Iida Group Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥685.03B
• Operating Income: ¥39.52B
• Net Income: ¥24.16B
• EPS: ¥90.18

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

Iida Group Holdings (IFRS, consolidated) delivered a steady FY2026 Q2 (cumulative) with resilient profitability despite a slight revenue contraction. Revenue was 6,850.27 (100M JPY), down 0.3% YoY, reflecting a broadly flat housing demand environment. Gross profit reached 1,096.44, yielding a gross margin of 16.0%, indicating stable pricing and cost control amid material and labor cost pressures. SG&A expenses were 729.11, supporting an operating income of 395.24 (+4.2% YoY), and an operating margin of approximately 5.8%. Net income was 249.18 (+5.3% YoY), while total comprehensive income was 231.39, implying negative OCI effects in the period. The effective tax rate was 31.0%, consistent with a normalized rate in Japan. DuPont analysis shows a net margin of 3.6%, asset turnover of 0.363x, and financial leverage of 1.90x, resulting in a reported ROE of 2.5% on a year-to-date basis. Given seasonality, the YTD ROE is not annualized; maintaining the current run-rate would imply roughly mid–single-digit full-year ROE. The balance sheet remains conservative with total equity of 9,951.32 and an equity ratio of 52.5%, supporting financial flexibility. Inventories are sizable at 7,913.72, accounting for 41.9% of total assets and 58.9% of current assets, underscoring the asset-heavy nature of the business model. Operating cash flow was 106.85, equating to an OCF/Net Income ratio of 0.43x; free cash flow was positive but modest at 48.70. Financing cash flow was an inflow of 176.87, more than offsetting dividend payments of 126.15 and indicating reliance on external financing in the period. EBITDA was 479.52, implying an EBITDA margin of 7.0% and evidencing moderate operating leverage. The reported payout ratio (calculated) is 101.3%, and FCF coverage of dividends was 0.19x, pointing to tight dividend coverage from internally generated cash in H1. Several items are unreported (interest expense, ordinary income, detailed current liabilities), limiting precision on interest coverage, current ratio, and net debt; conclusions are based on disclosed data only.

Profitability Analysis

roe_decomposition: ROE 2.5% = Net margin 3.6% x Asset turnover 0.363x x Financial leverage 1.90x. On an annualized basis (caveated for seasonality), ROE would approximate ~5% if H2 mirrors H1. margin_quality: Gross margin at 16.0% reflects controlled cost of sales despite a challenging cost environment; operating margin is ~5.8% (395.24/6,850.27). The positive spread between gross margin and SG&A ratio (~10.7%) supports operating profit growth (+4.2% YoY) despite flat sales. Net margin at 3.6% benefits from disciplined operating costs and a normalized tax rate (31.0%). OCI was negative (comprehensive income 231.39 vs net income 249.18), modestly diluting equity accretion. operating_leverage: With revenue -0.3% YoY and operating income +4.2% YoY, incremental margins were positive, evidencing some operating leverage via SG&A containment. EBITDA margin at 7.0% vs operating margin ~5.8% suggests D&A intensity is moderate (D&A 84.28), consistent with a primarily inventory-driven model rather than capex-heavy manufacturing.

Growth Assessment

revenue_sustainability: Sales were essentially flat (-0.3% YoY), indicating stable unit volume/ASP in core detached housing despite macro headwinds. High inventory levels support near-term deliveries, but conversion speed will be key to sustaining revenue. profit_quality: Operating income growth (+4.2% YoY) outpaced revenue, indicating improved mix and/or cost discipline. Effective tax rate at 31.0% indicates earnings quality is not driven by tax effects. Equity-method income contribution was small (1.74), with results mainly from core operations. outlook: Assuming stable demand, price discipline, and continued SG&A control, mid-single-digit operating profit growth is plausible. H2 is typically seasonally stronger for completions in housing; sustaining gross margin near 16% and SG&A efficiency will be central to achieving full-year earnings targets. Watch for material/labor cost normalization and mortgage rate trends affecting affordability.

