Landix Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥12.89B
• Operating Income: ¥1.99B
• Net Income: ¥535M
• EPS: ¥214.42

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

Landix Co., Ltd. (TSE: 29810) delivered a strong FY2026 Q2 performance with revenue of ¥12.89bn, up 35.9% YoY, and operating income of ¥1.99bn, up 123.4% YoY, indicating pronounced operating leverage. Net income rose 127.0% YoY to ¥1.22bn, translating to EPS of ¥214.42. DuPont decomposition points to an ROE of 13.01%, driven by a 9.42% net margin, 0.55x asset turnover, and 2.51x financial leverage. The operating margin of approximately 15.4% notably exceeds the reported gross margin of 14.9%, implying sizable other operating income or cost reclassifications that boosted operating profit; this warrants scrutiny of non-core/one-off contributions under JGAAP presentation. EBITDA was ¥2.01bn with a 15.6% margin and interest coverage a healthy 32.0x, supported by very low D&A of ¥23.9m and modest interest expense of ¥62.1m. Liquidity is sound with a current ratio of 178.7%, but the quick ratio of 62.4% highlights reliance on inventories (¥12.20bn) to support near-term commitments. Balance sheet leverage is moderate with total liabilities of ¥13.45bn versus total equity of ¥9.34bn (implied equity ratio about 39.8% using reported totals, though the provided equity ratio metric shows 0.0% which appears to be undisclosed). Operating cash flow was negative at -¥1.20bn, contrasting with strong earnings; the OCF/Net Income ratio of -0.98 indicates a material working-capital outflow, likely inventory build tied to growth. Financing cash inflow of ¥1.45bn suggests the company drew on external funding to support expansion and inventory procurement. Tax expense of ¥291m versus ordinary income of ¥1.88bn implies a mid-teens effective tax rate for the period; the listed 0.0% effective tax rate should be treated as undisclosed rather than zero. Dividend data appear undisclosed (annual DPS and payout ratio shown as 0.00), limiting assessment of shareholder return policy this period. Overall profitability metrics are robust, but the quality of earnings requires caution given OCF shortfalls and the unusual relationship between gross and operating margins. Inventory-heavy operations and funding mix are consistent with a real estate trading/development model, which can be cyclical and sensitive to credit conditions and interest rates. While leverage and coverage look manageable, sustained negative OCF would pressure the balance sheet if growth moderates. Data limitations (several zero-reported fields likely representing non-disclosure) constrain certain ratio interpretations and dividend analysis. The outlook hinges on the sustainability of elevated margins, inventory turnover, and the availability/cost of financing.

Profitability Analysis

ROE of 13.01% decomposes into Net Profit Margin 9.42% × Asset Turnover 0.55× × Financial Leverage 2.51×. The net margin expanded materially alongside operating income growth (+123.4% YoY vs revenue +35.9%), indicating strong operating leverage and/or one-off operating gains. Operating margin is approximately 15.4% (¥1,987m / ¥12,892m), which exceeds the gross margin of 14.9%—an atypical pattern that points to material other operating income or reclassification effects under JGAAP (e.g., gains on sales, subsidies, fee income) boosting operating profit. EBITDA margin of 15.6% with minimal D&A (¥23.9m) suggests earnings are largely cash-like before working capital movements, though the period’s OCF contradicts this due to inventory investment. Interest expense of ¥62.1m against EBITDA of ¥2,010.9m yields strong interest coverage (~32x), supporting profitability resilience to moderate rate changes. Ordinary income of ¥1,877m is slightly below operating income, implying some non-operating net expense despite favorable operating performance. The effective tax burden, based on income tax of ¥291m and pre-tax income approximated by ordinary income, appears in the mid-teens; the reported 0.0% metric is not reflective of actual taxation. Overall, profitability quality is strong at the P&L level but includes elements that may not be repeatable if other operating gains were significant. Monitoring the spread between gross and operating margins will be key to assessing recurring margin quality.

Growth Assessment

Revenue growth of 35.9% YoY to ¥12.89bn indicates strong demand and/or successful expansion of inventory turnover capacity. Operating income growth of 123.4% YoY outpaced sales, evidencing margin expansion and operating leverage. Net income increased 127.0% YoY to ¥1.22bn, aligned with the operating outperformance and manageable non-operating costs. The asset turnover of 0.55x suggests efficient deployment of assets for a real estate trading model, though this may be influenced by mid-year seasonality and inventory cycles. The negative OCF, in the face of strong earnings, suggests growth is being funded by working capital, particularly inventories (¥12.20bn), which can be accretive if sell-through remains robust but raises risk if the market slows. With financing CF of ¥1.45bn, the company appears to be scaling with external capital support, consistent with growth mode. Sustainability of revenue growth will depend on the pipeline/land bank, market liquidity in Greater Tokyo, and access to credit for customers and the company. Given the unusual operating > gross margin relationship, some growth in profits may include non-recurring or ancillary income; normalization could moderate profit growth even if sales remain firm. Outlook hinges on continued inventory sourcing and turnover, maintenance of pricing power, and stable borrowing conditions.

