SUNNY SIDE UP GROUP Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥5.43B
• Operating Income: ¥616M
• Net Income: ¥129M
• EPS: ¥32.30

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

Sunny Side Up Group delivered a strong FY2026 Q1 print with clear operating leverage. Revenue rose 47.6% YoY to ¥5.433bn, while operating income surged 241.7% to ¥616m, expanding the operating margin to roughly 11.3%. Net income increased 273.6% YoY to ¥479m, setting net margin at 8.82%. The DuPont bridge indicates ROE of 10.13%, driven by a healthy asset turnover of 0.634 and moderate financial leverage of 1.81. Gross margin stands at 15.5%, and the differential between operating and ordinary income is minimal, implying limited non-operating noise in the quarter. Interest expense is low at ¥1.676m, producing a very strong interest coverage of ~368x based on operating income. Liquidity is solid, with a current ratio of 177% and a quick ratio of ~177%, supported by light inventories (¥32m). Balance sheet resilience looks adequate: total assets are ¥8.575bn against total equity of ¥4.73bn, implying an equity ratio of ~55% (notwithstanding the reported 0.0% placeholder). The YoY profit acceleration suggests strong operating leverage from revenue mix, utilization, and SG&A discipline. Ordinary income of ¥621m versus operating income of ¥616m indicates minimal reliance on financial or one-off items. The effective tax burden calculated from disclosed figures appears around 10–12%, not 0% as the placeholder metric suggests. Cash flow statements were not disclosed in this snapshot (zeros indicate unreported), so cash conversion and free cash flow cannot be assessed for the quarter. Dividend data is also not disclosed for the term (DPS shown as 0 is a placeholder), making payout policy assessment contingent on future filings. While the quarterly momentum is compelling, sustainability will depend on pipeline visibility in core PR/marketing activations, event execution cadence, and client budget trends. Overall, Q1 performance points to improved profitability quality and balance sheet strength, but the absence of cash flow disclosure limits a full-quality assessment.

Profitability Analysis

ROE_decomposition: Reported ROE is 10.13%, decomposed as Net Profit Margin 8.82% × Asset Turnover 0.634 × Financial Leverage 1.81. This mix indicates profits are primarily margin- and efficiency-led with moderate leverage. margin_quality: Gross margin is 15.5% (GP ¥844m on revenue ¥5,433m). Operating margin is ~11.3% (¥616m/¥5,433m), with the gap to gross margin suggesting tight SG&A control in the quarter. Ordinary margin is ~11.4% (¥621m/¥5,433m), confirming minimal non-operating drag. Net margin of 8.82% demonstrates clean flow-through. operating_leverage: Revenue grew 47.6% YoY while operating income grew 241.7% YoY, evidencing strong operating leverage. This likely reflects higher utilization and favorable mix within project-based businesses (events/PR/promotions) alongside cost discipline.

Growth Assessment

revenue_sustainability: Top-line growth of 47.6% YoY is robust; sustainability hinges on repeat campaigns, contract backlog, event calendar density, and client marketing budget resilience. profit_quality: The small delta between operating and ordinary income suggests earnings quality is supported by core operations rather than one-offs. Interest burden is de minimis, reinforcing quality. outlook: If activity levels and mix persist, margins could remain elevated relative to last year; however, the project-driven nature of the business introduces quarter-to-quarter variability. Monitoring seasonality and booking visibility for the next two quarters is key.

Financial Health

liquidity: Current assets ¥8.626bn and current liabilities ¥4.866bn imply a current ratio of 177% and quick ratio of ~177% given low inventories (¥32m). Working capital is ¥3.761bn. solvency: Total equity ¥4.73bn vs total assets ¥8.575bn yields an estimated equity ratio of ~55% (reported 0% appears to be a placeholder). Debt-to-equity is 1.21x when using total liabilities to equity, reflecting moderate leverage. capital_structure: Financial leverage of 1.81x (assets/equity) is moderate. Interest expense is low (¥1.676m), and interest coverage is very strong (~368x), indicating ample headroom.

Cash Flow Quality

earnings_quality: Non-operating items are limited (ordinary ≈ operating). Effective tax appears ~10–12% (¥66m tax vs ¥621m ordinary income or ¥545m pre-tax using NI+tax), consistent with low-volatility earnings this quarter. FCF_analysis: Operating, investing, and financing cash flows were not disclosed in this snapshot (zeros indicate unreported). Free cash flow cannot be computed. working_capital: Working capital of ¥3.761bn supports operations; low inventories reduce obsolescence risk. Without OCF disclosure, we cannot assess cash conversion cycles or the magnitude of receivables changes typical in project-driven revenues.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio appear as 0.0% due to non-disclosure for the quarter. With EPS of ¥32.30 in Q1, capacity exists for distributions, but quarterly payout policies are not evident from the data. FCF_coverage: FCF is unreported, so coverage cannot be assessed. policy_outlook: Await full-year guidance or interim dividend announcements. Given moderate leverage and improved profitability, the balance sheet could support distributions, but visibility requires confirmed cash generation and management policy.

Risk Assessment

Business Risks:

• Project timing and seasonality causing revenue and margin volatility
• Client budget cuts in marketing/PR affecting pipeline
• Execution risk in large events/promotions
• Talent retention and utilization in a people-driven model
• Concentration risk if top clients drive a high share of revenue

Financial Risks:

• Working capital swings from receivables and unbilled revenues
• Potential cost inflation in subcontracting and event logistics
• Limited disclosure on cash flows this quarter reduces visibility on cash conversion
• Exposure to macro-sensitive advertising and promotion cycles

Key Concerns:

• Sustainability of the Q1 growth and margin uplift
• Lack of cash flow disclosure to validate earnings-to-cash conversion
• Possible normalization of margins as mix and activity shift across quarters

Investment Implications

Key Takeaways:

• Revenue +47.6% YoY with operating income +241.7% shows powerful operating leverage
• ROE of 10.13% underpinned by 8.82% net margin and 0.634x asset turnover
• Liquidity is strong (current ratio ~177%) with modest inventories
• Interest coverage ~368x reflects minimal financial risk this quarter
• Cash flow and dividend data are not disclosed; watch for updates to confirm cash conversion

Metrics to Watch:

• Order backlog and visibility for Q2–Q3
• Operating margin sustainability and SG&A trajectory
• Receivables days and OCF once disclosed
• Client concentration metrics and win rates
• Any guidance updates on dividends or capital allocation

Relative Positioning: Within Japan’s PR/marketing and event activation peer set, the company’s Q1 shows above-peer top-line growth and a sharper margin recovery, supported by moderate leverage and strong liquidity; confirmation via cash flow disclosure will be important to solidify comparative strength.

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