Soiken Holdings Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.42B
• Operating Income: ¥127M
• Net Income: ¥-290M
• EPS: ¥3.21

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 mixed FY2026 Q1 with modest top-line growth and positive earnings but with unusual line-item dynamics and limited cash flow visibility. Revenue rose 1.6% YoY to 14.15, while gross profit reached 6.69, implying a solid gross margin of 47.3%. Operating income printed at 1.27, translating into an operating margin of roughly 9.0% on the quarter. Ordinary income was 1.33, indicating some contribution from non-operating income (0.02) and potentially disciplined non-operating costs (unreported), though the non-operating line is small. Net income was 0.83, producing a quarterly net margin of 5.9% and a calculated ROE of 1.4% on very low leverage (Assets/Equity 1.14x). Balance sheet strength remains a clear positive: cash and deposits of 48.14 and current assets of 65.42 dwarf current liabilities of 7.89, yielding a current ratio of 828.8% and working capital of 57.52. Despite the strong ordinary income, the reported profit before tax of -2.82 contradicts the positive net income and small tax expense; this suggests classification differences or undisclosed extraordinary items under JGAAP—hence, we prioritize NI and ordinary income for performance interpretation and flag P/L mapping as a data limitation. SG&A of 9.39 exceeds gross profit, which typically implies an operating loss; the positive operating income suggests the presence of other operating income not itemized in the breakdown. Margin comparison in basis points vs. prior year is not available due to missing YoY margin data; on an absolute basis, the operating margin appears healthy for the quarter. Non-operating income was minimal (0.02), indicating earnings were primarily operating-driven this quarter. Leverage is low (Debt-to-Equity 0.14x using total liabilities as a proxy), reducing financial risk and interest burden risk, though interest expense was unreported. Cash flow quality cannot be assessed because operating cash flow was not disclosed, a key limitation for evaluating earnings sustainability. The payout ratio appears elevated at 157.6% on reported calculations, which may reflect seasonality and the small Q1 earnings base rather than a full-year policy stance. With robust liquidity and sizable retained earnings (21.82), near-term financial flexibility is high, but cash conversion risk remains unassessed. Forward-looking, the company must sustain gross margins and manage SG&A to protect operating leverage, while clarifying the discrepancy between ordinary income, PBT, and NI. Investors should watch OCF trends, SG&A discipline, and any extraordinary items that bridge the gap between ordinary income and earnings.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (5.9%) × Asset Turnover (0.208) × Financial Leverage (1.14x) = ROE ~1.4%. The biggest driver of the low ROE is the modest asset turnover (revenue 14.15 on assets 67.94), reflecting a cash-heavy balance sheet and possibly early-year seasonality. Net margin at 5.9% is reasonable for the quarter given an operating margin near 9.0%, though the gap to PBT/NI indicates potential extraordinary or classification effects. Financial leverage is very low (1.14x), which dampens ROE but enhances solvency. Business reason: high cash holdings (48.14) and a light liability structure suppress leverage and turnover; SG&A intensity (9.39) also caps margins despite a solid gross margin (47.3%). Sustainability: low leverage is likely sustained; margin profile hinges on SG&A control and product/service mix. The positive ordinary income suggests core operations are profitable, but the PBT discrepancy points to non-recurring or special items that may not repeat. Concerning trends: SG&A (9.39) exceeds gross profit (6.69), which is atypical; the positive operating income likely relies on other operating income—this dependence should be monitored. Without YoY margin and SG&A growth data, we cannot confirm operating leverage trends versus the prior year.

Growth Assessment

Top-line growth was modest at +1.6% YoY (14.15), suggesting steady demand but not strong acceleration. Gross margin at 47.3% indicates pricing/mix resilience; maintaining this while scaling revenue would be key to operating leverage. Operating income of 1.27 and ordinary income of 1.33 show that core profitability held up; however, the negative PBT reported (-2.82) introduces uncertainty about one-off items. Non-operating income was negligible (0.02), so earnings quality depends on operating contributions and any unreported other operating income. With no segment data, we cannot attribute growth by business line or product mix. Outlook hinges on SG&A discipline—if SG&A can be aligned with gross profit growth, operating margins can improve. Absent cash flow data, revenue sustainability via repeat orders, backlog, or subscription-like elements cannot be validated.

