J-Holdings Corp. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥115M
• Operating Income: ¥-257M
• Net Income: ¥-321M
• EPS: ¥-24.29

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

For FY2025 Q3 (consolidated, JGAAP), 株式会社ジェイホールディングス reported revenue of ¥115.0m, down 16.0% YoY, indicating a contraction in topline momentum. Despite the revenue decline, the reported gross profit margin stands high at 68.9%, implying gross profit of roughly ¥79.2m per the calculated metric. Operating performance remains deeply loss-making, with operating income at -¥257.0m and ordinary income at -¥258.0m, reflecting heavy SG&A/other operating costs relative to scale. Net income was -¥205.0m, translating to EPS of -¥24.29, underscoring significant per-share losses. DuPont metrics point to severe profitability pressure: net margin at -178.26%, asset turnover at 0.267x, and financial leverage at 13.03x yield a reported ROE of -621.21%. The very high financial leverage ratio (assets/equity) is consistent with total assets of ¥430.0m against a thin equity base of ¥33.0m. Liquidity shows some cushion with a current ratio of 147.1% and working capital of ¥59.3m, suggesting near-term obligations are covered, albeit with limited headroom given continued losses. The debt-to-equity ratio of 8.54x indicates a highly leveraged capital structure that amplifies equity volatility. Interest expense is modest (¥0.11m), but the interest coverage ratio is deeply negative given operating losses. Cash flow statement items are unreported (OCF/ICF/FCF shown as 0), limiting assessment of cash conversion and burn rate; zeros should be treated as undisclosed, not true zeros. Dividend payments are suspended (DPS ¥0.00), which is prudent given losses and limited equity buffer. Reported equity ratio is 0.0%, but based on the provided totals equity/asset is approximately 7.7%, pointing to a low capitalization level; the 0.0% figure likely reflects non-disclosure rather than true zero. Revenue scale relative to asset base (asset turnover 0.267x) suggests underutilized assets or a business mix with low throughput, which, combined with negative operating leverage, drives losses. The primary near-term focus should be on expense restructuring, revenue stabilization, and liquidity preservation. Data limitations (notably cash flows, shares outstanding, and some per-share metrics) constrain precision of certain conclusions, but the available figures indicate a stressed profitability profile and elevated financial risk.

Profitability Analysis

ROE decomposition (DuPont): Net profit margin -178.26% × Asset turnover 0.267 × Financial leverage 13.03 = ROE -621.21% (reported). The negative margin is the dominant driver of ROE deterioration; leverage merely magnifies the loss at the equity level. The calculated gross profit margin is strong at 68.9%, implying that cost of goods sold is not the primary issue; rather, operating expenses and/or other operating items are overwhelming gross profit. Operating margin is approximately -223% (operating loss -¥257.0m on revenue ¥115.0m), evidencing severe negative operating leverage at current scale. Ordinary margin is similar to operating margin, suggesting limited non-operating income support. Interest expense is negligible relative to losses (¥0.11m), so financial costs are not the key driver of the loss. Effective tax is not meaningful due to losses. Efficiency remains weak with asset turnover of 0.267x, indicating low revenue generation from the asset base and contributing to negative ROA. Overall, profitability is constrained by: 1) subscale revenue base, 2) high fixed or semi-fixed SG&A, and 3) potentially loss-making segments or underperforming assets.

Growth Assessment

Revenue declined 16.0% YoY to ¥115.0m, indicating demand softness or portfolio contraction. The high gross margin (68.9%) suggests product/service mix with strong unit economics, but revenue volume is insufficient to absorb overhead, pointing to negative operating leverage. Net loss of ¥205.0m with flat YoY notation on operating and net income (+0.0% YoY) implies that the magnitude of losses is similar to the prior year period, signifying limited progress on turnaround to date. Sustainability of revenue will depend on stabilizing customer demand and improving conversion/backlog, neither of which can be assessed from the provided data. Profit quality is weak as core operations are loss-making; ordinary income mirrors operating loss, implying limited contribution from non-operating items. Without cash flow disclosure, it is unclear whether working capital inflows temporarily supported the P&L or vice versa. Outlook hinges on cost rationalization and scaling revenue; given current turnover (0.267x), materially higher sales or asset-light restructuring appears necessary to restore break-even. Near-term growth visibility is low based on available metrics.

