AMBITION DX HOLDINGS Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥10.94B
• Operating Income: ¥460M
• Net Income: ¥948M
• Earnings per Unit (EPU): ¥29.67

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Unit Information

Distribution 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

Ambition DX Holdings (3300) posted a weak FY2026 Q1, with sharp profit contraction amid a steep revenue decline and elevated leverage. Revenue fell 27.2% YoY to 109.41, while operating income tumbled 71.1% to 4.60 and net income dropped 77.7% to 2.11. The operating margin compressed to roughly 4.2% from an estimated ~10.6% a year ago (about 640 bps contraction), reflecting negative operating leverage as sales fell faster than SG&A adjustments. Net margin declined to 1.9% from an estimated ~6.3% a year ago (about 430 bps compression). Gross margin printed at 29.0%, but the downshift in operating profit indicates fixed cost absorption pressure despite SG&A of 15.78. Ordinary income slid 78.0% to 3.32 as higher non-operating expenses (0.95, including 0.62 interest expense) weighed on results. Notably, profit before tax was 14.94—well above ordinary income—implying sizable special/extraordinary items not detailed in the disclosure, and yet net income still landed at 2.11 after 5.46 in taxes and other below-the-line items. Interest coverage remains adequate at 7.38x, but the balance sheet is highly levered with D/E at 4.32x and equity of 78.19 against total assets of 415.75 (equity ratio ~19%). Liquidity is decent near term with a current ratio of 178.8% and cash of 67.74 versus short-term loans of 100.17, supported by current assets of 307.47. ROE calculated at 2.7% reflects pressure from low net margin and weak asset turnover (0.263), partially masked by high financial leverage (5.32x). ROIC of 1.1% is far below a typical cost of capital, flagging capital efficiency concerns. Earnings quality cannot be fully assessed due to unreported operating cash flow; the gap between profit before tax and net income suggests significant one-offs or minority interests. Dividend visibility is low with dividends undisclosed; a calculated payout ratio of 354.3% appears unsustainably high but should be treated cautiously given data gaps. Forward-looking, the combination of margin compression, low ROIC, and high leverage points to continued sensitivity to demand, pricing, and financing conditions, making pace of margin recovery and deleveraging key to watch.

Profitability Analysis

ROE (2.7%) decomposes into Net Profit Margin (1.9%) × Asset Turnover (0.263) × Financial Leverage (5.32x). The primary driver of the YoY ROE decline is the deterioration in net profit margin (estimated ~430 bps compression YoY), as revenue fell 27.2% while costs did not flex down proportionately. Asset turnover is also weak at 0.263, likely down YoY given the revenue drop against a relatively large asset base of 415.75; this further depressed ROE. Financial leverage at 5.32x is high and likely similar to prior periods, providing some ROE support but elevating risk. Business reasons for margin pressure include negative operating leverage (fixed cost burden), higher financing costs impact (0.62 interest expense) and potentially adverse mix in the quarter. The PBT spike versus ordinary income indicates one-time items that did not translate into sustainable net profits—suggesting the margin compression is operational while the PBT uplift is non-recurring. Sustainability: absent a demand rebound and cost discipline, the current margin structure is not sustainable for attractive returns; any one-off gains are unlikely to repeat. Concerning trends: operating income (-71.1%) fell much faster than revenue (-27.2%), and ordinary income (-78.0%) underperformed operating income, implying rising non-operating burden; monitor if SG&A growth or rigidity outpaces revenue recovery.

Growth Assessment

Top-line contracted 27.2% YoY to 109.41, pointing to a significant slowdown in the company’s end markets or project timing. Gross profit of 31.73 implies a 29.0% gross margin; however, operating income fell to 4.60, indicating limited cost flexibility. Non-operating expenses (0.95) offset modest non-operating income (0.10), with interest expense at 0.62 consuming a meaningful portion of operating profit. Ordinary income decreased 78.0% to 3.32, and net income decreased 77.7% to 2.11, underscoring broad-based profit pressure. The large gap between ordinary income (3.32) and profit before tax (14.94) likely reflects extraordinary items; without detail, we treat these as non-recurring and not indicative of underlying growth. Outlook hinges on demand stabilization and cost control; recovery in operating margin back toward prior-year levels (~10% OPM) would require either volume rebound or meaningful SG&A and procurement efficiencies. Given ROIC of 1.1%, incremental growth must be value-accretive (pricing power, asset-light expansion) to improve returns.

