Saint Marc Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥43.59B
• Operating Income: ¥2.36B
• Net Income: ¥1.05B
• EPS: ¥48.22

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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: Solid top-line recovery and operating profit growth, but headline net income fell sharply due to a high tax burden and extraordinary items, leaving capital efficiency below target. Revenue rose 32.3% YoY to 435.85, reflecting strong traffic recovery and/or price/mix tailwinds. Operating income increased 29.4% YoY to 23.63, with operating margin at 5.4%. Ordinary income grew 13.7% to 22.50, but profit before tax was 20.70, implying roughly 1.8 of extraordinary losses or adjustments below ordinary level. Net income declined 37.3% to 10.48, pulling net margin down to 2.4%. Operating margin appears to have compressed slightly by about 12 bps YoY (from ~5.54% to 5.42%), suggesting SG&A absorption lagged revenue growth. Net margin compressed by roughly 266 bps YoY, driven primarily by a very high effective tax rate of 49.3% and the negative swing between ordinary income and profit before tax. Gross profit margin stands high at 73.3%, but SG&A intensity remains elevated at approximately 67.9% of sales, capping operating leverage. Cash flow quality is strong: operating cash flow of 41.54 is nearly 4x net income, signaling robust earnings conversion. Liquidity is healthy with a current ratio of 167.8% and 135.08 in cash, and interest coverage is strong at 17.2x. Leverage is moderate (D/E 1.26x), but ROE is a subdued 3.5% and ROIC is 3.3%, below the 5% warning threshold. Intangibles and goodwill are sizable (intangible assets 203.49, goodwill 160.24), potentially depressing ROA/ROIC and creating future impairment risk if performance stalls. Financing cash outflow of -31.47 and buybacks of -11.83 indicate ongoing shareholder returns, but the calculated payout ratio of 113.8% is above a comfortable level if sustained. Near-term, normalization of the tax rate and reduction of extraordinary losses are key to restore bottom-line growth in line with improved operations. Medium-term value creation hinges on improving store-level efficiency, managing rent and labor inflation, and lifting ROIC toward or above 5%. Overall, the quarter shows operational improvement overshadowed by below-the-line drags, with good cash generation but capital efficiency still needing work.

Profitability Analysis

ROE decomposition (DuPont): ROE 3.5% = Net Profit Margin 2.4% × Asset Turnover 0.636 × Financial Leverage 2.26x. The most material swing this quarter is the net profit margin, which fell as the effective tax rate spiked to 49.3% and profit before tax was impacted by roughly 1.8 of extraordinary losses. Asset turnover remains modest at 0.636, reflecting a sizeable asset base influenced by goodwill (160.24) and intangible assets (203.49). Financial leverage at 2.26x provided some support to ROE but is not excessive. Business drivers: while revenue recovered strongly and operating income rose, SG&A of 296.02 (67.9% of sales) limited operating margin expansion and in fact led to slight compression (~12 bps). The step-down from ordinary income (22.50) to profit before tax (20.70), combined with the high tax rate, is the primary reason net margin underperformed. Sustainability: the SG&A ratio should gradually improve with scale if cost controls hold; however, rent (54.17) and wage inflation pose ongoing pressure. The elevated tax rate is likely a one-off or mix-related factor and could normalize, providing upside to net margin. Concerning trends: SG&A growth likely tracked or exceeded sales growth given the margin compression; continued high SG&A intensity would cap operating leverage and ROE. Monitoring the persistence of extraordinary losses and the tax rate normalization is critical for margin recovery.

Growth Assessment

Revenue growth of 32.3% YoY indicates strong recovery momentum, likely driven by same-store sales growth and/or store network effects. Operating income grew 29.4%, slightly lagging sales, implying modest negative operating leverage this quarter due to elevated SG&A ratio. Ordinary income up 13.7% shows core profitability improvement, yet net income fell 37.3% due to below-the-line items (extraordinary losses) and a near-50% tax rate. EBITDA of 47.55 (10.9% margin) reflects decent cash earnings, supported by D&A of 23.92. With rent at 54.17, store-level cost management and occupancy efficiency remain key to sustaining growth. The quality of growth is mixed: operational metrics improved, but net outcomes suffered from one-off factors; if these normalize, reported growth should realign with operating trends. Outlook: expect continued top-line support from traffic normalization and pricing; profitability will hinge on SG&A discipline, labor/rent inflation management, and tax rate normalization. ROIC at 3.3% signals the need for tighter capital allocation (store closures/openings, asset-light approaches) to ensure growth is value-accretive.

