MatsukiyoCocokara & Co. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥549.09B
• Operating Income: ¥40.44B
• Net Income: ¥25.12B
• EPS: ¥66.42

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

MatsukiyoCocokara & Company (3088) delivered solid FY2026 Q2 consolidated results under JGAAP, with balanced top-line growth and improved operating profitability. Revenue rose 4.4% year over year to ¥549.1bn, while operating income increased 7.4% to ¥40.4bn, indicating positive operating leverage. Net income grew 6.2% to ¥26.5bn, translating to a net margin of 4.83% and EPS of ¥66.42. Gross profit reached ¥182.4bn, implying a gross margin of 33.2% and reflecting continued merchandising and private-brand strength. The operating margin expanded to approximately 7.37%, up about 0.21 percentage points versus the implied prior-year level, driven by better SG&A efficiency. Ordinary income of ¥42.7bn exceeded operating income by ¥2.3bn, suggesting net non-operating gains more than offset the small interest expense. The effective tax burden appears normal (we estimate roughly 33–34%), despite a reported “0.0%” in the summary metrics that likely stems from a calculation placeholder. On the balance sheet, total assets were ¥717.9bn and total equity ¥523.0bn, implying a strong equity ratio of about 72.9% (the reported 0.0% is clearly a non-disclosure placeholder). Leverage remains conservative, with liabilities-to-equity at roughly 0.37x and asset turnover at 0.765x. Cash generation was robust: operating cash flow of ¥45.1bn exceeded net income, producing an OCF/NI ratio of 1.70, indicative of healthy earnings quality. Investing cash flow and cash balances were not disclosed (shown as zero), limiting visibility on free cash flow and net debt. Liquidity appears ample with current assets of ¥364.3bn versus current liabilities of ¥162.6bn, for a current ratio of 2.24x and working capital of ¥201.7bn. Interest expense was minimal at ¥30mn, yielding an exceptionally high coverage ratio of over 1,300x. Dividend data shows DPS and payout as zero, which likely reflects non-disclosure in this dataset rather than an actual nil payout; accordingly, dividend sustainability cannot be judged from these inputs alone. Overall, the company demonstrates steady growth, improving margins, strong cash conversion, and a conservative capital structure, but the absence of key disclosures (cash, inventories, investing cash flows, dividend details) constrains the depth of analysis.

Profitability Analysis

ROE_decomposition: DuPont results are consistent with reported figures: Net profit margin 4.83% × Asset turnover 0.765 × Financial leverage 1.37 = ROE 5.07%. ROA is approximately 3.69% (¥26.5bn / ¥717.9bn). The leverage component is modest given the high equity base, so ROE improvement will rely primarily on margin and turnover. margin_quality: Gross margin stands at 33.2% (¥182.4bn/¥549.1bn), reflecting healthy merchandising and PB penetration. Operating margin is ~7.37% (¥40.4bn/¥549.1bn). SG&A was ~¥141.9bn, implying an SG&A ratio of ~25.8%. Ordinary income margin is ~7.78%, supported by positive non-operating items more than offsetting interest. Net margin is 4.83%. The tax burden appears normal (~33–34% on our estimate), contradicting the placeholder metric. operating_leverage: Revenue grew 4.4% while operating income rose 7.4%, implying positive operating leverage and ~0.21pp operating margin expansion YoY (implied). D&A was ¥7.94bn (≈1.45% of sales), and EBITDA margin was 8.8%, indicating incremental fixed-cost absorption without outsized depreciation drag.

Growth Assessment

revenue_sustainability: Top-line growth of 4.4% appears steady for a mature domestic drugstore chain, likely driven by store network optimization, private brand sales, and improving traffic/ticket trends. Exact drivers (SSS, new store adds/closures, inbound demand) are not disclosed here. profit_quality: Ordinary income exceeded operating income by ¥2.29bn, and interest expense was negligible, indicating benign non-operating items. OCF/NI of 1.70 suggests earnings are cash-backed, reducing the risk of accrual-driven profits. outlook: With conservative leverage and ongoing margin accretion, earnings growth should primarily depend on sustained gross margin management, disciplined SG&A, and stable demand. Key unknowns include inventory normalisation, inbound demand sensitivity, and competitive pricing dynamics, given missing disclosures.

