Yamaichi Real Estate Co.,Ltd FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.49B
• Operating Income: ¥-123M
• Net Income: ¥-312M
• EPS: ¥-37.08

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

Verdict: FY2026 Q2 was weak, with a sharp top-line contraction and losses at operating and ordinary levels, supported by debt-funded liquidity rather than internal cash generation. Revenue fell 49.7% YoY to 44.94, compressing scale and leaving gross profit of 13.73 against SG&A of 14.96, resulting in operating loss of -1.23. Ordinary loss widened to -3.76 as non-operating expenses of 3.05 (including 2.65 interest expense) outweighed modest non-operating income of 0.52. Net income was -3.18 (basic EPS -37.08 JPY), while total comprehensive income was -2.80. EBITDA was a slim 1.87 (margin 4.2%), insufficient to cover interest (interest coverage -0.46x). Gross margin stood at 30.5%, but operating margin was approximately -2.7% due to SG&A exceeding gross profit. Balance sheet size remained large (total assets 564.64) with high financial leverage (D/E 3.28x) and heavy use of long-term loans (240.09) and short-term loans (73.63). Liquidity at the headline level looks ample (current ratio 216.6%), supported by 321.27 of current assets, but cash and deposits of 36.59 are modest relative to short-term loans. Operating cash flow was deeply negative at -75.37, more severe than the accounting loss, and was backstopped by financing cash inflow of 62.54; capex was -7.49. The OCF/NI ratio prints 23.7x (because both are negative), but the absolute cash burn highlights weak earnings-to-cash conversion. ROE was -2.4% per DuPont (margin -7.1%, asset turnover 0.080, financial leverage 4.28x), reflecting poor profitability and low asset efficiency amplified by leverage. Margin expansion/compression in basis points versus the prior year cannot be precisely quantified from disclosed data; however, operating loss narrowed YoY (operating income +199.3% YoY) despite the revenue halving. Debt service risk increased, with interest costs materially pressuring ordinary profit. Forward-looking, the company must restore sales velocity and project turnover, improve cost absorption, and deleverage or reduce interest burden to stabilize ordinary profit. Near term, cash preservation and refinancing at acceptable terms are key, as internal cash generation is currently negative. Absent a recovery in operating cash flow, dividend capacity appears constrained. Overall, the quarter signals execution and financing discipline will be central to stabilizing returns.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-7.1%) × 0.080 × 4.28 ≈ -2.4%. The largest adverse driver is the net profit margin turning negative, given gross profit could not cover SG&A and interest. Asset turnover is very low at 0.080, consistent with an asset-heavy real estate model with slow inventory turns and a half-year revenue base. Financial leverage at 4.28x is high and mechanically amplifies losses into negative ROE. Business explanation: revenue fell 49.7% YoY, reducing scale to absorb fixed SG&A; non-operating expenses (notably interest of 2.65) further depressed ordinary income. Sustainability: the margin pressure from under-absorption of fixed costs can improve if project recognition and sales mix normalize; however, the interest burden is recurring until deleveraging occurs. Warning signs include SG&A (14.96) exceeding gross profit (13.73) in the half, indicating negative operating leverage; also, interest expense overwhelms EBITDA (1.87), implying structurally insufficient operating earnings at current run-rate.

Growth Assessment

Top-line contracted sharply (-49.7% YoY) to 44.94, suggesting project timing, weaker transactions, or a thinner pipeline. Gross margin at 30.5% is reasonable for the sector, but absolute gross profit was too small to cover SG&A, leading to operating margin of roughly -2.7%. EBITDA margin of 4.2% is thin and inadequate against interest, constraining growth reinvestment. Ordinary loss of -3.76 reflects both operating weakness and financing costs. With OCF at -75.37 and capex -7.49, internally funded growth is not feasible near term; the company relied on financing CF +62.54, likely additional borrowings. Outlook hinges on restoring sales recognition/turnover in H2 and managing the cost base; absent revenue normalization, profit recovery is at risk. Reported ROIC of -0.3% is below management targets typical for the industry and needs improvement via asset rotation or higher-margin pipeline.