Financial Health

Liquidity is adequate with a current ratio of 178.8% (current assets 307.47 vs current liabilities 171.96) and cash and deposits of 67.74. No immediate red flag on current ratio (<1.0) is present. Solvency is a concern: D/E at 4.32x triggers a high-leverage warning; equity is 78.19 against total liabilities of 337.56 (equity ratio ~18.8%). Interest coverage is 7.38x, above the 5x comfort threshold, but vulnerable if operating income remains depressed or rates rise. Maturity profile: short-term loans total 100.17 versus cash 67.74; while current assets exceed current liabilities, refinancing and working capital discipline are important to avoid a maturity mismatch. Long-term loans of 154.46 indicate reliance on debt funding across durations. Off-balance sheet obligations are not disclosed; none identified in the provided data.

Cash Flow Quality

Operating cash flow is unreported, so OCF/Net Income cannot be assessed; we cannot confirm earnings quality via cash conversion. Free cash flow and capex are unreported, limiting visibility on reinvestment needs and funding capacity. Working capital signals are mixed: current assets are ample, but with accounts receivable and inventories unreported, we cannot diagnose whether the revenue decline is accompanied by inventory buildup or lengthening receivables. The large discrepancy between profit before tax (14.94) and net income (2.11) suggests material non-operating or below-the-line adjustments; without OCF, we treat headline earnings as lower quality this quarter.

Dividend Sustainability

Dividend data is not disclosed for the quarter; total dividends paid and DPS are unreported. A calculated payout ratio of 354.3% appears unsustainably high relative to earnings, but given the absence of DPS in the filings, this figure should be treated with caution. With OCF and FCF unreported, coverage cannot be assessed. Given high leverage (D/E 4.32x) and low ROIC (1.1%), maintaining a high payout would likely constrain balance sheet flexibility; a conservative payout aligned with cash generation would be prudent until profitability normalizes.

Risk Assessment

Business Risks:

• Demand volatility and project timing risk contributing to a 27.2% YoY revenue decline
• Negative operating leverage causing ~640 bps operating margin compression
• Execution risk in cost control and procurement amid lower volumes
• Potential reliance on one-off/extraordinary gains (PBT far above ordinary income)

Financial Risks:

• High leverage (D/E 4.32x) and low equity ratio (~19%) heighten refinancing risk
• Interest rate risk: interest expense (0.62) meaningful vs OI; coverage could deteriorate if OI weakens
• Short-term funding dependence (ST loans 100.17) vs cash 67.74 requires disciplined liquidity management
• Low ROIC (1.1%) vs likely cost of capital implies value dilution risk if growth is debt-funded

Key Concerns:

• Earnings quality uncertainty due to unreported OCF and FCF
• Large gap between profit before tax (14.94) and net income (2.11) pointing to undisclosed special items or minority interest impacts
• Ordinary income (-78.0% YoY) underperforming operating income (-71.1% YoY), suggesting rising non-operating burden
• Data limitations: SG&A breakdown, depreciation, and working capital details not disclosed

Investment Implications

Key Takeaways:

• Sharp profit contraction with operating income down 71.1% and net income down 77.7% on a 27.2% revenue decline
• Operating margin compressed to ~4.2% from ~10.6% YoY (~640 bps), indicating significant negative operating leverage
• High leverage (D/E 4.32x) alongside adequate near-term liquidity (current ratio 1.79x) creates a narrow operating cushion
• Interest coverage (7.38x) is currently acceptable but exposed to earnings volatility and rate changes
• ROIC at 1.1% signals sub-par capital efficiency and the need for margin/turnover improvement
• Earnings quality is unclear due to missing cash flow data and notable below-the-line items

Metrics to Watch:

• Operating margin recovery trajectory and SG&A-to-sales ratio
• Ordinary income trends vs operating income to gauge non-operating drag
• Net interest expense and interest coverage amid rate environment
• Leverage (D/E) and equity ratio progress through deleveraging or earnings recovery
• Operating cash flow and free cash flow once disclosed
• Working capital days (receivables, payables, inventories) when available

Relative Positioning: Versus domestic small/mid-cap real estate and property services peers, Ambition DX shows weaker profitability (low OPM and ROIC) and higher financial leverage, though near-term liquidity is comparatively adequate; sustained improvement depends on margin recovery and balance sheet de-risking.

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