FLYING GARDEN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.55B
• Operating Income: ¥335M
• Net Income: ¥209M
• EPS: ¥72.37

Income Statement

Balance Sheet

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

Flying Garden (33170) reported FY2026 Q2 single-entity results under JGAAP with solid top-line growth and stronger operating leverage. Revenue reached ¥4,547 million, up 13.0% YoY, while operating income rose 29.8% YoY to ¥335 million, indicating expanding operating margins. Gross profit was ¥2,751 million, implying a high gross margin of 60.5%, consistent with pricing power and/or favorable sales mix. Ordinary income was ¥344 million, and net income was ¥209 million, for a net margin of 4.6%. The DuPont-based ROE is 6.1%, derived from a 4.6% net margin, 0.909x asset turnover, and 1.46x financial leverage, suggesting a primarily operations-driven return with conservative leverage. The balance sheet remains strong: total assets are ¥5,004 million, liabilities ¥1,554 million, and equity ¥3,424 million; this implies an equity ratio of roughly 68.5% (equity/assets), despite the reported 0.0% figure being an undisclosed placeholder. Liquidity is healthy with a current ratio of 200.8% and quick ratio of 199.9%, supported by current assets of ¥1,927 million and current liabilities of ¥960 million. Working capital stands at ¥967 million, offering ample short-term flexibility for procurement and seasonal demand. Debt-to-equity is modest at 0.45x (total liabilities/equity), indicating low financial risk and capacity to absorb shocks in input costs or demand. The company’s operating leverage is evident: operating profit growth outpaced revenue growth, suggesting good cost control or efficiencies. EPS is ¥72.37 for the period; implied average shares outstanding are about 2.89 million (based on net income/EPS), but share count in the dataset is undisclosed. Reported cash flow items (OCF/FCF/CF balances) and depreciation/interest are all shown as zero, which reflect non-disclosure in the dataset rather than true zeros; as a result, EBITDA and effective tax rate in the provided metrics are not meaningful. Using disclosed income tax of ¥108 million and ordinary income of ¥344 million, the implied effective tax rate is approximately 31–32%. Dividend data (DPS and payout) are also not disclosed for this period. Overall, results depict healthy growth, better margins, and conservative financial structure; however, the lack of cash flow and depreciation disclosures limits a full assessment of earnings durability and capital intensity. Monitoring input cost trends (meat, grains, energy), wage inflation, and same-store sales will be key to confirming sustainability of these improvements.

Profitability Analysis

ROE of 6.1% decomposes into net profit margin 4.6% × asset turnover 0.909 × financial leverage 1.46, indicating returns are mostly driven by operating performance rather than balance-sheet leverage. Operating margin is approximately 7.4% (¥335m/¥4,547m), up YoY as operating income grew +29.8% vs revenue +13.0%, demonstrating positive operating leverage. Gross margin of 60.5% is high for F&B, implying effective pricing and mix or accounting classification that keeps COGS narrow (SG&A likely holds labor/utility/occupancy). The delta between gross and operating margin (~53pp) reflects significant store-level and overhead costs; the improvement YoY suggests some fixed-cost absorption and/or cost discipline. Ordinary income slightly exceeds operating income, indicating net non-operating gains or financial income. Net margin of 4.6% is healthy in the context of casual dining, though still sensitive to food and labor costs. With leverage at 1.46x, financial gearing contributes modestly to ROE; upside in ROE would likely come from higher margins or better asset turnover. Effective tax rate based on disclosed taxes and ordinary income is roughly 31–32%, consistent with statutory levels. EBITDA is undisclosed (D&A reported as zero), so true operating cash generation capacity cannot be directly inferred from the dataset.

Growth Assessment

Revenue growth of +13.0% YoY indicates robust demand, likely from same-store sales strength and/or store network expansion. Operating income outpaced sales (+29.8% YoY), signaling improved cost efficiency and fixed-cost leverage. Net income grew +28.9% YoY, showing that margin gains carried through after non-operating items and taxes. The sustainability of growth will depend on maintaining traffic and ticket size amid consumer sensitivity and competition, as well as managing input cost inflation (meat and energy). Asset turnover at 0.909x suggests reasonable utilization; further acceleration would support higher ROE if capital intensity remains contained. Given the single-entity scope, consolidation effects (if any subsidiaries exist) are not captured; results reflect the parent entity’s operations only. With cash flow data undisclosed, it is unclear whether growth is funded primarily by internal cash generation or working capital optimization. Outlook hinges on pricing power, menu innovation, labor scheduling efficiency, and energy cost trend normalization. Near-term, operating leverage offers upside if sales momentum persists; conversely, a traffic slowdown could quickly compress margins.

