INTRANCE CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥514M
• Operating Income: ¥-213M
• Net Income: ¥-239M
• EPS: ¥-5.13

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: FY2026 Q2 was weak with a sizable operating loss despite higher revenue, indicating insufficient scale and elevated SG&A pressure. Revenue rose 36.1% YoY to 5.14, while gross profit reached 3.91, implying a high gross margin of 76.1%. However, SG&A of 6.05 outpaced gross profit, resulting in operating income of -2.13 and ordinary income of -2.37. Net income was -2.38 (EPS -5.13 yen), translating to a net margin of -46.3%. Operating cash flow was -2.54, broadly aligned with the net loss (OCF/NI 1.07x), but still a cash burn. Liquidity is adequate but tight: current assets 7.67 vs current liabilities 5.19 yields a current ratio of 147.8%, slightly below the 150% benchmark. Cash and deposits of 5.32 cover nearly all current liabilities, providing a short-term buffer. Financial leverage is moderate (D/E 1.21x), but interest coverage is negative due to operating losses, triggering a debt-service quality alert. Book equity stands at 5.00, but retained earnings are deeply negative at -21.78, evidencing accumulated losses funded by equity issuances (capital stock 14.44; capital surplus 12.14). Gross margin quality appears strong on reported mix, yet operating margin is deeply negative at -41.4%, underscoring insufficient operating leverage. Margin trend analysis versus prior periods is limited due to lack of YoY margin disclosures, but current levels indicate significant compression at the operating and net levels relative to profitable thresholds. The financing cash inflow of 2.49 largely funded the OCF deficit, highlighting reliance on external capital to sustain operations this quarter. No dividend data was disclosed, consistent with the earnings profile and retained earnings deficit. Forward-looking, the company must either grow revenue materially or reduce SG&A to approach breakeven; absent this, continued dilution or refinancing dependence is likely. Key watch items are order/backlog visibility, deal pipeline conversion, SG&A discipline, and cash runway against current liabilities.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (-46.3%) × Asset Turnover (0.466) × Financial Leverage (2.21x) = ROE (-47.6%). The dominant drag is net profit margin, which is deeply negative due to operating losses (SG&A 6.05 exceeding gross profit 3.91). Asset turnover at 0.466 indicates low utilization of the asset base (revenue 5.14 against total assets 11.04), consistent with a lumpy, project-based model. Leverage at 2.21x (assets/equity) moderately amplifies losses into ROE but is not the primary driver. Business reason: revenue growth of 36.1% YoY has not yet achieved sufficient scale to cover fixed SG&A; likely timing and scale issues in project monetization. Sustainability: the gross margin level (76.1%) looks structurally healthy if mix is maintained, but the negative operating margin reflects an unsustainable SG&A burden without further revenue scaling or cost cuts. Concerning trends: SG&A absolute level exceeds gross profit; with revenue at 5.14, the implied SG&A ratio is ~118% of sales, a red flag. There is no evidence of equity-method income support, and non-operating items were minor (income 0.01; expenses 0.25).

Growth Assessment

Revenue grew 36.1% YoY to 5.14, but profitability deteriorated at the operating and net levels given SG&A at 6.05. Gross profit of 3.91 suggests healthy unit economics on deals executed, but operating leverage is negative at current scale. Profit quality is weak: losses at operating and ordinary levels with minimal non-operating offset. Outlook requires either a step-up in transaction volume/backlog conversion or SG&A normalization to restore breakeven; absent these, sustained losses are likely. Given the small revenue base and lumpy nature of real-estate/project monetization, quarter-to-quarter volatility is expected. With OCF negative and financing inflows plugging the gap, growth reliant on external capital may face constraints if market conditions tighten.

