Saita Holdings Co., Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.55B
• Operating Income: ¥65M
• Net Income: ¥7M
• EPS: ¥90.88

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

Saita Holdings Co., Ltd. (19990) reported FY2026 Q1 consolidated results under JGAAP showing solid top-line expansion but margin compression and weaker earnings. Revenue grew 7.5% year over year to ¥1,551 million, indicating resilient demand or successful business development. Gross profit was ¥412 million, translating to a gross margin of 26.6%, which appears reasonable for a project/service-oriented business but leaves limited room to absorb higher operating costs. Operating income declined 11.6% YoY to ¥65 million, implying that selling, general, and administrative expenses grew faster than gross profit despite the revenue increase. Ordinary income of ¥85 million exceeded operating income, suggesting some non-operating gains or financial income helped offset operating pressure; however, net income fell 32.4% YoY to ¥57 million, pointing to a heavier tax burden and/or other below-the-line headwinds. Net profit margin was 3.68%, down from the prior year (implied by the YoY net profit decline), and the operating margin was 4.2%, indicating squeezed profitability. DuPont analysis shows ROE of 0.88% = Net margin (3.68%) × Asset turnover (0.174x) × Financial leverage (1.37x), reflecting low asset efficiency and modest leverage as key ROE constraints. The balance sheet appears conservative: total assets of ¥8,898 million against total liabilities of ¥2,902 million and equity of ¥6,474 million, implying an equity ratio of roughly 72.8% by our calculation (the reported 0.0% is treated as undisclosed). Liquidity is strong with a current ratio of 276% and quick ratio of 268%, supported by sizeable current assets relative to current liabilities, and working capital of ¥4,319 million. Interest coverage is healthy at about 26.7x, consistent with low financial risk. Cash flow statements and depreciation/amortization were not disclosed in the XBRL for this quarter (zeros indicate unreported), limiting our ability to assess earnings quality and capex intensity. Dividend per share was not disclosed for the period (annual DPS shown as 0.00), and outstanding shares data was also undisclosed; EPS was provided at ¥90.88, which anchors per-share profitability but prevents validation of share count-based metrics. Overall, the quarter demonstrates topline growth but weaker operating leverage, leading to a notable decline in operating and net income. The firm retains ample balance sheet capacity to navigate near-term volatility, but improving asset turnover and restoring operating margin will be critical to lift ROE. Given the absence of cash flow data and D&A details, we emphasize caution in interpreting EBITDA-based metrics and free cash flow coverage. Monitoring the trajectory of SG&A control, pricing power, and working capital discipline will be central to assessing sustainability of earnings recovery.

Profitability Analysis

ROE_decomposition: ROE 0.88% = Net margin 3.68% × Asset turnover 0.174 × Financial leverage 1.37. The primary drag is low asset turnover, with modest leverage offering limited lift. Net margin compression versus revenue growth further constrained ROE. margin_quality: Gross margin of 26.6% on ¥1,551m revenue yields ¥412m gross profit. Operating margin at ~4.2% (¥65m OI) indicates SG&A growth outpaced gross profit. Net margin of 3.68% reflects added pressure from non-operating/tax items despite ordinary income surpassing operating income. operating_leverage: Despite 7.5% revenue growth, operating income fell 11.6% YoY, signaling negative operating leverage in the quarter. This implies fixed/semi-fixed costs or deliberate investments (e.g., personnel, sales, systems) rose faster than gross profit, compressing margins.

Growth Assessment

revenue_sustainability: Top-line growth of 7.5% YoY suggests stable demand and/or effective business development. Without segment disclosure, sustainability hinges on repeat/project visibility, order backlog, and pricing power. profit_quality: Ordinary income exceeded operating income (¥85m vs. ¥65m), indicating reliance on non-operating contributions this quarter. Net income declined 32.4% YoY to ¥57m, implying margin pressure and potentially higher tax burden or non-recurring items. outlook: To translate revenue growth into earnings growth, the company needs to stabilize gross margin and rein in SG&A intensity. Improving asset turnover (currently 0.174x) via higher utilization or portfolio optimization would support ROE expansion. Absent cash flow data, visibility on capex and working capital needs remains limited, tempering near-term confidence.

