Hibino Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥31.32B
• Operating Income: ¥2.38B
• Net Income: ¥778M
• EPS: ¥133.54

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

Hibino Co., Ltd. delivered a strong FY2026 Q2, with revenue up 16.4% year over year to ¥31.3bn and operating income up 62.6% to ¥2.38bn, signaling solid demand recovery and effective cost control. Gross profit of ¥9.49bn implies a gross margin of 30.3%, supporting the view that mix and pricing have improved alongside scale. Operating margin expanded meaningfully to 7.6% (¥2.381bn/¥31.316bn) from an implied ~5.4% in the prior year period, demonstrating positive operating leverage. Ordinary income slightly exceeded operating income (¥2.396bn vs. ¥2.381bn), indicating net non-operating gains of roughly ¥15m despite ¥88m of interest expense. Net income rose 69.8% to ¥1.33bn, with EPS at ¥133.54, reflecting both top-line strength and margin expansion. The DuPont profile shows ROE at 9.97%, driven by a 4.23% net margin, 0.695x asset turnover, and 3.39x financial leverage, pointing to improved profitability on an asset-intensive base. Liquidity is adequate with a current ratio of 122.5% and positive working capital of ¥4.88bn; the quick ratio at 92.4% is slightly below 1x but consistent with the business model’s inventory and receivables needs. Capital structure is on the leveraged side with liabilities/equity of 2.42x and an implied equity ratio of ~29.5% (equity ¥13.29bn over assets ¥45.07bn), though interest coverage is healthy at 27.1x. Implied tax burden appears normal; using reported income tax of ¥582m and net income of ¥1.325bn suggests a pre-tax profit around ¥1.907bn and an effective tax rate near 30–31%, despite the 0.0% figure shown in summary metrics (zeros are undisclosed values). Cash flow items (OCF/FCF) and depreciation were not disclosed in this dataset, so cash conversion, capex intensity, and FCF coverage of dividends cannot be assessed here. Given Hibino’s equipment-centric operations, depreciation is typically material; the zero entries should be treated as unreported rather than true zeros. The growth profile appears broad-based, but sustainability will hinge on event/activity levels, utilization of rental assets, and pricing discipline. A stronger gross margin alongside faster operating profit growth than sales suggests structural improvements and/or favorable scale effects. Balance sheet capacity looks adequate for operations, but continued attention to leverage and working capital is warranted given the asset-heavy model. Dividend information shows as zero for this period and likely reflects non-disclosure at Q2; policy assessment requires full-year guidance. Overall, results indicate improved earnings quality at the P/L level, with the main analytical gap being the absence of cash flow and capex data.

Profitability Analysis

ROE of 9.97% decomposes into: net profit margin 4.23% × asset turnover 0.695 × financial leverage 3.39. The margin uplift is notable: operating income grew 62.6% versus revenue at 16.4%, taking operating margin to 7.6% from an implied ~5.4% a year ago, highlighting strong operating leverage. Gross margin of 30.3% indicates favorable mix/pricing and better cost absorption. Ordinary income modestly exceeded operating income by ¥15m, implying non-operating income net of interest of roughly ¥103m, partially offsetting financing costs; this supports margin quality. Interest coverage at 27.1x (operating income/interest expense) indicates low earnings sensitivity to interest costs at current levels. Net margin of 4.23% is consistent with a service-plus-asset model where depreciation (undisclosed here) typically depresses EBITDA-to-OP bridge; the zero EBITDA reported reflects non-disclosure rather than reality. Asset turnover at 0.695x is typical of an equipment-heavy rental/service provider, suggesting earnings gains are coming more from margins than from accelerated turnover. Overall, profitability is improving on both gross and operating lines, with clean non-operating contributions and manageable financing drag.

Growth Assessment

Top-line growth of 16.4% YoY (to ¥31.3bn) indicates robust demand, likely from recovery in live events, corporate/entertainment projects, and stable rental/utilization. Operating income rose 62.6% to ¥2.38bn, implying significant operating leverage and/or SG&A efficiency. Net income growth of 69.8% to ¥1.33bn further reflects limited below-the-line headwinds this period. The sustainability of revenue growth will depend on event calendars, corporate capex for A/V upgrades, and utilization rates; current margin trajectory suggests mix/pricing support beyond pure volume. With gross margin at 30.3%, the company appears to be capturing value from specialized services and equipment differentiation. Absence of cash flow and depreciation data limits assessment of whether growth requires elevated reinvestment; historically, the model is capex-intensive, so monitoring capex, backlog, and utilization is key. Outlook hinges on continuation of post-pandemic normalization in large-scale events and potential new verticals (sports, exhibitions, installations). Near-term momentum appears favorable given the scale-driven margin gains, but cyclicality in discretionary events introduces variability.

