NIHON HOUSE HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥14.41B
• Operating Income: ¥515M
• Net Income: ¥1.17B
• EPS: ¥6.21

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

For FY2026 Q2 (consolidated, JGAAP), Japan House Holdings (18730) reported a sharp top-line contraction and heavy margin compression, with revenue down 21.4% YoY to ¥14,408m and operating income down 72.3% YoY to ¥515m. Net income declined 78.6% YoY to ¥248m, translating to an EPS of ¥6.21 (shares outstanding not disclosed, so per-share context is limited). The DuPont bridge indicates ROE of 1.13%, driven by a thin net margin of 1.72%, low asset turnover of 0.347x, and moderate financial leverage of 1.89x. Operating margin stood at roughly 3.6%, consistent with significant negative operating leverage amid revenue contraction. The provided gross margin is 54.8%, which appears unusually high for a house builder; we use the reported metric but acknowledge that account classification under JGAAP or segment aggregation may influence this figure. EBITDA was ¥1,289m (8.9% margin), and interest coverage remained adequate at 5.9x, indicating manageable debt service capacity despite profit pressure. Ordinary income was ¥461m, below operating income after non-operating items; interest expense was ¥88m. The reported effective tax rate metric is 0.0%, which does not reconcile with the disclosed income tax of ¥510m and positive net income; tax line items likely include timing or non-recurring adjustments, and the effective tax ratio in the calculated section should not be relied upon. Balance sheet strength is moderate: total assets are ¥41,568m with total equity of ¥21,973m (implying an equity ratio of approximately 52.9% based on balance sheet totals, while the tabular equity ratio shows 0.0% as undisclosed). Liquidity is tight with a current ratio of 98.1% and working capital of -¥234m, though quick ratio at 97.4% suggests limited inventory reliance for short-term liquidity (inventory disclosure itself is minimal). Operating cash flow was strong at ¥3,733m, far exceeding net income (OCF/NI of 15.05x), likely driven by working capital release; however, detailed drivers are not fully visible due to limited line-item disclosure. Investing cash flow and cash balances were not disclosed, constraining free cash flow and net cash assessments; reported FCF is shown as 0, reflecting data unavailability rather than true zero. The company paid no dividends (DPS ¥0.00) and has a payout ratio of 0%, which conserves cash amid earnings pressure. Overall, profitability deterioration and tight liquidity require monitoring, but interest coverage and implied equity buffer are reasonable. Seasonality and backlog dynamics in the housing sector may explain part of the H1 softness; the outlook hinges on orders, pricing discipline, and cost control into the back half. Data limitations (notably for cash, investing flows, and per-share base) temper precision, so tracking subsequent quarterly disclosures will be key.

Profitability Analysis

ROE_decomposition: ROE 1.13% = Net profit margin 1.72% × Asset turnover 0.347 × Financial leverage 1.89. The primary drag is a very low net margin, with slow asset turnover typical for asset-intensive homebuilding and only moderate leverage. margin_quality: Operating margin is ~3.6% (¥515m/¥14,408m), down sharply YoY, indicating significant negative operating leverage. Reported gross margin is 54.8%, unusually high for the industry; we rely on the provided metric but note that classification differences could inflate the gross line. EBITDA margin is 8.9%, implying meaningful SG&A and other operating costs pressure. operating_leverage: Revenue fell 21.4% YoY while operating income dropped 72.3% YoY, indicating high negative operating leverage. Cost base appears relatively fixed near-term; absorption effects and pricing pressure likely compounded margin compression.

Growth Assessment

revenue_sustainability: Top-line declined to ¥14,408m (-21.4% YoY). In a homebuilding context, this likely reflects weaker order intake, slower site progress, or delayed closings. Without order/backlog disclosure, sustainability is uncertain. profit_quality: Net margin 1.72% and operating margin ~3.6% indicate compressed profitability. Ordinary income below operating income and interest expense of ¥88m further tighten profits. The reported tax line appears noisy relative to net profit, suggesting non-recurring/timing effects. outlook: Recovery depends on orders, backlog conversion in H2, pricing power versus construction input inflation, and SG&A discipline. If demand stabilizes and cost pressures ease, margins could normalize; otherwise, continued negative operating leverage remains a risk.

