UNIVA Oak Holdings Limited FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥784M
• Operating Income: ¥-356M
• Net Income: ¥-401M
• EPS: ¥-4.91

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

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 deep operating loss and negative ordinary income, driven by a sharp revenue contraction and SG&A cost overhang. Revenue fell to 7.84 (−44.3% YoY), while gross profit was 5.44, implying a high gross margin of 69.4% but insufficient to cover SG&A of 9.01. Operating income was −3.56, translating to an operating margin of approximately −45.4%. Ordinary income deteriorated to −3.96 and net income to −3.95, with basic EPS at −4.91 yen. Non-operating result was slightly negative (income 0.23 vs expenses 0.62), largely due to interest expense of 0.40. Cash outflow from operations was −3.66, broadly tracking the accounting loss (OCF/NI ≈ 0.93x), indicating losses are cash-consumptive but not inflated by working capital swings. Liquidity is adequate in the near term (current ratio 168%, quick ratio 161%) with cash and deposits of 7.25 and working capital of 11.70. However, leverage is elevated on a liabilities basis (D/E 2.11x), and debt service capacity is weak (interest coverage −8.85x). ROE calculated at −25.9% and ROIC at −18.3% highlight significant value destruction in the period. The balance sheet shows equity of 15.23 (BVPS ~18.89 yen) with negative retained earnings (−9.76), underscoring accumulated losses. Comprehensive income (−2.65) benefited from positive OCI versus net loss, partially cushioning equity erosion. Capex was minimal at 0.04, suggesting limited growth investment amid cash preservation. Financing inflow of 2.29 likely supported liquidity in the face of negative OCF. Margin comparison in basis points versus prior periods is not available due to absent YoY or sequential margin disclosures; current gross margin is strong, but operating margin is heavily negative due to SG&A burden. Forward-looking, stabilization requires material cost rationalization and/or revenue recovery to return to operating breakeven; funding flexibility remains a key watchpoint given negative coverage and reliance on financing cash flow.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (−50.4%) × 0.166 × 3.11 ≈ −25.9%. The largest negative driver is the net profit margin at −50.4%, reflecting a deep operating loss and net finance costs. Asset turnover at 0.166 is low, consistent with the revenue contraction and underutilized asset base. Financial leverage at 3.11x amplifies the margin impact on equity returns. Business reason: SG&A of 9.01 exceeded gross profit of 5.44 despite a high gross margin, indicating fixed/semi-fixed costs not adjusted to the smaller revenue base; interest expense (0.40) further pressured ordinary income. Sustainability: the margin compression appears tied to current demand weakness and cost stickiness; without structural cost reductions or revenue normalization, the negative margin could persist. Concerning trend flags: revenue down 44.3% YoY while SG&A remains high (SG&A/revenue ~115%), implying deleverage and poor operating leverage; interest burden meaningful relative to EBITDA (−3.48).

Growth Assessment

Top-line contracted sharply (−44.3% YoY to 7.84), suggesting either loss of business lines, client attrition, project delays, or a strategic pullback; details are undisclosed. Gross margin at 69.4% indicates mix may be skewing to higher-margin services/products, but scale loss offsets this benefit at the operating level. Operating margin is ~−45.4%, and ordinary margin is ~−50.5%, both pointing to significant negative operating leverage. Non-operating result is a modest drag, with interest expense most notable. With capex at 0.04, reinvestment is constrained, limiting near-term growth catalysts. Outlook: recovery hinges on revenue stabilization and SG&A resizing; absent that, continued losses are likely. Data limitations (no segment or order intake disclosure) prevent assessing sustainability by business line.

Financial Health

Liquidity is adequate: current ratio 168.2% and quick ratio 160.8% exceed benchmarks, supported by cash and deposits of 7.25 against current liabilities of 17.17. No warning on current ratio (<1.0) is triggered. Maturity profile shows limited short-term loans (0.03) with the bulk as long-term loans (11.49), reducing acute rollover risk; current assets exceed current liabilities, indicating low near-term maturity mismatch. Solvency: total liabilities of 32.09 vs equity of 15.23 yield a D/E of 2.11x (warning >2.0), highlighting leverage sensitivity. Equity ratio (not disclosed) approximates ~32% by calculation (15.23/47.33). Interest coverage is negative due to operating losses, indicating weak debt service capacity. Off-balance sheet obligations are not disclosed; none can be assessed from available data.

Cash Flow Quality

OCF of −3.66 vs net income of −3.95 yields OCF/NI ≈ 0.93x, above the 0.8 warning threshold—losses are largely reflected in cash rather than accrual distortions. Free cash flow is not fully calculable due to unreported investing CF; observed capex is minimal (0.04), implying FCF was likely meaningfully negative given OCF. Financing inflow of 2.29 partially offset operating cash burn, indicating reliance on external funding. No clear signs of working capital manipulation are observable from the limited disclosures; receivables and inventories are modest, but turnover metrics cannot be assessed without period comparatives.

Dividend Sustainability

Dividend information is unreported for the period. With net loss (−3.95), negative OCF (−3.66), and accumulated deficits in retained earnings (−9.76), distributable capacity appears weak. Even though capex is low, internal cash generation is insufficient to support shareholder returns sustainably at this time. Any dividend resumption would likely require a return to positive OCF and profitability; policy outlook is unclear due to absent guidance.

Risk Assessment

Business Risks:

• Revenue contraction of 44.3% YoY indicates demand weakness or business loss risk.
• High SG&A burden relative to current scale (SG&A/revenue ~115%) risks prolonged operating losses.
• Execution risk around cost restructuring and business mix optimization.
• Potential impairment risk in noncurrent assets if losses persist (goodwill/intangibles present, albeit small).

Financial Risks:

• Elevated leverage (D/E 2.11x) increases sensitivity to earnings volatility.
• Debt service risk with negative interest coverage (−8.85x).
• Liquidity reliance on external financing (Fin CF +2.29 amid negative OCF).
• Dilution risk if equity financing is used to bolster capital.
• Covenant breach risk if financial covenants are tied to profitability/coverage (not disclosed).

Key Concerns:

• ROIC at −18.3% signals significant value destruction.
• Asset turnover at 0.166 reflects underutilization of the asset base.
• Negative retained earnings (−9.76) constrain financial flexibility.
• Margin recovery path unclear due to limited disclosure on segments and growth drivers.

Investment Implications

Key Takeaways:

• Severe top-line decline with operating loss (−3.56) despite high gross margin points to urgent need for cost resizing.
• OCF tracks net loss (0.93x), confirming cash burn from operations; financing cash supported liquidity.
• Balance sheet liquidity is adequate near term, but leverage (D/E 2.11x) and negative coverage are key constraints.
• ROE (−25.9%) and ROIC (−18.3%) underscore poor capital efficiency this period.

Metrics to Watch:

• Quarterly revenue trajectory and order backlog (if disclosed).
• SG&A run-rate and cost reduction progress (SG&A/gross profit and SG&A/revenue).
• Operating margin and interest coverage recovery.
• Operating cash flow and net working capital movements.
• Financing activities, debt maturities, and covenant headroom.
• BVPS trend and retained earnings recovery.

Relative Positioning: Within small-cap Japan peers, the company currently screens weak on profitability (negative ROE/ROIC) and debt service, neutral-to-decent on near-term liquidity, and high risk on leverage compared with conservative benchmarks.

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