Financial Health

Liquidity is sound: current ratio 167.8% and quick ratio 167.8% (cash and receivables dominate current assets), with 135.08 in cash against current liabilities of 117.93. No warning on current ratio (<1.0) or D/E (>2.0); D/E is 1.26x, a moderate level. Interest-bearing debt detail is partially unreported, but short-term loans are 10.00 and long-term loans 185.04 (total loans ~195.04), consistent with moderate leverage relative to equity of 302.62. Interest coverage is strong at 17.21x, suggesting ample headroom on debt service. Maturity mismatch risk appears contained: cash and current assets (197.91) comfortably cover current liabilities (117.93). Off-balance sheet obligations are not disclosed; given the industry, lease commitments could be material under JGAAP classification—monitor future disclosures. Intangibles and goodwill are large (total 363.73), elevating asset base and potential impairment risk if earnings weaken.

Cash Flow Quality

OCF of 41.54 is 3.96x net income, indicating strong cash conversion and low accrual risk this period. Using a simple proxy, OCF minus capex (-15.46) implies an estimated free cash flow of ~26.08, comfortably positive; however, full investing cash flows were unreported, so this is an approximation. Financing cash outflow was -31.47, including share repurchases of -11.83 and likely debt/dividend cash movements; dividends were unreported. The strong OCF suggests underlying operations are healthy despite net income volatility from taxes/extraordinary items. No clear signs of working capital manipulation are observable from the limited data; receivables (54.02) are modest relative to sales, and cash is robust. Cash generation appears sufficient to fund maintenance capex and a portion of shareholder returns, but sustained elevated payouts could pressure balance sheet if OCF moderates.

Dividend Sustainability

The calculated payout ratio of 113.8% is above the <60% benchmark and is a warning if it reflects ongoing policy rather than timing/one-off effects. Given estimated FCF of ~26.08 (OCF minus capex), coverage of ordinary dividends appears feasible in this half, but coverage of both dividends and buybacks (-11.83) tightens headroom. With net income depressed by temporary factors (high effective tax and extraordinary losses), payout optics look stretched; normalization of the tax rate would improve coverage. Cash on hand (135.08) provides near-term flexibility, and leverage is moderate; however, sustaining payout above earnings while ROIC is 3.3% is not advisable over the medium term. Policy outlook: expect management to balance shareholder returns with investment in store refurbishment and productivity; a focus on maintaining cash dividend and flexing buybacks cyclically would be prudent.

Risk Assessment

Business Risks:

• Consumer demand sensitivity to macro conditions affecting dine-in traffic.
• Food and beverage cost inflation compressing margins if not offset by pricing.
• Labor cost inflation and staffing shortages elevating SG&A.
• Rent and occupancy cost rigidity (rent expense 54.17) limiting margin flexibility.
• Execution risk in store openings/closures and format optimization.
• Potential goodwill/intangible asset impairment if earnings underperform.

Financial Risks:

• Moderate leverage (D/E 1.26x; total loans ~195.04) exposes earnings to refinancing and rate risk.
• High effective tax rate (49.3%) reducing net profitability; uncertainty on normalization timing.
• Extraordinary loss items (~1.8) creating volatility between ordinary and net income.
• Payout ratio above 100% if sustained could pressure liquidity over time.

Key Concerns:

• ROIC at 3.3% below the 5% warning threshold, indicating weak capital efficiency.
• SG&A intensity at ~68% of sales constraining operating margin.
• Dependence on below-the-line normalization (taxes/extraordinary) to restore net margin.
• Large goodwill/intangibles (363.73) heighten impairment risk in downturns.

Investment Implications

Key Takeaways:

• Operational recovery is evident: revenue +32.3% and operating income +29.4% with EBITDA margin 10.9%.
• Headline net income fell 37.3% due to a 49.3% tax rate and extraordinary losses, not core weakness.
• Cash conversion is strong (OCF/NI 3.96x) and liquidity robust (current ratio 167.8%).
• Capital efficiency remains weak (ROE 3.5%, ROIC 3.3%), weighed by high intangibles and SG&A.
• Shareholder returns continue (buybacks -11.83), but the calculated payout ratio of 113.8% is a caution flag.

Metrics to Watch:

• Same-store sales growth and average ticket to gauge demand durability.
• SG&A ratio and labor/rent cost trends for operating leverage.
• Effective tax rate trajectory and any disclosure on drivers/one-offs.
• Extraordinary gains/losses bridging ordinary income to profit before tax.
• ROIC progress toward >5% via store portfolio optimization and capex discipline.
• Free cash flow (OCF minus capex) and coverage of dividends/buybacks.
• Debt trajectory and interest coverage amid rate environment.

Relative Positioning: Compared to domestic restaurant peers, Saint Marc shows healthy liquidity and cash generation with mid–single-digit operating margins, but lags on capital efficiency (ROIC 3.3%) and exhibits higher net income volatility due to below-the-line items; sustained improvement hinges on SG&A discipline and normalization of the tax burden.

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
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