TOBISHIMA HOLDINGS Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥64.20B
• Operating Income: ¥3.03B
• Net Income: ¥1.90B
• EPS: ¥99.97

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

Tobishima Holdings (256A0) reported FY2026 Q2 consolidated results under JGAAP with modest top-line and earnings growth but notable cash flow weakness typical of construction cycle seasonality. Revenue was ¥64.2bn (+1.3% YoY), with gross profit of ¥7.58bn and a gross margin of 11.8%, indicating stable project-level profitability despite input cost pressures. Operating income was ¥3.03bn (+1.1% YoY), implying an operating margin of 4.7% and relatively flat operating leverage in the period. Ordinary income reached ¥2.61bn and net income was ¥1.91bn (+4.7% YoY), lifting the net margin to 2.98% and EPS to ¥99.97 on a cumulative H1 basis. DuPont analysis shows ROE at 3.74%, driven by a modest net margin (2.98%), asset turnover of 0.416x, and financial leverage of 3.02x. EBITDA was ¥3.61bn (5.6% margin), and interest coverage appears comfortable at 12.9x based on operating income of ¥3.03bn versus interest expense of ¥0.236bn. The balance sheet indicates total assets of ¥154.4bn, total liabilities of ¥106.7bn, and total equity of ¥51.1bn; this implies an equity ratio of roughly 33% (the reported 0.0% is not disclosed rather than zero). Liquidity looks adequate with a current ratio of 141% and reported quick ratio of 141% (noting inventories are unreported), supported by ¥37.1bn of working capital. Cash flow is the primary weak spot: operating cash flow was -¥7.79bn, resulting in an OCF/NI ratio of -4.07x, which likely reflects working capital consumption on ongoing projects and seasonal milestone timing. Investing cash flow was undisclosed, and cash and equivalents were undisclosed, limiting full cash coverage analysis; however, negative OCF suggests free cash flow was likely negative in the period. The effective tax rate shown as 0.0% is undisclosed; given income tax expense of ¥0.75bn and ordinary income of ¥2.61bn, the implied tax burden appears broadly consistent with a high-20s rate. Leverage measured as total liabilities to equity is 2.09x; interest servicing capacity is adequate given EBITDA and operating income coverage. Dividend metrics are undisclosed (DPS and payout shown as zero reflect non-disclosure), so capital return policy cannot be assessed from this dataset. Overall, profitability is steady but thin, leverage is manageable, and liquidity is sufficient, while cash generation is currently weak and bears monitoring. The outlook hinges on order execution, input cost containment, and normalization of working capital in H2. Data limitations (including undisclosed inventories, cash, investing CF, equity ratio, share data) constrain precision but do not alter the directional read of stable margins and pressured cash conversion.

Profitability Analysis

ROE of 3.74% decomposes into net margin 2.98%, asset turnover 0.416x, and financial leverage 3.02x, indicating that returns are primarily constrained by low margins typical of general contractors and modest asset efficiency. Gross margin at 11.8% suggests acceptable project mix and cost pass-through; however, the spread to operating margin of 4.7% implies SG&A and overhead absorption remain a drag, with limited operating leverage YoY (OP +1.1% vs revenue +1.3%). EBITDA margin of 5.6% provides a buffer for interest and taxes, and interest coverage of 12.9x based on operating income points to adequate earnings headroom against financing costs. Ordinary income trails operating income due to interest and non-operating items, and net margin of 2.98% indicates taxes and below-OP items absorb roughly 170bps of revenue. The stability of margins YoY suggests steady bidding discipline; however, seasonality and project progress recognition can create volatility intra-year. With asset turnover at 0.416x, capital efficiency is modest; improving turnover via faster billing/collection and tighter WIP management would be accretive to ROE. Overall profitability is steady but thin, consistent with sector norms, with limited evidence of operating leverage expansion in the period.

Growth Assessment

Revenue growth of +1.3% YoY reflects stable order execution rather than a surge in new wins; absent order-book data, sustainability cannot be fully assessed. Operating income growth of +1.1% YoY indicates margin stability; net income growth of +4.7% YoY benefits from below-OP items and tax mix, not a step-change in core profitability. D&A of ¥0.58bn suggests a relatively light asset base, supporting modest reinvestment needs. The lack of disclosed inventory/WIP and backlog metrics limits visibility into future run-rate; however, construction seasonality often back-weights revenue and profit recognition to H2. Price/cost dynamics remain a key swing factor; current gross margin implies manageable material and subcontractor cost inflation. With asset turnover at 0.416x, revenue scalability depends on disciplined project selection and execution rather than capacity expansion. Outlook: near-term growth appears incremental, contingent on timely project completions and collection; any acceleration would likely require an improved order environment or mix shift to higher-margin work.

