥7.47bn, yielding a current ratio of 327.9% and sizable working capital of ¥17.02bn. Quick ratio equals the current ratio due to inventories being unreported; in construction, contract assets often substitute for inventories, so true quick liquidity may be slightly lower but still ample. Interest expense is only ¥8.85m, consistent with low financial risk. Equity ratio was reported as 0.0% due to non-disclosure; based on available assets and equity, the implied equity ratio is approximately 74%—indicative of high solvency. Overall, the company demonstrates strong liquidity and solvency, with capacity to absorb shocks and fund operations, though the current period’s negative OCF highlights working capital sensitivity.

Cash Flow Quality

Earnings quality is mixed: strong accrual profits but weak cash conversion this half. Operating cash flow was -¥2.21bn, producing an OCF/Net Income ratio of -1.41, which points to significant working capital outflows (e.g., increases in receivables/contract assets or decreases in advances from customers). This pattern is not uncommon mid-year for contractors depending on project billing schedules, but it does elevate execution and collection risk if not reversed in H2. Investing cash flow was not disclosed, so maintenance vs. growth capex cannot be assessed; as a result, free cash flow cannot be reliably calculated despite a reported “0” figure. EBITDA of ¥2.20bn indicates healthy pre-working-capital operating capacity relative to the small interest burden, but cash realization is the key watchpoint. Working capital: With current assets far exceeding current liabilities, the firm has headroom; however, the period draw on OCF suggests cash is tied up in ongoing projects. Monitoring contract assets/liabilities, receivable days, and billing milestones will be crucial.

Dividend Sustainability

Dividend per share and payout ratio are shown as 0.00 in the dataset but should be treated as not disclosed rather than zero. Without DPS and actual cash and capex data, payout sustainability and FCF coverage cannot be determined. Earnings capacity appears solid (net income ¥1.57bn in H1), and leverage is low, which would generally support distribution flexibility. However, negative operating cash flow this period implies that any dividend would rely on either H2 cash inflows or existing liquidity. Policy outlook cannot be inferred from the provided data; confirmation of historical payout policy and planned distributions would be needed for a robust assessment.

Risk Assessment

Business Risks:

• Project execution risk on fixed-price or long-duration contracts affecting margins
• Order backlog visibility and dependence on successful bidding for new projects
• Input cost volatility (materials, subcontracting, and labor) impacting gross margins
• Timing risk in revenue recognition and milestone billings driving earnings lumpiness
• Regional concentration risk if operations are geographically focused
• Seasonality and weather disruptions affecting construction progress

Financial Risks:

• Negative operating cash flow due to working capital build in the period
• Collection and counterparty risk on receivables/contract assets
• Potential need for short-term financing if working capital outflows persist
• Interest rate risk is limited but present if leverage increases
• Tax rate normalization from a reported 0% effective rate could lower net margins

Key Concerns:

• OCF/Net Income ratio of -1.41 indicating weak cash conversion in H1
• Incomplete cash flow disclosure (Investing CF and cash balance not reported)
• Dependence on H2 backlog conversion to sustain full-year earnings and cash
• Ordinary income exceeding operating income suggests non-operating reliance

Investment Implications

Key Takeaways:

• Strong topline growth (+29.1% YoY) with stable operating margin (~10.6%)
• Net income up 48.3% aided by non-operating gains and minimal interest burden
• Moderate ROE at 6.35% with conservative leverage (assets/equity ~1.35x)
• Very strong liquidity (current ratio ~3.28x) and low debt (D/E ~0.31x)
• Operating cash flow negative (-¥2.21bn), highlighting working capital sensitivity
• Several balance sheet and cash flow items not disclosed, limiting FCF analysis

Metrics to Watch:

• Order backlog and new orders/bid-win rate
• Gross and operating margin trajectory in H2
• Operating cash flow and working capital components (receivables, contract assets/liabilities)
• Ordinary vs. operating income mix (recurring vs. non-operating contributions)
• Interest-bearing debt levels and interest coverage
• Tax rate normalization in H2 and full-year

Relative Positioning: Versus domestic small-to-mid cap general contractors, Yamaura shows stronger liquidity and lower leverage than many peers, mid-tier profitability with an ROE in the mid-single digits, and weaker cash generation in this half due to working capital outflows; sustained H2 execution and cash normalization would be needed to converge toward higher-quality peer cash profiles.

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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