RAITO KOGYO CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥65.06B
• Operating Income: ¥6.91B
• Net Income: ¥3.74B
• EPS: ¥114.55

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

Raito Kogyo Co., Ltd. (19260) delivered strong FY2026 Q2 consolidated results under JGAAP, with clear signs of operating leverage and disciplined balance sheet management. Revenue rose 18.4% YoY to ¥65.06bn, while operating income increased 25.5% to ¥6.91bn, indicating margin expansion alongside top-line growth. Net income grew 33.1% to ¥5.02bn, outpacing revenue and operating profit, aided by low interest costs and modest non-operating gains. Gross margin stood at 17.9% and operating margin at 10.6%, both healthy for a civil engineering–oriented business model. EBITDA reached ¥8.36bn (12.8% margin), with D&A of ¥1.45bn implying moderate capital intensity. Cash generation was robust: operating cash flow of ¥8.32bn implies an OCF/Net Income ratio of 1.66x, signaling high earnings quality and strong cash conversion. The balance sheet is conservative: total assets ¥121.37bn and total equity ¥86.96bn imply an equity ratio around 71–72% based on non-zero items, and liabilities are modest at ¥33.53bn. Liquidity is strong with a current ratio of 2.47x and quick ratio of 2.47x (inventories are negligible at ¥24m), indicating ample working capital. Financial risk is limited: interest expense was only ¥49m and interest coverage is a very comfortable 141x. DuPont decomposition shows a net margin of 7.71%, asset turnover of 0.536x, and financial leverage of 1.40x, combining to an ROE of 5.77% for the period. Effective tax rate by proxy appears around the high-20s percent based on reported tax and income figures. Financing cash outflows of ¥6.96bn suggest shareholder returns and/or debt reduction, though detailed breakdowns and dividends were not disclosed in this dataset. While several line items are not disclosed (e.g., cash and equivalents, investing cash flows, dividend per share), the available non-zero data points are sufficient to conclude that profitability, cash generation, and financial health strengthened YoY. Seasonality in construction typically biases earnings toward the back half; thus, the first-half strength bodes positively for full-year performance if execution continues. Overall, the company demonstrates improving margins, solid cost control, and prudent capital structure, supporting operational resilience despite sector cyclicality. Data limitations (items recorded as zero) mean some assessments, such as free cash flow after capex and dividend sustainability, rely on proxies and qualitative judgment. Even so, the core signal from revenue growth, margin uplift, and cash conversion is clearly positive for the period.

Profitability Analysis

ROE_decomposition: DuPont metrics provided indicate Net Profit Margin 7.71% x Asset Turnover 0.536x x Financial Leverage 1.40x = ROE 5.77% for the half-year period. The primary driver of ROE improvement YoY appears to be margin expansion (operating profit +25.5% vs revenue +18.4%), with modest leverage and steady asset efficiency. margin_quality: Gross margin 17.9% and operating margin 10.6% reflect effective project selection and cost control in a typically low-teens operating margin industry. Non-operating items are small (ordinary income ¥7.08bn vs operating income ¥6.91bn), implying earnings are predominantly operating in nature. Net margin at 7.71% benefits from low interest burden (¥49m). Proxy tax rate is in the high-20s percent range, consistent with normalized levels. operating_leverage: Operating income growth (+25.5% YoY) exceeded revenue growth (+18.4% YoY), indicating positive operating leverage. EBITDA margin at 12.8% vs operating margin 10.6% suggests manageable D&A burden (¥1.45bn) and a stable fixed-cost base supporting incremental margins on higher volumes.

Growth Assessment

revenue_sustainability: Top-line growth of +18.4% YoY signals robust demand execution in the first half. Construction-related businesses can exhibit seasonality and project timing effects; sustained growth will depend on backlog conversion and order intake in H2. profit_quality: Earnings quality is high with OCF/Net Income at 1.66x and minimal reliance on non-operating gains. Interest costs are negligible, and tax expense appears consistent with normalized levels, supporting the durability of net profit growth. outlook: Given margin expansion and cash conversion in H1, the trajectory into H2 is favorable if project mix and execution remain solid. Watch for potential normalization of margins as project phasing shifts and for any input cost pressures; nonetheless, the current run-rate suggests the company is well positioned to meet or exceed internal plans.

