Oisix ra daichi Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥131.82B
• Operating Income: ¥3.01B
• Net Income: ¥2.42B
• 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

Oisix ra daichi (3182) reported FY2026 Q2 consolidated results under JGAAP showing modest top-line growth but weaker profitability and cash generation. Revenue rose 4.9% YoY to ¥131.82bn, indicating continued demand and scale in its online/food subscription businesses. Gross profit was ¥37.28bn, implying a gross margin of 28.3%, which is reasonable for a D2C/EC food model but reflects limited pricing power amid cost inflation. Operating income declined 8.6% YoY to ¥3.01bn, compressing the operating margin to about 2.3%, pointing to higher SG&A (likely marketing, fulfilment, and personnel/logistics) outpacing gross profit growth. Ordinary income was ¥2.72bn, below operating income due to financing costs (interest expense ¥0.353bn), evidencing a non-trivial debt load. Net income fell sharply by 61.2% YoY to ¥0.927bn, indicating heavier below-operating-line pressures and/or one-off items; reported metrics show effective tax rate 0.0% but disclosed tax expense is ¥1.66bn, suggesting data inconsistencies in reported tax metrics and likely an elevated tax burden relative to pre-tax profit. DuPont analysis highlights that low net margin (0.70%) is the primary drag on ROE, while asset turnover (0.96x) is solid and leverage (3.60x financial leverage factor) provides some ROE support. Calculated ROE is 2.43%, which is low for the business risk profile, underscoring the need for margin recovery. Liquidity metrics are adequate with a current ratio of 115.9% and quick ratio of 110.1%, and working capital of ¥7.313bn, suggesting near-term obligations are manageable. However, operating cash flow was negative at -¥0.261bn, highlighting working capital absorption and weaker cash conversion versus earnings. Financing cash inflow of ¥5.255bn suggests reliance on external funding (likely new borrowings), while investing cash flow and cash balance were not disclosed (zeros indicate unreported, not zero). EBITDA was ¥5.26bn, yielding an EBITDA margin of 4.0% and an interest coverage of 8.5x, which is acceptable but leaves limited cushion if operating conditions worsen. The debt-to-equity ratio is 2.49x (based on total liabilities/equity), indicating meaningful leverage for a low-margin retail/EC model. The company paid no dividend (DPS ¥0, payout 0%), which is consistent with preserving liquidity during a period of subdued profitability and negative OCF. Overall, the quarter reflects resilient revenue but pressured margins, cautious yet adequate liquidity, elevated leverage, and weak cash conversion, with data gaps (cash, investing CF, equity ratio, per-share figures) limiting depth of analysis.

Profitability Analysis

ROE of 2.43% decomposes into net profit margin 0.70% × asset turnover 0.96× × financial leverage 3.60×. The principal constraint is the thin net margin, driven by SG&A intensity (fulfilment/logistics, marketing, and overhead) outweighing modest gross margin headroom. Gross margin of 28.3% indicates reasonable sourcing and pricing discipline, but not enough to offset higher operating costs. Operating margin is approximately 2.3% (¥3.011bn/¥131.82bn), down YoY, signaling negative operating leverage: costs grew faster than gross profit. EBITDA margin at 4.0% gives some cushion over interest costs (8.5x coverage), but profitability remains sensitive to cost inflation and volume fluctuations. Ordinary income below operating income reflects financing costs and possibly non-operating items; interest expense of ¥0.353bn is material relative to operating profits. The large decline in net income (-61.2% YoY) versus a smaller decline in operating income (-8.6% YoY) suggests unfavorable below-OP impacts (finance costs and taxes) and/or one-offs. Margin quality is mixed: gross margin stable, but SG&A efficiency weakened, indicating elevated customer acquisition/retention spend and logistics cost pressures.

Growth Assessment

Revenue growth of 4.9% YoY to ¥131.82bn suggests stable customer demand and ongoing expansion of order volume or basket size, but not a high-growth profile. The sustainability of revenue growth likely depends on customer retention, cohort monetization, and ability to pass through cost inflation; these drivers are not disclosed here. Profit growth is lagging revenue given operating income declined 8.6% YoY, indicating growth is currently coming at higher cost. Net income declined 61.2% YoY, showing profit quality deterioration and heavier drag below the operating line. Asset turnover of 0.96x is healthy for the model and supports growth without excessive asset inflation. Outlook hinges on restoring operating leverage via SG&A productivity (marketing ROI, delivery density, labor efficiency) and stabilizing non-operating expenses. Without evidence of accelerating revenue or cost relief, near-term profit recovery looks dependent on incremental margin management rather than top-line reacceleration.

