Syuppin Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥24.42B
• Operating Income: ¥939M
• Net Income: ¥613M
• EPS: ¥28.33

Income Statement

Balance Sheet

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

Shuppin Co., Ltd. (3179) reported FY2026 Q2 (non-consolidated, JGAAP) revenue of ¥24.424 billion, down 7.9% YoY, with a disproportionately large decline in operating income to ¥939 million (-53.5% YoY), indicating sharp margin compression and negative operating leverage. Net income was ¥613 million (-55.1% YoY), yielding an EPS of ¥28.33. The implied operating margin is approximately 3.8% (operating income/revenue), while the provided net profit margin is 2.51%, reflecting both weaker operating profitability and a typical tax burden. DuPont metrics indicate an ROE of 6.5%, decomposed into a 2.51% net margin, 1.407x asset turnover, and 1.84x financial leverage, underscoring that ROE softness is primarily profit-margin driven rather than asset efficiency or leverage. Total assets stand at ¥17.354 billion and total equity at ¥9.430 billion, implying an equity ratio of roughly 54% (computed) despite the equity ratio field being shown as 0.0% (unreported). Ordinary income of ¥922 million is slightly below operating income, suggesting minor non-operating losses or reduced non-operating gains in the period. Although the income tax line is unreported, the difference between ordinary income and net income implies an effective tax rate near 33–34%. Cash flow statements and key liquidity line items (cash, current assets/liabilities) are not disclosed in the dataset, limiting visibility on working capital and cash conversion. Inventory metrics are also unreported, which is a material gap for a resale/retail model where stock levels drive gross margin and OCF. The deterioration in operating earnings relative to a single-digit revenue decline points to either gross margin pressure (e.g., mix, pricing, sourcing costs, FX) and/or SG&A deleverage. Asset turnover at 1.41x remains healthy for a specialty retailer, suggesting operational throughput is intact even as profitability weakens. Financial leverage at 1.84x is moderate, with implied liabilities around ¥7.9 billion, but the composition (interest-bearing vs. trade payables) cannot be determined. Dividend information appears unreported, so payout assessment relies on earnings capacity and implied cash generation rather than disclosed distributions. Overall, the quarter reflects a challenging margin environment with stable asset efficiency and moderate balance sheet risk, but limited cash flow disclosure raises uncertainty around earnings quality and dividend capacity. Data limitations are significant; the analysis focuses on available non-zero items and reasonable inferences from those.

Profitability Analysis

ROE_decomposition: ROE 6.5% = Net margin 2.51% x Asset turnover 1.407 x Financial leverage 1.84. The principal drag is the low net margin versus historical specialty retail norms; asset utilization is comparatively solid and leverage is moderate. margin_quality: - Operating margin ~3.8% (¥939m ÷ ¥24,424m) has compressed materially YoY as operating income fell 53.5% against a 7.9% revenue decline. Net margin at 2.51% reflects both weaker operating profit and a normalizing tax burden. Ordinary income (¥922m) is slightly below operating income (¥939m), implying minor non-operating headwinds versus prior periods.

• Gross margin is unreported; the scale of operating profit decline suggests pressure from gross margin (pricing/mix/sourcing/FX) and/or higher SG&A ratio. operating_leverage: Negative operating leverage is evident: a mid-single-digit revenue drop produced a disproportionately large decline in operating income. This indicates low flexibility in fixed costs and/or promotional intensity. Monitoring SG&A as a % of sales and gross margin (when disclosed) will be key to assessing recovery potential.

Growth Assessment

revenue_sustainability: Revenue contracted 7.9% YoY to ¥24.424bn, implying softer demand or tighter supply in core categories (e.g., pre-owned cameras/watches) and possibly macro or FX effects. Asset turnover of 1.407x indicates throughput remains reasonable despite sales headwinds. profit_quality: Operating income fell 53.5% to ¥939m, suggesting margin compression beyond what sales decline alone would imply. Ordinary income at ¥922m points to minimal non-operating support, and the implied tax rate (~33–34%) translates a modest pre-tax base into a further net decline. outlook: Near-term growth hinges on restoring gross margin (product mix, pricing discipline, sourcing) and improving SG&A efficiency. If revenue stabilizes and promotions normalize, operating margins could recover; conversely, prolonged demand softness or inventory markdowns would keep pressure on profit growth.

