Quick View
| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥723.0B | ¥599.0B | +20.6% |
| Operating Income | ¥54.7B | ¥43.3B | +26.2% |
| Ordinary Income | ¥55.0B | ¥42.7B | +28.7% |
| Net Income | ¥35.9B | ¥27.5B | +30.7% |
| ROE | 8.3% | 6.8% | - |
Executive Summary
Profit expanded at a pace exceeding revenue growth, resulting in higher revenue and income accompanied by improved profit margins. Revenue was ¥723.0B (+20.6% YoY), Operating Income was ¥54.7B (+26.2%), Ordinary Income was ¥55.0B (+28.7%), and Net Income attributable to owners of the parent was ¥35.9B (+30.7%). Against a gross profit margin of 66.0%, the absorption of fixed costs through revenue growth contributed to margin improvement even under a structure with an SG&A expense ratio of 58.5%.
Factors Affecting Performance
【Revenue】Revenue increased 20.6% YoY to ¥723.0B. The primary driver of revenue growth was an increase in the number of stores, apparently due to an expansion in new store openings; a breakdown by segment has not been disclosed.
【Profit and Loss】Operating Income was ¥54.7B (+26.2%), and the Operating Income margin improved to 7.6% from approximately 7.2% in the same period of the previous year. Revenue growth, combined with the high gross profit margin of 66.0%, absorbed the SG&A burden, resulting in positive operating leverage. Ordinary Income was ¥55.0B (+28.7%), while non-operating income and expenses remained at a net gain of ¥0.3B, including a foreign exchange gain of ¥1.2B, indicating that profit growth was primarily driven by the core business. Extraordinary losses of ¥2.1B, including a loss on disposal of fixed assets of ¥1.4B and impairment losses of ¥0.3B, exceeded extraordinary income of ¥1.3B and became a temporary factor reducing Profit Before Tax by approximately ¥0.75B. Nevertheless, Net Income remained higher at ¥35.9B (+30.7%); overall, the company achieved both revenue and income growth.
Key Financial Indicators
【Profitability】The Operating Income margin of 7.6% and Net Income margin of 5.0% both improved from the same period of the previous year (approximately 7.2% and approximately 4.6%, respectively). The gross profit margin remained high at 66.0%, demonstrating the strength of the earnings base.【Cash Quality】Although disclosure of Operating Cash Flow (OCF) and other items is unavailable, extraordinary losses included a loss on disposal of fixed assets of ¥1.4B and impairment losses of ¥0.3B, indicating that part of profit was subject to non-recurring downward pressure.【Investment Efficiency】ROE was 8.3%. Total asset turnover was relatively low, while tangible fixed assets of ¥440.3B accounted for 53.5% of total assets, making the asset-intensive store-based structure a constraint on asset efficiency.【Financial Soundness】The Equity Ratio was 52.4%. With interest-bearing debt of ¥110.2B and interest expense of ¥1.3B, the interest burden was immaterial, indicating a stable financial foundation.
Cash Flow Analysis
As the cash flow statement has not been disclosed, fund movements are analyzed based on changes in the balance sheet. Cash and deposits were ¥156.5B, an increase of ¥31.3B from ¥125.2B in the previous year. Meanwhile, long-term borrowings increased from ¥83.1B to ¥100.2B, suggesting that part of the investment funding associated with store expansion may have been financed through borrowings. Tangible fixed assets increased from ¥414.8B to ¥440.3B, indicating that ongoing capital investment was undertaken. The coexistence of higher cash balances and increased borrowings suggests a balance between financing and investment during the business expansion phase.
Earnings Quality
The difference between Ordinary Income and Net Income was primarily attributable to income taxes and other taxes (¥18.3B; effective tax rate of approximately 33.8%), reflecting the recurring profit structure. Non-operating income was modest at ¥2.0B, including a foreign exchange gain of ¥1.2B, and its contribution to Ordinary Income was limited. Extraordinary items resulted in a net loss of ¥0.75B, with non-recurring items including a loss on disposal of fixed assets of ¥1.4B and impairment losses of ¥0.3B exerting slight downward pressure on Profit Before Tax. Excluding these items, the earnings growth trend from the core business appears stronger. Comprehensive Income was ¥33.7B, slightly below Net Income of ¥35.9B, mainly due to foreign currency translation adjustments of -¥2.3B. The divergence between Net Income and Comprehensive Income was limited, indicating that earnings quality was generally sound.