Financial Health

Liquidity: Current ratio 147.8% (slightly below the 150% healthy benchmark but above the 100% warning) with quick ratio also 147.8%, supported by cash of 5.32 versus current liabilities 5.19. Solvency/leverage: D/E 1.21x is within conservative bounds (<1.5x). Equity ratio (calculated) ~45.3% (5.00/11.04), providing some balance sheet cushion despite accumulated deficits. Debt service: Interest coverage is negative (quality alert), reflecting inability to cover interest from operations this quarter. Maturity mismatch risk: Current assets 7.67 comfortably exceed current liabilities 5.19; however, the cash burn rate (OCF -2.54) reduces the effective runway without continued financing. Off-balance sheet: No disclosures of guarantees or other commitments in the provided data.

Cash Flow Quality

Earnings quality: OCF/Net Income at 1.07x indicates cash flows are directionally consistent with reported losses, not inflated by accruals; however, absolute OCF is negative (-2.54). FCF: Not calculable due to unreported capex; directionally, negative given OCF deficit. Working capital: Limited payables (0.03) and modest receivables (0.84) suggest minimal supplier financing and potential timing volatility in cash conversion; no inventory data was disclosed. Signs of manipulation: None evident from available metrics; the reliance on financing CF (2.49) to fund OCF shortfall is a risk but not an accounting red flag.

Dividend Sustainability

No dividend data disclosed. With net loss (-2.38), negative OCF (-2.54), and retained earnings at -21.78, distributions appear unlikely and would be unsustainable from internal cash generation. Payout ratios and FCF coverage are not calculable but would fail typical thresholds given negative earnings and cash flow. Policy outlook likely prioritizes liquidity preservation and business investment over shareholder returns until profitability and positive FCF are restored.

Risk Assessment

Business Risks:

• Insufficient operating scale: SG&A (6.05) exceeds gross profit (3.91), creating structural losses.
• Project/transaction timing risk leading to revenue and cash flow volatility.
• Real estate market cyclicality (pricing, demand, and transaction volume).
• Concentration risk if revenue depends on a small number of deals.
• Execution risk in sourcing, renovating, and disposing of assets to sustain the high gross margin.

Financial Risks:

• Negative operating cash flow (-2.54) requiring external financing (FinCF +2.49).
• Negative interest coverage (debt-service capability risk).
• Retained earnings deficit (-21.78) heightening dilution risk if additional equity financing is needed.
• Tight liquidity buffer despite current ratio >1.0; cash runway sensitive to deal slippage.
• Potential refinancing risk if credit conditions tighten.

Key Concerns:

• Persistent operating and ordinary losses (operating margin -41.4%; net margin -46.3%).
• Low asset turnover (0.466) undermines ROE alongside negative margin.
• Lack of inventory disclosure obscures pipeline visibility and liquidity tied up in projects.
• Dependence on financing inflows to sustain operations this quarter.
• Data gaps (segment, SG&A breakdown) limit assessment of cost flexibility.

Investment Implications

Key Takeaways:

• Revenue growth (+36.1% YoY) did not translate into profitability due to heavy SG&A.
• High gross margin (76.1%) suggests favorable deal economics, but scale is insufficient.
• Operating loss (-2.13) and OCF deficit (-2.54) were funded by financing (+2.49), an unsustainable pattern without improvement.
• Balance sheet shows moderate leverage (D/E 1.21x) and adequate but tight liquidity (current ratio 1.48x).
• ROE is sharply negative (-47.6%), driven primarily by the margin component.

Metrics to Watch:

• Backlog/contracted sales and deal pipeline conversion to revenue.
• SG&A run-rate vs revenue trajectory (operating leverage).
• Operating cash flow trend and cash balance vs current liabilities.
• Gross margin stability by project mix.
• Interest coverage and refinancing activity.
• Equity ratio and any additional equity issuance/dilution.

Relative Positioning: Versus domestic small-cap real estate operators, profitability and cash generation are weaker given negative operating margin and OCF; leverage is moderate, but reliance on external financing and accumulated deficits place the company in a more fragile position until scale and cost discipline improve.

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