Financial Health

liquidity: Current ratio 98.1% and quick ratio 97.4% indicate tight near-term liquidity; working capital is -¥234m, suggesting reliance on rolling short-term liabilities and ongoing collections. solvency: Total equity ¥21,973m vs total assets ¥41,568m implies an equity ratio of ~52.9% (tabular equity ratio shown as 0.0% is undisclosed). Debt-to-equity is 0.93x and interest coverage 5.9x, consistent with moderate leverage and serviceable interest burden. capital_structure: Leverage is balanced for the sector with D/E 0.93x. Financial leverage of 1.89x from DuPont aligns with a mid-50% equity buffer on the balance sheet, supporting going-concern flexibility.

Cash Flow Quality

earnings_quality: OCF of ¥3,733m versus net income of ¥248m (OCF/NI 15.05x) suggests strong cash conversion, likely driven by working capital inflows (e.g., collections, advances) rather than core margin expansion. FCF_analysis: Investing CF is undisclosed (0 placeholder), so true free cash flow cannot be determined; reported FCF of 0 reflects missing investing cash data. Without capex/land acquisition detail, FCF sustainability is non-assessable. working_capital: Working capital is modestly negative, and quick ratio near 1.0 implies receivables/payables timing is key. Inventory disclosure is minimal (¥100m), likely incomplete; thus, specific WC drivers (land/units under construction) are not visible.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00; payout ratio 0% aligns with the need to conserve cash amid earnings compression and tight liquidity. FCF_coverage: FCF coverage is shown as 0.00x due to undisclosed investing cash flows; therefore, we cannot evaluate dividend coverage on a cash basis. policy_outlook: Given reduced profitability and lack of FCF visibility, a conservative stance on shareholder returns is likely until earnings and liquidity improve and investing cash needs are clarified.

Risk Assessment

Business Risks:

• Housing demand softness and order volatility amid macro uncertainty and rate sensitivity
• Construction cost inflation (materials and subcontractor labor) pressuring gross margins
• Project execution and scheduling risk affecting revenue recognition and cash timing
• Pricing power limitations in a competitive homebuilding market
• Geographic concentration and demographic headwinds in Japan’s housing market
• Supply chain bottlenecks and subcontractor availability

Financial Risks:

• Tight liquidity (current ratio 98.1%, negative working capital) increases rollover and timing risk
• Interest rate increases could raise financing costs and dampen demand
• Potential reliance on customer advances; reversal could pressure cash flows
• Tax and non-operating items volatility affecting bottom-line predictability

Key Concerns:

• Sustained negative operating leverage if revenue does not recover in H2
• Visibility on investing cash flows and net cash/liquidity reserves is limited
• Discrepancies in tax metrics and margin composition complicate earnings quality assessment

Investment Implications

Key Takeaways:

• Sharp YoY revenue decline (-21.4%) and operating income contraction (-72.3%) reflect severe margin compression
• ROE is low at 1.13% driven by thin net margin and low asset turnover
• Liquidity is tight (current ratio 98.1%, working capital -¥234m) despite adequate interest coverage (5.9x)
• Operating cash flow is strong (¥3,733m), but FCF cannot be assessed due to undisclosed investing CF
• Implied equity ratio is healthy (~52.9%), supporting solvency despite weak profitability
• Dividend suspended (DPS ¥0), conserving cash amid uncertainty

Metrics to Watch:

• Orders received, backlog, and cancellation rate
• Gross margin on new orders and overall gross margin trend
• SG&A ratio and fixed cost absorption
• Operating cash flow sustainability and movements in advances/receivables
• Investing cash flows (capex, land acquisition) and net cash/liquidity levels
• Interest coverage and current ratio trajectory
• ROE improvement via margin recovery and asset turnover

Relative Positioning: Within Japan’s homebuilding cohort, the company exhibits weaker interim profitability and growth this period, but maintains moderate leverage and an implied solid equity base; near-term positioning hinges on order recovery and cost control versus peers.

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