TSUKADA GLOBAL HOLDINGS Inc. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥49.11B
• Operating Income: ¥3.58B
• Net Income: ¥2.30B
• EPS: ¥83.22

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

Tsukada Global Holdings (2418) reported FY2025 Q3 (cumulative) consolidated results under JGAAP showing solid top- and bottom-line momentum, with revenue of ¥49.1bn (+14.8% YoY) and operating income of ¥3.59bn (+34.0% YoY). Gross profit was ¥15.91bn, yielding a robust gross margin of 32.4%, indicating improved mix/pricing and/or cost discipline. Operating margin expanded to roughly 7.3% (operating income/revenue), evidencing operating leverage as revenue growth outpaced cost growth. Ordinary income of ¥1.81bn sits below operating income, implying net non-operating expenses (notably interest expense of ¥0.585bn) and potentially other financial/non-operating items weighing on this line. Net income, however, reached ¥3.95bn (+71.8% YoY), surpassing operating and ordinary income, suggesting the presence of extraordinary gains and/or tax effects under JGAAP. The effective tax rate displays as 0.0%, likely reflecting special factors (e.g., tax credits, loss carryforwards, or extraordinary items) rather than a structural tax rate; this should be viewed as non-recurring without further disclosure. DuPont analysis indicates ROE of 10.41%, driven by an 8.03% net margin, 0.355x asset turnover, and 3.65x financial leverage, a balanced return profile supported by both margin recovery and moderate leverage. Liquidity appears adequate with a current ratio of 126% and working capital of ¥5.44bn, aided by current assets of ¥26.32bn against current liabilities of ¥20.88bn. The debt-to-equity ratio of 2.05x (liabilities/equity) signals a leveraged capital structure but manageable given an interest coverage of about 6.1x. Equity-to-assets (computed) is approximately 27.4%, despite the disclosed equity ratio showing 0.0% (likely an unreported metric rather than zero). Cash flow data (OCF, FCF, financing CF) were not disclosed in the XBRL feed and therefore appear as zeros, limiting assessment of earnings-to-cash conversion at this stage. Similarly, depreciation/amortization and inventories were unreported, which depresses the calculated EBITDA to zero and inflates EBITDA margin/lender metrics artificially; these zeros should not be interpreted as actual values. No dividend was disclosed (DPS 0.00), and payout ratio/FCF coverage appear as 0.0%/0.00x due to missing CF data and a non-declared dividend; policy signals cannot be inferred. Overall, results point to a continued post-pandemic normalization in core operations (weddings/hospitality) with improved profitability, but the quality and sustainability of net income require validation once cash flow and extraordinary item details are available.

Profitability Analysis

ROE of 10.41% is decomposed into: net profit margin 8.03% x asset turnover 0.355x x financial leverage 3.65x. The gross margin of 32.4% (¥15.91bn GP on ¥49.11bn revenue) supports a 7.3% operating margin, evidencing better operating efficiency versus the prior year (operating income +34% vs revenue +14.8%). Ordinary margin is 3.7% (¥1.81bn/¥49.11bn), reflecting interest and other non-operating costs. Net margin at 8.03% exceeds ordinary margin, pointing to extraordinary gains and/or favorable tax items. Operating leverage is positive: fixed cost absorption appears stronger as volumes recover, magnifying operating income growth relative to sales. Interest coverage stands at ~6.1x (¥3.585bn/¥0.585bn), adequate for a service/hospitality model. Margin quality is good at the gross and operating levels, but the gap between operating, ordinary, and net income indicates a meaningful non-operating and extraordinary component; hence, recurring profitability should be anchored to operating income rather than bottom-line. Depreciation was unreported (0), so EBITDA and related ratios are not meaningful; true operating cash profitability is likely higher than reported EBITDA figures suggest.

Growth Assessment

Revenue growth of +14.8% YoY to ¥49.1bn signals healthy demand recovery and potential share gains or price/mix improvements. Operating income grew +34.0% YoY to ¥3.59bn, indicating efficiency gains and operating leverage. The YoY acceleration in net income (+71.8%) suggests non-recurring support (extraordinary or tax effects); sustainability should be assessed using operating income as the baseline. Asset turnover of 0.355x is modest for a service asset base, consistent with a venue/hospitality footprint; further utilization upticks could support growth without large asset additions. Outlook hinges on continued recovery of wedding volumes, banquet/F&B, and hospitality occupancy/ADR; absent disclosed segment detail, growth appears broad-based. Pricing discipline and cost management likely contributed to improved gross and operating margins. With ordinary income below operating income, financial costs and other non-operating factors remain a drag; reducing interest expense or stabilizing FX/financial items could enhance recurring growth. Given missing cash flow data, the conversion of earnings to cash cannot be confirmed; sustaining growth will require continued working capital discipline and capex prioritization. Near-term, we expect revenue normalization to continue if consumer demand and event activity remain firm, but net income growth will likely normalize toward operating trends as extraordinary/tax items fade.