Financial Health

liquidity: Key liquidity metrics (cash, current assets/liabilities, current ratio, quick ratio) are unreported, limiting assessment. Inventory and payables—critical for a resale retailer—are also not disclosed. solvency: Total assets ¥17.354bn and equity ¥9.430bn imply an equity ratio of roughly 54% (¥9.430bn/¥17.354bn), suggesting a solid capital base. Implied liabilities are ~¥7.924bn; without debt detail, interest-bearing leverage cannot be determined. capital_structure: Financial leverage of 1.84x (assets/equity) is moderate. Interest expense is unreported and the interest coverage ratio shown as 0.0x reflects non-disclosure rather than financial stress. Composition between operating liabilities and borrowings remains unknown.

Cash Flow Quality

earnings_quality: Operating cash flow is unreported, resulting in an OCF/Net Income ratio of 0.00 by placeholder. Using earnings alone, quality assessment is inconclusive. The significant drop in operating income raises the bar for cash conversion to validate earnings durability. FCF_analysis: Investing and financing cash flows are unreported; Free Cash Flow cannot be calculated. Capex intensity is typically modest for this business model, but working capital swings can dominate FCF. working_capital: Inventory, receivables, and payables are not disclosed. For a pre-owned retail model, inventory procurement, turnover, and markdowns crucially impact OCF. Absent data, we cannot evaluate turns, aging, or obsolescence risk.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are shown as 0.00/0.0% due to non-disclosure. Based on net income of ¥613m, the capacity to pay dividends exists, but the appropriate payout cannot be inferred without policy guidance and cash flow visibility. FCF_coverage: FCF is unreported; coverage cannot be assessed. Elevated uncertainty stems from missing OCF and working capital data. policy_outlook: No dividend policy details are provided in the dataset. Sustainability would depend on stabilizing operating margin and maintaining inventory discipline to support OCF.

Risk Assessment

Business Risks:

• Demand volatility in discretionary categories (cameras, luxury watches) impacting sales and pricing power
• Gross margin sensitivity to product mix, sourcing costs, and FX rates on imported inventory
• Inventory valuation and markdown risk inherent in a resale/retail model
• Competitive pricing pressure from e-commerce platforms and peer specialty retailers
• Supply tightness in high-demand SKUs affecting turnover and margins
• Operational deleverage if sales remain soft while fixed costs persist

Financial Risks:

• Limited visibility on liquidity and cash balances due to non-disclosure
• Potential reliance on trade finance or short-term borrowings not visible in the dataset
• Tax rate variability; implied effective tax ~33–34% reduces net earnings sensitivity
• Non-operating income volatility, albeit currently minor vs. operating profits

Key Concerns:

• Sharp operating income decline (-53.5% YoY) versus modest revenue drop (-7.9%)
• Unreported cash flow and working capital details hinder assessment of earnings-to-cash conversion
• Gross margin and SG&A deleverage likely, but quantification is not possible with available data

Investment Implications

Key Takeaways:

• ROE at 6.5% is chiefly constrained by a low net margin; asset efficiency and leverage are reasonable
• Operating margin compression is the core issue; restoring pricing/mix and cost discipline is pivotal
• Balance sheet appears sound with an implied ~54% equity ratio, but debt mix is unclear
• Cash flow opacity is high; confirmation of OCF resilience is needed to underwrite dividend capacity
• Ordinary income trails operating income slightly, indicating limited non-operating support

Metrics to Watch:

• Gross profit margin and SG&A ratio (once disclosed)
• OCF/Net income and inventory turnover days
• Average selling price trends and markdown rate
• Non-operating income/expense and interest costs
• Effective tax rate normalization
• Quarterly guidance on revenue trajectory and promotional intensity

Relative Positioning: Within Japanese specialty retail/resale, Shuppin shows healthy asset turnover and moderate leverage but currently weaker profitability, implying a need for margin repair to regain parity with peers.

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