STORAGE-OH Co.,Ltd. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.63B
• Operating Income: ¥-188M
• Net Income: ¥-126M
• EPS: ¥-68.65

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

Verdict: Top-line surged, losses narrowed in margin terms but remain material, with leverage and interest coverage the key pressure points. Revenue doubled to 16.32 (100M JPY), up 103.7% YoY, signaling rapid expansion in the core business. Gross profit was 1.46 (100M JPY), equating to a 9.0% gross margin. SG&A was 3.27 (100M JPY), or roughly 20.0% of sales, outpacing gross profit and keeping operating income negative. Operating income was -1.88 (100M JPY) (improving YoY on a margin basis), and ordinary income was -1.97 (100M JPY). Net income was -1.26 (100M JPY), with basic EPS of -68.65 JPY. Despite a larger absolute net loss, the net margin improved to -7.7% owing to strong sales growth. Operating margin improved to about -11.5% from a much deeper loss rate last year. Using the disclosed growth rates, we estimate operating margin expanded by roughly 1,380 bps YoY and net margin by about 140 bps YoY. Interest expense was 0.08 (100M JPY), and interest coverage stood at -24.47x, underscoring weak debt-servicing capacity. The balance sheet shows total assets of 53.72 (100M JPY) and equity of 9.93 (100M JPY), implying high financial leverage (assets/equity 5.41x). Liquidity is solid with a current ratio of 226.1%, but solvency risk is elevated with a D/E ratio of 2.53x. ROE is -12.7%, driven mainly by a negative net margin and low asset turnover (0.304). Cash flow data was not disclosed, so earnings quality and FCF coverage cannot be confirmed. Forward-looking, the company must translate scale into positive operating leverage while deleveraging or lowering funding costs; absent that, high leverage and negative coverage could constrain growth and raise refinancing risk.

Profitability Analysis

Decomposition (DuPont): ROE (-12.7%) = Net Profit Margin (-7.7%) × Asset Turnover (0.304) × Financial Leverage (5.41x). The largest swing appears in margin dynamics: operating margin improved materially to about -11.5% (operating income -1.88 over revenue 16.32), aided by revenue more than doubling. Asset turnover is low at 0.304, reflecting a capital-intensive model with sizable assets relative to sales. Financial leverage is high at 5.41x (assets/equity 53.72/9.93), amplifying the impact of losses on equity. Business driver: revenue scale-up helped dilute fixed costs, but gross margin at 9.0% remains thin and SG&A at ~20% of sales continues to weigh on operating profits. The improvement in operating margin versus last year is likely partly structural (scale benefits) but also sensitive to utilization and pricing; sustainability hinges on occupancy rates and rent yields in self-storage sites. Concerning trends: SG&A absolute growth exceeded gross profit, and with gross profit of 1.46 vs SG&A 3.27, operating losses persist despite revenue growth. Also, negative interest coverage indicates financing costs can erode any operating gains. Overall, ROE remains negative primarily due to the net margin component; leverage magnifies downside.

Growth Assessment

Revenue growth of +103.7% YoY to 16.32 (100M JPY) indicates strong expansion, likely from site additions and ramping occupancy. Profitability did not keep pace: gross margin is 9.0% and operating margin -11.5%, implying scale benefits are not yet sufficient to cover fixed costs. Ordinary and net losses persist (ordinary income -1.97; net income -1.26), though margins improved versus last year due to the larger revenue base. Interest expense (0.08) and high leverage temper the conversion of growth into equity value. Outlook hinges on achieving higher site utilization and pricing to lift gross margin and on controlling SG&A growth. Near-term, expect continued pressure on bottom-line unless revenue growth translates into higher contribution margin and interest burden is managed.

Financial Health

Liquidity: current ratio 226.1% and quick ratio 226.1% indicate ample short-term liquidity; working capital is 15.45 (100M JPY). Solvency: D/E is 2.53x (warning >2.0). Equity/asset ratio is about 18.5% (9.93/53.72), pointing to a thin capital buffer. Debt structure: short-term loans are 6.39 (100M JPY) vs cash and deposits 5.33 and current assets 27.70, suggesting manageable near-term maturity coverage, though reliance on refinancing is likely. Long-term loans are 10.05, total liabilities 25.12. Interest coverage is -24.47x, flagging a debt service risk in the absence of operating profits. No off-balance sheet items were reported in the provided data.

Cash Flow Quality

Operating cash flow, investing cash flow, and financing cash flow were not disclosed, so OCF/NI and free cash flow cannot be assessed. With net losses and negative operating income, internal funding capacity is likely weak absent favorable working capital movements or non-cash charges. No signs of working capital manipulation can be inferred due to data gaps. Dividend and capex coverage with FCF cannot be evaluated without OCF and capex data.

Dividend Sustainability

Dividend data was not reported. With net income at -1.26 (100M JPY) and unknown OCF/FCF, payout capacity appears limited in the near term. Any distribution would likely rely on external financing or asset recycling, which is risky given high leverage and negative interest coverage. Policy outlook is likely conservative until operating cash generation improves and leverage is reduced.

Risk Assessment

Business Risks:

• Execution risk in scaling self-storage assets (site ramp-up, occupancy, and pricing needed to reach breakeven).
• Thin gross margin (9.0%) leaves limited buffer for SG&A and interest costs.
• Potential sensitivity to land/lease costs and construction inflation impacting unit economics.
• Competitive intensity in self-storage markets affecting occupancy and rents.

Financial Risks:

• High leverage (D/E 2.53x) and low equity ratio (~18.5%).
• Negative interest coverage (-24.47x) indicating weak debt-servicing capacity.
• Refinancing risk on short-term loans of 6.39 (100M JPY) if operating turnaround lags.
• Earnings volatility amplified by financial leverage (5.41x).

Key Concerns:

• Sustained operating losses despite 100%+ revenue growth.
• Absence of cash flow disclosures limits assessment of earnings quality and FCF.
• Dependence on favorable occupancy/rent trends to achieve operating leverage.
• Potential covenant or funding cost pressures if losses persist.

Investment Implications

Key Takeaways:

• Triple-digit revenue growth but losses continue; operating margin approximately -11.5%.
• Net margin improved to -7.7% despite larger absolute loss due to scaling.
• Leverage is high (D/E 2.53x) with negative interest coverage, elevating refinancing and solvency risk.
• Liquidity adequate in the near term (current ratio 226.1%), but equity buffer is thin (~18.5%).
• ROE -12.7% driven by negative margin and low asset turnover (0.304).

Metrics to Watch:

• Occupancy and average rent per unit to validate gross margin expansion.
• SG&A as a percentage of sales for operating leverage realization.
• Operating cash flow and free cash flow once disclosed.
• Net debt/EBITDA (when EBITDA disclosed) and interest coverage trajectory.
• Short-term loan rollover and interest rate on new borrowings.

Relative Positioning: Compared to typical listed domestic self-storage operators, the company appears to be in an earlier scale-up phase: top-line growth is strong, but profitability and coverage metrics lag peers with established occupancy and higher gross margins. Leverage is on the higher side, making the path to breakeven more sensitive to execution and rate conditions.

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