Dualtap Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥393M
• Operating Income: ¥-71M
• Net Income: ¥-3M
• EPS: ¥-21.28

Income Statement

Balance Sheet

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

Dualtap Co., Ltd. (TSE: 3469) reported FY2026 Q1 consolidated results under JGAAP showing a sharp top-line contraction and a modestly narrower operating loss. Revenue declined 77.3% year over year to ¥393 million, indicative of significant quarter-to-quarter volatility typical of small real estate developers with lumpy property handovers. Despite the revenue drop, reported gross profit was ¥261 million and the calculated gross margin was an unusually high 66.4%, suggesting a revenue mix skewed to higher-margin service/commission income or the timing of property recognition. Operating income was a loss of ¥71 million, a slight YoY improvement of 2.4%, implying cost controls and/or a favorable mix effect against the steep revenue decline. Ordinary loss widened to ¥82 million, with interest expense of ¥13.6 million weighing on earnings amid a leveraged capital structure. Net loss was ¥88 million (EPS: -¥21.28), improving 57.4% YoY, which mirrors the operating loss trend and indicates limited non-operating or tax burden impacts this quarter. Liquidity appears solid with a current ratio of 2.55x and working capital of approximately ¥2.44 billion, providing near-term funding cushion despite the quarterly loss. Balance sheet leverage is meaningful, with a provided debt-to-equity ratio of 1.33x and computed equity ratio near 44.5% (Total Equity ¥2.36 billion vs. Total Assets ¥5.31 billion), implying moderate financial leverage. ROE, via DuPont, was -3.73% driven by a negative net margin (-22.39%), low asset turnover (0.074x), and leverage of 2.25x; the weak turnover reflects a slow delivery quarter. Interest coverage was -5.2x (operating loss vs. interest expense), underscoring sensitivity to financing costs if delivery pacing remains soft. Cash flow statements were not disclosed in the dataset (items show as zero), limiting assessment of operating cash conversion and free cash flow in the quarter. Dividend remains suspended (DPS ¥0), which is consistent with the loss profile and the need to preserve liquidity through cycles. The quarter’s results highlight Dualtap’s reliance on project timing and sales recognition, with profitability hinging on the cadence of unit handovers and the mix of service versus property sales revenue. While the margin profile appears favorable this quarter, the sustainability is uncertain without visibility into backlog, inventory, and the timing of future completions. Given limited disclosure on cash flows and inventories in this snapshot, monitoring upcoming quarters for delivery normalization, backlog execution, and debt service capacity is critical.

Profitability Analysis

ROE decomposition indicates: Net Profit Margin -22.39%, Asset Turnover 0.074x, and Financial Leverage 2.25x, yielding a calculated ROE of -3.73%. The negative margin is the primary driver of weak ROE, amplified by low turnover typical of a light-delivery quarter. Reported gross margin of 66.4% is unusually high for property sales and likely reflects a mix shift toward higher-margin services/fees or timing effects; sustainability is uncertain without segment detail. Operating leverage appears elevated: a 77% revenue decline translated into only a slight improvement in operating loss, implying substantial fixed-cost reductions or cost flexibility this quarter, but negative operating income still indicates insufficient scale. Interest expense of ¥13.6 million against an operating loss drove an interest coverage ratio of -5.2x, highlighting that profitability normalization relies on restoring delivery volumes. Effective tax rate appears minimal for the quarter given losses and reported income tax of ¥3.4 million, with limited distortion from tax effects.

Growth Assessment

Revenue fell 77.3% YoY to ¥393 million, consistent with lumpy sales recognition for a small real estate developer; quarterly growth is therefore not a reliable indicator of annual trend. The positive gross margin suggests revenue this quarter may be driven more by service/commission income or idiosyncratic recognition rather than large-scale property closings. Profit quality is mixed: operating loss narrowed despite revenue collapsing, indicating improved cost discipline or favorable mix, but ordinary and net losses remain, indicating insufficient scale. Without disclosed inventories/backlog, visibility on near-term revenue sustainability is limited; recovery depends on the pipeline of properties scheduled for delivery in subsequent quarters. Interest expense levels imply that growth must be supported by timely unit deliveries to maintain solvency and avoid margin erosion from financing costs. Outlook hinges on pacing of contracted deliveries, new project starts, and market conditions (interest rates, mortgage demand); absent backlog data, we assume a reversion to more normal delivery volumes would be necessary to reattain profitability.

