MINKABU THE INFONOID,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.30B
• Operating Income: ¥201M
• Net Income: ¥178M
• Earnings per Unit (EPU): ¥11.87

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Unit Information

Distribution 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: FY2026 Q2 was a mixed quarter with resilient profitability and solid cash conversion, but financial risk remains elevated due to extreme leverage and very weak liquidity. Revenue was 42.99, down 9.1% YoY, while operating income reached 2.01, implying an operating margin of 4.7%. Gross profit was 19.43 with a gross margin of 45.2%, indicating a still-attractive unit economics profile despite the revenue decline. Ordinary income was 1.26 as non-operating expenses (0.78, mainly interest) more than offset non-operating income (0.02). Net income printed 1.79 with EPS of 11.87 JPY. EBITDA was 5.09 and interest expense was 0.60, yielding an interest coverage ratio of 3.38x—adequate but not robust given the debt load. Cash generation was a bright spot: operating cash flow of 2.97 exceeded net income (OCF/NI = 1.66x), supporting earnings quality. Balance sheet quality is the primary concern: total assets of 98.97 are dominated by intangibles (61.84, including goodwill 28.12), while equity is only 8.82, resulting in a debt-to-equity ratio of 10.22x. Liquidity is acutely tight with a current ratio of 0.25 and quick ratio of 0.25; short-term loans of 77.17 dwarf current assets of 21.73. Asset turnover was 0.434, and with financial leverage of 11.22x, ROE calculates to 20.3%—flattered by a very small equity base rather than high economic returns (ROIC is 0.9%). Margin trend analysis vs. prior year is not possible as YoY margin data are not disclosed; however, the negative revenue growth and the SG&A burden (17.41) suggest limited operating leverage. Effective tax rate was high at 43.6%, potentially reflecting non-recurring items. The divergence between net income (supported by an apparent extraordinary gain, given PBT of 3.16 vs. ordinary income of 1.26) and ordinary profitability warrants caution. Near term, refinancing and balance sheet stabilization are paramount, as the maturity profile is skewed to short-term debt. Looking ahead, incremental improvement in operating margin and recurring cash flow could help, but deleveraging and strengthening tangible capital are needed to reduce insolvency risk.

Profitability Analysis

ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 4.2% × 0.434 × 11.22 ≈ 20.3%. The largest driver of ROE is financial leverage (11.22x), not underlying operating returns or efficiency. Net margin of 4.2% is modest and appears influenced by below-operating and/or extraordinary items (ordinary income 1.26 vs. PBT 3.16 indicates special gains), while asset turnover at 0.434 is moderate for a software/media platform with large intangible assets. The business reason for ROE strength is the extremely thin equity base (owners' equity 8.82) rather than superior profitability; interest expense (0.60) also depresses ordinary income, highlighting debt drag. Sustainability: leverage-driven ROE is fragile; any margin pressure or interest rate uptick could sharply reduce equity returns. Concerning trends: revenue fell 9.1% YoY while SG&A was 17.41 (no YoY disclosed), suggesting limited cost flexibility; non-operating expenses meaningfully erode operating gains; and ROIC at 0.9% is far below cost of capital, implying value dilution absent improvement.

Growth Assessment

Top-line declined 9.1% YoY to 42.99, indicating headwinds in demand or project timing. Gross margin of 45.2% remains healthy, implying the decline is likely volume/mix rather than pricing collapse. Operating income of 2.01 and EBITDA of 5.09 show the business remains profitable, but ordinary income of 1.26 versus PBT of 3.16 implies non-recurring gains below operating line propped up bottom line this quarter. With interest expense at 0.60, growth is constrained by financial costs. No segment data were disclosed to parse recurring versus one-off contributions. Outlook: stabilizing revenue and improving operating margin via SG&A discipline will be necessary to offset financing costs; conversion of short-term debt to longer tenor would reduce earnings volatility. Near-term growth visibility is limited given the revenue contraction and dependence on special gains; maintaining OCF above net income is a key positive.

