OCHI HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥58.53B
• Operating Income: ¥675M
• Net Income: ¥512M
• EPS: ¥41.89

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

OCHI Holdings (31660) reported FY2026 Q2 consolidated results under JGAAP with modest topline growth but mixed margin dynamics. Revenue increased 2.7% year over year to ¥58.53bn, while operating income declined 2.5% to ¥0.675bn, indicating some margin compression at the operating level. Gross profit was ¥7.892bn, translating to a gross margin of 13.5%, which remains relatively thin and suggests a price-competitive or pass-through oriented business model. Operating margin was 1.15%, highlighting sensitivity to cost inflation and SG&A control. Ordinary income was ¥0.971bn, exceeding operating income by ¥0.296bn, implying positive non-operating contributions (e.g., financial income or other non-operating gains) offsetting weak operating leverage. Net income rose 6.6% to ¥0.545bn, aided by these non-operating factors, despite the dip in operating profit. The DuPont breakdown shows a net profit margin of 0.93%, asset turnover of 0.859x, and financial leverage of 2.85x, producing an ROE of 2.28% for the period—subdued and largely constrained by slim margins. Cash flow quality appears solid for the half: operating cash flow of ¥1.223bn is 2.24x net income, indicating earnings are backed by cash generation this period. Liquidity is adequate with a current ratio of 117.2% and positive working capital of ¥6.786bn, though the quick ratio equals the current ratio due to undisclosed inventories. Leverage is moderate with total liabilities of ¥46.51bn and a debt-to-equity proxy of 1.94x; interest expense is low at ¥15m with robust coverage of about 45x, mitigating near-term financing risk. Depreciation and amortization of ¥0.407bn supports EBITDA of ¥1.082bn and an EBITDA margin of about 1.85%, underscoring the low-margin profile. The effective tax rate metric shown as 0.0% is not reflective of reality; reported income tax expense of ¥0.423bn against ordinary income of ¥0.971bn implies a materially higher tax burden. Several items (e.g., inventories, cash and equivalents, investing cash flows, equity ratio, dividend per share, and share counts) were not disclosed in this dataset and appear as zeros; conclusions are drawn only from available figures. Free cash flow and dividend coverage cannot be reliably assessed due to lack of investing cash flow and capex detail. Overall, the quarter shows resilient cash conversion and manageable financial risk, but thin operating margins and limited operating leverage keep ROE muted. The near-term focus remains on cost pass-through, mix improvement, and SG&A discipline to defend margins in a steady demand environment.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.0093
• asset_turnover: 0.859
• financial_leverage: 2.85
• calculated_ROE: 0.0228
• commentary: ROE of 2.28% is primarily constrained by a 0.93% net margin; leverage is moderate and asset turnover is decent, but margin thinness is the main drag. margin_quality: Gross margin at 13.5% and operating margin at 1.15% indicate a low-margin structure, likely reflecting distribution/trading economics and competitive pricing. Ordinary income outpacing operating income by ¥0.296bn suggests supportive non-operating items (e.g., investment income or other gains), which improved bottom-line results. Interest expense is minimal (¥15m), so the gap is not debt-driven. Effective tax burden appears substantial based on tax expense vs. pre-tax income, despite the displayed 0.0% effective rate being a non-disclosure artifact. operating_leverage: Revenue grew 2.7% YoY while operating income fell 2.5%, demonstrating negative operating leverage in the period. This implies either gross margin pressure or elevated SG&A that did not scale with revenue. Given EBITDA growth is not indicated, cost control and pricing power will be key to restoring positive operating leverage.

Growth Assessment

revenue_sustainability: Top-line growth of 2.7% suggests stable demand, but low absolute margins imply limited pricing power. Sustainability will depend on continued volume and mix, as well as the ability to pass through costs. profit_quality: Net income growth (+6.6%) contrasts with operating income decline (-2.5%), indicating that non-operating factors contributed to bottom-line resilience. Cash earnings quality is solid this half as OCF exceeded net income (2.24x), but durability requires recurring operating improvements. outlook: With thin operating margins, incremental gross margin gains or SG&A efficiency are necessary to translate modest revenue growth into profit expansion. External cost pressures (e.g., materials, logistics) and competitive dynamics remain key variables. Near-term earnings trajectory hinges on margin defense and the recurrence of non-operating gains.

