KANMONKAI Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.89B
• Operating Income: ¥-259M
• Net Income: ¥-121M
• EPS: ¥-12.54

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

Kanmonkai Co., Ltd. (3372) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥1,891 million, up 5.0% YoY, but remained loss-making at every profit line. Gross profit reached ¥1,238 million, translating to a high gross margin of 65.5%, indicative of strong unit economics or pricing power at the gross level. Despite this, operating income was a loss of ¥259 million (operating margin -13.7%), a deterioration of roughly 19% YoY in the size of the loss, highlighting heavy SG&A burden and negative operating leverage. Ordinary income was a loss of ¥267 million and net loss was ¥171 million (net margin -9.0%), with the net loss widening about 52% YoY. The DuPont framework indicates ROE of -15.45% driven by negative margins (-9.04%), modest asset turnover (0.654x), and financial leverage of 2.61x. Liquidity ratios appear adequate on the surface (current ratio 143.5%, quick ratio 109.0%), supported by working capital of ¥700 million, but operating cash outflow of ¥399 million in the period raises concerns about cash burn. Inventory stood at ¥555 million; relative to COGS of ¥563 million for the half-year, this implies very slow turnover and working capital intensity, a potential drag on cash generation. Interest expense was ¥14.3 million with interest coverage at -18.1x, reflecting that core earnings do not currently support financing costs. Total assets were ¥2,893 million and total equity ¥1,107 million, implying an equity ratio around 38% (based on assets/equity), even though the equity ratio field is unreported. Debt-to-equity of 1.83x suggests a moderately leveraged balance sheet that could become more pressured if losses persist. Operating CF was -¥399 million, while investing CF and cash/equivalents were unreported; hence, free cash flow and cash runway cannot be reliably assessed from the disclosed items. Dividend per share was zero, appropriate given losses and cash burn. Overall, the quarter shows resilient gross margin but insufficient scale and/or cost control, leading to negative operating leverage. The immediate priorities appear to be restoring traffic and check growth, tightening SG&A and labor efficiency, and improving inventory turns to stabilize cash flow. Data limitations (notably cash balance, investing CF, and share counts) constrain precision in cash runway and per-share analyses, but the available figures indicate elevated execution and liquidity risks if cash burn persists.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -9.04%
• asset_turnover: 0.654x
• financial_leverage: 2.61x
• calculated_ROE: -15.45%
• commentary: Negative ROE is entirely driven by a negative net margin. Asset turnover is modest for a restaurant operator, and leverage magnifies the loss. margin_quality:
• gross_margin: 65.5% (¥1,238m GP on ¥1,891m sales)
• operating_margin: -13.7% (¥-259m OI)
• ordinary_margin: -14.1% (¥-267m)
• net_margin: -9.0% (¥-171m)
• insight: High gross margin suggests favorable menu economics and/or pricing, but SG&A and labor/overheads outweigh gross profits, keeping operating margin deeply negative. operating_leverage:
• YoY_revenue_growth: +5.0%
• YoY_operating_income_change: Operating loss widened by ~19%
• interpretation: Negative operating leverage: modest top-line growth did not cover fixed cost inflation (labor, utilities, rents, headquarters SG&A), worsening operating loss.

Growth Assessment

revenue_sustainability: Top-line grew 5.0% YoY, likely driven by price/mix and partial traffic recovery. However, absent segment or same-store disclosures, sustainability cannot be confirmed. profit_quality: Despite strong gross margin, earnings remain negative at operating and net levels. The widening losses imply cost pressures (labor, food inflation) or insufficient scale/productivity. outlook: Near-term recovery hinges on traffic normalization, execution on cost controls (labor scheduling, procurement), and improving store-level productivity. Without a step-up in sales density or SG&A discipline, profitability will likely remain pressured.