Financial Health

Liquidity appears adequate: current ratio 115.9% and quick ratio 110.1%, with working capital of ¥7.313bn, implying the company can meet short-term obligations assuming typical collection cycles. Total liabilities of ¥95.076bn versus equity of ¥38.153bn yields a debt-to-equity of 2.49x, indicating high leverage for a low-margin retailer and raising sensitivity to earnings volatility. Interest expense of ¥0.353bn is covered 8.5x by operating income, acceptable but with limited buffer if margins compress further. Total assets are ¥137.308bn; asset intensity seems moderate given the model, supporting an asset turnover of 0.96x. Equity ratio was shown as 0.0% in reported metrics but this appears unreported rather than true; the balance sheet indicates an equity-to-asset ratio of approximately 27.8% (¥38.153bn/¥137.308bn). Overall solvency is adequate but dependent on maintaining operating cash generation and access to financing.

Cash Flow Quality

Operating cash flow was -¥0.261bn despite net income of ¥0.927bn, resulting in an OCF/Net Income ratio of -0.28, which indicates poor cash conversion this period and likely working capital outflows (receivables growth, timing of payables, or inventory positioning). EBITDA of ¥5.26bn suggests underlying cash earnings capacity exists, but the translation to cash was weak. Free cash flow was not derivable due to unreported investing cash flows and capex; the calculated FCF metric is 0, which should be treated as undisclosed rather than zero. Financing cash inflows of ¥5.255bn imply reliance on external funding to support operations or liquidity while OCF is negative. Inventory is modest at ¥2.685bn, so working capital pressure likely stems more from receivables or payables timing rather than inventory build. Overall, earnings quality is mixed: accounting profits exist but are not backed by cash this period, elevating risk if negative OCF persists.

Dividend Sustainability

No dividend was paid (DPS ¥0), and the payout ratio is 0.0%. Given low ROE (2.43%), negative operating cash flow (-¥0.261bn), and elevated leverage (D/E 2.49x), capital allocation appears appropriately conservative. FCF coverage is shown as 0.00x due to unreported investing CF; thus, we cannot assess FCF-based coverage. In the current state, sustaining or initiating dividends would likely require stabilization of OCF and improved profitability. The implicit policy stance appears to prioritize reinvestment and balance sheet flexibility over shareholder distributions until cash generation normalizes.

Risk Assessment

Business Risks:

• Intense competition in online grocery/meal-kit and broader EC food categories, pressuring pricing and marketing spend
• Logistics and fulfilment cost inflation (last-mile delivery, labor, fuel) compressing operating margins
• Customer acquisition and retention risk; higher churn could force elevated marketing spend
• Supply chain and food safety risks impacting brand trust and gross margin
• Weather and agricultural volatility affecting procurement costs and product availability
• FX exposure on imported food items and packaging costs
• IT/system reliability and cybersecurity risks impacting order processing and service continuity
• Regulatory changes related to food safety, labor, and e-commerce

Financial Risks:

• Negative operating cash flow and weak cash conversion increase reliance on external financing
• High leverage (total liabilities/equity 2.49x) heightens sensitivity to profit volatility
• Interest rate risk impacting finance costs and coverage
• Working capital volatility (receivables/payables timing) can strain liquidity
• Potential covenant constraints if profitability weakens further
• Tax burden uncertainty given discrepancies in reported effective tax metrics

Key Concerns:

• Margin compression with operating income down 8.6% YoY despite revenue growth
• Sharp net income decline (-61.2% YoY) indicating below-OP headwinds
• Negative OCF alongside increased financing inflows, implying weaker self-funding capacity
• Elevated leverage relative to low operating margins

Investment Implications

Key Takeaways:

• Top-line growth remains positive (+4.9% YoY), but operating leverage is negative
• ROE is low at 2.43%, constrained by thin net margins despite decent asset turnover
• Liquidity is adequate (current ratio 116%, quick ratio 110%), but cash conversion is weak
• Leverage is meaningful (D/E 2.49x) and requires stable earnings to maintain coverage
• EBITDA coverage of interest at 8.5x provides some buffer, but margin pressure narrows headroom

Metrics to Watch:

• Gross margin trajectory and fulfilment/logistics cost ratio within SG&A
• Marketing efficiency (CPA/CAC) and retention/cohort profitability
• Operating margin and EBITDA margin recovery path
• Operating cash flow normalization and working capital turns (DSO/DPO/DIO)
• Leverage and interest coverage trends; any changes in borrowing conditions
• Tax rate normalization and any one-off items affecting bottom line
• Capex and investing cash flows once disclosed to assess true FCF

Relative Positioning: Within Japanese EC/food subscription peers, Oisix shows solid asset turnover and mid-to-high 20s gross margin but lower operating margins and weaker cash conversion this period; leverage is on the higher side, making profitability recovery and OCF normalization more critical to maintain balance sheet resilience.

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