Financial Health

Liquidity appears adequate: current assets ¥127.8bn vs current liabilities ¥90.7bn yields a current ratio of 140.8%. The reported quick ratio equals the current ratio due to undisclosed inventories; in reality, quick liquidity may be lower but still likely comfortable given sector norms. Working capital of ¥37.1bn provides a buffer for project execution. Solvency is moderate: total liabilities of ¥106.7bn vs equity of ¥51.1bn implies a debt-to-equity of 2.09x and financial leverage (assets/equity) of 3.02x. Using reported assets and equity implies an equity ratio around 33% (reported 0.0% reflects non-disclosure), which is reasonable for a contractor with sizable advance receipts and payables. Interest coverage at 12.9x suggests low near-term refinancing risk from an earnings perspective. A small inconsistency between assets, liabilities, and equity totals suggests classification differences or rounding; directionally, the capital structure appears balanced with moderate leverage.

Cash Flow Quality

Earnings quality is pressured by cash conversion: operating cash flow of -¥7.79bn versus net income of ¥1.91bn yields OCF/NI of -4.07x, indicating substantial working capital outflow in H1. This is consistent with construction seasonality, where receivables and costs build ahead of milestone billings; nonetheless, sustained negative OCF would be a concern if not offset by H2 normalization. D&A at ¥0.58bn relative to EBITDA of ¥3.61bn implies decent non-cash earnings content. Investing cash flow is undisclosed, preventing precise free cash flow calculation; the reported FCF of 0 should be treated as not available. Given negative OCF, underlying FCF was likely negative absent significant asset disposals. Working capital management (receivables, unbilled revenue, advances from customers, payables) is the key driver; undisclosed inventories suggest WIP/unbilled balances may be presented under different captions. Financing cash flow of -¥0.66bn implies modest net outflows (e.g., repayments or dividends), but cash and equivalents are undisclosed, limiting analysis of liquidity headroom.

Dividend Sustainability

Dividend data are not disclosed in this dataset (DPS and payout shown as 0 indicate non-reporting rather than actual zero). Without DPS and cash balance details, we cannot assess payout ratios or FCF coverage precisely. On earnings capacity, H1 net income of ¥1.91bn provides room for distributions in principle, but negative operating cash flow in H1 would argue for conservatism until working capital normalizes. Typical sector policies target stable or progressive dividends aligned with full-year profit; confirmation would require management guidance and historical payout trends. Near-term sustainability hinges on H2 cash generation and leverage covenants; given adequate interest coverage and moderate leverage, capacity exists if cash inflows recover, but disclosure constraints prevent firm conclusions.

Risk Assessment

Business Risks:

• Project execution risk leading to cost overruns and margin compression
• Input cost inflation (materials, labor, subcontractors) challenging cost pass-through
• Order intake/backlog volatility affecting revenue visibility
• Timing risk on milestone recognition and collections causing cash flow swings
• Competitive bidding pressure compressing gross margins
• Regulatory and public sector budget dependency for civil engineering demand
• Supply chain disruptions impacting project schedules

Financial Risks:

• Negative operating cash flow in H1 increasing reliance on working capital facilities
• Moderate leverage (liabilities/equity 2.09x) amplifying earnings volatility
• Potential tightening of liquidity if receivable collection is delayed
• Interest rate risk on borrowings affecting finance costs
• Disclosure gaps (cash, investing CF, inventories) limiting visibility into liquidity buffers

Key Concerns:

• OCF/NI at -4.07x indicates weak cash conversion that must normalize in H2
• Thin net margin (2.98%) leaves limited cushion against cost shocks
• Asset turnover at 0.416x constrains ROE absent margin or leverage changes

Investment Implications

Key Takeaways:

• Stable profitability with modest YoY growth: OP +1.1%, net +4.7%, net margin 2.98%
• ROE 3.74% driven by low margin and modest asset efficiency; leverage moderate at 3.02x assets/equity
• Liquidity adequate (current ratio 141%), but H1 cash burn significant (OCF -¥7.79bn)
• Interest coverage solid at 12.9x, suggesting manageable debt service
• Disclosure limitations (cash, investing CF, inventories, dividend data) constrain full assessment

Metrics to Watch:

• H2 operating cash flow and working capital movements (receivables, unbilled revenue, advances)
• Order intake and backlog to gauge revenue sustainability
• Gross margin trajectory and cost pass-through effectiveness
• Debt levels and interest expense trend amid rate environment
• Capital allocation disclosures (capex, dividends, share count) in subsequent filings

Relative Positioning: Within Japanese general contractors, margins and leverage appear broadly in line with mid-tier peers, with adequate interest coverage but weaker-than-desired cash conversion this half; improved working capital discipline and backlog visibility would strengthen the relative profile.

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