BENEFIT JAPAN Co.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.94B
• Operating Income: ¥673M
• Net Income: ¥338M
• 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 Integrated Analysis

Analysis integrating XBRL data (GPT-5) and PDF earnings presentation (Claude)

Executive Summary

Benefit Japan (TSE:39340) delivered solid top-line and profit growth in FY2026 Q2 under JGAAP on a consolidated basis, with revenue of ¥7,938 million (+27.7% YoY) and operating income of ¥673 million (+31.2% YoY). Net income reached ¥431 million (+27.4% YoY), translating to EPS of ¥73.47, indicating resilient earnings momentum. Profitability remained healthy: gross profit was ¥3,604 million, implying a gross margin of 45.4%, while operating margin stood at approximately 8.5%, reflecting sizable SG&A intensity but positive operating leverage. Ordinary income of ¥680 million shows modest non-operating tailwinds, with minimal interest burden (¥3.7 million) supporting robust interest coverage of 181x. DuPont analysis yields ROE of 5.31% via a 5.43% net margin, 0.638x asset turnover, and 1.53x financial leverage, indicating a return profile driven mainly by steady margins and efficient asset use rather than leverage. The balance sheet is conservative: total assets are ¥12,438 million against equity of ¥8,123 million, implying an analytically derived equity ratio of about 65% (the reported 0.0% appears undisclosed rather than zero), and a low debt intensity (debt-to-equity 0.48x). Liquidity is ample with a current ratio of 433% and working capital of ¥8,496 million, supporting operating flexibility. Operating cash flow was ¥277 million, at 0.64x of net income, suggesting weaker cash conversion this period due to working capital investment or timing effects. Investing cash flow and cash & equivalents were not disclosed (reported as 0), limiting visibility into capex and cash balances; consequently, reported free cash flow is shown as 0, which should be interpreted as undisclosed rather than nil. Dividend per share is shown as ¥0 with a 0% payout ratio; given limited cash flow disclosures, dividend capacity cannot be fully assessed. Effective tax rate appears closer to ~29–30% based on disclosed tax expense and profit figures, despite the reported metric showing 0.0% (likely an undisclosed field). Overall, the company demonstrates strong revenue growth, solid operating leverage, and conservative financial structure. Cash conversion lags earnings in the quarter, but interest burden is minimal, and liquidity is strong. Key data limitations (investing cash flows, cash balance, share count, and equity ratio disclosure) temper precision in certain assessments, but the core earnings trajectory appears favorable. The outlook hinges on sustaining growth while managing SG&A and working capital to improve cash conversion. We do not provide investment recommendations, but we highlight the need to monitor capex, OCF trajectory, and any updates to dividend policy.

From Earnings Presentation: Benefit Japan Corporation's financial results presentation for the second quarter of fiscal year ending March 2026 clearly demonstrates that the company has achieved record-high performance with net sales of 7,938 million yen (+27.7% year-on-year) and ordinary profit of 680 million yen (+31.7%), driven by the synergistic effects of its four business portfolios (Internet Communications, Robotics, Water Server, and Reuse), which are materializing the concept of 'Lifestyle Arrangement that Stays Close to Customers' Lives.' Notably, the Internet Communications Service business exceeded 300,000 contracted lines with 307,700 lines (+20.5%), with expanding demand for MVNE and prepaid SIM strengthening the revenue base. The Robotics business achieved profit growth for four consecutive quarters through optimization of sales costs, with stock revenue growing steadily. The Water Server business saw sales surge by over +150% year-on-year with the full-scale launch of the water purification product 'STILIS,' and operating profit margin improved to 15.9%. The Reuse business opened 10 new stores (total 40 stores) through the acquisition of SENKA Corporation, initiating synergy creation with existing sales networks through event-based purchasing. Behind the working capital absorption and low OCF/net income ratio pointed out by GPT analysis are advance payments of agency commissions (629.6 million yen increase) and increased accounts receivable accompanying sales expansion, which management positions as a short-term investment phase. The dividend payout ratio of 0% reflects the policy prioritizing growth investments, and a long-term strategy is presented aiming to capitalize on the reuse market flow exceeding 4 trillion yen by 2030 and achieve both social contribution from SDGs/ESG perspectives and business growth.

Financial Analysis

Profitability

ROE_decomposition: ROE 5.31% = Net margin 5.43% × Asset turnover 0.638 × Financial leverage 1.53. Returns are primarily driven by margins and asset efficiency; leverage contribution is modest. margin_quality: Gross margin 45.4% and operating margin ~8.5% suggest significant SG&A spending relative to gross profit. Ordinary margin (~8.6%) benefits slightly from net non-operating income. Net margin is 5.43%, consistent with the tax burden and low interest costs. The margin structure indicates a stable core with room to optimize overhead. operating_leverage: Operating income growth (+31.2% YoY) outpaced revenue growth (+27.7% YoY), evidencing positive operating leverage from scale. D&A is modest (¥66 million), so earnings are predominantly cash-earnings driven before working capital effects.