Financial Health

Liquidity: Current assets ¥185.1m vs current liabilities ¥125.9m yields a current ratio of 147.1% and positive working capital of ¥59.3m, providing some short-term cushion. Quick ratio is also 147.1%, suggesting limited or undisclosed inventories (inventories reported as 0, likely not disclosed). Solvency: Total liabilities ¥281.7m against equity ¥33.0m implies a debt-to-equity ratio of 8.54x and financial leverage (assets/equity) of 13.03x, indicating high balance sheet risk. The reported equity ratio is 0.0% (likely a placeholder); computed equity/asset is approximately 7.7%, still very low. Interest expense is minimal, but given operating losses, coverage is deeply negative. Capital structure is stretched, with little equity buffer to absorb ongoing losses; further losses could pressure covenant headroom or necessitate capital measures. Overall, the company maintains near-term liquidity but faces elevated solvency risk if losses persist.

Cash Flow Quality

Operating, investing, and financing cash flows are shown as 0, which should be interpreted as undisclosed rather than actual zeros; hence OCF/NI and FCF cannot be reliably assessed. The reported OCF/Net Income ratio of 0.00 is not meaningful given missing OCF. Earnings quality is weak given large operating losses and limited visibility into non-cash components (depreciation is undisclosed). With no cash and equivalents disclosed (shown as 0), actual liquidity on hand cannot be determined from the data; reliance on the balance sheet current assets figure is necessary but not a substitute for cash data. Working capital dynamics (receivables/payables) are not available, limiting assessment of cash conversion. Given negative operating profit, true free cash flow is likely negative absent significant working capital release or non-recurring inflows, but this cannot be confirmed without CF statements.

Dividend Sustainability

The company paid no dividend (DPS ¥0.00) with a payout ratio of 0.0%, which aligns with the loss-making profile (EPS -¥24.29). With net losses and a thin equity base (~¥33.0m), sustaining or initiating dividends is not supported by earnings. Free cash flow coverage is shown as 0.00x, but FCF is undisclosed; regardless, negative operating profit implies poor cash dividend capacity. Dividend policy appears prudently conservative under the circumstances. Future distributions would require demonstrable return to profitability and positive free cash flow.

Risk Assessment

Business Risks:

• Revenue contraction (-16.0% YoY) indicating demand softness or customer churn
• High operating losses (-¥257.0m) reflecting inability to cover fixed costs
• Low asset turnover (0.267x) suggesting underutilized asset base
• Potential execution risk in restructuring and cost containment
• Customer concentration or project timing risk (not disclosed but common drivers of volatility)
• Limited scale potentially reducing pricing power and bargaining leverage

Financial Risks:

• High leverage: debt-to-equity 8.54x and financial leverage 13.03x
• Thin equity buffer (~¥33.0m) increases vulnerability to further losses
• Negative interest coverage due to operating losses
• Liquidity visibility constrained by undisclosed cash and cash flow data
• Possible covenant and refinancing risks if losses persist

Key Concerns:

• Sustained negative operating margins and lack of evident turnaround progress
• Very low capitalization (implied equity ratio ~7.7%)
• Insufficient disclosure on cash flows and cash balance limiting assessment of runway
• Dependence on revenue recovery or cost cuts to reach break-even

Investment Implications

Key Takeaways:

• Topline declined 16.0% YoY to ¥115.0m; scale remains subpar relative to cost base
• Gross margin is high at 68.9%, but operating losses are severe (-¥257.0m)
• ROE is deeply negative at -621.21% driven by negative margin and high leverage
• Liquidity is moderate (current ratio 147.1%), but solvency risk is elevated (D/E 8.54x)
• Cash flow data are undisclosed, constraining analysis of cash burn and runway
• Dividend is suspended (DPS ¥0), appropriate given losses

Metrics to Watch:

• Quarterly revenue trajectory and order backlog/book-to-bill (if disclosed)
• SG&A run-rate and restructuring savings to narrow operating losses
• Asset turnover improvements (disposals or asset-light shifts)
• Equity ratio and net debt trends; any capital raising or covenant disclosures
• Operating cash flow and cash balance once disclosed
• Working capital movements (receivables collection, payables terms)
• Non-operating income/expenses that could affect ordinary income

Relative Positioning: Relative to small-cap peers, the company exhibits above-average gross margin potential but materially weaker operating profitability and a more leveraged balance sheet, with lower asset efficiency and higher solvency risk.

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