| Metric | Current | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥18.4B | ¥16.7B | +10.2% |
| Operating Income | ¥2.1B | ¥1.6B | +30.3% |
| Ordinary Income | ¥2.5B | ¥2.6B | -3.8% |
| Net Income | ¥1.7B | ¥1.7B | -3.8% |
| ROE | 3.2% | 3.4% | - |
FY2026 Q2 results were Revenue ¥18.4B (YoY +¥1.7B +10.2%), Operating Income ¥2.1B (YoY +¥0.5B +30.3%), Ordinary Income ¥2.5B (YoY -¥0.1B -3.8%), and Net Income ¥1.7B (YoY -¥0.1B -3.8%). At the operating level, the company achieved higher revenue and profit, maintaining a high gross margin of 65.4%. While the operating margin improved to 11.7% from the prior-year period, Ordinary Income edged down despite recording ¥0.5B in gains on sale of marketable securities under non-operating items, and Net Income was flat. For the Full Year, the company forecasts Revenue of ¥41.2B (YoY +12.0%) and Operating Income of ¥5.2B (YoY +12.5%), assuming a recovery in the second half.
[Profitability] ROE 3.2% (down from 5.8% in the prior year), Operating Margin 11.7% (+2.1pt improvement from 9.6% in the prior year), maintaining a high Gross Margin of 65.4%. ROIC stands at 4.7%, indicating room to improve capital efficiency. [Cash Quality] Operating Cash Flow (OCF) to Net Income ratio of 0.65x indicates weak cash conversion of profits; cash conversion ratio 0.46x; accrual ratio 1.0%. The company holds cash and deposits of ¥21.8B, and short-term liability coverage is 4.2x, indicating ample liquidity. [Investment Efficiency] Total Asset Turnover 0.31x; Capex-to-Depreciation ratio 0.05x, indicating restrained capital expenditures and potential concern about future underinvestment. [Financial Soundness] Equity Ratio 88.2%, Current Ratio 498.0%, and Debt-to-Capital ratio 0.13x, maintaining an extremely conservative financial structure.
Operating Cash Flow was ¥1.1B, or 0.65x of Net Income of ¥1.7B, indicating weak cash conversion of profits. Investing Cash Flow was -¥2.0B, mainly due to acquisition and sale of investment securities and movements in time deposits, resulting in a cash outflow. Financing Cash Flow was -¥1.1B, primarily reflecting cash outflows equivalent to dividend payments of ¥1.1B. FCF was -¥0.9B, confirming that dividends and investments were not covered by OCF. Cash and cash equivalents decreased by ¥2.1B during the period, with cash and deposits at ¥21.8B; however, comparing Current Assets of ¥25.7B to Current Liabilities of ¥5.2B indicates that short-term liquidity is sufficiently secured. Accounts Payable increased by ¥0.3B YoY (+47.7%), suggesting changes in payment terms or increases in procurement-related costs.
Against Ordinary Income of ¥2.5B, Operating Income was ¥2.1B, resulting in a net non-operating increase of approximately ¥0.4B. The breakdown is mainly dividend income of ¥0.2B and gains on sale of marketable securities of ¥0.5B, with non-operating income accounting for 4.0% of revenue. The inclusion of disposal gains related to investment securities within non-operating income is a one-time factor and should be distinguished from the recurring earnings base. OCF of ¥1.1B fell short of Net Income of ¥1.7B; while the accrual ratio is low at 1.0% and thus at a healthy level, the cash conversion efficiency of 0.46x suggests issues with the quality of earnings. Profitability at the operating income level is high, but weak cash generation may constrain sustainability.
[Industry Position] (Reference information; Company Analysis) The Operating Margin of 11.7% shows an improving trend versus historical results, indicating relatively stable profitability. ROE of 3.2% is below the company’s historical level of 5.8%, with capital efficiency remaining low. Total Asset Turnover of 0.31x is affected by the large holdings of investment assets and low capex, leaving substantial room to improve operating efficiency. The Equity Ratio of 88.2% is extremely high, suggesting a conservative level of financial soundness even within the industry. While the Gross Margin of 65.4% indicates high profitability, weak OCF and low ROIC point to efficiency improvements as a challenge within the industry. Note: Comparison benchmark: past fiscal periods; Source: Company compilation
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our company based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any investment decisions.
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