Earnings Forecasts and Guidance
The full-year company forecast is Revenue of ¥1,471.6B (+18.7%), Operating Income of ¥107.7B (+16.5%), and Ordinary Income of ¥106.0B (+17.3%). Based on first-half results, progress rates were 49.1% for Revenue, 50.8% for Operating Income, and 51.9% for Ordinary Income, all of which were in line with or slightly above the standard half-year progress rate of 50%. The implied Operating Income margin under the second-half plan is approximately 7.1%, slightly below the first-half actual result of 7.6%; personnel expenses, cost trends, and cost control in the second half will therefore be key to achieving the plan.
Shareholder Returns
The Q2 dividend was ¥20.00 per share, while the full-year forecast dividend is ¥40.00 per share. Based on forecast EPS of ¥192.53, the forecast Payout Ratio is approximately 20.8%, significantly below the general sustainability benchmark of approximately 60%. The low Payout Ratio suggests a capital allocation policy prioritizing the securing of growth capital, such as investment in new store openings. The status of share repurchases has not been disclosed, and the Total Return Ratio has not been calculated.
Risk Factors
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Food Service Demand and Cost Structure Risk: The SG&A expense ratio is high at 58.5%. If labor costs and food material costs rise while price pass-through does not progress, the Operating Income margin of 7.6% could come under pressure.
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Store Opening and Asset Recovery Risk: While the company holds tangible fixed assets of ¥440.3B and deposits and guarantee money of ¥65.7B, it has already recorded a loss on disposal of fixed assets of ¥1.4B and impairment losses of ¥0.3B. The emergence of unprofitable stores or delays in the ramp-up of new stores could impair asset efficiency.
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Interest Rate and Foreign Exchange Volatility Risk: The interest coverage ratio exceeds 41x against interest-bearing debt of ¥110.2B, indicating high current resilience. However, the company recorded a foreign exchange gain of ¥1.2B, and foreign exchange sensitivity through imported food materials and other channels could become a source of cost volatility.
Industry Benchmark (For Reference; Compiled by the Company)
Industry Benchmark (retail)
Profitability and Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 7.6% | – | – |
| Net Income Margin | 5.0% | – | – |
As comparative data is limited, it is difficult to assess the company’s relative position within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 20.6% | – | – |
The Revenue Growth Rate of 20.6% appears to exceed the growth rate generally seen in the retail industry; however, an exact comparison cannot be made because median data is unavailable.
Source: Compiled by the Company
Key Points from the Earnings Results
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Against Revenue growth of +20.6%, Operating Income increased +26.2% and Net Income increased +30.7%, indicating profit growth at a pace exceeding revenue growth and demonstrating positive operating leverage throughout the first half, as reflected in the earnings data.
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While the Operating Income progress rate against the full-year forecast was 50.8%, slightly above the standard half-year progress rate, the implied Operating Income margin under the second-half plan is below the first-half actual level. Cost trends in the second half will therefore be a key point of observation for plan achievement.
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The forecast Payout Ratio remains low at approximately 20.8%. Together with an Equity Ratio of 52.4% and high interest coverage, the financial indicators confirm a capital allocation structure that prioritizes growth investment while maintaining financial soundness.
Theoretical Share Price (Reference Value)
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥1,293 |
| base | ¥1,393 |
| bull | ¥1,447 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥1,118 |
| Adjusted Forecast EPS | ¥197.8 |
| Cost of Equity r | 9.77% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 1.00%) |
| Residual Income Persistence Factor ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 20.8% |
| Forecast EPS Confidence Adjustment | ×1.028 (based on the track record of guidance achievement in the same industry) |
| Implied PBR / PER | 1.25x / 7.0x |
Sensitivity: ¥1,353–¥1,435 at Cost of Equity ±1%, and ¥1,386–¥1,404 at ω±0.1.
