Aoba-BBT,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.82B
• Operating Income: ¥197M
• Net Income: ¥101M
• EPS: ¥7.97

Income Statement

Balance Sheet

Cash Flow Statement

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: Aoba-BBT delivered a modestly better-than-expected quality quarter with slight profit growth, robust cash generation, and a conservative balance sheet, but profitability and ROE remain subdued. Revenue rose 1.0% YoY to 38.17, while operating income increased 3.4% YoY to 1.97, and ordinary income rose 6.9% YoY to 2.03, indicating mild operating leverage. Net income grew 2.6% YoY to 1.00, with EPS of 7.97 yen. Gross profit came in at 14.99, implying a gross margin of 39.3%, while the operating margin stands at 5.2% (1.97/38.17). Given revenue growth of 1.0% vs operating income growth of 3.4%, operating margin likely expanded slightly, although precise bps change cannot be quantified from available disclosures. EBITDA was 3.08, implying an EBITDA margin of 8.1% and a depreciation and amortization burden of 1.11. Non-operating items were small (income 0.07, expenses 0.02), so core operating trends dominated earnings. Earnings quality was strong: operating cash flow of 5.03 was approximately 5.0x net income, signaling healthy cash conversion. Liquidity remains comfortable with cash and deposits of 30.44 and a current ratio of 129.9% (above 1.0 but below a 1.5 comfort threshold). Leverage is modest with debt-to-equity of 0.68x and interest coverage of 246.9x, reflecting minimal financial risk. ROE is low at 2.2%, driven by a thin net margin (2.6%) and moderate asset turnover (0.503), despite only moderate leverage (1.68x). ROIC is 6.4%, below the 7–8% target range common in the market, highlighting room for efficiency or mix improvement. The effective tax rate was elevated at 50.4%, which depressed bottom-line margin; normalization would be an upside lever for net profit. Intangible assets and goodwill are sizable at 26.85 combined (35% of assets), implying sensitivity to impairment tests. Forward-looking, modest top-line growth paired with disciplined SG&A is key to margin expansion, with cash on hand providing flexibility for investment or shareholder returns. Overall, the quarter shows resilient cash generation and stable operations, but structural profitability remains the key improvement area.

Profitability Analysis

ROE decomposition (DuPont): ROE 2.2% = Net Profit Margin (2.6%) × Asset Turnover (0.503) × Financial Leverage (1.68x). The binding constraint is the low net margin at 2.6%; asset turnover is moderate and leverage is not high. The component likely improving modestly YoY is the operating margin, inferred from revenue growth of 1.0% vs operating income growth of 3.4% (bps change not quantifiable with given data). Business drivers: SG&A of 13.01 (34.1% of revenue) consumed 86.8% of gross profit, leaving limited operating profit despite a 39.3% gross margin; tax expense at a 50.4% effective rate further compressed net margin. Sustainability: slight operating margin improvement could be sustainable if SG&A is controlled and mix favors higher-margin courses/services; the elevated tax rate may normalize, offering upside to NPM, while non-operating contributions are small and likely recurring at low levels. Watch-fors: SG&A growth outpacing revenue would quickly erode operating leverage; current data show only modest positive leverage (OP +3.4% vs Sales +1.0%).

Growth Assessment

Top-line growth was modest at +1.0% YoY to 38.17, signaling steady but slow demand in the period. Profit growth outpaced sales modestly: operating income +3.4%, ordinary income +6.9%, and net income +2.6%, indicative of incremental efficiency or mix benefits. Gross margin at 39.3% supports the view of stable pricing and cost control; operating margin at 5.2% remains thin but likely improved slightly YoY (exact bps not available). EBITDA margin of 8.1% indicates limited operating leverage given SG&A intensity. Non-operating income (0.07) was not a material driver; core profitability was the main contributor. The elevated effective tax rate (50.4%) trimmed net growth; any normalization would help sustain bottom-line growth even with flat sales. Given the company’s strong cash position, selective investment in high-ROIC offerings and digital content could support sustainable growth. Near-term outlook: expect low single-digit revenue growth with a focus on margin discipline; risk to the outlook stems from wage inflation and competitive intensity in digital education/training. Data limitations (no segment detail, no ARPU/enrollment KPIs) constrain the depth of revenue sustainability analysis.