Financial Health

Total assets are ¥138.51bn, total equity ¥37.90bn, and total liabilities ¥77.68bn. Computed equity-to-assets is approximately 27.4% (vs. disclosed equity ratio 0.0%, which appears unreported). The debt-to-equity ratio (liabilities/equity) is 2.05x, implying a leveraged profile consistent with asset-heavy venues and hospitality. Current assets of ¥26.32bn and current liabilities of ¥20.88bn yield a current ratio of 126% and working capital of ¥5.44bn, indicating adequate short-term liquidity. Quick ratio also reads 126% due to inventories being unreported (0); true quick coverage may be slightly lower once inventories are included. Interest expense is ¥0.585bn; with operating income of ¥3.585bn, interest coverage is ~6.1x, a comfortable cushion but sensitive to earnings volatility. Ordinary income below operating income highlights the cost of carry on the balance sheet and potential exposure to financial market movements. Without CF data, we cannot assess debt amortization capacity or refinancing needs; however, the current ratio and coverage suggest no immediate stress. Ongoing attention to leverage, tenor structure, and floating-rate exposure remains important in a rising/volatile rate environment.

Cash Flow Quality

Cash flow statement items (OCF, investing CF, financing CF) are undisclosed in the dataset and appear as zeros; thus, the OCF/Net Income ratio of 0.00 and FCF of 0 should not be interpreted literally. Earnings quality at the operating level looks improved given higher gross and operating margins, but verification requires OCF and working capital detail. The large spread between operating income and net income suggests non-operating/extraordinary impacts; cash conversion of these items may be limited or timing-dependent. Depreciation was also undisclosed, rendering EBITDA metrics unusable and impairing assessment of maintenance vs growth capex needs. Working capital appears stable at the balance-sheet level given the current ratio and positive working capital, but without period cash movements we cannot confirm whether revenue growth required incremental receivables or prepayments. Overall, preliminary view is that operating earnings quality is improving, but full validation awaits the release of OCF and capex data.

Dividend Sustainability

No dividend per share (DPS 0.00) and a reported payout ratio of 0.0% were disclosed for the period; given missing cash flow data, FCF coverage cannot be assessed (reported 0.00x is not meaningful). With net income of ¥3.95bn and ROE of 10.41%, there is potential capacity for dividends if the company so chooses, but absent a stated policy and OCF/capex visibility, sustainability cannot be evaluated. Capital allocation likely prioritizes balance sheet resilience and potential reinvestment in venue maintenance/refresh and marketing. Future dividends will depend on stabilization of core earnings (operating income), cash conversion, leverage targets, and any covenants. Monitor year-end guidance and policy commentary for clarity on payout intentions.

Risk Assessment

Business Risks:

• Cyclicality in weddings/hospitality demand and discretionary consumer spending
• Demographic headwinds in Japan affecting marriage rates and ceremony sizes
• Seasonality and event concentration risk affecting quarterly volatility
• Competitive pricing pressure from alternative venues and experiential offerings
• Dependence on travel/inbound tourism for hospitality/banquet utilization
• Cost inflation in labor, F&B, and energy potentially compressing margins

Financial Risks:

• Leverage at 2.05x liabilities/equity and associated interest burden (¥0.585bn YTD)
• Exposure to non-operating items (ordinary income < operating income), including FX and financial market volatility
• Refinancing and interest rate risk if a portion of debt is floating or near maturity
• Cash flow visibility limited due to undisclosed OCF/FCF; potential working capital swings
• Potential covenant constraints if earnings soften

Key Concerns:

• Sustainability of net income boost given extraordinary/tax effects implied by 0% effective tax rate
• Absence of cash flow disclosure impedes validation of earnings quality and debt service capacity
• Unreported depreciation distorts EBITDA-based metrics and could mask higher maintenance capex needs

Investment Implications

Key Takeaways:

• Top-line recovery (+14.8% YoY) and operating leverage (+34.0% operating income) are evident
• ROE of 10.41% supported by improved margins and moderate leverage
• Ordinary income lagging operating income underscores ongoing financial/non-operating drag
• Net income uplift likely includes non-recurring elements; recurring profitability best gauged at operating level
• Liquidity is adequate (current ratio 126%), and interest coverage is reasonable (~6.1x)
• Leverage is material (2.05x liabilities/equity); deleveraging would enhance resilience
• Cash flow and depreciation were not disclosed, limiting assessment of cash conversion and maintenance needs

Metrics to Watch:

• Operating margin trajectory and gross margin sustainability
• Ordinary income vs operating income gap (tracking non-operating costs and FX)
• Interest expense run-rate and effective interest rate
• OCF, FCF, and capex once disclosed; OCF/NI conversion ratio
• Working capital days (receivables/payables/inventories) when available
• Leverage ratios (net debt/EBITDA when D&A disclosed) and interest coverage
• Any updates to dividend policy and year-end payout intentions

Relative Positioning: Within Japan’s weddings/hospitality cohort, TGHD appears to be in a recovery phase with improving operating margins and adequate liquidity, though leverage remains above some peers and bottom-line volatility is elevated due to non-operating and extraordinary items; clarity on cash generation and capex will be key to narrowing any valuation or risk premium versus better-capitalized competitors.

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