Notes:
- Net assets as of the end of the quarter are used (there is a timing mismatch with the full-year forecast).
- As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.
(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee future share prices.)
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.
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AI Financial Analysis
Executive Summary
FY2026 Q2 was a strong first-half result, with revenue and profit growth ahead of the company’s full-year growth assumptions while preserving solid balance-sheet capacity for store expansion. Revenue increased 20.6% year on year to ¥72.30bn. Operating income rose faster than sales, up 26.2% to ¥5.47bn. Ordinary income increased 28.7% to ¥5.50bn. Net income attributable to owners increased 30.5% to ¥3.61bn. Gross profit rose to ¥47.74bn, and the gross margin expanded by 47bp year on year to 66.0%. Operating margin improved by 33bp to 7.6%, reflecting positive operating leverage despite a continued investment phase. Net margin rose by 38bp to 5.0%. SG&A increased 21.0% to ¥42.26bn, broadly tracking the 20.6% revenue expansion and limiting SG&A-ratio deterioration to approximately 15bp. The high gross margin and modest operating-margin expansion indicate that incremental sales are being converted into operating profit, although the business remains structurally labor-, occupancy- and store-investment intensive. Ordinary income growth exceeded operating-income growth because non-operating income increased, including ¥0.12bn of foreign-exchange gains. Below ordinary income, ¥0.21bn of extraordinary losses, primarily ¥0.14bn of fixed-asset disposal losses and ¥0.03bn of impairment, were more than offset only partly by ¥0.13bn of extraordinary income. The annualized DuPont ROE was 16.7%, exceeding the 15% benchmark and indicating attractive earnings generation from a combination of margin, asset utilization and leverage. Revenue progress against full-year guidance was 49.1%, close to the standard 50% first-half pace. Operating-income progress was slightly stronger at 50.8%, and ordinary-income progress was 51.9%. Net-income progress was 48.7%, reflecting the effect of taxes and extraordinary items. Full-year guidance implies second-half revenue growth of approximately 17.0% year on year, below the 20.6% first-half rate, while implied second-half operating-income growth is approximately 9.3%, below the 26.2% first-half rate. This guidance profile suggests management is retaining room for ongoing cost inflation, new-store ramp-up costs and execution risk in the second half. The ¥20.0 interim dividend represents a 21.7% first-half dividend payout ratio, and the ¥40.0 full-year DPS forecast implies a dividend payout ratio of approximately 20.8% based on forecast EPS of ¥192.53. Overall, the first-half numbers support a favorable operating trajectory, with the principal issues for monitoring being the conversion of rapid sales growth into sustained margins and the balance-sheet implications of continued physical-network investment.
Profitability Analysis
The annualized 16.7% ROE decomposes into a 5.0% net profit margin, 1.757x asset turnover and 1.91x financial leverage. The principal driver of the year-on-year return improvement is stronger profitability: net income grew 30.5%, faster than revenue growth of 20.6%, while the reported annualized ROE improved from an estimated approximately 13% in the comparable period. Gross margin expanded to 66.0% from 65.6%, a 47bp improvement, indicating favorable restaurant-level economics, pricing/mix and/or procurement management. Operating margin increased to 7.6% from 7.2%, a 33bp expansion, showing that the gross-margin gain more than absorbed modest SG&A-ratio pressure. SG&A rose 21.0%, only slightly above sales growth, and SG&A as a percentage of revenue increased approximately 15bp to 58.5%; this is controlled cost growth rather than a material negative operating-leverage signal. The 1.91x financial-leverage factor contributes meaningfully to ROE but remains supported by a 0.91x debt-to-equity ratio and 20.4% debt-to-capital ratio. Interest burden was exceptionally resilient at 0.992, while interest coverage was 41.13x, so debt servicing does not currently constrain profitability. The effective tax rate was 33.8%, producing a tax burden of 0.665; this is a moderate drag on conversion from pre-tax to net profit. JGAAP goodwill of ¥2.47bn is modest relative to equity and assets, reducing concern that accounting for acquisitions is materially distorting reported profitability. The operating-margin improvement appears operationally credible, but its durability depends on preserving gross margin as the company continues to add and mature stores.
