TAKACHIHO KOHEKI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥13.47B
• Operating Income: ¥954M
• Net Income: ¥717M
• EPS: ¥38.48

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

Takachiho Koheki (2676) delivered a solid FY2026 Q2 with modest top-line growth and stronger bottom-line gains, underpinned by tight cost control and a small lift from non-operating income. Revenue rose 1.2% YoY to 134.72, while operating income increased 1.9% YoY to 9.54, evidencing slight operating leverage. Ordinary income jumped 21.4% YoY to 9.85, aided by favorable non-operating items and limited interest expense. Net income climbed 20.6% YoY to 7.17, with an effective tax rate of 31.5%. Gross margin stands at 25.4%, reflecting healthy value-add for a specialized trading company. Operating margin is 7.1% this quarter; on our back-solve, this implies c.+5 bps YoY expansion (from ~7.03% to ~7.08%). Net margin expanded more meaningfully, from ~4.46% to ~5.32% (+86 bps), driven by improved ordinary income and light financing costs. Ordinary-income margin improved from ~6.09% to ~7.31% (+122 bps), indicating a notable uplift in below-operating line contributions. The balance sheet is strong: current ratio 336%, quick ratio 272%, and working capital of 132.65, with cash of 59.67 and low financial leverage (Debt-to-Equity 0.38x). Interest coverage is extremely robust at 954x, reflecting negligible interest expense (0.01). ROE calculates to 4.2% via DuPont, with asset turnover of 0.574 and financial leverage of 1.38x; this is respectable but below a typical cost of equity for listed Japanese small/mid caps. ROIC is 5.9%, below the 7–8% target range that trading companies often aim for, signaling room for capital efficiency improvement. Earnings quality cannot be fully assessed because operating cash flow was not disclosed; thus cash conversion remains a key unknown. Non-operating income (0.75) represents a modest 10.5% of profit contribution by the provided ratio, indicating limited dependence on non-core drivers. Forward-looking, the company appears well-positioned to continue steady earnings given the strong liquidity, but unlocking higher ROE/ROIC will likely require either better asset turnover or incremental margin expansion. Near-term monitoring should focus on working-capital discipline, sustainability of gross margins, and confirmation of cash-generation once CF data is available.

Profitability Analysis

ROE (4.2%) decomposes into Net Profit Margin (5.3%) × Asset Turnover (0.574) × Financial Leverage (1.38x). The largest positive delta this quarter appears at the margin level: net margin rose by ~86 bps YoY (to 5.32%), while operating margin improved only ~5 bps and leverage stayed conservative (assets/equity ~1.38x). The business driver was stronger ordinary income versus revenue growth, supported by non-operating income (dividends 0.49, interest 0.22) and minimal interest expense, while SG&A growth seems contained relative to gross profit expansion (given operating income rose faster than revenue). This mix-driven improvement looks partly sustainable if SG&A control and gross margins hold, but reliance on non-operating items introduces variability. Watch for any reversal in dividend/interest income that could pressure ordinary income. Concerning trends are limited; however, ROIC at 5.9% trails the 7–8% benchmark and ROE is modest versus likely cost of equity—signaling a need for better asset productivity or margin enhancement over time.

Growth Assessment

Top-line growth was modest at +1.2% YoY, consistent with selective demand in the specialized trading arena. Operating income grew slightly faster at +1.9% YoY, reflecting incremental operating leverage. Ordinary income and net income grew +21.4% and +20.6% YoY respectively, buoyed by non-operating gains and low financing costs. The current operating margin is 7.1% and net margin is 5.3%; both are healthy for a specialized trader, with net margin showing the larger YoY uplift. Revenue sustainability will hinge on demand for electronics/FA and solution businesses, and on maintaining the current gross profit margin of 25.4%. Profit quality is acceptable on the P/L, but we lack OCF to confirm cash conversion. Outlook-wise, the strong balance sheet supports continued investment and resilience; improving ROIC above the 7–8% target range will likely require either faster revenue growth on the same asset base or working-capital turns improvement to lift asset turnover from 0.574.

