ANAP HOLDINGS INC. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.77B
• Operating Income: ¥-1.46B
• Net Income: ¥-2.37B
• EPS: ¥-153.95

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

ANAP Holdings (31890) reported FY2025 Q4 consolidated results under JGAAP marked by a sharp revenue contraction and persistent operating losses, offset by a strong balance sheet and sizable external financing. Revenue was ¥1,774 million, down 67.4% YoY, indicating substantial demand weakness or strategic retrenchment. Despite the steep topline decline, gross profit was ¥885 million with a gross margin of 49.9%, suggesting pricing discipline and/or a more profitable mix even amid volume pressure. Operating income was a loss of ¥1,456 million (flat YoY per disclosure), showing limited progress on cost absorption and fixed-cost flexibility. Ordinary loss narrowed to ¥316 million, implying significant non-operating gains or income that partially cushioned operating losses despite ¥42 million of interest expense. Net loss expanded to ¥2,660 million, and EPS was ¥-153.95, indicating further equity value erosion on a per-share basis. DuPont decomposition shows a net margin of -149.94%, asset turnover of 0.097x, and financial leverage of 1.45x, yielding a calculated ROE of -21.04% (consistent with reported). The extremely low asset turnover highlights underutilized assets or timing distortions from large cash-like current assets against a depressed revenue base. Liquidity is robust: current assets of ¥17,952 million and current liabilities of ¥5,506 million translate to a current ratio of 326% and quick ratio of 322%, with working capital of ¥12,447 million. The capital structure appears conservative with total liabilities of ¥5,675 million against total equity of ¥12,644 million; the implied equity ratio is approximately 69% (equity/total assets), despite the displayed 0.0% equity ratio being an undisclosed placeholder. Cash flow quality remains weak: operating cash flow (OCF) was ¥-1,948 million versus net loss of ¥-2,660 million (OCF/NI = 0.73), indicating losses are partially cash-based. Free cash flow was heavily negative at ¥-12,629 million, driven by sizable investing outflows of ¥-10,681 million, likely for growth or restructuring initiatives. Financing inflows of ¥13,207 million covered both operating and investing needs, temporarily alleviating liquidity strain but introducing execution and financing-dependency risks. Dividend policy remains conservative with DPS at ¥0, reflecting a rational stance given negative earnings and FCF. Overall, the period reflects significant revenue stress, high operating leverage, and reliance on external financing, counterbalanced by a sizable equity base and near-term liquidity headroom. Data gaps exist (e.g., cash balance, equity ratio, share counts), but the available figures support a view of operational underperformance with balance sheet resilience.

Profitability Analysis

roe_decomposition: ROE of -21.04% is driven by a severely negative net profit margin (-149.94%), very low asset turnover (0.097x), and modest financial leverage (1.45x). The margin component is the dominant drag; leverage is not amplifying returns meaningfully due to the negative core earnings. margin_quality: Gross margin of 49.9% is robust despite a 67.4% YoY revenue decline, suggesting disciplined pricing, mix shift, or lower markdown intensity. However, EBITDA margin of -82.0% and operating loss of ¥-1,456 million indicate SG&A absorption issues and high fixed costs relative to the shrunken revenue base. Positive ordinary-income delta versus operating results implies reliance on non-operating items to mitigate core weakness. operating_leverage: High operating leverage is evident: modest gross profit (¥885 million) could not cover SG&A and other operating costs, resulting in a large operating loss. The stabilization in operating loss (flat YoY) alongside a severe revenue drop suggests some cost actions, but fixed-cost base remains too high for the current scale.

Growth Assessment

revenue_sustainability: Revenue fell to ¥1,774 million (-67.4% YoY), indicating structural pressure or the effects of strategic downsizing. Sustainability hinges on stabilizing customer traffic/engagement and channel mix; current asset turnover of 0.097x underscores underutilized capacity. profit_quality: Non-operating factors narrowed the ordinary loss to ¥-316 million despite a ¥-1,456 million operating loss, indicating quality of profit is weak and not driven by core operations. The positive gross margin shows potential for recovery if scale returns, but fixed-cost intensity weighs on overall profitability. outlook: Near-term outlook centers on restoring sales run-rate while aligning SG&A to a lower revenue base. With significant investing cash outflows in the period, management appears to be repositioning or investing for growth; execution will be critical to translate this into revenue recovery and improved operating margin.

