BENEFIT JAPAN Co.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.94B
• Operating Income: ¥673M
• Net Income: ¥431M
• EPS: ¥73.47

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 topline-driven quarter with modest operating leverage, but cash conversion lagged significantly. Revenue rose 27.7% YoY to 79.38, outpacing operating income growth of 31.2% to 6.73, indicating slight positive operating leverage. Gross profit reached 45.40 with a gross margin of 57.2%, highlighting a high-value mix and/or effective procurement/agency economics. SG&A was 38.66, implying an SG&A ratio of 48.7% and leaving operating margin at roughly 8.5%. Ordinary income was 6.80, with non-operating items essentially neutral (non-op income 0.12 vs expenses 0.05). Net income rose 27.4% to 4.31, translating to a net margin of 5.4% and basic EPS of 73.47 yen. The operating margin stood near 8.5%; YoY basis-point change is not inferable from the disclosed dataset, but revenue outpacing SG&A suggests slight margin expansion. Net margin of 5.4% aligns with ordinary income trends and a 33.9% effective tax rate. ROE calculated via DuPont is 5.3% (net margin 5.4% × asset turnover 0.638 × leverage 1.53x), indicating moderate profitability on conservative leverage. ROIC is reported at 7.6%, just below the 8% excellence threshold, but consistent with disciplined capital use. Liquidity remains robust with a 366.6% current ratio and ample cash of 37.45 against short-term debt of 3.00. Leverage is conservative at D/E 0.53x and Debt/EBITDA 1.98x, with very strong interest coverage of 136x. Earnings quality is the key blemish: OCF of 1.30 is just 0.30x net income, indicating weak cash conversion this half. Capex was light at 0.14 and buybacks were modest at 0.07, while financing CF of -4.60 suggests repayments/returns to shareholders likely exceeded new borrowings. Forward-looking, sustaining revenue momentum while improving cash conversion and managing SG&A intensity will be critical to lift ROE and support distributions.

Profitability Analysis

ROE decomposition: ROE 5.3% = Net Profit Margin (5.4%) × Asset Turnover (0.638x) × Financial Leverage (1.53x). The current ROE is primarily driven by the margin component, as leverage is conservative and asset turnover is moderate. Given revenue grew 27.7% while operating income grew 31.2%, operating margin likely improved slightly; however, precise YoY basis-point changes are not disclosed. The business reason for margin resilience appears to be scale benefits and a stable gross margin profile (57.2%), with SG&A growing slower than revenue in this period. Non-operating items were small and did not drive ROE. Sustainability: modest margin improvement from operating leverage can be sustainable if growth continues and SG&A discipline holds; however, the weak OCF/NI (0.30x) warns that accrual profits may be outpacing cash realization near term. Concerning trends: the SG&A ratio at 48.7% remains high; while we cannot confirm SG&A YoY growth vs revenue due to missing prior data, ongoing SG&A intensity is a structural headwind to further margin expansion unless scale efficiencies deepen.

Growth Assessment

Revenue growth of 27.7% YoY to 79.38 indicates strong demand and/or successful customer acquisition/ARPU uplift. Operating income growth of 31.2% exceeded sales growth, implying slight operating leverage. Gross margin at 57.2% suggests a relatively attractive mix and pricing power for the business model. Net income grew 27.4% to 4.31, roughly in line with top-line growth, consistent with stable below-OP line effects and normalized taxes. Non-operating income was limited (0.12) and not a major growth driver; growth is primarily organic/operational. Outlook hinges on sustaining revenue momentum while containing SG&A; incremental margin gains are plausible if cost discipline continues. However, the OCF shortfall versus NI introduces uncertainty about the durability of growth on a cash basis. With ROIC at 7.6%, reinvestment returns are near target levels; disciplined capital allocation can support continued growth if cash generation improves.

