SHINTO Holdings,Inc. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥16.57B
• Operating Income: ¥293M
• Net Income: ¥-43M
• EPS: ¥0.25

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Shinto Holdings (2776) reported FY2026 Q3 consolidated results under JGAAP that show very strong top-line expansion but very thin margins and meaningful non-recurring losses that depressed bottom-line visibility. Revenue reached 165.66 (100M JPY), up 134.7% YoY, indicative of a sharp scale-up, likely in trading-heavy segments where gross margins are structurally slim. Reported gross profit was 3.23 (100M JPY), equating to a gross margin of 1.9%, underscoring a low-value-added, volume-driven earnings model. Operating income was 2.93 (100M JPY), up 577.0% YoY, suggesting operating leverage is materializing despite thin margins. However, ordinary income was 2.47 (100M JPY), and profit before tax swung to -0.53 (100M JPY), implying significant extraordinary losses of roughly 3.0 (100M JPY) in the period. Net income was modest at 0.10 (100M JPY), with total comprehensive income of 1.15 (100M JPY), hinting at positive other comprehensive income. DuPont metrics show a calculated ROE of 0.3% (net margin ~0.1%, asset turnover 1.713x, financial leverage 3.29x), reflecting minimal bottom-line conversion despite solid turnover and leverage. Liquidity appears adequate on a current basis (current ratio 145.9%), but the quick ratio is only 76.2%, indicating reliance on inventory to support liquidity. Capital structure is moderately leveraged (total liabilities/equity 1.49x), with interest-bearing loans of approximately 20.33 (100M JPY) and cash of 2.04 (100M JPY), implying net debt of roughly 18.29 (100M JPY). Retained earnings remain negative at -45.68 (100M JPY), resulting in a low book value per share of 62.15 JPY, despite capital stock and capital surplus being sizable. Cash flow data are unreported, limiting assessment of earnings quality and free cash flow coverage. There are internal inconsistencies across line items (e.g., gross profit vs cost of sales; operating income vs SG&A), suggesting classification differences or partial disclosures; conclusions are therefore indicative rather than definitive. Inventory at 17.44 (100M JPY) and receivables at 13.07 (100M JPY) make working capital management critical to cash generation. Interest coverage appears strong on an operating basis (~23x using operating income and interest expense), though sustainability depends on recurring operating profit absent extraordinary items. Dividend information is unreported; given accumulated deficits and thin profit, distributable capacity is likely constrained, but policy remains unknown. Overall, topline momentum is notable, but profitability quality, cash conversion, and the scale and nature of extraordinary losses are the key areas to monitor.

Profitability Analysis

roe_decomposition: Calculated ROE is 0.3%, driven by net profit margin of ~0.1% (0.10/165.66), asset turnover of 1.713x (165.66/96.72), and financial leverage of 3.29x (assets/equity = 96.72/29.41). The very low net margin is the principal constraint on ROE. margin_quality: Gross margin is 1.9% (3.23/165.66), consistent with a trading-heavy mix. Operating margin implied by operating income is ~1.8% (2.93/165.66). Ordinary income margin falls to ~1.5% (2.47/165.66). Extraordinary losses (~3.0) pushed PBT negative (-0.53), indicating non-recurring items materially impacted profitability. Note: Reported cost of sales (67.36) does not reconcile with revenue and gross profit, and SG&A (3.88) exceeds gross profit, yet operating income is positive. This suggests other operating income and/or classification differences not fully disclosed. operating_leverage: Operating income growth (+577% YoY) outpaced revenue growth (+134.7% YoY), implying positive operating leverage; however, the low gross margin constrains scalability. Leverage to volume is high, but small swings in gross margin or extraordinary costs can flip bottom-line outcomes.

Growth Assessment

revenue_sustainability: Revenue of 165.66 (100M JPY) grew 134.7% YoY, indicating strong volume expansion. Sustainability depends on customer concentration, repeat trading flows, and pricing discipline in low-margin segments. profit_quality: Operating profit expanded to 2.93 (100M JPY), but the margin remains thin and ordinary income was lower at 2.47. The translation from operating to net profit is weak due to extraordinary losses, resulting in net income of only 0.10. Absent extraordinary items, normalized profitability would be higher, but current disclosures do not allow clean normalization. outlook: If the company maintains revenue scale while improving gross margin even modestly (e.g., +50–100 bps) and avoids large extraordinary losses, ROE could lift materially. Conversely, any revenue slowdown or margin compression would rapidly erode profits due to the thin margin structure.