Financial Health

liquidity: Current assets ¥17,952 million vs. current liabilities ¥5,506 million produce a current ratio of 326% and quick ratio of 322%, with working capital of ¥12,447 million—ample near-term liquidity. Year-end cash and equivalents are undisclosed, but net cash flow for the period implies a positive change (OCF -¥1,948m, Investing -¥10,681m, Financing +¥13,207m; net +¥578m). solvency: Total liabilities ¥5,675 million vs. total equity ¥12,644 million indicates conservative leverage; implied equity ratio ~69%. Debt-to-equity is 0.45x, suggesting manageable indebtedness. Interest expense of ¥42 million and negative interest coverage (-34.3x on EBITDA) reflect earnings pressure rather than overleverage. capital_structure: Low financial leverage (1.45x assets/equity) reduces solvency risk but limits ROE uplift. The large financing inflow suggests reliance on capital markets or lenders to fund losses and investments; future terms and potential covenants are key considerations.

Cash Flow Quality

earnings_quality: OCF/Net Income = 0.73 indicates losses are largely reflected in cash outflow, with some non-cash elements (e.g., working capital changes, valuation effects). Depreciation and amortization are minimal (¥0.816 million), so accrual-driven uplift is limited. fcf_analysis: Free cash flow is deeply negative at ¥-12,629 million (OCF -¥1,948m plus Investing -¥10,681m). The scale of investing suggests strategic repositioning (e.g., systems, logistics, brand initiatives, or M&A); absent near-term revenue scale-up, FCF will remain constrained. working_capital: Inventories of ¥217 million are modest relative to sales, and quick ratio nearly equals current ratio, indicating low inventory risk at quarter-end. However, the large current assets balance likely includes significant receivables or other current assets; turnover is weak as evidenced by 0.097x asset turnover.

Dividend Sustainability

payout_ratio_assessment: With EPS at ¥-153.95 and a net loss of ¥-2,660 million, a dividend payout would be unsustainable; reported payout ratio is 0.0%. Retaining earnings aligns with capital preservation needs. fcf_coverage: FCF coverage is effectively 0.00x given negative FCF of ¥-12,629 million; distributions would need to be financed externally and are therefore not supportable. policy_outlook: Given negative earnings, negative OCF, and ongoing investment, a no-dividend stance is likely to persist until operating profitability and FCF turn positive.

Risk Assessment

Business Risks:

• Demand volatility in fashion/apparel amid weak consumer sentiment and competitive intensity
• Execution risk in translating large recent investments into revenue and margin recovery
• High operating leverage with fixed SG&A base relative to current scale
• Brand relevance and merchandising risk, including markdowns and assortment missteps
• E-commerce and marketplace competition compressing take rates and raising CAC
• Supply chain disruptions and procurement costs (including FX exposure on imports)
• Potential impairment risk if investments fail to generate expected cash flows

Financial Risks:

• Reliance on external financing (¥13,207 million inflow) to fund losses and capex
• Negative interest coverage, exposing the company to rate increases or tightening credit
• Potential dilution risk if equity issuance underpins financing inflows
• Working capital efficiency challenges given low asset turnover
• Tax cash outflows despite losses (income tax expense ¥104 million) affecting liquidity

Key Concerns:

• Severe revenue decline (-67.4% YoY) with insufficient cost flexibility
• Sustained operating losses (¥-1,456 million) despite strong gross margin
• Deeply negative FCF (¥-12,629 million) driven by heavy investment outlays
• Dependence on non-operating income to narrow ordinary loss
• Execution risk on strategic investments to restore growth

Investment Implications

Key Takeaways:

• Topline contracted sharply to ¥1,774 million, pointing to structural or transitional headwinds
• Gross margin resilience at 49.9% suggests underlying pricing power/mix despite volume pressure
• Core profitability remains weak with EBITDA margin at -82.0% and operating loss of ¥-1,456 million
• Ordinary loss (¥-316 million) was cushioned by non-operating items despite ¥42 million interest expense
• Balance sheet is relatively strong with implied equity ratio ~69% and current ratio 326%
• OCF negative (¥-1,948 million) and FCF deeply negative (¥-12,629 million) underscore cash burn
• Large financing inflows (¥13,207 million) provided liquidity but heighten financing dependence
• Asset turnover of 0.097x highlights underutilized assets and the need to rebuild scale

Metrics to Watch:

• Quarterly revenue run-rate and like-for-like sales/traffic trends
• SG&A ratio and breakeven sales level to gauge operating leverage normalization
• Gross margin trajectory (markdowns vs. mix) to test pricing power
• OCF and FCF progression, including capex/investment cadence
• Inventory days and working capital turns
• Interest coverage and effective tax cash outflows
• Equity ratio and financing mix (debt vs. equity) including dilution risk
• Realized returns from recent investments (sales uplift, digital KPIs, channel mix)

Relative Positioning: Versus TSE-listed small-cap apparel/retail peers, ANAP exhibits superior near-term liquidity and a relatively conservative balance sheet but materially weaker operating profitability and asset efficiency, with higher reliance on external financing and execution on recent investments to drive recovery.

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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