Financial Health

liquidity: Current assets ¥78.41bn vs current liabilities ¥31.72bn yield a current ratio of 2.47x and quick ratio of 2.47x (inventories ¥24m are negligible), indicating strong near-term liquidity and ample buffer for project working capital needs. solvency: Total equity ¥86.96bn against total assets ¥121.37bn implies an equity ratio around 71–72% based on non-zero items, denoting a conservative capital base. Interest coverage is 141x, and total liabilities-to-equity is ~0.39x, underscoring low financial risk. capital_structure: Leverage is modest (financial leverage 1.40x; liabilities/equity ~0.39x). Financing cash outflow of ¥6.96bn indicates capacity for shareholder returns and/or deleveraging while maintaining balance sheet strength.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥8.32bn vs net income of ¥5.02bn (OCF/NI 1.66x) reflects strong cash realization, suggesting limited accrual build and healthy collection of receivables during the period. FCF_analysis: Free cash flow cannot be precisely determined because investing cash flow and capex were not disclosed in the dataset. EBITDA of ¥8.36bn and modest D&A imply manageable maintenance capex needs, but growth capex is unknown. working_capital: Working capital is ¥46.69bn, and liquidity ratios are strong. Given the project-based nature of the business, cash conversion can fluctuate with billing milestones; the current period indicates favorable working capital dynamics.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed in the provided data (zeros denote non-disclosure). EPS is ¥114.55; if dividends are paid, the strong earnings and low leverage suggest capacity to sustain distributions, but exact payout level is unknown. FCF_coverage: FCF is not available due to missing investing cash flow/capex disclosure. On a proxy basis, OCF is ample relative to likely dividends for a company of this size, but confirmation requires capex and dividend details. policy_outlook: While specific policy signals are not provided here, the conservative balance sheet and positive OCF underpin an ability to maintain or gradually increase shareholder returns, subject to capex plans and order visibility.

Risk Assessment

Business Risks:

• Project execution risk and margin volatility due to cost overruns or schedule delays
• Order intake and backlog timing affecting revenue visibility and seasonality
• Input cost inflation (materials, labor) potentially compressing margins
• Exposure to public sector budgeting cycles and policy-driven demand
• Competition in civil engineering/geotechnical segments impacting pricing

Financial Risks:

• Working capital swings inherent in milestone-based billing and collections
• Potential increase in capex for capacity or equipment renewal not captured in current disclosures
• Currency exposure on any imported materials or overseas projects (if applicable)
• Counterparty risk from customers in downturn scenarios

Key Concerns:

• Lack of disclosed investing cash flows and cash balance limits precision of FCF and liquidity runway analysis
• First-half strength may not fully extrapolate to full-year due to seasonality
• Limited visibility on dividend policy and capital allocation priorities from the provided data

Investment Implications

Key Takeaways:

• Strong H1 revenue growth (+18.4% YoY) with operating leverage (OP +25.5% YoY)
• Healthy margins: GM 17.9%, OP margin 10.6%, EBITDA margin 12.8%
• High earnings quality with OCF/NI at 1.66x and OCF margin ~12.8%
• Very low interest burden; interest coverage 141x
• Conservative balance sheet with equity ratio around 71–72% and current ratio 2.47x
• Non-operating items minimal; profitability primarily operating-driven
• Financing outflows suggest active shareholder returns and/or deleveraging

Metrics to Watch:

• Order intake and backlog to validate revenue sustainability into H2
• Project mix and cost trends to monitor margin durability
• Working capital (receivables, unbilled, advances) and OCF conversion
• Capex/investing cash flows to refine FCF and dividend coverage views
• Any updates on dividend policy and share buyback activity

Relative Positioning: Within Japan’s civil engineering and construction services cohort, the company appears to be operating with above-average balance sheet strength, solid mid-teen gross margins, and disciplined cost control, positioning it favorably on profitability resilience and cash conversion while maintaining low financial risk.

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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