Financial Health

Total assets are ¥23.44bn, liabilities ¥13.45bn, and equity ¥9.34bn, implying an approximate equity ratio of ~39.8% and a debt-to-equity ratio of 1.44x. Liquidity is solid at a current ratio of 178.7% driven by large inventories, while the quick ratio of 62.4% underscores reliance on inventory conversion for near-term obligations. Working capital stands at ¥8.25bn, providing a cushion for operations. Interest coverage is robust at ~32x on an EBITDA basis, suggesting low near-term default risk. The liability structure likely includes short-term borrowings tied to inventory; refinancing/rollover capacity is therefore important. The negative operating cash flow (-¥1.20bn) funded by positive financing CF (¥1.45bn) indicates dependence on external funding to support growth and working capital. Balance sheet solvency appears adequate, but sustained inventory build without proportional cash realization would pressure leverage and liquidity. The provided equity ratio metric of 0.0% appears to be undisclosed; analysis relies on computed ratios from available balance sheet figures.

Cash Flow Quality

Earnings quality is mixed: EBITDA margin is healthy (15.6%) and D&A is minimal, but operating cash flow is negative (-¥1.20bn) despite net income of ¥1.22bn, yielding an OCF/Net Income ratio of -0.98. This gap is most likely driven by working capital outflows, particularly inventory increase and possibly receivables build, consistent with a scaling real estate trading model. Free cash flow cannot be reliably assessed because investing cash flow is reported as 0 (likely undisclosed), and capex details are not available; therefore, FCF figures should be treated as incomplete. Financing cash inflow of ¥1.45bn indicates the company funded growth and working capital through borrowings or equity-related inflows (debt is more likely given the business model and interest expense). The persistence of earnings-to-cash divergence will determine the durability of reported profitability; a near-term improvement in OCF via inventory sell-through would validate earnings quality. Monitoring cash conversion cycle components (inventory days, receivable days, payable days) is crucial to assess normalization prospects.

Dividend Sustainability

Dividend information appears undisclosed for the period (annual DPS and payout ratio shown as 0.00 should not be interpreted as actual zeros). Given the strong earnings but negative operating cash flow and reliance on financing cash inflows, near-term dividend capacity would typically hinge on cash generation and debt covenants rather than accounting profits alone. Without capex/FCF detail, FCF coverage of dividends cannot be calculated with confidence. If the company maintains a growth-first capital allocation stance typical of inventory-driven real estate businesses, retained earnings may be prioritized to fund working capital. Policy outlook cannot be inferred from the provided data; any assessment should await disclosure of dividend guidance, historical payout policy, and year-end cash flow.

Risk Assessment

Business Risks:

• Inventory valuation and sell-through risk amid real estate market fluctuations
• Sensitivity to interest rate changes affecting both financing costs and customer demand
• Potential normalization of margins if other operating income or one-off gains do not recur
• Supply constraints or sourcing risk for attractive properties/land bank
• Regulatory and taxation changes impacting real estate transactions
• Geographic concentration risk if revenue is concentrated in specific metropolitan areas

Financial Risks:

• Negative operating cash flow funded by increased borrowings, elevating refinancing risk
• High reliance on inventories (¥12.20bn) for liquidity with a quick ratio of 62.4%
• Leverage at 1.44x D/E could rise if inventory builds continue and cash conversion lags
• Exposure to variable-rate debt could weaken interest coverage if rates rise materially
• Potential working capital volatility leading to cash flow swings

Key Concerns:

• Operating income exceeding gross profit suggests non-core or one-off contributions to earnings
• Sustained OCF shortfall versus net income (OCF/NI = -0.98)
• Dependence on financing CF (+¥1.45bn) to fund operations and growth

Investment Implications

Key Takeaways:

• Strong top-line growth (+35.9% YoY) with outsized operating income growth (+123.4% YoY) indicates operating leverage
• ROE of 13.01% supported by healthy margins and moderate leverage
• Operating margin (~15.4%) exceeds gross margin (14.9%), implying material other operating income or reclassifications
• Negative OCF (-¥1.20bn) points to working capital investment; cash conversion is a key swing factor
• Balance sheet appears sound with implied equity ratio ~39.8% and interest coverage ~32x, but reliance on inventories is high
• External financing (+¥1.45bn) is supporting growth and inventory procurement

Metrics to Watch:

• OCF/Net Income and cash conversion cycle (inventory days, receivable/payable days)
• Inventory turnover and write-downs, if any
• Spread between gross margin and operating margin (recurrence of other operating income)
• Net debt to equity and interest coverage amid rate changes
• Pre-sales/backlog or contracted sales (if disclosed) to gauge revenue visibility
• Effective tax rate normalization versus statutory benchmarks

Relative Positioning: Within Japan’s inventory-intensive real estate trading/development peers, Landix’s reported operating margin (~15%) and ROE (13%) appear strong for a mid-year period, but cash conversion lags and inventory reliance are typical sector constraints; sustainability will depend on maintaining turnover and accessing cost-effective financing.

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
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