Financial Health

liquidity: Current assets ¥6,768m vs. current liabilities ¥2,449m yield a current ratio of ~276% and quick ratio of ~268%, indicating ample near-term liquidity. Working capital stands at ¥4,319m. solvency: Total liabilities ¥2,902m vs. equity ¥6,474m imply a debt-to-equity (total liabilities/equity) of ~0.45x and an equity ratio of ~72.8% (derived). Interest coverage is ~26.7x (¥65m OI / ¥2.44m interest), evidencing low financial risk. capital_structure: Low leverage and strong liquidity provide flexibility. With asset turnover at 0.174x, capital efficiency improvement is a key lever for returns, given limited appetite/need for higher leverage.

Cash Flow Quality

earnings_quality: Operating cash flow was undisclosed this quarter (reported as 0 due to non-disclosure). As such, the OCF/Net Income ratio of 0.00 should not be interpreted as poor cash conversion. Earnings quality cannot be validated without cash flow or working capital details. FCF_analysis: Free cash flow was not disclosed. The absence of D&A data (reported as 0 due to non-disclosure) also limits inference on maintenance capex needs and EBITDA-derived metrics. working_capital: Current assets significantly exceed current liabilities, but without period flow data (AR, AP, inventory turns), we cannot assess whether revenue growth was supported by efficient collections or inventory management.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is undisclosed (shown as 0.00), and payout ratio of 0.0% reflects non-disclosure rather than policy. With EPS of ¥90.88, capacity for distributions would depend on true OCF and capex requirements. FCF_coverage: FCF not disclosed; the reported 0.00x coverage is not meaningful. Balance sheet strength suggests potential capacity, but sustainability requires confirmed positive OCF and visibility on capex. policy_outlook: No explicit dividend data this quarter. If the company targets a stable payout policy, recovery in operating margin and confirmation of cash generation would be prerequisites for distributions.

Risk Assessment

Business Risks:

• Margin pressure from rising labor, subcontracting, or input costs amid fixed SG&A base
• Project timing/seasonality risk leading to quarterly earnings volatility
• Pricing power constraints if competition intensifies
• Dependence on non-operating income to support ordinary profit in weak quarters
• Execution risk in scaling operations while maintaining cost discipline

Financial Risks:

• Low asset turnover (0.174x) constraining ROE
• Potential working capital build during growth phases impacting OCF (cash flow data not disclosed)
• Tax burden variability affecting net margins
• Exposure to interest rate changes is limited but present (interest expense ¥2.44m)

Key Concerns:

• Operating income decline (-11.6% YoY) despite 7.5% revenue growth
• Net income down 32.4% YoY, highlighting earnings sensitivity to margin and below-the-line items
• Absence of cash flow and D&A disclosures this quarter limits assessment of earnings quality and capex needs

Investment Implications

Key Takeaways:

• Top-line growth (+7.5% YoY) but negative operating leverage led to earnings decline
• ROE at 0.88% is primarily constrained by low asset turnover and compressed margins
• Balance sheet is strong with ~73% equity ratio and robust liquidity (current ratio ~276%)
• Ordinary income benefited from non-operating items versus operating income, but net profit fell sharply
• Cash flow and D&A not disclosed; confirmation of cash generation is a key validation point

Metrics to Watch:

• Operating margin recovery (targeting improvement from ~4.2%)
• Gross margin stability vs. input and labor cost trends
• SG&A ratio to sales and operating leverage trajectory
• Asset turnover improvement from 0.174x (e.g., order backlog conversion, utilization)
• OCF and FCF (once disclosed), including AR/AP/inventory turns
• Tax expense trajectory and its impact on net margin

Relative Positioning: Relative to typical Japanese small-cap peers, the company shows stronger balance sheet conservatism and liquidity, but currently weaker ROE due to low asset turnover and margin compression; sustained revenue growth with cost control is needed to close the return gap.

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