Financial Health

liquidity:

• current_ratio: 143.5%
• quick_ratio: 109.0%
• working_capital: ¥700,141,000
• commentary: Headline liquidity is adequate; however, substantial operating cash outflow (¥-399m) and sizable inventories indicate potential strain if cash burn persists. solvency_and_capital_structure:
• total_assets: ¥2,893,000,000
• total_liabilities: ¥2,027,160,000 (reported)
• total_equity: ¥1,107,000,000
• equity_ratio_estimate: ≈38% (using assets/equity; reported field unfilled)
• debt_to_equity: 1.83x
• interest_coverage: -18.1x (EBIT/Interest)
• commentary: Leverage is moderate but increasingly risky given negative EBITDA. Interest is not covered by operating earnings; sustained losses could erode equity and tighten covenant headroom.

Cash Flow Quality

earnings_quality: OCF/Net Income ratio of 2.33 reflects OCF more negative than net income (both negative), signaling weaker cash earnings quality and likely working capital drag. free_cash_flow: Investing CF is unreported; thus, FCF cannot be reliably derived. Using only available data would understate/overstate true FCF. working_capital_dynamics: Inventories of ¥555m versus half-year COGS of ¥563m imply very slow turnover (indicative of ~6 months of stock if taken at face value), tying up cash. Receivables/payables details are not provided, limiting deeper analysis. key_observations: Operating CF: ¥-399,279,000 in the period., Depreciation & amortization: ¥42,035,000; EBITDA negative at ¥-216,965,000., Income tax benefit (¥-71m) supports net income but not operating CF sufficiently.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio 0%, appropriate under current losses (EPS ¥-12.54). FCF_coverage: Not assessable due to unreported investing CF and cash balance; prudent to assume no capacity for distributions until operating CF turns positive. policy_outlook: Given negative earnings and cash burn, maintaining a no-dividend stance appears likely until a clear turnaround in profitability and OCF is achieved.

Risk Assessment

Business Risks:

• Traffic volatility and consumer discretionary weakness impacting same-store sales.
• Food cost inflation and procurement risk (notably for specialty seafood) compressing margins.
• Labor shortages and wage inflation elevating SG&A and reducing operating leverage.
• Food safety and regulatory compliance risks intrinsic to seafood handling.
• Seasonality effects leading to uneven quarterly performance.
• Brand concentration and geographic concentration increasing sensitivity to regional shocks.

Financial Risks:

• Sustained negative EBITDA and operating losses eroding equity.
• Negative operating cash flow increasing liquidity stress and potential reliance on external funding.
• Weak interest coverage (-18.1x) heightening refinancing and covenant risks.
• Inventory build leading to cash being tied up and potential obsolescence/markdown risk.
• Potential mismatch between reported liabilities and equity implying classification or rounding uncertainties.

Key Concerns:

• Negative operating leverage despite revenue growth.
• Large operating cash outflow with limited visibility on cash balance and runway.
• High inventory relative to COGS suggesting inefficient working capital.

Investment Implications

Key Takeaways:

• Revenue growth of 5% YoY failed to translate into profitability; operating loss widened to ¥-259m.
• Gross margin remains robust at 65.5%, but SG&A intensity keeps EBITDA negative (¥-217m).
• Operating CF of ¥-399m signals cash burn; liquidity ratios may overstate comfort without cash details.
• Leverage at 1.83x D/E and interest coverage at -18.1x increase solvency risk if trends persist.
• Inventory appears elevated versus period COGS, pressuring cash conversion.
• Equity ratio is estimated around 38% (unreported), providing some buffer but at risk if losses continue.

Metrics to Watch:

• Same-store sales growth and average ticket/traffic trends.
• SG&A-to-sales ratio and labor cost ratio.
• Food cost ratio and gross margin stability.
• Inventory days and payable days (cash conversion cycle).
• Operating cash flow and EBITDA trajectory.
• Interest coverage and net debt metrics (once cash and debt details are disclosed).

Relative Positioning: Versus domestic restaurant peers, Kanmonkai exhibits higher gross margins but weaker operating margins, negative EBITDA, and greater cash flow strain; balance sheet leverage is moderate but risk is elevated due to lack of earnings coverage.

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