Financial Health

liquidity: Cash and equivalents were 4,330.97. Current assets were 13,426.22, heavily weighted to inventories (7,913.72). Current liabilities are unreported, so a current ratio cannot be computed; the provided 'working capital' equals current assets and is not true working capital. solvency: Total liabilities were 8,718.44 versus total equity of 9,951.32, yielding an equity ratio of 52.5%, which is robust for a homebuilder. Debt-to-equity is shown as 0.88x; given interest-bearing debt is unreported, this likely approximates liabilities-to-equity, not net financial debt. capital_structure: Financial leverage (assets/equity) is 1.90x, moderate for the sector. Interest coverage is not calculable due to unreported interest expense; however, EBITDA of 479.52 offers a reasonable buffer against typical funding costs in a low-rate environment, subject to confirmation when interest data are disclosed.

Cash Flow Quality

earnings_quality: OCF/Net income at 0.43x signals weaker cash conversion in H1, typical in inventory-build periods for homebuilders. The gap between net income (249.18) and OCF (106.85) suggests working capital absorption, likely from land acquisition and construction WIP. fcf_analysis: Free cash flow was 48.70 after investing CF of -58.15, indicating modest surplus cash generation in H1. Financing CF was +176.87 while dividends paid were -126.15, implying external funding covered shareholder returns and incremental liquidity needs. working_capital: Inventories are 41.9% of total assets and 58.9% of current assets, highlighting conversion risk. Accounts receivable are low at 108.29, consistent with cash-based settlements upon delivery. With current liabilities unreported, full cash conversion cycle metrics are unavailable; monitor inventory days and land bank turnover.

Dividend Sustainability

payout_ratio_assessment: The provided calculated payout ratio is 101.3%; DPS details are unreported, so the basis may reflect annual dividends vs semiannual earnings. On cash terms, H1 dividends of 126.15 vs net income of 249.18 imply an approximate 51% cash payout for the period. fcf_coverage: FCF coverage is 0.19x, indicating dividends were not covered by free cash flow in H1 and were effectively supported by financing inflows. Sustainability improves if H2 cash conversion strengthens with deliveries. policy_outlook: Given a strong equity base (52.5% equity ratio) but variable cash conversion, the company can likely maintain dividends through the cycle; however, medium-term increases would depend on better OCF/NI and inventory monetization. Explicit dividend policy and DPS were not disclosed.

Risk Assessment

Business Risks:

• Domestic housing demand softness or slower household formation affecting unit sales
• Mortgage rate increases reducing affordability and conversion
• Land acquisition costs and availability impacting margins and pipeline
• Construction material and labor cost inflation compressing gross margin
• Execution risk in inventory turnover (land and WIP) and project scheduling
• Regulatory and zoning changes affecting development timelines
• Natural disasters impacting operations and insurance costs in Japan

Financial Risks:

• High inventory concentration (7,913.72) heightens cash conversion risk
• Weak H1 cash conversion (OCF/NI 0.43x) and low FCF coverage of dividends (0.19x)
• Reliance on financing inflows in the period (+176.87) with interest costs undisclosed
• Potential refinancing risk if funding conditions tighten
• OCI volatility affecting equity (comprehensive income below net income)

Key Concerns:

• Sustaining gross margin near 16% amid input cost fluctuations
• Timely monetization of inventory to support OCF in H2
• Dividend coverage reliant on stronger H2 cash flow
• Limited visibility on interest burden and current liabilities due to unreported items

Investment Implications

Key Takeaways:

• Stable topline (-0.3% YoY) with improved operating profit (+4.2% YoY) reflects disciplined cost control
• Margins are solid for the segment: gross 16.0%, operating ~5.8%, EBITDA 7.0%
• Balance sheet is conservative (equity ratio 52.5%, leverage 1.90x), supporting resilience
• Cash conversion lagged earnings (OCF/NI 0.43x); FCF positive but insufficient to cover dividends
• Inventory-heavy asset base (7,913.72) is both a near-term revenue driver and a liquidity risk
• ROE 2.5% YTD implies mid–single-digit potential on an annualized basis, contingent on H2 performance

Metrics to Watch:

• Gross margin and ASP trends versus material/labor costs
• Inventory days and land bank turnover
• OCF/Net income and FCF after dividends
• SG&A ratio to sales and operating margin progression
• Financing cash flows and disclosure of interest expense/coverage
• Mortgage rate trends and order intake/cancellation rates

Relative Positioning: Within Japanese homebuilders, Iida Group maintains a scale advantage and a stronger-than-average equity ratio, but operates with structurally low margins and high inventory intensity; performance hinges on efficient inventory monetization and disciplined cost control.

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