ARIAKE JAPAN Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥31.28B
• Operating Income: ¥5.11B
• Net Income: ¥2.15B
• EPS: ¥129.59

Income Statement

Balance Sheet

Cash Flow Statement

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

Ariake Japan (2815) reported FY2026 Q2 (cumulative) consolidated results under JGAAP showing resilient profitability despite a slight top-line decline. Revenue was ¥31.278 billion (-0.8% YoY), while operating income rose to ¥5.106 billion (+8.1% YoY), indicating margin expansion and disciplined cost control. Gross profit was ¥9.036 billion, implying a gross margin of 28.9%, and operating margin improved to approximately 16.3%. Ordinary income reached ¥5.912 billion, and net income surged to ¥4.127 billion (+97.0% YoY), though the outsized YoY increase likely reflects prior-year one-offs or normalization of non-operating items and tax effects. DuPont shows net margin of 13.19%, asset turnover of 0.211, and financial leverage of 1.13x, yielding a reported ROE of 3.16% on a half-year basis; annualized, this suggests roughly mid–single-digit ROE. The balance sheet is exceptionally strong: total assets are ¥147.94 billion and equity ¥130.409 billion, implying an equity ratio of about 88.2% (the reported 0% equity ratio is unreported, not zero). Liquidity appears abundant, with a current ratio of 785% and quick ratio of 734%, reflecting a cash- and receivables-heavy current asset base, despite cash and equivalents being shown as 0 (unreported). Interest expense is negligible (¥54 thousand), and interest coverage is effectively unconstrained at ~94,556x, consistent with a near debt-free structure. Operating cash flow of ¥5.565 billion exceeds net income (OCF/NI 1.35x), suggesting good earnings quality and positive working capital contribution or non-cash add-backs. Investing cash flow is shown as 0 (unreported), so free cash flow and capex intensity cannot be reliably assessed; depreciation is ¥1.097 billion, implying ongoing asset base maintenance. Financing cash flow was an outflow of ¥2.895 billion, potentially related to shareholder returns or debt repayment; however, dividends per share are reported as 0 (unreported), so distribution specifics are not available. Overall, the company demonstrates strong profitability, robust cash generation relative to earnings, and a fortress balance sheet. Key limitations include missing disclosures for investing cash flows, cash balances, and dividends, which constrain assessment of capex, free cash flow, and payout policy. Outlook hinges on sustaining margin gains amid flat sales; monitoring revenue reacceleration, gross-to-operating spread, and working capital dynamics will be critical.

Profitability Analysis

ROE_decomposition: DuPont indicates ROE of 3.16% = Net Profit Margin (13.19%) × Asset Turnover (0.211) × Financial Leverage (1.13). On an annualized basis (given Q2 cumulative), ROE would approximate ~6.3% if margins and turnover persist. margin_quality: Gross margin 28.9% and operating margin ~16.3% show healthy value capture and cost discipline. Net margin at 13.19% benefited from low interest burden and a normalized effective tax rate estimated at ~24% (derived: ¥1.320 billion tax on ~¥5.447 billion pre-tax). The expansion of operating income despite slight revenue decline signals effective cost control and/or product mix improvements. operating_leverage: With revenue down 0.8% YoY but operating income up 8.1% YoY, incremental margins were positive, suggesting favorable operating leverage from fixed-cost absorption or SG&A efficiencies. Sustaining these gains will depend on revenue stabilization or growth, as negative top-line momentum can eventually limit leverage benefits.

Growth Assessment

revenue_sustainability: Sales declined modestly (-0.8% YoY), indicating a stable but slightly soft demand environment. No segment or geographic breakdown is available, limiting visibility into drivers. profit_quality: Operating profit growth outpaced sales due to margin expansion. Ordinary income and net income strength appear supported by low financing costs and normalized taxation; the +97% YoY net income implies prior-year comparatives may have been depressed. outlook: Absent disclosure on order trends or pipeline, a base case is for flattish revenue near term with a focus on preserving margins. Monitoring price/mix, input cost trends, and operational efficiency will be key to sustaining profit growth.