Financial Health

liquidity: Current assets of ¥46.14bn vs. current liabilities of ¥39.36bn yield a current ratio of 117.2% and working capital of ¥6.79bn. The quick ratio equals the current ratio due to undisclosed inventories; true quick liquidity could be lower if inventories are material. solvency: Total liabilities of ¥46.51bn against equity of ¥23.95bn imply leverage of 1.94x. Interest coverage is strong at ~45x, indicating ample buffer against rate increases or earnings volatility. capital_structure: Leverage is moderate with financial flexibility supported by low interest burden. Equity ratio shown as 0.0% is not disclosed; however, assets of ¥68.13bn and equity of ¥23.95bn imply an approximate equity-to-asset ratio near 35% using period-end figures.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥1.223bn versus net income of ¥0.545bn (2.24x) indicates solid cash conversion in the period, suggesting limited accrual build or supportive working capital movements. FCF_analysis: Free cash flow cannot be reliably calculated as investing cash flow and capex figures are not disclosed (displayed as zero). As such, FCF trends and coverage ratios are not assessable from this dataset. working_capital: Working capital is positive at ¥6.79bn. With inventories undisclosed, the composition of current assets is unclear. The OCF strength suggests working capital did not deteriorate materially in the half.

Dividend Sustainability

payout_ratio_assessment: Payout ratio displayed as 0.0% is not informative due to data non-disclosure. EPS is ¥41.89 for the period, but without confirmed DPS and policy guidance, payout evaluation is not possible. FCF_coverage: Not assessable; investing cash flow and capex are undisclosed, preventing calculation of free cash flow and coverage. policy_outlook: Dividend policy was not disclosed in the provided data. Assessment requires management guidance, historical payout trends, and confirmed FCF trajectory.

Risk Assessment

Business Risks:

• Thin operating margins (1.15%) increase sensitivity to input cost inflation and pricing pressure.
• Negative operating leverage in the period (revenue up, operating income down) signals vulnerability to cost drift.
• Dependence on non-operating gains to bridge operating shortfalls introduces earnings variability.
• Competitive intensity in distribution/trading-like models can cap pricing power and compress gross margins.
• Potential exposure to cyclical end-markets affecting volume and mix.

Financial Risks:

• Moderate leverage (liabilities/equity ~1.94x) could amplify earnings volatility in downturns.
• Undisclosed cash balance and inventory levels obscure true liquidity buffer and quick ratio.
• Tax burden appears high relative to pre-tax income, reducing net margin resilience.
• Free cash flow visibility limited due to lack of capex/investing cash flow disclosure.

Key Concerns:

• Sustained margin compression could further weaken ROE from an already low 2.28%.
• If non-operating gains are non-recurring, net income could revert toward weaker operating trends.
• Insufficient disclosure on investing cash flows hinders FCF and dividend capacity assessment.

Investment Implications

Key Takeaways:

• Revenue grew 2.7% YoY to ¥58.53bn, but operating income fell 2.5% to ¥0.675bn.
• Gross margin at 13.5% and operating margin at 1.15% underscore a low-margin profile.
• Ordinary income exceeded operating income by ¥0.296bn, indicating supportive non-operating items.
• OCF strength (¥1.223bn; 2.24x net income) supports earnings quality this period.
• Leverage is moderate (liabilities/equity ~1.94x) with strong interest coverage (~45x).
• ROE at 2.28% is constrained by thin net margin (0.93%).
• Dividend and FCF details are not disclosed, limiting capital return assessment.

Metrics to Watch:

• Gross margin trajectory and cost pass-through effectiveness.
• SG&A ratio and operating margin to gauge operating leverage normalization.
• Recurring vs. non-recurring components of non-operating income.
• Working capital turns and OCF sustainability.
• Capex and investing cash flows to establish FCF and dividend capacity.
• Tax rate normalization and its impact on net margin.

Relative Positioning: Within low-margin distribution-oriented peers, OCHI shows adequate liquidity and strong interest coverage but lags on operating margin and ROE; improving cost discipline and price/mix would be required to close the profitability gap.

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
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