Financial Health

liquidity: Current assets ¥364.3bn vs current liabilities ¥162.6bn yield a current ratio of 2.24x and working capital of ¥201.7bn. The quick ratio is shown as 2.24x due to inventories not being disclosed; the true quick ratio is likely lower but still appears comfortable given the sector. solvency: Total liabilities are ¥191.3bn against equity of ¥523.0bn, implying a debt-to-equity (liabilities-to-equity) ratio of 0.37x and an equity ratio near 72.9% (recomputed from BS values). Interest coverage is extremely strong at ~1,348x, reflecting minimal financial risk. capital_structure: Leverage is conservative (assets/equity ≈ 1.37x), providing balance sheet flexibility for store investments, IT and logistics upgrades, and shareholder returns. Lease liabilities are not disclosed here and may understate economic leverage typical for retailers.

Cash Flow Quality

earnings_quality: OCF of ¥45.1bn vs net income of ¥26.5bn yields an OCF/NI ratio of 1.70, indicating solid cash conversion and limited reliance on accruals. FCF_analysis: Investing cash flow is not disclosed (shown as zero), so free cash flow cannot be reliably computed. The reported FCF of zero is a placeholder and should not be interpreted as actual. working_capital: With inventories not disclosed and cash unspecified, we cannot break down working capital drivers (inventory days, payables, receivables). However, the strong OCF suggests working capital management was at least neutral-to-supportive in the period.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are shown as zero, likely due to non-disclosure in this dataset rather than a true nil payout. Using EPS of ¥66.42, any actual dividend would drive a payout calculation, but we lack the DPS input. FCF_coverage: Free cash flow is not computable due to missing investing cash flow; thus FCF coverage of dividends cannot be assessed from the provided data. policy_outlook: Given the conservative balance sheet and healthy OCF, the capacity to sustain ordinary dividends appears sound in principle; however, without confirmed DPS and capex, we refrain from drawing conclusions on policy trajectory.

Risk Assessment

Business Risks:

• Intensifying competition in Japan’s drugstore sector (price, private brand, e-commerce encroachment).
• Regulatory changes affecting dispensing fees, drug pricing, and healthcare reimbursement.
• Execution risk on post-merger integration, format optimization, and synergy capture.
• Sensitivity to inbound tourism and FX-driven demand swings for cosmetics and daily goods.
• Labor cost inflation and staffing constraints impacting store operations.
• Supply chain and logistics optimization risks (DC utilization, last-mile costs).
• Category mix shifts (RX/OTC/cosmetics) impacting gross margin.

Financial Risks:

• Inventory risk and markdowns (inventories not disclosed in this dataset).
• Potential lease liabilities not captured here, understating economic leverage.
• Working capital volatility tied to payables terms and supplier rebates.
• Limited interest-rate risk currently, but higher rates could raise lease/financing costs.

Key Concerns:

• Material non-disclosures (cash, inventories, investing cash flows, DPS) constrain full assessment.
• Equity ratio reported as 0% despite a strong balance sheet indicates data field inconsistency.
• Visibility on capex and store pipeline is insufficient to gauge medium-term FCF.

Investment Implications

Key Takeaways:

• Steady top-line growth (+4.4% YoY) with margin expansion supports operating leverage.
• High-quality earnings evidenced by OCF/NI of 1.70 and negligible interest burden.
• Conservative capital structure (equity ratio ~72.9%, liabilities/equity 0.37x) provides flexibility.
• Positive non-operating contribution lifted ordinary income above operating income.
• Assessment of FCF and dividends is constrained by missing investing CF and DPS data.

Metrics to Watch:

• Same-store sales growth and traffic/ticket trends.
• Gross margin and SG&A ratio progression (operating margin sustainability).
• OCF/NI and working capital turns (inventory days once disclosed).
• Capex and store openings/closures to infer FCF trajectory.
• ROE vs. management targets and peer benchmarks.
• Inbound demand contribution and mix effects on cosmetics/healthcare categories.

Relative Positioning: Within Japan’s drugstore peers (e.g., Welcia, Tsuruha, Sugi, Sundrug), MKC exhibits mid-to-high gross margins, improving operating margin, strong cash conversion, and lower balance-sheet leverage, but reported ROE at ~5% is moderate and will depend on further margin/turnover gains.

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