UNIVA Oak Holdings Limited FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥784M
• Operating Income: ¥-356M
• Net Income: ¥-244M
• 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

UNIVA・Oak Holdings (31130) reported FY2026 Q2 consolidated results under JGAAP showing significant top-line contraction and continued losses. Revenue was 784.0 million yen, down 44.3% YoY, highlighting a sharp slowdown in activity. Despite the revenue decline, reported gross profit was 841.2 million yen, implying a gross margin of 107.3%, which indicates material non-standard items within cost of sales (e.g., cost reversals, inventory revaluations, project settlements, or classification of other operating income); this requires caution in interpreting margin quality. Operating income remained a loss at -356.0 million yen (flat YoY per disclosure), pointing to heavy fixed-cost pressure and negative operating leverage. Ordinary income deteriorated to -396.0 million yen as interest expense of 36.3 million yen and other non-operating items weighed on results. Net income was -395.0 million yen (EPS -4.91), with a minimal tax charge of 1.4 million yen consistent with losses. DuPont analysis shows a deeply negative ROE of -25.94%, driven chiefly by a -50.38% net profit margin and a low asset turnover of 0.166x, while financial leverage is elevated at 3.11x. Liquidity remains adequate but not robust, with a current ratio of 129.2% and quick ratio of 125.0%, supported by 3.13 billion yen of current assets versus 2.42 billion yen of current liabilities. Total assets were 4.73 billion yen and total equity 1.52 billion yen, implying an equity ratio around the low-30% range (the reported equity ratio field is undisclosed). Cash flow from operations was negative at -65.9 million yen, but less negative than net loss (OCF/NI = 0.17), indicating sizable non-cash charges or working capital releases cushioning cash burn. Financing cash flow was an outflow of -150.6 million yen, suggesting debt repayment or other financing reductions amid losses. Free cash flow is not derivable because investing cash flow and cash balance were undisclosed; the displayed “0” should be treated as unreported. The company paid no dividends (DPS 0), with payout and FCF coverage not meaningful given losses. The combination of contracting revenue, abnormal gross margin, and negative operating profit points to stressed fundamentals and uncertain earnings visibility. Near-term priorities appear to be stabilizing revenue, normalizing gross margin composition, and containing operating costs to improve cash generation. Data limitations (notably cash balance, investing CF, shares outstanding) constrain precision in solvency and per-share analysis, but available metrics indicate heightened risk and the need for disciplined financing and cost control.

Profitability Analysis

ROE decomposition (DuPont) indicates: Net profit margin -50.38%, Asset turnover 0.166x, and Financial leverage 3.11x, resulting in a calculated ROE of -25.94% (matches reported). The primary drag is the severely negative margin, with asset efficiency also weak for the asset base employed. Reported gross margin of 107.3% is atypically high and likely reflects non-recurring or classification effects (e.g., reversals in cost of sales or recognition of other operating income within gross profit), which undermines the quality of the margin and limits its predictive value. EBITDA was -346.2 million yen, yielding an EBITDA margin of -44.2%, evidencing insufficient scale to cover fixed SG&A and operating costs. Operating income of -356.0 million yen, close to EBITDA given modest D&A (9.8 million yen), suggests the cost structure is largely cash-based and fixed/semifixed in the near term. Interest expense of 36.3 million yen produced a negative interest coverage ratio of -9.8x on an EBITDA basis, indicating lack of near-term capacity to service interest from operating earnings. Ordinary income at -396.0 million yen is slightly worse than operating income, implying additional non-operating burdens beyond interest. Overall, profitability is impaired by demand contraction (revenue -44.3% YoY), negative operating leverage, and likely one-off or non-core drivers in gross profit that are not sustainably repeatable.

Growth Assessment

Revenue fell 44.3% YoY to 784.0 million yen, indicating substantial demand weakness, downsizing of business lines, project delays, or portfolio restructuring. The steep top-line decline translated into a persistent operating loss, highlighting negative operating leverage. Given the unusual gross profit exceeding revenue, a portion of the apparent gross performance likely stems from non-recurring or non-operational sources; this reduces confidence in the underlying earnings trend. With ordinary income and net income both negative, there is limited evidence of near-term earnings recovery without a clear rebound in revenue or significant cost cuts. Asset turnover at 0.166x indicates underutilization of the asset base relative to sales, a headwind for growth-driven returns. Outlook depends on stabilizing core revenue streams and normalizing cost of sales; absent detailed segment disclosure, sustainability of any gross profit uplift cannot be confirmed. Near-term growth visibility is low, and the company appears to be in a consolidation or restructuring phase. Reacceleration would require order intake recovery, improved pricing, and tighter cost control. Any incremental financing constraints could also cap growth initiatives until cash generation improves.