Financial Health

Total assets ¥5,004m, total liabilities ¥1,554m, and equity ¥3,424m imply an equity ratio near 68.5% and liabilities-to-equity of 0.45x, indicating a conservative capital structure. Current assets ¥1,927m vs current liabilities ¥960m yield a current ratio of 200.8% and a quick ratio of 199.9%, reflecting strong liquidity. Working capital is ¥967m, providing headroom for inventory procurement and payment cycles. Interest expense is undisclosed; the reported interest coverage metric of 0.0x is not meaningful in this dataset. The low leverage suggests limited refinancing risk and good capacity to withstand cost shocks. Absence of cash & equivalents disclosure limits assessment of immediate cash buffer. Potential off-balance sheet lease obligations (common in restaurants) are not captured here, which could understate economic leverage.

Cash Flow Quality

Operating cash flow, investing cash flow, financing cash flow, and cash balance are undisclosed (shown as zero placeholders), preventing a direct assessment of earnings-to-cash conversion. The reported OCF/Net Income ratio of 0.00 is not indicative of performance given the data limitation. Free cash flow cannot be computed without OCF and capex; depreciation is also undisclosed, obscuring capital intensity. Working capital appears healthy with current assets exceeding current liabilities by ¥967m; inventories are reported at ¥8.6m, which is unusually low for restaurants and may reflect classification choices (e.g., most costs expensed as period costs) rather than operational minimalism. Without cash flow data, we cannot validate whether margin expansion translated into cash. Key to watch: OCF relative to operating income, capex for new stores/renovations, and changes in payables/receivables as sales scale.

Dividend Sustainability

Dividend per share, payout ratio, and FCF coverage are undisclosed for the period. With EPS at ¥72.37 for the half-year, internal capacity for dividends appears to exist, but sustainability cannot be assessed without OCF and capex. The strong equity base and low leverage support potential for stable distributions when cash generation is confirmed. Policy clarity (target payout ratio or DOE) is not provided in the dataset. Until cash conversion and capex needs are observable, dividend coverage and trajectory remain uncertain.

Risk Assessment

Business Risks:

• Input cost inflation (meat, grains, edible oils) compressing gross margins
• Labor cost inflation and staffing shortages impacting service levels and SG&A
• Energy and utility cost volatility affecting store operating expenses
• Demand sensitivity to macro conditions and consumer confidence
• Intense competition in casual dining/family restaurant segment
• Food safety and reputational risks inherent to restaurant operations
• Weather and seasonality affecting traffic and sales mix
• Regional concentration risk if store network is geographically clustered

Financial Risks:

• Limited visibility on cash flow generation due to undisclosed OCF/FCF
• Potential off-balance sheet lease obligations increasing effective leverage
• Tax rate variability relative to statutory assumptions
• Working capital swings as sales scale, affecting liquidity
• Interest rate risk minimal currently but could rise if debt is utilized for expansion

Key Concerns:

• Lack of cash flow and depreciation disclosure impedes assessment of earnings quality
• Sustainability of margin gains amid cost inflation and competitive pricing
• Dependence on operating leverage; sales softness could quickly erode margins

Investment Implications

Key Takeaways:

• Top-line growth of +13.0% YoY paired with +29.8% YoY operating profit indicates healthy operating leverage
• Net margin at 4.6% and ROE at 6.1% reflect solid but not highly leveraged returns
• Strong balance sheet with implied equity ratio ~68.5% and current ratio ~201% provides resilience
• Cash flow, depreciation, and dividend data are not disclosed, limiting visibility on cash-backed returns
• Implied effective tax rate around 31–32% based on disclosed taxes and ordinary income

Metrics to Watch:

• Same-store sales growth and average ticket
• Food cost ratio, labor cost ratio, and energy costs as a share of sales
• Operating margin trajectory vs sales growth (operating leverage)
• OCF vs operating income, capex, and resulting free cash flow
• Store openings/closures and capex per store
• Asset turnover and ROE trend
• Any disclosure on lease liabilities and interest expense
• Dividend policy updates and payout/coverage once cash flows are disclosed

Relative Positioning: A small-cap regional casual dining operator with high gross margins, improving operating margins, and a conservative balance sheet; ROE is mid-single-digit with room to improve via margin expansion and asset utilization, but visibility is constrained by undisclosed cash flow and depreciation data.

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