Financial Health

liquidity: Current ratio 785.2% and quick ratio 733.6% indicate exceptional near-term coverage; working capital of ¥73.395 billion provides a large buffer. Cash and equivalents are shown as 0 but are likely unreported; still, liquidity appears ample given the quick ratio. solvency: Total equity is ¥130.409 billion vs total assets ¥147.94 billion, implying an equity ratio of ~88.2% (reported 0% is unreported). Interest expense is negligible (¥54 thousand), and interest coverage is ~94,556x, evidencing minimal financial risk. capital_structure: Debt-to-equity is reported at 0.13x, consistent with low leverage. Total liabilities are ¥17.351 billion, underscoring a conservative balance sheet primarily financed by equity.

Cash Flow Quality

earnings_quality: OCF of ¥5.565 billion exceeds net income of ¥4.127 billion (OCF/NI 1.35x), indicating strong accrual quality and likely favorable working capital or non-cash add-backs. FCF_analysis: Investing CF is reported as 0 (unreported), preventing reliable FCF estimation. Using depreciation of ¥1.097 billion as a proxy suggests ongoing reinvestment needs; however, actual capex could be above or below D&A. working_capital: Inventories are ¥5.527 billion, modest relative to current assets of ¥84.106 billion and current liabilities of ¥10.712 billion, implying limited inventory risk. Receivables and payables details are not disclosed; nonetheless, strong OCF suggests working capital is not a drag in this period.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0, which should be treated as unreported. Given net income of ¥4.127 billion and strong OCF, the capacity to pay dividends appears present, but actual policy cannot be inferred from the provided data. FCF_coverage: FCF coverage cannot be calculated due to unreported investing cash flows and cash balance. On a capacity basis, positive OCF supports potential distributions, but reinvestment needs are unknown. policy_outlook: No explicit guidance or historical policy is provided. With a high equity ratio and minimal leverage, the balance sheet could accommodate distributions, subject to capex and strategic investments.

Risk Assessment

Business Risks:

• Top-line softness (-0.8% YoY) may persist if end-market demand remains subdued.
• Margin sustainability risk if input costs rise or pricing power weakens.
• Concentration risks (customers, products, or geographies) cannot be assessed due to lack of disclosure.
• Operational risks from capacity utilization and fixed-cost absorption if volumes decline.

Financial Risks:

• Limited visibility on capex and investing cash flows could mask future cash needs.
• Potential currency and interest rate exposures not disclosed, though interest burden is minimal.
• Dividend commitments (if any) versus reinvestment needs are unclear.

Key Concerns:

• Missing data on investing cash flows and cash balance complicates FCF assessment.
• Sustainability of operating margin gains amid slightly declining revenue.
• Large financing outflow (¥2.895 billion) without details on dividends or buybacks.

Investment Implications

Key Takeaways:

• Resilient profitability with operating income up 8.1% despite a 0.8% revenue decline.
• Strong balance sheet with an estimated ~88% equity ratio and negligible interest expense.
• High cash conversion (OCF/NI 1.35x) supports earnings quality.
• Data gaps on investing CF and dividends limit visibility on FCF and shareholder return policy.
• Operating margin around 16% points to solid cost control and/or favorable mix.

Metrics to Watch:

• Revenue growth reacceleration and volume/mix trends.
• Gross margin and operating margin spread as indicators of pricing and cost control.
• OCF/NI ratio and working capital movements (receivables, inventories, payables).
• Capex and investing CF to establish sustainable FCF.
• Financing CF composition (dividends vs buybacks vs debt).
• ROE trajectory (and annualized ROE vs cost of equity).

Relative Positioning: Financially conservative with superior balance sheet strength and strong cash conversion, positioning the company defensively relative to peers, albeit with modest asset turnover and mid–single-digit annualized ROE.

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