Financial Health

liquidity: Current ratio is 145.9% (36.48/25.01), but quick ratio is 76.2%, indicating dependence on inventory for liquidity. Working capital stands at 11.47 (100M JPY). Cash and deposits are 2.04, relatively low versus short-term loans of 8.50. solvency: Total liabilities/equity is 1.49x (43.73/29.41). Long-term loans are 11.83 and short-term loans are 8.50, implying total interest-bearing loans of ~20.33; with cash of 2.04, net debt is ~18.29. Net debt/equity approximates 0.62x. Negative retained earnings (-45.68) reflect accumulated losses and constrain equity quality. capital_structure: Owners' equity is 24.79 vs total equity 29.41, indicating non-controlling interests of ~4.62. Capital stock (25.49) and capital surplus (35.28) are sizable relative to retained losses, suggesting past equity raises. Interest coverage on an operating basis is healthy (~23x), but is sensitive to the persistence of operating income and absence of extraordinary charges.

Cash Flow Quality

earnings_quality: Operating CF is unreported; we cannot directly validate accruals or earnings-to-cash conversion. Thin margins and inventory/receivables intensity elevate working capital risk. fcf_analysis: Free cash flow is unreported. With limited cash (2.04) versus debt and significant working capital, sustaining growth likely requires careful WC discipline and possibly continued access to funding. working_capital: Receivables (13.07) and inventories (17.44) together comprise ~84% of current assets, highlighting cash conversion cycle sensitivity. Monitoring collections and inventory turnover is critical given the low gross margin regime.

Dividend Sustainability

payout_ratio_assessment: Dividend data are unreported. Given net income of 0.10 and accumulated retained losses of -45.68, the capacity for distributions appears constrained without stronger and sustained profitability. fcf_coverage: Unassessable due to unreported OCF/FCF. With thin earnings and working capital intensity, FCF coverage of any prospective dividends would be uncertain. policy_outlook: Policy is undisclosed in this dataset. A prudent stance would typically prioritize rebuilding retained earnings and strengthening liquidity before distributions; confirmation requires management guidance.

Risk Assessment

Business Risks:

• Structural low gross margin (~1.9%) business mix; profitability highly volume-sensitive
• Customer concentration and pricing pressure risk typical of trading-heavy models
• Working capital intensity (high inventories/receivables) raising cash conversion volatility
• Execution risk in scaling operations while preserving margin
• Supply chain and procurement risks affecting spread stability

Financial Risks:

• Extraordinary loss of ~3.0 (100M JPY) in the period driving PBT negative
• Negative retained earnings (-45.68) constraining equity quality and financial flexibility
• Quick ratio below 1.0 (76.2%), reliance on inventory for liquidity
• Refinancing and interest rate risk with short-term loans of 8.50 and total loans ~20.33
• Limited cash (2.04) relative to short-term obligations

Key Concerns:

• Inconsistencies between cost of sales, gross profit, SG&A, and operating income suggest disclosure/classification gaps
• Lack of operating cash flow data limits validation of earnings quality
• Magnitude and recurrence of extraordinary losses need clarification
• Sustainability of triple-digit revenue growth without margin erosion

Investment Implications

Key Takeaways:

• Top-line growth is strong (+134.7% YoY), but profitability rests on razor-thin margins
• Operating leverage is evident, yet non-recurring losses erased underlying gains at PBT level
• Liquidity is adequate on a current basis but tight on a quick basis; cash is low
• Balance sheet shows moderate leverage with accumulated deficits, implying a focus on profit retention
• Data limitations (notably cash flows and line-item reconciliations) temper confidence in trend durability

Metrics to Watch:

• Gross margin trajectory and operating margin (OI/Revenue)
• Scale and nature of extraordinary gains/losses; normalization to PBT
• Inventory turnover and receivables days; overall cash conversion cycle
• Net debt and short-term refinancing needs; interest coverage resilience
• Ordinary income to net income conversion and comprehensive income components

Relative Positioning: Within TSE-listed trading-oriented small/mid-cap peers, the company appears to have above-peer revenue growth but below-average margins and weaker retained earnings, leaving it more sensitive to working capital swings and extraordinary items.

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