Growth

revenue_sustainability: Revenue growth of +27.7% YoY is strong; sustainability will depend on customer acquisition/retention, pricing, and churn dynamics in the company’s service mix. Asset turnover of 0.638 indicates adequate utilization; maintaining or improving this while scaling will support sustained growth. profit_quality: Operating profit grew slightly faster than revenue, indicating operating leverage. Interest expense is minimal, and ordinary income closely tracks operating income, supporting quality of earnings. However, OCF/NI of 0.64 indicates weaker cash conversion this period, warranting attention to working capital discipline. outlook: With a high gross margin base and low financial costs, incremental revenue should translate to improved operating profit if SG&A is contained. Continued scale benefits could lift operating margin toward the high single digits to low double digits, contingent on cost control and retention trends. Data gaps on capex constrain visibility into longer-term growth investments.

Financial Health

liquidity: Current ratio 433.2% and quick ratio 433.2% reflect substantial short-term liquidity (current assets ¥11,045 million vs. current liabilities ¥2,550 million). Working capital is ¥8,496 million, providing ample buffer. solvency: Analytically derived equity ratio is ~65% (equity ¥8,123 million / assets ¥12,438 million), despite the reported 0.0% field being undisclosed. Debt-to-equity of 0.48x indicates moderate leverage, and interest coverage is very strong at 181x. capital_structure: Assets are primarily funded by equity (~65%) with moderate liabilities (~35%). Low interest expense and strong coverage suggest conservative use of interest-bearing debt. The structure supports resilience and financial flexibility.

Cash Flow

earnings_quality: Net income of ¥431 million vs. OCF of ¥277 million yields OCF/NI of 0.64, implying lower cash conversion due to working capital or timing effects in the quarter. EBITDA of ¥739 million vs. operating income of ¥673 million indicates low non-cash charges (D&A ¥66 million), suggesting operating earnings are not heavily driven by accounting accruals. FCF_analysis: Investing cash flow is undisclosed (reported as 0), so free cash flow cannot be reliably derived; the reported FCF of 0 should be treated as a placeholder. Without capex data, we cannot judge reinvestment intensity or FCF yield. working_capital: High current assets and working capital indicate capacity to support growth, but the weak OCF/NI ratio suggests working capital absorption in the period. Monitoring receivables collection, payables terms, and contract liabilities is key to improving cash conversion.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is shown as ¥0 with a 0.0% payout ratio; given positive earnings, this likely reflects policy or timing rather than incapacity, but undisclosed cash and capex data limit certainty. FCF_coverage: FCF coverage is shown as 0.00x due to undisclosed investing cash flows; with OCF at ¥277 million, coverage cannot be assessed without capex. Balance sheet strength (equity ~65%, low interest) suggests capacity, but data is insufficient. policy_outlook: If growth investments remain the priority and cash conversion is temporarily suppressed by working capital, management may maintain a conservative stance on dividends. Any move to initiate or increase dividends would require visibility on sustainable OCF and capex cadence.

Business Outlook

Progress rates against full-year plan are approximately on track at 46.6% for net sales and 46.3% for operating profit, with management viewing second-half seasonal factors (year-end and New Year communications demand, gold market price increase effects in reuse market) as opportunities. The water purification water server business plans to accelerate conversion of water delivery users and new customer acquisition through STILIS's price competitiveness and large-capacity filter convenience, against the backdrop of a trend where 470,000 units are added annually in the water delivery market of 5.7 million households (60% being purification type). The Reuse business is progressing with 17 new franchise store openings during fiscal 2026 based on SENKA's 40-store network, aiming to diversify purchasing touchpoints through alliances with existing Robotics business, PC repair services, and mobile phone shops, and expand robot sales opportunities leveraging a repeat rate of over 30%. In the Internet Communications Service business, steady progress in MVNE and prepaid SIM inbound demand (including technical trainees) is expected to support further accumulation of contracted lines and continued strengthening of stock revenue base. Meanwhile, short-term cash flow pressure from advance agency commission payments has a structure to be recovered over the medium to long term through contracted line retention, making working capital management optimization a challenge for the second half and beyond.

Management Guidance

Management evaluated that 'sales partner strategy has been successful, with mobile Wi-Fi sales volumes increasing through expansion of mobile phone shops and telemarketing channels,' positioning contracted line growth as 'long-term investment to strengthen stable revenue base.' Regarding the Robotics business, they stated 'as a result of continuing optimization of sales costs initiated last period and expanding sales of diverse communication robots, stock sales have grown steadily, strengthening overall business stability and future growth foundation,' emphasizing achievement of profit growth for four consecutive quarters. For the Water Server business, they indicated 'because we developed business without owning water delivery production facilities, we were able to make a major shift toward purification server deployment,' showing policy to expand market share leveraging STILIS's price competitiveness (3,000 yen monthly, 9-month replacement frequency). For the Reuse business, they explained 'while using SENKA's store network as foundation, we initiated event-based purchasing operations utilizing our sales network of over 10,000 stores built over 20+ years, aiming to maximize purchasing opportunities by diversifying customer touchpoints,' acknowledging temporary second-quarter revenue decline due to record heat while confirming current recovery trend. There was no explicit mention of dividend policy, with 0% payout ratio suggesting a growth investment phase prioritizing retained earnings.

