| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥279.8B | ¥273.0B | +2.5% |
| Operating Income | ¥6.1B | ¥5.5B | +11.7% |
| Ordinary Income | ¥5.8B | ¥5.3B | +10.1% |
| Net Income | ¥3.6B | ¥3.4B | +6.2% |
| ROE | 6.5% | 6.4% | - |
FY2026 Q3 results show Create Corporation delivering revenue of 27.98 billion yen (YoY +2.5%), operating income of 0.61 billion yen (YoY +11.7%), ordinary income of 0.58 billion yen (YoY +10.1%), and net income of 0.36 billion yen (YoY +6.2%). The company achieved solid profit growth outpacing revenue expansion, with operating margin improving to 2.2% from 2.0% in the prior year, an increase of 20 basis points. Revenue increased by 0.68 billion yen while operating income improved by 0.06 billion yen, demonstrating operating leverage despite a relatively low gross margin structure of 17.5%. Total assets reached 18.91 billion yen with equity of 5.57 billion yen. Full-year guidance targets revenue of 37.6 billion yen, operating income of 0.85 billion yen, and net income of 0.51 billion yen, with Q3 progress tracking on schedule for achievement.
[Profitability] ROE of 6.5% positioned at the upper end of the industry median range of 3.7% (IQR: 2.2%-8.4%), operating margin 2.2% below industry median of 3.2% but improved 20 basis points from 2.0% YoY, net profit margin 1.3% below industry median of 2.0%. ROE decomposition reveals net profit margin of 1.29%, asset turnover of 1.480, and financial leverage of 3.39x, with leverage being the primary ROE driver. Gross margin of 17.5% indicates constrained pricing power or competitive input costs. [Cash Quality] Cash and deposits increased 31.5% YoY to 1.86 billion yen, providing short-term debt coverage of 1.61x against short-term borrowings of 1.16 billion yen. [Investment Efficiency] Asset turnover of 1.480 exceeds industry median of 1.06, demonstrating superior asset utilization. Receivables turnover at approximately 64 days is faster than industry median of 73.57 days. Operating working capital cycle efficiency warrants monitoring given elevated accounts receivable levels of 4.88 billion yen. [Financial Health] Debt-to-equity ratio of 2.39 exceeds threshold of 2.0 and substantially above industry median financial leverage of 1.97, indicating elevated leverage risk. Current ratio of 125.4% and quick ratio of 102.4% demonstrate adequate short-term liquidity, though short-term debt comprises 82.3% of total liabilities. Long-term borrowings decreased 46.4% YoY from 0.47 billion yen to 0.25 billion yen, reflecting debt structure optimization.
Cash and deposits increased 0.35 billion yen YoY to 1.86 billion yen, representing 31.5% growth driven by operating profit improvement and working capital management. The substantial cash accumulation alongside net income of 0.36 billion yen suggests operating activities generated adequate cash during the period. Working capital movements show accounts receivable at 4.88 billion yen with DSO of approximately 64 days, which is faster than the industry median turnover cycle, indicating reasonable collection efficiency. Long-term borrowings declined 0.22 billion yen or 46.4% to 0.25 billion yen, suggesting financing activities included significant debt repayment, likely funded by operating cash generation. Short-term borrowings maintained at 1.16 billion yen indicate ongoing utilization of trade credit facilities. The cash position of 1.86 billion yen provides coverage of 1.61x against short-term borrowings, confirming adequate liquidity buffer. Investment securities increased 0.04 billion yen or 27.6% to 0.19 billion yen, representing modest deployment of surplus cash into financial assets. The combination of cash accumulation, debt reduction, and maintained working capital efficiency indicates sound cash management, though the heavy reliance on short-term debt (82.3% of total liabilities) requires continued monitoring of refinancing capabilities.
Ordinary income of 0.58 billion yen compared to operating income of 0.61 billion yen indicates a non-operating net loss of approximately 0.03 billion yen, representing 0.1% of revenue. This minor divergence suggests earnings are primarily driven by core operations with limited impact from non-operating items. Non-operating income composition consists mainly of interest and dividend income as well as potential foreign exchange effects, though specific breakdowns are not disclosed. The operating profit margin of 2.2% reflects the core business profitability, and the close alignment between operating and ordinary income demonstrates earnings are not materially dependent on financial activities or one-time gains. The 31.5% increase in cash and deposits alongside net income growth suggests operating cash generation supports reported earnings, indicating solid earnings quality from a cash conversion perspective. Asset turnover of 1.480 exceeds the industry median of 1.06, confirming revenue generation efficiency. The low gross margin structure of 17.5% and operating margin of 2.2% are characteristic of the trading industry business model with thin spreads, making earnings quality dependent on volume maintenance and cost discipline. The consistency between profit metrics and balance sheet cash accumulation supports an assessment of healthy recurring earnings quality.