Growth Assessment
Top-line growth of 20.6% was robust for the first half, with revenue reaching ¥72.30bn. Operating income, ordinary income and net income grew faster than revenue by 5.6ppt, 8.1ppt and 9.9ppt, respectively, demonstrating improving earnings conversion. The company achieved first-half revenue progress of 49.1% against the ¥147.16bn full-year sales forecast, essentially in line with the normal 50% pace. Operating-income progress of 50.8% against the ¥10.77bn forecast and ordinary-income progress of 51.9% against the ¥10.60bn forecast are modestly ahead of the standard first-half pace. Forecast net-income progress of 48.7% against ¥7.42bn is marginally below the standard pace but remains broadly consistent with achieving the plan. Management’s forecast calls for full-year revenue growth of 18.7% and operating-income growth of 16.5%, both slower than the first-half run rate. The implied moderation in second-half operating-profit growth indicates that management is not extrapolating first-half margin expansion without allowance for investment and cost pressures. PPE amounted to ¥44.03bn, or 53.5% of assets, underscoring the importance of disciplined returns from the store base and new openings. Receivables rose 32.3% year on year to ¥6.91bn, faster than revenue, while inventories rose 45.4% to ¥1.10bn; these changes should be assessed alongside ongoing sales growth and the operational requirements of a larger network. The inventory balance remains only 1.3% of total assets and is small in absolute terms relative to sales, which moderates inventory-risk concerns.
Financial Health
Liquidity is adequate but not excessive. The current ratio was 118.5%, above 1.0x, and the quick ratio was 113.6%, above 1.0x, indicating that current obligations are covered by liquid current assets. Working capital was positive at ¥4.16bn. Cash and deposits increased 25.0% year on year to ¥15.65bn and represented 19.0% of total assets. Current liabilities increased with the operating scale to ¥22.52bn, while accounts payable rose 38.4% to ¥6.21bn. The payable increase exceeds revenue growth, which is consistent with larger purchasing activity and provides some operating funding, but payment terms should remain a monitoring item. Reported short-term loans were ¥1.00bn, and the current portion of long-term loans was ¥3.28bn; cash therefore substantially exceeds these near-term loan maturities. The cash-to-short-term-debt ratio was 15.65x, providing a substantial short-term refinancing buffer. Long-term loans were ¥10.02bn, and reported interest-bearing debt was ¥11.02bn. Debt-to-equity was 0.91x, below the 2.0x warning threshold, while debt-to-capital was 20.4%, well below the 40% investment-grade benchmark. Interest coverage of 41.13x demonstrates considerable capacity to service financing costs, notwithstanding interest expense rising to ¥1.33bn from ¥0.21bn in the comparable period. Total equity increased to ¥43.10bn from ¥40.36bn, strengthening the capital base. Goodwill was ¥2.47bn, equivalent to 5.7% of equity and 3.0% of assets, while intangible assets were 4.5% of assets; these levels do not create material goodwill-concentration risk. Lease obligations totaled ¥2.31bn, and asset-retirement obligations were ¥1.22bn, reflecting ongoing store-network commitments that should be considered alongside debt in evaluating fixed obligations.
Notable B/S Changes
Inventories: +¥0.34bn (+45.4%) to ¥1.10bn - growth exceeded revenue expansion, although inventory remains only 1.3% of total assets and therefore represents limited balance-sheet concentration. Accounts payable: +¥1.72bn (+38.4%) to ¥6.21bn - supplier financing expanded faster than sales, supporting working capital but warranting monitoring of purchasing growth and payment terms. Accounts receivable: +¥1.69bn (+32.3%) to ¥6.91bn - increase exceeded the 20.6% sales-growth rate, making collection-cycle discipline relevant. Cash and deposits: +¥3.13bn (+25.0%) to ¥15.65bn - stronger cash reserves enhance liquidity and comfortably cover reported near-term loan maturities. Property, plant and equipment: +¥2.56bn (+6.2%) to ¥44.03bn - PPE represents 53.5% of assets, highlighting the strategic importance of store-investment returns and impairment discipline.