Financial Health

Liquidity: Current ratio 129.9% (1.30x) and quick ratio 129.9% are adequate (above 1.0 threshold but below the 1.5 comfort benchmark); cash and deposits of 30.44 comfortably exceed current liabilities of 26.91, limiting near-term liquidity risk. Solvency: Debt-to-equity of 0.68x is conservative; long-term loans are only 0.75. Interest coverage is very strong at 246.9x, implying minimal refinancing risk. Maturity mismatch: With cash (30.44) + receivables (2.61) exceeding current liabilities (26.91), short-term obligations appear covered; short-term loans are unreported, but coverage from liquid assets provides cushion. Off-balance sheet: No off-balance sheet obligations were disclosed in the provided data. Capital structure: Equity of 45.10 vs liabilities of 30.79 reflects a solid equity buffer. No explicit warning triggers (CR <1.0 or D/E >2.0) are present.

Cash Flow Quality

OCF/Net Income of 5.03x signals high earnings quality and strong cash conversion. Operating cash flow of 5.03 versus net income of 1.00 suggests either robust profitability-to-cash dynamics or a favorable working capital tailwind (details unreported). Capex was modest at 0.48, implying an indicative FCF of about 4.55 before other investing activities (investing CF details unreported). Given the cash balance of 30.44 and limited debt service needs, FCF appears sufficient to fund maintenance capex and potential modest shareholder returns. No signs of aggressive working capital manipulation are evident from the limited data, but the OCF uplift may include timing effects (e.g., deferred revenue or payables), which are not disclosed. Overall, cash flow quality is strong this quarter.

Dividend Sustainability

The calculated payout ratio is 156.9%, which is above sustainable norms (<60% benchmark) and implies dividends exceed current-period earnings. Dividend per share and total dividends paid were unreported, so the payout calculation basis is unclear; interpret with caution. On a cash basis, indicative FCF (OCF 5.03 minus capex 0.48 ≈ 4.55) suggests the company could fund dividends if the absolute cash outlay is modest, supported by cash on hand of 30.44. However, sustaining a payout materially above earnings would not be prudent over the medium term without earnings growth. Policy visibility is low due to missing DPS guidance; watch for full-year payout guidance and linkage to profit or FCF.

Risk Assessment

Business Risks:

• Modest revenue growth (+1.0% YoY) limits operating leverage and margin expansion potential
• High SG&A intensity (34.1% of sales; 86.8% of gross profit) constrains operating margin
• Dependence on intangible assets and goodwill (26.85; 35% of assets) raises impairment risk if growth underperforms
• Elevated effective tax rate (50.4%) depresses net margin and could remain volatile
• Competitive pressure in digital education/training could compress pricing and retention

Financial Risks:

• Payout ratio calculated at 156.9% suggests potential strain if maintained without earnings growth
• Current ratio only moderate at 1.30x; a working capital reversal could narrow liquidity headroom
• Asset turnover at 0.503 and ROE at 2.2% indicate low capital efficiency
• Investing cash flows and debt composition are unreported, limiting visibility on future obligations

Key Concerns:

• Low ROE (2.2%) and sub-target ROIC (6.4%) vs 7–8% benchmark
• Thin operating margin (5.2%) vulnerable to cost inflation
• Intangible-heavy balance sheet heightens impairment sensitivity
• Data gaps (dividends, investing CF, short-term debt) could conceal emerging risks

Investment Implications

Key Takeaways:

• Resilient quarter with slight profit growth and very strong cash conversion (OCF/NI 5.0x)
• Liquidity ample (cash 30.44 > current liabilities 26.91) and leverage low (D/E 0.68x)
• Profitability remains the main weakness: ROE 2.2%, ROIC 6.4%, operating margin 5.2%
• SG&A discipline is critical to sustain emerging operating leverage
• Tax rate normalization would be a material tailwind to NPM
• Dividend sustainability uncertain given a calculated payout >100% with incomplete disclosures

Metrics to Watch:

• Revenue growth vs SG&A growth (operating leverage)
• Operating margin and gross margin trend (bps)
• OCF/Net Income and working capital drivers (deferred revenue, receivables)
• Effective tax rate trajectory
• Goodwill and intangible impairment testing outcomes
• Dividend policy guidance and FCF coverage
• ROIC vs target range and capital allocation to higher-return initiatives

Relative Positioning: Relative to domestic education/e-learning peers, Aoba-BBT shows a conservative balance sheet and strong cash conversion but lags on structural profitability (ROE/ROIC) and top-line growth; execution on margin improvement and capital efficiency will determine convergence toward peer averages.

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