Margin Compression Risk: Operating margin of 2.2% remains below the industry median of 3.2%, and gross margin of 17.5% leaves limited buffer against input cost inflation or pricing pressure. Any deterioration in procurement terms or intensified price competition could compress already thin margins and materially impact profitability.
Financial Leverage Risk: Debt-to-equity ratio of 2.39 significantly exceeds the industry median of 1.97 and the threshold of 2.0, with short-term debt representing 82.3% of total liabilities. This elevated leverage combined with concentration in short-term maturities exposes the company to refinancing risk and increased financial costs in a rising interest rate environment.
Working Capital Management Risk: Accounts receivable of 4.88 billion yen with DSO of approximately 64 days, while faster than industry median, still represents significant capital tied up in trade credit. Any deterioration in customer creditworthiness or collection efficiency could strain cash flow and necessitate increased external financing, exacerbating leverage concerns.
[Industry Position] (Reference - Proprietary Analysis)
Profitability: ROE 6.5% exceeds industry median of 3.7% (IQR: 2.2%-8.4%), positioning in the upper half of peer performance. However, this is substantially driven by financial leverage of 3.39x versus industry median of 1.97, rather than superior operational profitability. Operating margin of 2.2% trails industry median of 3.2% (IQR: 1.3%-4.6%), indicating room for operational efficiency improvement. Net profit margin of 1.3% also falls below industry median of 2.0% (IQR: 1.0%-3.9%).
Financial Health: Debt-to-equity ratio of 2.39 exceeds industry median financial leverage of 1.97 (IQR: 1.80-2.33), placing the company at the high end of sector leverage and above typical prudent thresholds. Current ratio of 125.4% is substantially below industry median of 188% (IQR: 164%-238%), reflecting tighter liquidity positioning relative to peers.
Efficiency: Asset turnover of 1.480 significantly outperforms industry median of 1.06 (IQR: 0.70-1.32), demonstrating superior asset utilization efficiency. Receivables turnover of approximately 64 days is faster than industry median of 73.57 days (IQR: 64.79-91.11 days), indicating effective credit management. Revenue growth of 2.5% aligns closely with industry median of 2.6% (IQR: -5.3%-10.8%).
Overall positioning: Create Corporation demonstrates strong asset efficiency metrics but operates with below-median profitability margins and elevated financial leverage relative to trading industry peers. The company's ROE outperformance is primarily leverage-driven rather than margin-driven, highlighting the importance of deleveraging to improve financial resilience.
(Industry: Trading, N=15 companies, Comparison: 2025-Q3 period, Source: Proprietary analysis)
Profit Growth Momentum with Margin Expansion Opportunity: The company delivered revenue growth of 2.5% alongside operating income growth of 11.7%, demonstrating positive operating leverage. Operating margin improved 20 basis points to 2.2%, though this remains below the industry median of 3.2%. The gap to industry median represents approximately 1.0 percentage points or roughly 0.28 billion yen in potential additional operating income at current revenue levels, highlighting meaningful upside if the company can optimize procurement, pricing, or cost structure to industry-standard profitability levels. The consistent revenue trajectory and full-year guidance progress suggest the earnings momentum is sustainable in the near term.
Asset Efficiency Leadership Offset by Capital Structure Concerns: Asset turnover of 1.480 substantially exceeds the industry median of 1.06, confirming the company's competitive advantage in capital-light operations and working capital management. However, this operational strength is counterbalanced by a debt-to-equity ratio of 2.39, significantly above the industry median of 1.97, and concentration of 82.3% of liabilities in short-term maturities. The 46.4% reduction in long-term borrowings during the period indicates management focus on debt optimization, yet the elevated D/E ratio and short-term refinancing exposure remain key financial constraints. Continued deleveraging through retained earnings and operational cash generation will be essential to align the capital structure with industry norms and reduce financial risk, particularly given the current trajectory toward higher interest rate environments.
Dividend Sustainability Supported by Cash Generation: The announced dividend of 26.0 yen per share implies a payout ratio of approximately 41.9% based on full-year EPS guidance of 130.97 yen, which falls comfortably within sustainable parameters (typically under 60%). Cash and deposits increased 31.5% YoY to 1.86 billion yen, and the company reduced long-term debt significantly, suggesting operating cash flow is sufficient to support both debt reduction and shareholder returns. However, the lack of disclosed free cash flow data limits full assessment of cash dividend coverage, making ongoing monitoring of operating cash flow generation critical to confirm multi-year dividend sustainability, especially if working capital requirements increase or capital expenditure accelerates.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.