Cash Flow Quality
Dividend Sustainability
The Q2 dividend was ¥20.0 per share, compared with ¥18.0 in the comparable period. The calculated first-half dividend payout ratio was 21.7%, a conservative level relative to the 60% sustainability benchmark. The forecast full-year dividend is ¥40.0 per share. Based on forecast EPS of ¥192.53, the forecast dividend payout ratio is approximately 20.8%. This low earnings payout provides substantial retained-profit capacity for growth investment, debt reduction and resilience against temporary earnings volatility. Retained earnings increased to ¥333.39bn from ¥304.24bn in the comparable period. Dividend policy appears aligned with a growth-oriented capital-allocation profile rather than maximizing near-term shareholder distributions.
Risk Assessment
Business risks include Restaurant demand risk: discretionary consumer spending, traffic and customer ticket trends can be affected by household confidence, food inflation and changes in consumer preferences., Cost inflation risk: labor, food ingredients, utilities and occupancy costs can pressure the 7.6% operating margin if price and menu-mix actions do not offset higher costs., Store-expansion execution risk: the large PPE base of ¥44.03bn makes returns dependent on site selection, opening execution and the speed at which new stores reach mature productivity., Competitive and cannibalization risk: restaurant competition and a growing store network can reduce incremental sales productivity or require higher promotional spending., Asset-utilization risk: fixed-asset disposal losses of ¥0.14bn and impairment losses of ¥0.03bn, although small relative to operating income, demonstrate continuing exposure to underperforming-site closures or renovations..
Financial risks include Leverage contributes to the annualized 16.7% ROE through a 1.91x financial-leverage factor; a sustained decline in operating profitability would reduce the benefit of this structure., Interest expense increased to ¥1.33bn from ¥0.21bn in the comparable period, making financing-cost trends relevant even though current interest coverage remains strong at 41.13x., Accounts receivable increased 32.3% year on year to ¥6.91bn, faster than revenue growth, requiring continued discipline in collection and settlement cycles., Accounts payable increased 38.4% to ¥6.21bn, faster than sales growth; a reversal in supplier-credit support could increase operating funding requirements..
Key concerns include The full-year plan implies a material slowdown from first-half profit growth, with implied second-half operating-income growth of approximately 9.3% year on year., SG&A rose 21.0%, marginally faster than revenue; sustained excess SG&A growth would reverse the modest first-half operating-margin expansion., Current-ratio headroom is adequate at 118.5% but is below the 1.5x healthy benchmark, so liquidity flexibility depends partly on maintaining cash generation and supplier financing., Foreign-exchange gains of ¥0.12bn supported non-operating income; this contribution is not necessarily recurring..
Investment Implications
Key takeaways include First-half revenue growth of 20.6% translated into 26.2% operating-income growth and 30.5% owner-attributable net-income growth., Gross margin expanded 47bp to 66.0% and operating margin expanded 33bp to 7.6%, evidencing favorable first-half operating leverage., Annualized ROE of 16.7% is above the 15% excellence benchmark, supported by a 5.0% net margin, 1.757x asset turnover and 1.91x leverage., The balance sheet retains meaningful capacity, with ¥15.65bn of cash, a 20.4% debt-to-capital ratio and 41.13x interest coverage., Guidance achievement is broadly on track, but the forecast embeds slower second-half profit growth than achieved in the first half..
Metrics to watch include Revenue growth relative to the 18.7% full-year sales-growth plan, Operating margin relative to the 7.6% first-half level, SG&A growth relative to revenue growth, Receivables and payables growth relative to sales, Interest expense and interest coverage, Fixed-asset disposal and impairment losses, Progress toward the ¥10.77bn full-year operating-income forecast.
Regarding relative positioning, The company combines specialty-service-level gross margins with high SG&A intensity characteristic of a restaurant operator with a substantial physical store base. Its 16.7% annualized ROE, 66.0% gross margin and conservative 20.4% debt-to-capital ratio indicate a favorable profitability-versus-balance-sheet profile, while the 7.6% operating margin remains below the broader 8%-15% good benchmark and leaves sensitivity to store-level cost inflation.