Strategic Initiatives

• Full-scale deployment of water purification water server 'STILIS': accelerate conversion of water delivery users and new customer acquisition with 3,000 yen monthly subscription model
• Synergy creation in Reuse business: collaborate SENKA's store network with company's 10,000-store sales network to diversify purchasing touchpoints through event-based purchasing, PC on-site repair, and mobile phone shop alliances
• Further expansion of MVNE and prepaid SIM (particularly inbound and technical trainee demand) leveraging breakthrough of 300,000 contracted lines
• Maintain profit growth for four consecutive quarters through optimization of Robotics business sales costs and strengthening of stock revenue base
• Expand participating stores to 1,900 stores (approximately +900 stores in 2 years) to increase product lineup and achieve 'diversification of customer visit purposes' and 'strengthened relationships with sales partners'
• Through initiatives toward SDGs Goals 3, 6, 8, 11, 12, and 13, advocate environmental contribution through reuse distribution expansion and purification server penetration, aiming to achieve both contribution to sustainable society and business growth
• Long-term strategy toward 2030 to capture reuse market flow exceeding 4 trillion yen, positioning behavioral change from 'disposal to sale' and senior generation's hidden assets of 44 trillion yen as business opportunities

Risk Assessment

Business Risks:

• Customer acquisition cost increases or higher churn could compress margins and slow growth.
• Dependence on specific service lines or channels could introduce concentration risk.
• Competitive pricing pressure could erode the 45% gross margin.
• Regulatory or compliance changes affecting telecom/IT service offerings (sector-specific).
• Execution risk in scaling operations while controlling SG&A.

Financial Risks:

• Weaker cash conversion (OCF/NI 0.64) due to working capital swings.
• Potential capex requirements not disclosed, obscuring FCF and leverage trajectory.
• Reliance on undisclosed cash balance complicates short-term cash planning assessment.
• Interest rate risk is limited currently but could rise if leverage increases.

Key Concerns:

• Incomplete disclosure on investing cash flows and cash balances limits FCF visibility.
• SG&A intensity constraining operating margin despite high gross margin.
• Sustainability of +27.7% revenue growth amid competitive dynamics.

Risk Factors from Presentation:

• Short-term operating profit margin decline (increased revenue but decreased profit phase) due to advance agency commission payments in Internet Communications Service business
• Second-quarter revenue decline in Reuse business due to record heat impact on store visits (currently in recovery trend)
• OCF/net income ratio slowdown due to working capital absorption (increased accounts receivable and prepaid expenses) accompanying sales expansion
• Increased credit and collection management burden accompanying new sales partner sales volume increases
• Price competition risk due to intensifying competition in water purification water server market
• Possibility of increased management and training costs accompanying accelerated Reuse business store opening pace (17 franchise stores in progress)

Investment Implications

Key Takeaways:

• Strong revenue growth and positive operating leverage with operating income +31.2% YoY.
• Healthy profitability profile: gross margin 45.4%, operating margin ~8.5%, net margin 5.43%.
• Conservative balance sheet with analytically derived equity ratio ~65% and interest coverage 181x.
• Cash conversion lagging earnings (OCF/NI 0.64), pointing to working capital pressure.
• Data gaps on capex and cash hinder FCF and dividend capacity assessment.

Metrics to Watch:

• OCF/NI and working capital turnover (DSO/DPO) to gauge cash conversion improvements.
• Operating margin trajectory versus SG&A growth rate.
• Capex and investing cash flows to clarify reinvestment and FCF outlook.
• Revenue growth rate sustainability and customer metrics (retention, ARPU).
• Leverage and equity ratio updates as growth is funded.

Relative Positioning: The company combines high gross margin and low financial risk with solid growth, positioning it favorably among domestic service/IT peers on profitability quality and balance sheet strength, though cash conversion and disclosure completeness trail best-in-class operators.

Supplementary Insights (Key Highlights)

• Contracted lines reached a record high of 307,700 lines, with prepaid SIM (1 year or more) surging +107.1% year-on-year and MVNE growing +29.4%
• Water purification water server 'STILIS' features a subscription model at 3,000 yen per month, with industry-leading slim design and large-capacity filter (9-month replacement frequency) as competitive advantages
• Robotics business achieved profit growth for four consecutive quarters through optimization of sales costs, with stock sales growing steadily to 1.42 billion yen
• In the Reuse business, acquired SENKA Corporation and initiated event-based purchasing operations in collaboration with existing 10,000-store sales network, targeting senior generation as main customer base
• Group mission positioned on dual axes of 'Customer Satisfaction' and 'Sales Partner Satisfaction,' expanding participating stores to 1,900 stores (approximately +900 stores in 2 years)
• Stock sales reached a record high of 4 billion yen, accounting for approximately 50% of total sales composition, improving revenue stability
• Operating profit in Internet Communications Service business showed increased revenue but decreased profit, positioning advance agency commission investment (629.6 million yen increase) as strategic investment for long-term contracted line growth
• Long-term strategy toward 2030 aims to capture the reuse market flow exceeding 4 trillion yen and contribute to SDGs Goal 12 (Responsible Consumption and Production)

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