Oisix ra daichi Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥131.82B
• Operating Income: ¥3.01B
• Net Income: ¥1.11B
• EPS: ¥26.70

Income Statement

Balance Sheet

Cash Flow Statement

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

Verdict: A mixed quarter—top-line growth and strong operating cash flow, but margin compression, elevated leverage, and a sharp drop in net income due to a high tax burden. Revenue rose 4.9% YoY to 1,318.2, with gross profit of 380.3 and an implied gross margin of 28.8%. Operating income declined 8.6% YoY to 30.1, taking operating margin down to roughly 2.3%. Ordinary income fell 25.4% YoY to 27.2, reflecting higher non-operating expenses (notably interest) outweighing modest non-operating income. Net income dropped 61.2% YoY to 9.3, with an effective tax rate of 58.9% severely depressing the bottom line. We estimate operating margin compressed by about 34 bps YoY (from ~2.6% to ~2.3%) based on the provided growth rates. SG&A intensity remains high at 26.6% of revenue, constraining operating leverage despite revenue growth. Cash generation was a bright spot: operating cash flow (OCF) was 52.2 versus net income of 9.3, implying an OCF/NI of 5.64x, indicating robust earnings quality this period. Liquidity is tight: current ratio of 0.96 and quick ratio of 0.91 point to near-term funding pressure; short-term loans of 224 are sizable versus cash of 237 and receivables of 272. Leverage is elevated with D/E at 2.60x and Debt/EBITDA at 6.18x, while ROIC at 3.2% is below the 5% warning threshold, signaling capital efficiency concerns. Intangibles and goodwill total 544.6 (about 39.7% of assets), introducing impairment risk if growth or margins disappoint. Interest coverage is adequate at 8.3x (EBIT basis), but the reliance on short-term debt heightens refinancing risk if rates rise or credit conditions tighten. Non-operating line items netted to a loss (non-operating income 2.95 vs expenses 5.91), adding pressure below operating income. Free cash flow is not disclosed; using OCF minus reported capex, we estimate FCF at roughly 43.4, sufficient for deleveraging or selective investment. Forward-looking, management likely needs to defend gross margin and moderate SG&A growth to restore operating leverage, while improving the tax rate could materially lift net income. Overall, the quarter underscores the need to strengthen liquidity, reduce leverage, and lift ROIC above the cost of capital to support a more durable earnings trajectory.

Profitability Analysis

ROE decomposition (DuPont): ROE ≈ Net Profit Margin (0.7%) × Asset Turnover (0.96x) × Financial Leverage (3.60x) = ~2.4% (matches reported 2.4%). The biggest drag this period is the net profit margin, compressed by a high effective tax rate (58.9%) and higher non-operating expenses, despite positive operating profit. Asset turnover at 0.96x is reasonable for an asset-light digital/food distribution model but not enough to offset thin margins. Financial leverage is high at 3.60x (Assets/Equity), mechanically supporting ROE but at the cost of higher risk. Operating margin was ~2.3%, down ~34 bps YoY, reflecting SG&A intensity (26.6% of sales) rising faster than operating income growth. Business drivers: logistics costs, marketing/customer acquisition, and interest expense weighed on profit conversion from gross profit. Sustainability: margin pressure appears ongoing unless cost efficiencies or pricing actions materialize; tax rate normalization could offer one-off relief but is uncertain. Watch for concerning trends: SG&A growth outpacing revenue growth (implied by OI down despite sales up), and non-operating expenses (interest) eroding ordinary income.

Growth Assessment

Revenue grew 4.9% YoY to 1,318.2, indicating steady demand but not enough to generate operating leverage. Gross margin at 28.8% looks stable for the format, but the step-down in operating income (-8.6% YoY) signals rising operating cost intensity. Ordinary income (-25.4% YoY) fell more than operating income, highlighting pressure from non-operating items (interest and other expenses). Net income declined 61.2% YoY due to the high effective tax rate on top of compressed ordinary income. Growth mix quality is thus skewed toward volume/top-line rather than profit, with limited conversion into bottom-line earnings. Outlook: focus on cost control (logistics, fulfillment, marketing efficiency) and selective price/mix to stabilize margins; any improvement in the tax rate would have outsized impact on EPS. Near-term, revenue growth alone is unlikely to drive EPS recovery without SG&A discipline and tighter working capital.