Financial Health

Liquidity is strong: current ratio 366.6% and quick ratio 366.6% (no inventories reported), with cash of 37.45 comfortably exceeding short-term loans of 3.00. No warning on current ratio (<1.0) or D/E (>2.0); D/E is 0.53x, conservative. Interest-bearing debt totals approximately 14.40 (short-term 3.00 + long-term 11.40), yielding Debt/EBITDA of 1.98x, well within prudent levels, and interest coverage of 136x is robust. Maturity mismatch risk appears low given sizable current assets (113.39) relative to current liabilities (30.93). Off-balance sheet obligations are not disclosed in the dataset; none can be assessed.

Cash Flow Quality

OCF was 1.30 vs net income of 4.31, yielding OCF/NI of 0.30x, which is below the 0.8 threshold and signals weak cash conversion this period. The shortfall versus NI is 3.01, likely due to working capital movements and/or timing effects, though detailed drivers are not disclosed. Capex was minimal at 0.14, implying asset-light operations and limited maintenance burden. Implied period free cash flow (OCF – Capex) is approximately 1.16; however, full FCF to equity cannot be concluded without investing/financing details (dividends unreported). Financing CF was -4.60, suggesting debt repayment and/or shareholder returns exceeded internal cash this half, funded by cash on hand. There are no explicit signs of working capital manipulation in the disclosed data, but the OCF/NI ratio warrants monitoring.

Dividend Sustainability

The calculated payout ratio is 60.0%, right at the benchmark threshold for sustainability. Dividend amounts and timing are not disclosed, preventing precise FCF coverage analysis. On a period basis, implied FCF of roughly 1.16 could cover modest distributions, but the weak OCF/NI and negative financing CF (-4.60) suggest reliance on the existing cash buffer for returns if cash conversion does not improve. Policy outlook cannot be inferred from disclosures; sustainability hinges on restoring OCF closer to NI and maintaining low capex.

Risk Assessment

Business Risks:

• Margin pressure from high SG&A intensity (48.7% of revenue) if growth slows
• Potential competition and pricing pressure in telecom/IT service channels (industry context)
• Execution risk in sustaining 27.7% YoY revenue growth as the base increases
• Customer acquisition and churn dynamics that may elevate marketing/commission costs

Financial Risks:

• Low cash conversion (OCF/NI 0.30x) raising earnings quality concerns
• Negative financing CF (-4.60) implying repayments/returns outpacing internal cash generation in the period
• Dependence on maintaining a high gross margin (57.2%) to support operating margin
• Moderate leverage sensitivity if cash flows remain soft despite D/E of 0.53x

Key Concerns:

• EARNINGS_QUALITY flag: OCF/NI 0.30x (<0.8 threshold)
• Visibility on dividend outflows is limited (dividend amounts unreported)
• Limited disclosure granularity (SG&A and non-op breakdowns largely unreported) hampers diagnostics

Investment Implications

Key Takeaways:

• Topline growth of 27.7% translated into slightly better operating leverage (OP +31.2%)
• Healthy profitability profile: gross margin 57.2%, operating margin ~8.5%, net margin 5.4%
• ROE of 5.3% on conservative leverage (1.53x) and moderate asset turnover (0.638x)
• ROIC at 7.6% is near target levels, supporting disciplined reinvestment
• Earnings quality is the main weakness: OCF/NI 0.30x with a 3.01 shortfall vs NI
• Balance sheet strength (current ratio 366.6%, cash 37.45) mitigates near-term risk

Metrics to Watch:

• OCF to Net Income ratio (goal: ≥1.0 over time)
• SG&A ratio and operating margin progression (basis-point changes)
• Working capital movements (AR and payables turns) to diagnose cash conversion
• Debt/EBITDA and interest coverage as distributions and repayments continue
• ROIC relative to 8%+ target
• Dividend outflow disclosures and FCF coverage

Relative Positioning: Relative to domestic small/mid-cap service providers, the company shows above-average gross margins and conservative leverage but lags on cash conversion; sustaining growth while normalizing OCF will be key to improving ROE toward peers with higher double-digit returns.

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