Financial Health

Liquidity is very strong: current ratio 3.36x and quick ratio 2.72x, with cash and deposits of 59.67 covering current liabilities comfortably (56.21). No warning on current ratio (>>1.0) and no signs of maturity mismatches, as current assets (188.86) far exceed current liabilities (56.21). Solvency is conservative: Debt-to-Equity is 0.38x, with interest expense only 0.01 and interest coverage 954x. Total assets are 234.74 against equity of 169.59 (financial leverage 1.38x), indicating low balance sheet risk. Off-balance sheet obligations are not disclosed in the data, so contingent liabilities or guarantees, if any, are unknown.

Cash Flow Quality

Operating cash flow was not disclosed, so we cannot compute OCF/Net Income or assess cash conversion; therefore, no explicit earnings quality flag can be made. With capex and FCF unreported, we cannot judge FCF coverage of dividends or growth investments. Working-capital accounts are sizable (AR 59.66, inventory 35.92, AP 27.93), but there are no explicit signs of manipulation from the reported snapshot alone. Key watchpoints are receivables collection and inventory turnover once cash flow and turnover data are available.

Dividend Sustainability

Dividend data (DPS, total dividends paid) were not disclosed for the period, and the calculated payout ratio of 454% is likely not meaningful without DPS/FCF context and may reflect partial-period dynamics or data limitations. Given the strong liquidity and minimal financial leverage, the company appears capable of supporting ordinary dividends, but sustainability cannot be validated without OCF and capex data. Policy outlook remains unclear in this dataset; monitor board guidance, target payout ratio, and DOE/ROE targets when disclosed.

Risk Assessment

Business Risks:

• Demand cyclicality in electronics/FA and solution businesses impacting revenue visibility
• Margin pressure from customer pricing and competitive intensity, affecting a 25.4% gross margin base
• Supply chain and component availability risks that can affect delivery schedules and gross profit
• FX volatility (e.g., USD/JPY) influencing import costs and competitiveness

Financial Risks:

• Valuation risk on investment securities (36.02) affecting comprehensive income and net assets
• Potential variability in non-operating income (dividends 0.49, interest 0.22) supporting ordinary income
• Cash flow visibility risk due to unreported OCF/FCF this period
• Interest rate risk is limited given negligible interest expense, but rising rates could affect securities income

Key Concerns:

• ROE at 4.2% and ROIC at 5.9% are below typical cost of equity/management targets, implying capital efficiency headroom
• Asset turnover at 0.574 indicates room to improve working-capital efficiency and sales productivity
• Ordinary income benefited from non-operating items; persistence is uncertain without disclosures on sustainability
• Data gaps (cash flow and dividends) limit assessment of earnings quality and shareholder return capacity

Investment Implications

Key Takeaways:

• Steady top-line with stronger bottom-line: revenue +1.2% YoY; net income +20.6% YoY
• Margins improved: net margin +86 bps YoY; ordinary income margin +122 bps YoY
• Balance sheet is very strong with current ratio 3.36x and interest coverage 954x
• ROE 4.2% and ROIC 5.9% signal need for better asset efficiency and/or margin expansion
• Non-operating income is a modest but supportive contributor; reliance not excessive

Metrics to Watch:

• Operating cash flow and free cash flow when disclosed
• Gross margin stability and SG&A discipline
• Working-capital turns (AR days, inventory days, AP days) to lift asset turnover
• ROIC progression toward 7–8% and ROE trend vs cost of equity
• Exposure and valuation swings in investment securities
• FX sensitivity and hedging effectiveness

Relative Positioning: Versus specialized trading peers, Takachiho Koheki exhibits a very strong liquidity profile and conservative leverage, competitive operating margins, but below-peer capital efficiency (ROE/ROIC), leaving upside if asset turnover and cash conversion improve.

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