Financial Health

Liquidity: Current assets 3,127.9 million yen vs. current liabilities 2,420.4 million yen yield a current ratio of 129.2% and quick ratio of 125.0%, indicating a modest cushion but not ample given losses. Inventories are relatively small at 102.6 million yen, so liquidity rests more on receivables and cash-like items (cash balance itself is undisclosed). Working capital stands at 707.5 million yen, which supports short-term obligations if collections remain timely. Solvency: Total liabilities of 3,222.9 million yen vs. equity of 1,523.0 million yen imply a debt-to-equity of 2.12x and financial leverage (assets/equity) of 3.11x; leverage is elevated for a loss-making profile. The implied equity ratio is roughly 32% (equity/asset), though the reported equity ratio field is undisclosed. Interest expense of 36.3 million yen alongside negative EBITDA signals weak interest service capacity without external support or asset monetization. Capital structure: With financing cash outflows (-150.6 million yen), the company may be reducing debt or facing tighter access to funding. Absent disclosure on cash and interest-bearing debt composition, precise solvency headroom cannot be ascertained, but leverage and losses suggest a cautious stance is warranted.

Cash Flow Quality

Earnings quality: OCF of -65.9 million yen versus net income of -395.0 million yen yields an OCF/NI ratio of 0.17, indicating cash outflow is materially less severe than the accounting loss. This gap likely reflects non-cash charges, timing differences, and/or working capital releases. However, with EBITDA deeply negative, recurring cash generation from operations remains weak. Free cash flow: FCF cannot be reliably calculated because investing cash flow is undisclosed (displayed as 0). As such, the presented FCF value of 0 should be treated as not available. Working capital: Current assets exceed current liabilities by 707.5 million yen, and low inventories suggest limited inventory risk; however, receivables quality and collection timing are key given the revenue drop. Financing CF was -150.6 million yen, likely debt repayments; combined with negative OCF, this implies a drawdown of cash or reliance on asset sales/other sources, but the period-end cash position is undisclosed. Overall, cash flow quality is weak but not as negative as the P/L would suggest; sustainability remains uncertain without clarity on capex and investing flows.

Dividend Sustainability

The company paid no dividend (DPS 0) and recorded losses, so payout and FCF coverage metrics are not meaningful for this period. Given negative net income and negative OCF, internal capacity to fund distributions is currently absent. With leverage elevated (D/E 2.12x) and interest coverage negative, maintaining liquidity and complying with financing terms would take priority over shareholder returns. Dividend policy outlook will likely hinge on restoring profitability and positive OCF; until then, a conservative stance is implied by the current DPS of 0. Any future resumption would require demonstrable, sustained earnings and cash improvements.

Risk Assessment

Business Risks:

• Sharp revenue contraction (-44.3% YoY) indicating demand volatility and project/order risk
• Abnormal gross margin (>100%) suggesting reliance on non-recurring items or accounting classifications
• Negative operating leverage with high fixed/semifixed costs driving operating losses
• Low asset turnover (0.166x) implying underutilized assets and drag on returns
• Execution risk in restructuring and cost containment amid shrinking scale
• Customer concentration or end-market cyclicality risk (implied by steep revenue swing, specifics undisclosed)

Financial Risks:

• Elevated leverage (D/E 2.12x; financial leverage 3.11x) amid losses
• Negative EBITDA and negative interest coverage (-9.8x) impairing debt service capacity
• Negative operating cash flow and financing outflows, with undisclosed cash balance
• Potential refinancing risk if access to funding tightens
• Profit volatility risk from non-operating items impacting ordinary income

Key Concerns:

• Sustainability of reported gross profit given margin exceeding 100%
• Path to breakeven absent near-term revenue recovery
• Liquidity headroom given losses and financing outflows without disclosed cash
• Visibility on capex and investing needs (investing CF undisclosed)
• Potential covenant pressure given negative coverage metrics

Investment Implications

Key Takeaways:

• Revenue fell 44.3% YoY to 784.0 million yen; earnings remain negative across operating, ordinary, and net levels
• ROE is deeply negative at -25.94%, primarily driven by a -50.38% net margin and low asset turnover
• Gross margin of 107.3% likely includes non-recurring or reclassification effects, reducing earnings quality
• Liquidity is adequate short term (current ratio 129%) but leverage is high (D/E 2.12x) with negative coverage
• OCF (-65.9 million yen) is less negative than net income, but EBITDA is deeply negative, challenging sustainability
• Financing outflows (-150.6 million yen) suggest debt reduction or tightening funding conditions

Metrics to Watch:

• Underlying gross margin excluding one-off/non-operating effects
• Order intake/backlog and quarterly revenue trajectory
• EBITDA trend and operating expense run-rate for signs of breakeven path
• OCF and working capital movements (DSO, collection efficiency)
• Interest-bearing debt levels, interest expense, and maturity profile
• Capex and investing cash flows (currently undisclosed)
• Equity ratio and any capital measures affecting solvency

Relative Positioning: Compared with typical TSE peers, the company exhibits weaker profitability (negative EBITDA and ROE), lower asset efficiency (0.166x turnover), and higher financial leverage, offset by a fair but thin liquidity buffer; near-term positioning appears defensive and restructuring-oriented rather than growth-driven.

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