Financial Health

Warning: Current ratio is 0.25 (<1.0), indicating acute liquidity risk. Warning: Debt-to-equity is 10.22x (>2.0), indicating very high leverage. Current liabilities are 85.36 vs current assets of 21.73, implying a large maturity mismatch; short-term loans of 77.17 are the dominant liability. Cash and deposits are 9.05 and accounts receivable are 8.50, together insufficient to cover short-term loans, elevating refinancing risk. Noncurrent liabilities are reported at 4.80 despite a separate line for long-term loans of 47.92, suggesting classification differences or a tilt toward short-term funding; conservatively, near-term refinancing pressure is high. Equity is only 8.82 with negative retained earnings of -65.46, limiting loss-absorption capacity. Intangibles are 61.84 (including goodwill 28.12), indicating low tangible asset backing and potential impairment sensitivity. Interest coverage at 3.38x is acceptable but could compress if rates rise or EBITDA falls. No off-balance sheet obligations were disclosed.

Cash Flow Quality

OCF/Net Income is 1.66x (2.97 / 1.79), indicating good earnings quality this quarter. Free cash flow cannot be fully computed due to unreported investing CF, but capex was modest at -0.27, implying OCF likely covered maintenance investment with room to spare. No dividends or share repurchases were disclosed, so cash outlay to shareholders appears limited. Working capital: despite positive OCF, the very large reliance on short-term debt signals structural funding of long-term/intangible assets with short-term borrowings, a maturity mismatch rather than working capital optimization. No signs of aggressive working capital manipulation are evident from the disclosed figures.

Dividend Sustainability

Dividend data are unreported. Given owners' equity of 8.82 and retained earnings of -65.46 (accumulated deficit), capacity to pay dividends is constrained under JGAAP corporate law norms that rely on distributable amounts; conserving cash for deleveraging appears prudent. OCF of 2.97 and modest capex of 0.27 would support a small payout in isolation, but high refinancing needs and leverage argue against distributions. Policy outlook: expect a focus on balance sheet repair over shareholder returns until liquidity and equity buffers improve.

Risk Assessment

Business Risks:

• Revenue contraction of 9.1% YoY suggests demand softness or execution slippage.
• Dependence on intangible-heavy assets (intangibles 61.84; goodwill 28.12) raises impairment risk if growth underperforms.
• High effective tax rate (43.6%) introduces earnings volatility if driven by non-recurring items.

Financial Risks:

• Very low liquidity: current ratio 0.25 and quick ratio 0.25.
• Refinancing/maturity mismatch: short-term loans 77.17 vs current assets 21.73.
• High leverage: D/E 10.22x; interest coverage only 3.38x.
• Thin equity base (owners' equity 8.82) with negative retained earnings (-65.46), limiting shock absorption.
• ROIC at 0.9% well below typical cost of capital, risking value erosion.

Key Concerns:

• Earnings quality reliance on below-operating items: PBT 3.16 vs ordinary income 1.26 implies non-recurring support.
• Potential covenant pressure and reclassification of borrowings to short-term, heightening liquidity stress.
• Sensitivity to interest rate increases given sizeable floating-rate exposure is likely (not disclosed).
• Potential goodwill impairment if revenue weakness persists.

Investment Implications

Key Takeaways:

• Operationally profitable with 4.7% operating margin and positive OCF exceeding net income.
• Balance sheet risk dominates: extreme leverage (D/E 10.22x) and liquidity shortfall (current ratio 0.25).
• ROE of 20.3% is leverage-driven; underlying ROIC is only 0.9%, indicating weak economic returns.
• Non-operating/extraordinary items likely supported bottom line (PBT > ordinary income).
• Intangible-heavy asset base increases impairment and refinancing risk.

Metrics to Watch:

• Current ratio and short-term loans outstanding (refinancing progress).
• EBITDA and interest coverage relative to interest expense.
• ROIC improvement toward >5% as a minimum threshold.
• OCF consistency and FCF after capex.
• Any goodwill impairment testing outcomes and changes in effective tax rate.

Relative Positioning: Versus domestic software/media peers, profitability and cash conversion are serviceable, but leverage, liquidity, and ROIC screen materially weaker, placing the company in a high-risk financial profile despite acceptable operating margins.

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