SAINT-CARE HOLDING CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥28.92B
• Operating Income: ¥1.29B
• Net Income: ¥1.06B
• EPS: ¥43.10

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

Verdict: A steady but quality-mixed quarter—topline grew and operating profit held flat, while net profit jumped on below-operating items and extraordinary gains. Revenue rose 3.3% YoY to 289.22, supported by resilient demand in care services. Operating income was essentially flat at 12.88 (+0.1% YoY), implying modest operating margin compression. Net income rose 31.4% YoY to 10.62, outpacing operating trends due to non-operating and extraordinary contributions. Gross profit was 36.32, translating to a gross margin of 12.6%. Operating margin was 4.45% (12.88/289.22), down roughly 14 bps YoY based on the growth differential between revenue and operating profit. Ordinary income reached 13.67 (+2.6% YoY), aided by non-operating income of 1.46 against non-operating expenses of 0.67. Profit before tax of 16.16 exceeds ordinary income by 2.49, indicating material extraordinary gains this quarter. Effective tax rate was 34.3%, broadly normal for JGAAP. ROE (DuPont) is 6.2%, driven by thin net margin (3.7%), asset turnover of 0.946, and moderate leverage of 1.78x. Liquidity remains strong with a current ratio of 235% and quick ratio of 233.8%. Balance sheet quality is solid with low long-term loans of 8.91 and strong interest coverage of 22.29x. However, OCF was unreported, preventing confirmation of earnings-to-cash conversion and dividend coverage. Payout ratio is calculated at a high 70.6%, which could constrain reinvestment if cash flow does not track earnings. Forward-looking, maintaining operating margin discipline amid wage inflation and regulatory fee revisions remains key. Overall, the quarter delivers stable operations with a lift from below-OP items, but sustainability hinges on cost control and cash generation.

Profitability Analysis

ROE decomposition: 6.2% = Net Profit Margin (3.7%) × Asset Turnover (0.946) × Financial Leverage (1.78x). The weakest link is the low net margin typical of care services, while leverage is moderate and asset turnover under 1x. Given revenue grew 3.3% and operating income only 0.1%, operating margin compressed by roughly 14 bps YoY (current 4.45% vs prior ~4.59% implied), signaling modest negative operating leverage. The biggest delta in profit growth came below operating income: ordinary income rose faster than OP, and PBT exceeded ordinary income by 2.49, indicating extraordinary gains that boosted net profit by 31.4%. Business reason: likely non-recurring gains or valuation/transaction effects and slightly higher non-operating income (interest and others), rather than fundamental margin expansion. Sustainability: operating margin pressure from personnel costs is a secular headwind, while extraordinary gains are by nature one-time and should not be extrapolated. Watch for SG&A trends; though itemized SG&A is unreported, the divergence (revenue +3.3% vs OP +0.1%) implies cost growth near or above revenue, a caution for future operating leverage.

Growth Assessment

Top-line growth of 3.3% YoY indicates steady demand. Operating profit growth was flat (+0.1%), suggesting growth quality was not fully cost-productive this quarter. Net income growth of +31.4% was driven by non-operating and extraordinary factors rather than core profitability improvements. Non-operating income ratio is 13.7%, a meaningful contribution to ordinary profit, elevating headline earnings. ROIC at 7.5% aligns with a 7–8% target range, implying adequate capital efficiency for the sector. Without OCF and capex data, sustainability of growth investments cannot be fully assessed; receivables are sizeable (94.11), so working capital discipline will matter for cash-backed growth. Outlook hinges on wage inflation management, service mix optimization, and potential reimbursement revisions in Japan’s long-term care insurance system. In the near term, we expect stable revenue with tight margin management, and a normalization of below-OP contributions.

Financial Health

Liquidity is strong: current ratio 235% and quick ratio 233.8% (both well above benchmarks). No warning on Current Ratio < 1.0 or D/E > 2.0; D/E is 0.78x, a conservative-to-moderate profile. Interest coverage is robust at 22.29x, indicating ample buffer to service interest expense (0.58). Maturity mismatch risk appears low: current assets of 173.88 comfortably cover current liabilities of 74.00; cash and deposits (67.80) plus receivables (94.11) alone exceed total current liabilities. Long-term loans are modest at 8.91; total interest-bearing debt is unreported, but solvency indicators are sound. Goodwill (5.99) and intangibles (7.61) are manageable relative to equity (171.36), mitigating impairment risk magnitude. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

Operating cash flow is unreported, so we cannot compute OCF/Net Income or free cash flow—this is a key limitation. As a result, earnings quality cannot be validated via cash conversion; we flag this as a monitoring item rather than a current issue. The large receivables balance (94.11) relative to revenue suggests timing of collections can influence period OCF; any increase in AR days would depress cash conversion. With capex and dividends unreported, FCF coverage of dividends is not assessable. No clear signs of working capital manipulation can be inferred from the limited dataset; however, given net profit outpaced operating profit changes and extraordinary gains boosted PBT, we expect cash conversion to lag headline NI this quarter.

Dividend Sustainability

The calculated payout ratio is high at 70.6% versus a <60% benchmark. With EPS (basic) at 43.10 yen, this implies an indicative DPS around 30 yen, subject to confirmation. Strong liquidity and low leverage provide short-term capacity to maintain dividends, but absent OCF/FCF data, sustainability beyond the near term is uncertain. If operating margin pressure persists and below-OP/extraordinary gains normalize, payout ratio could become stretched relative to internally generated cash. Policy-wise, we would expect management to prioritize stable dividends, but future adjustments could hinge on cash generation and investment needs.

Risk Assessment

Business Risks:

• Personnel cost inflation and caregiver labor shortages pressuring operating margins
• Regulatory/reimbursement changes in Japan’s long-term care insurance system
• Execution risk in service mix optimization and pricing
• Integration and impairment risk related to goodwill and intangibles (total 13.6)

Financial Risks:

• High payout ratio (70.6%) with unreported OCF/FCF may pressure financial flexibility
• Earnings reliance on non-operating/extraordinary items this quarter, increasing volatility of bottom line
• Receivables concentration and collection timing risk affecting cash conversion

Key Concerns:

• Operating margin compression (~14 bps YoY) despite revenue growth
• Net income growth (+31.4%) driven by below-OP and extraordinary factors, not core operations
• Data limitations: OCF, capex, and dividend cash amounts unreported

Investment Implications

Key Takeaways:

• Steady revenue growth (+3.3%) but flat operating profit (+0.1%) signals cost pressure
• Operating margin at 4.45% compressed modestly YoY
• NI up 31.4% on non-operating and extraordinary contributions—non-recurring risk
• Strong liquidity (current ratio 235%) and interest coverage (22.29x)
• ROE at 6.2% and ROIC at 7.5%—capital efficiency around sector norms
• High payout ratio (70.6%) could constrain reinvestment if cash flow lags earnings

Metrics to Watch:

• Operating margin and personnel cost ratio
• OCF/Net Income and FCF once disclosed
• AR days and cash conversion cycle
• Extraordinary gains/losses and non-operating income sustainability
• ROIC versus 8% threshold
• Dividend policy updates and payout guidance

Relative Positioning: Within Japan’s care services peers, the company shows above-average liquidity and conservative leverage, with margins that are thin but stable and ROIC near the 7–8% target range. Earnings quality this quarter is less robust due to reliance on below-OP and extraordinary items, placing emphasis on forthcoming cash flow disclosures and cost containment.

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