Financial Health

Liquidity is very strong: current assets 65.42 vs current liabilities 7.89 yield a current ratio of 8.29x; quick ratio is effectively the same given minimal inventories reported. No warning triggers: Current Ratio >> 1.0 and D/E (using total liabilities/equity proxy) is 0.14x, well below 2.0. Cash of 48.14 comfortably covers all current liabilities, minimizing refinancing risk. Maturity mismatch risk appears low given large cash and current asset buffers relative to current liabilities. Interest-bearing debt details are unreported; however, total liabilities are small (8.09), suggesting limited leverage. No off-balance sheet obligations were disclosed in the data provided.

Cash Flow Quality

Operating cash flow is unreported, preventing OCF/NI analysis and FCF assessment. Therefore, we cannot evaluate earnings-to-cash conversion or working capital dynamics. With NI at 0.83, OCF/NI cannot be compared to the 0.8 threshold; earnings quality remains unverified. Capex and dividends are unreported, leaving FCF coverage of shareholder returns unknown. Given high cash on hand (48.14), near-term liquidity risk is low, but sustainability of payouts and reinvestment depends on recurring OCF that is not disclosed.

Dividend Sustainability

The calculated payout ratio of 157.6% appears high relative to quarterly earnings, but DPS and total dividends are unreported and quarterly seasonality can distort this metric. Without OCF and capex data, FCF coverage of dividends cannot be assessed. Balance sheet flexibility is strong (cash 48.14, retained earnings 21.82), providing capacity for distributions in the short term. Longer-term dividend sustainability hinges on consistent OCF generation and maintaining operating margins; current disclosures are insufficient to confirm coverage.

Risk Assessment

Business Risks:

• Margin pressure if SG&A remains elevated relative to gross profit, limiting operating leverage
• Potential reliance on other operating income to achieve positive operating profit
• Limited visibility on segment mix and revenue quality (recurring vs. one-time) hampers predictability
• Regulatory and labeling changes in health/functional foods and clinical/health services could impact demand and costs
• Supply chain and raw material cost volatility affecting gross margin

Financial Risks:

• Cash flow uncertainty due to unreported operating cash flow and capex
• Potential one-off gains/losses or extraordinary items causing P/L volatility (ordinary income vs. PBT discrepancy)
• Small scale limits operating buffers against shocks despite strong liquidity

Key Concerns:

• Inconsistency between ordinary income (1.33), reported profit before tax (-2.82), and positive net income (0.83) suggests classification or undisclosed special items
• SG&A (9.39) exceeding gross profit (6.69) implies dependence on other operating income to achieve EBIT
• Dividend payout ratio (157.6%) appears high on quarterly earnings; sustainability unverified without OCF

Investment Implications

Key Takeaways:

• Top line grew modestly (+1.6% YoY) with strong gross margin (47.3%)
• Operating income positive (1.27) despite high SG&A, implying other operating income contributions
• Ordinary income healthy (1.33), but PBT reported negative, creating earnings quality uncertainty
• Balance sheet is cash-rich with very low leverage; liquidity risk is minimal
• Dividend sustainability cannot be assessed due to missing cash flow data; calculated payout appears high on a quarterly basis

Metrics to Watch:

• Operating cash flow and working capital movements (AR days vs. revenue 14.15; AR 4.41)
• SG&A ratio to sales and progress on cost control
• Gross margin stability and product/service mix
• Reconciliation items between ordinary income, PBT, and NI (extraordinary gains/losses under JGAAP)
• Capex and investment intensity to gauge future growth and FCF
• Tax rate normalization given distorted effective tax rate (-2.9%)

Relative Positioning: Relative to small-cap peers, the company exhibits superior liquidity and conservative leverage but lower capital efficiency (asset turnover 0.208) and unresolved earnings quality questions due to unreported cash flow and unusual P/L mapping.

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