Financial Health

Total assets are ¥45.07bn and total equity is ¥13.29bn, implying financial leverage (assets/equity) of 3.39x and an implied equity ratio of ~29.5%. Total liabilities are ¥32.10bn, with a debt-to-equity proxy of 2.42x (liabilities/equity). Liquidity is adequate: current assets ¥26.61bn vs. current liabilities ¥21.73bn yield a current ratio of 122.5% and working capital of ¥4.88bn. Quick ratio of 92.4% aligns with current assets excluding inventories (¥26.61bn - ¥6.53bn ≈ ¥20.09bn). Interest coverage is strong at 27.1x, suggesting comfortable servicing of financing costs from operating earnings. While the disclosed equity ratio field shows 0.0%, the balance sheet data imply a solid, though not conservative, equity buffer. Given the equipment-heavy model, maintaining sufficient liquidity for seasonal working capital and capex is important. No cash balance or debt breakdown is provided here; refinancing and maturity profiles cannot be assessed from this dataset.

Cash Flow Quality

Operating, investing, and financing cash flows are undisclosed in this dataset (zeros indicate non-reporting). Consequently, OCF/Net Income, FCF, and cash conversion cycle diagnostics cannot be computed here, and the displayed OCF/NI ratio of 0.00 and FCF of 0 should be treated as placeholders. Earnings quality at the P/L level looks improved given gross and operating margin expansion and minimal non-operating distortion. However, without depreciation and capex data, we cannot assess the durability of earnings relative to maintenance investment needs. Working capital appears positive with inventories at ¥6.53bn; receivables and payables dynamics are not provided, limiting insight into cash conversion. When available, focus should be on OCF relative to operating income, capex versus depreciation (maintenance vs. growth), and intra-year working capital swings tied to event seasonality.

Dividend Sustainability

Dividend data for the period show as zero and are likely undisclosed at Q2; payout ratio and FCF coverage metrics displayed as 0.0%/0.00x are not meaningful. With net income at ¥1.33bn and improved margins, capacity for distributions appears to be improving at the earnings level, but sustainability depends on actual free cash flow after maintenance capex, which is not provided. Historically for asset-intensive service models, stable dividends rely on consistent OCF and disciplined capex. Policy outlook cannot be assessed from this dataset; full-year guidance and historical payout practices (interim/final) are needed. Monitor announced DPS at year-end, payout ratio versus net income, and FCF coverage once cash flows are disclosed.

Risk Assessment

Business Risks:

• Demand cyclicality in live events, exhibitions, and corporate A/V projects
• Utilization risk for rental assets leading to under-absorption
• Pricing pressure from competitive bidding in event services
• Technology obsolescence of A/V equipment requiring ongoing reinvestment
• Seasonality and project timing affecting quarterly volatility
• Supply chain and lead-time risks for specialized equipment
• FX exposure on imported equipment costs
• Execution risk on large-scale events and installations

Financial Risks:

• Leverage sensitivity with liabilities/equity at 2.42x
• Refinancing and interest rate risk (debt tenor/mix undisclosed)
• Working capital swings affecting OCF in peak seasons
• Capex intensity potentially compressing FCF in growth periods
• Potential impairment risk on specialized equipment if demand softens

Key Concerns:

• Lack of disclosed cash flow and depreciation data limits visibility on FCF and maintenance needs
• Quick ratio below 1x, requiring tight working capital management
• Asset turnover at 0.695x indicates dependence on margin to drive ROE

Investment Implications

Key Takeaways:

• Strong topline growth (+16.4% YoY) with outsized operating profit growth (+62.6%) signals effective operating leverage
• Gross margin at 30.3% and operating margin at 7.6% reflect improved mix and scale benefits
• ROE at 9.97% improves on higher margins, supported by moderate asset turnover and elevated leverage
• Liquidity is adequate (current ratio 1.23x) with positive working capital, though quick ratio is just under 1x
• Interest coverage is robust at 27.1x, mitigating near-term financing risk
• Cash flow and depreciation not disclosed; FCF and dividend capacity cannot be verified

Metrics to Watch:

• Operating cash flow versus net income and working capital movements
• Capex versus depreciation (maintenance vs. growth split)
• Utilization rates, order backlog, and project pipeline
• Gross and operating margin trajectory (pricing, mix, SG&A ratio)
• Debt maturity profile, interest rate exposure, and net debt/EBITDA when disclosed
• Dividend declarations and payout policy at year-end

Relative Positioning: Within Japan’s A/V event services and equipment rental niche, Hibino appears to be executing above trend on operating leverage and margin expansion, with leverage higher than asset-light peers but manageable given strong interest coverage; visibility on cash generation remains the main differentiator to confirm durability.

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