Financial Health

Liquidity is tight: current ratio 0.96 and quick ratio 0.91—explicit warning triggered (<1.0). Working capital is negative (-25.6), reflecting current liabilities (613.4) exceeding current assets (587.8). Short-term loans (223.9) are large relative to cash (236.9) and receivables (271.6), indicating some maturity mismatch risk if cash conversion slows. Solvency: D/E at 2.60x (warning >2.0) and Debt/EBITDA at 6.18x are elevated for a consumer/retail-like profile. Interest coverage at 8.3x (EBIT/interest) is adequate, but rising rates or weaker EBIT could quickly erode headroom. Asset composition: high intangibles and goodwill (544.6, ~39.7% of assets) increase impairment risk under weaker growth. No off-balance sheet obligations were reported; data limitations may obscure lease commitments or purchase obligations common in logistics-heavy models.

Cash Flow Quality

Earnings quality is strong this quarter: OCF/Net Income of 5.64x (>1.0) indicates cash conversion well above accounting profits, helped by working-capital inflows and non-cash D&A of 23.7. While reported FCF is N/A, an analyst-derived estimate (OCF – capex) suggests FCF of ~43.4, providing capacity to reduce debt or invest. Sustainability: OCF strength should be monitored for reversals—if working capital tailwinds normalize, OCF could moderate. No clear signs of working capital manipulation from the disclosed data, but the tight liquidity and reliance on short-term debt heighten the importance of maintaining rapid receivables collection and lean inventories.

Dividend Sustainability

Dividend data are unreported; payout ratio and total dividends are N/A, so we cannot assess policy execution this period. From a capacity standpoint, estimated FCF (~43.4) would cover a modest dividend, but elevated leverage (D/E 2.60x) and sub-par ROIC (3.2%) argue for prioritizing deleveraging and investments to improve unit economics. If dividends are resumed or increased, sustainability should be judged against multi-period FCF, net leverage trajectory, and the stability of OCF absent working capital tailwinds.

Risk Assessment

Business Risks:

• Margin pressure from logistics, fulfillment, and marketing costs in e-grocery/meal-kit operations
• Customer churn and CAC inflation reducing LTV/CAC and impairing operating leverage
• Food inflation and supplier cost pass-through challenges impacting gross margin
• Operational execution risk in cold-chain and last-mile delivery
• High intangibles/goodwill (544.6) posing impairment risk if growth slows

Financial Risks:

• Low liquidity (current ratio 0.96, quick ratio 0.91) and negative working capital (-25.6)
• High leverage (D/E 2.60x; Debt/EBITDA 6.18x) increasing refinancing and covenant risk
• Short-term funding reliance (short-term loans 223.9) creating maturity mismatch risk
• High effective tax rate (58.9%) depressing net income and ROE
• Interest rate sensitivity via floating-rate debt exposure (implied by short-term loans)

Key Concerns:

• ROIC at 3.2% below 5% warning threshold, indicating inadequate returns versus likely WACC
• Operating margin compression (~34 bps YoY) despite revenue growth
• Non-operating expense burden (interest) reducing ordinary income
• Potential volatility in OCF if working capital support reverses

Investment Implications

Key Takeaways:

• Top-line growth (+4.9% YoY) but declining operating and ordinary profits
• High-quality cash flow this quarter (OCF/NI 5.64x) offsets weak EPS optics
• Liqudity and leverage are the primary near-term constraints (CR 0.96; D/E 2.60x)
• Tax rate normalization represents the largest single EPS lever if achievable
• ROIC (3.2%) must improve through margin uplift and capital discipline

Metrics to Watch:

• Operating margin trajectory and SG&A as % of sales
• Net debt/EBITDA and short-term debt rollover profile
• OCF/NI and working capital turns (DSO, DPO, inventory days)
• Gross margin resilience amid input cost and logistics changes
• Effective tax rate and any structural drivers behind it

Relative Positioning: Within Japan’s e-grocery/meal-kit space, the company shows moderate revenue growth with weaker profit conversion, elevated leverage, and below-par ROIC versus typical consumer internet/retail peers; cash generation was a relative positive this quarter, but balance sheet repair and margin stabilization are required to close the 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
• 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