Financial Health

Total assets are ¥5.31 billion and total equity ¥2.36 billion, implying an equity ratio of ~44.5% (vs. the displayed 0.0% which is likely unreported). Total liabilities are ¥3.13 billion, and the provided debt-to-equity ratio is 1.33x, suggesting meaningful leverage. Liquidity metrics are solid: current assets ¥4.02 billion vs. current liabilities ¥1.58 billion give a current ratio of 2.55x and quick ratio of 2.55x (inventories not disclosed). Working capital is approximately ¥2.44 billion, offering cushion for near-term obligations and project execution. However, interest coverage is negative (-5.2x), reflecting reliance on future deliveries to cover financing costs. The capital structure appears balanced with moderate equity and leverage, but sensitivity to delivery timing remains high due to interest burden.

Cash Flow Quality

Operating, investing, and financing cash flows are not disclosed in this dataset (zeros indicate unreported), preventing a direct assessment of earnings-to-cash conversion. The reported OCF/Net Income ratio of 0.00 and FCF of 0 arise from non-disclosure rather than true cash generation or burn. Given the business model, OCF can swing materially with inventory build and property deliveries; quarter-to-quarter volatility is expected. Working capital dynamics cannot be fully analyzed without inventories and receivables/payables detail; however, the large working capital balance suggests capacity to fund near-term operations. Until OCF is disclosed, earnings quality assessment rests on future confirmation that operating losses narrow alongside improved delivery-driven cash inflows.

Dividend Sustainability

Annual DPS is ¥0 with a payout ratio of 0%, appropriate given the net loss and the need to preserve cash. FCF coverage is shown as 0.00x due to unreported FCF; thus, cash-based coverage cannot be evaluated this quarter. With negative earnings and interest expense pressure, resumption of dividends would likely require a sustained return to profitability and positive operating cash flow. Company policy outlook is not provided, but prudence suggests maintaining financial flexibility until delivery volumes normalize and leverage metrics improve.

Risk Assessment

Business Risks:

• High revenue volatility from lumpy property handovers and project timing under JGAAP
• Dependence on contracted backlog and pipeline visibility (not disclosed here)
• Margin variability driven by sales mix between property sales and service/commission income
• Market sensitivity to housing demand, mortgage availability, and interest rates
• Execution risk in land acquisition, development, and construction timelines

Financial Risks:

• Negative interest coverage (-5.2x) with reliance on future deliveries to service debt
• Leverage exposure (debt-to-equity 1.33x) amid weak quarterly profitability
• Potential refinancing risk if market conditions tighten
• Working capital absorption and cash flow volatility due to inventory/delivery cycles

Key Concerns:

• Sustainability of the elevated gross margin absent segment detail
• Lack of disclosed cash flow statements and inventory balances in the quarter
• Low asset turnover (0.074x) reflecting a slow delivery quarter
• Ordinary loss of ¥82 million with interest expense of ¥13.6 million

Investment Implications

Key Takeaways:

• Revenue fell 77.3% YoY to ¥393 million, highlighting delivery timing volatility
• Gross margin reported at 66.4%, likely mix- or timing-driven; sustainability uncertain
• Operating loss narrowed to ¥71 million (+2.4% YoY), indicating some cost discipline
• Ordinary and net losses persist (¥82 million and ¥88 million), pressured by interest costs
• Liquidity is strong (current ratio 2.55x; working capital ~¥2.44 billion) despite losses
• ROE -3.73% driven by negative margin and low asset turnover; leverage at 2.25x magnifies impact
• Cash flow data not disclosed; FCF and OCF cannot be assessed this quarter
• Dividend remains suspended (DPS ¥0) pending profitability and cash flow normalization

Metrics to Watch:

• Contracted backlog and scheduled deliveries for FY2026
• Inventory balances and turnover (currently not disclosed)
• Segment mix and gross margin sustainability
• SG&A run-rate versus revenue recovery
• Interest-bearing debt levels, average borrowing cost, and interest coverage
• Operating cash flow and free cash flow once disclosed
• Asset turnover improvement as deliveries normalize

Relative Positioning: As a small-cap Japanese real estate developer, Dualtap exhibits higher earnings and cash flow volatility than larger peers due to concentrated projects and delivery timing; liquidity is comparatively adequate, but interest coverage is weaker, making near-term performance highly dependent on the cadence of property handovers.

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