Financial Health

Liquidity: Current ratio is 216.6% and quick ratio 216.6%, both healthy; working capital is 172.94. Cash and deposits (36.59) cover only about half of short-term loans (73.63), but total current assets (321.27) comfortably exceed current liabilities (148.33), mitigating immediate liquidity risk. Solvency: Debt-to-equity is 3.28x (warning >2.0), signaling high leverage. Interest coverage is -0.46x, indicating earnings do not cover interest—a key concern. Maturity mismatch: Short-term loans 73.63 are material versus cash; refinancing and rollover risk exists, though current assets provide collateral/coverage. Long-term loans 240.09 dominate the liability structure, implying sustained interest burden. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

The OCF/Net Income ratio is 23.7x (>1.0), but both figures are negative (OCF -75.37 vs NI -3.18), indicating cash burn far exceeding accounting loss—this is a quality concern despite the ratio threshold. Indicative free cash flow (OCF - Capex) is approximately -82.86, implying dividends and debt service require external funding. The reliance on financing CF (+62.54) to bridge OCF shortfall suggests limited self-funding capacity. Likely drivers of negative OCF include working capital build (e.g., land acquisitions or project costs), but detailed components were not disclosed. No clear signs of deliberate working capital manipulation can be assessed from the limited disclosure; however, the magnitude of OCF outflow warrants close monitoring.

Dividend Sustainability

Dividend data were not disclosed; payout ratios are not calculable from XBRL, and the reported calculated payout ratio (-81.8%) is not meaningful with negative earnings. With indicative FCF around -82.86 in the half, dividend coverage from internal cash is not available. Given high leverage and negative OCF, prudent policy would prioritize deleveraging and liquidity over distributions; absent a swift OCF turnaround in H2, dividend capacity appears constrained. Outlook depends on sales recognition recovery and working capital release.

Risk Assessment

Business Risks:

• Revenue volatility from project timing and market conditions (revenue -49.7% YoY)
• Negative operating leverage with SG&A exceeding gross profit
• Execution risk in monetizing pipeline to restore turnover (asset turnover 0.080)
• Real estate market cyclicality affecting pricing and absorption

Financial Risks:

• High leverage (D/E 3.28x) and weak interest coverage (-0.46x)
• Refinancing/rollover risk on short-term loans (73.63) with modest cash (36.59)
• Sustained negative OCF (-75.37) requiring external funding
• Interest rate risk increasing debt service costs

Key Concerns:

• Ordinary loss (-3.76) driven by interest expense (2.65) despite positive EBITDA
• ROE -2.4% and ROIC -0.3% below acceptable thresholds
• Dependence on financing CF (+62.54) to fund operations
• Limited visibility due to unreported details (inventories, investing CF, dividend data)

Investment Implications

Key Takeaways:

• Top-line halved YoY, pushing operating margin to roughly -2.7% despite an improvement in operating income YoY
• Interest burden materially depresses ordinary profit; EBITDA insufficient to cover interest
• Leverage is high (D/E 3.28x); deleveraging or earnings ramp is required to stabilize returns
• OCF is deeply negative and financed by additional borrowings; internal funding capacity is weak
• Liquidity is adequate at the working-capital level, but cash coverage of short-term debt is thin

Metrics to Watch:

• H2 revenue and gross margin trajectory
• SG&A run-rate vs gross profit (operating leverage)
• Operating cash flow and working capital movements
• Debt maturities, average interest rate, and interest expense run-rate
• ROIC improvement via asset rotation or higher-margin projects
• Cash and deposits versus short-term loans coverage

Relative Positioning: Within Japan real estate operators/developers, the company currently exhibits weaker earnings quality (negative OCF vs loss), higher-than-peer leverage, and inferior ROIC, leaving it more exposed to refinancing and rate risks until operating momentum 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
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