JMDC Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥23.08B
• Operating Income: ¥4.03B
• Net Income: ¥2.34B
• EPS: ¥36.35

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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: Strong top-line and operating profit growth with modest margin expansion and high cash conversion, but capital efficiency remains weak due to low ROIC and elevated leverage vs EBITDA. Revenue rose 24.4% YoY to 230.8, with operating income up 27.7% to 40.25, outpacing sales and implying slight operating margin expansion. Gross profit was 123.54, yielding a robust gross margin of 53.5%. Operating margin stood at 17.4% (40.25/230.80), up roughly 44 bps YoY based on implied prior-period margins. Net income increased 8.5% YoY to 23.76, translating to a net margin of 10.3%; the slower NI growth versus OI reflects a higher effective tax rate (35.9%) and negative non-operating items (PBT 36.57 vs OI 40.25). EBITDA was 55.35, with an EBITDA margin of 24.0%, underscoring healthy core profitability. Cash flow quality was strong: operating cash flow of 68.53 implies OCF/NI of 2.88x, well above the 1.0x quality threshold. Free cash flow was positive at 18.47 despite investing outflows of -50.06, as capex remained modest at -1.39 and operating cash generation was solid. The balance sheet shows total assets of 1,526.74 and equity of 798.99 (equity ratio 52.1%), but capital structure efficiency is challenged: ROE is 3.0% and ROIC is only 2.1% (warning <5%). Leverage measured by D/E is 0.91x (conservative by absolute level), but Debt/EBITDA at 7.91x is high for a data/IT services profile, indicating reliance on debt-funded M&A. Intangible intensity is significant with goodwill of 618.18 and other intangibles of 60.39, heightening impairment risk if growth underperforms. Liquidity appears adequate with cash and equivalents of 358.63 and limited short-term borrowings of 57.03, although current liabilities data are unreported. Dividend payments of -10.45 imply a 44% payout ratio and 1.76x FCF coverage, indicating current dividends are sustainable. Overall, the quarter demonstrates resilient operating momentum and excellent cash conversion, but improvement in capital efficiency (ROIC) and deleveraging relative to EBITDA are key to medium-term value creation.

Profitability Analysis

ROE decomposition: ROE 3.0% = Net Profit Margin (10.3%) × Asset Turnover (0.151) × Financial Leverage (1.91x). The primary drag is low asset turnover (0.151), reflecting a balance sheet heavy in goodwill/intangibles from acquisitions. Net margin held solid at 10.3%, supported by a 17.4% operating margin and offset by a 35.9% effective tax rate and negative non-operating items (PBT < OI by 3.68). Operating leverage was favorable this quarter: revenue +24.4% and operating profit +27.7% imply c. +44 bps operating margin expansion (from ~17.0% to 17.4%). The biggest component change versus implied prior period is net margin improvement at the operating level, while asset turnover likely declined or stayed low due to continued asset growth (including goodwill). Business reason: continued M&A and platform build-out elevates the asset base faster than recognized revenue, suppressing AT; modest scale benefits and cost discipline improved the operating margin. Sustainability: incremental margin gains appear sustainable if growth persists and integration synergies materialize, but non-operating headwinds (interest expense, other items) and a high tax rate cap net margin. Watch for any trend where SG&A growth would outpace revenue; while detailed SG&A breakdown is unreported, the OI outperformance versus revenue indicates SG&A discipline this quarter.

Growth Assessment

Revenue growth of +24.4% YoY to 230.8 is strong and likely a mix of organic expansion and M&A (given high goodwill); however, the exact split is unreported. Operating income grew faster at +27.7% to 40.25, indicating improving operating efficiency and scale effects. Net income growth of +8.5% lagged OI due to a higher tax burden (35.9%) and negative non-operating items. Gross margin at 53.5% and EBITDA margin at 24.0% reflect a sticky, data/solution-driven revenue mix. Given the small capex (-1.39) relative to OCF (68.53), the business model is asset-light operationally, but balance-sheet intensive via acquired intangibles. Forward outlook hinges on sustaining double-digit top-line growth, monetization of data platforms, and realization of M&A synergies to lift ROIC above the 5% warning threshold. Near-term margin direction is modestly positive given operating leverage, but non-operating drag and taxes may limit translation to NI. Absence of segment detail and non-operating breakdown limits visibility on the repeatability of growth drivers.

Financial Health

Liquidity: Current ratio cannot be calculated due to unreported current liabilities; however, current assets are 584.03 and cash & equivalents stand at 358.63, suggesting solid liquidity. No explicit warning on current ratio can be made without current liabilities; still, short-term loans are 57.03, likely well-covered by cash. Solvency: D/E at 0.91x is within conservative bounds (<1.5x benchmark), and equity ratio is 52.1%. However, Debt/EBITDA at 7.91x is elevated, indicating sensitivity to earnings fluctuations. Total interest-bearing loans disclosed (short-term 57.03 + long-term 380.56 = 437.59); interest coverage is not calculable due to unreported interest expense. Maturity mismatch risk appears manageable given sizeable cash (358.63) versus short-term borrowings (57.03), but we lack the full current liability picture. Off-balance sheet obligations are not disclosed in the provided data.

Cash Flow Quality

OCF/Net Income of 2.88x indicates high-quality earnings with strong cash conversion. Free cash flow was positive at 18.47 despite investing CF of -50.06, implying the bulk of investing outflows are likely acquisitions or intangibles rather than maintenance capex (capex only -1.39). Dividend payments of -10.45 are comfortably covered by FCF (1.76x). No clear signs of working capital manipulation can be inferred; OCF strength relative to NI suggests either favorable collections or deferred revenue dynamics, but without detailed WC breakdown we cannot attribute drivers precisely. Sustainability: given low maintenance capex and strong OCF, FCF should remain positive barring large M&A outlays.

Dividend Sustainability

Payout ratio is 44.0%, below the 60% benchmark and consistent with a sustainable policy. Cash dividends (-10.45) are covered by FCF (18.47) at 1.76x, indicating near-term safety. Balance sheet liquidity (cash 358.63) adds cushion, though elevated Debt/EBITDA suggests management may prioritize deleveraging if growth investments continue. With ROE at 3.0% and ROIC at 2.1%, the capital return profile is moderate; increases in DPS should trail earnings growth until ROIC improves. Policy outlook: stable to modestly rising dividends are feasible if OCF remains strong and non-operating drags do not intensify.

Risk Assessment

Business Risks:

• Execution risk on M&A integration given high goodwill (618.18) and intangibles (60.39).
• Dependence on sustained high growth to justify intangible asset base and support margins.
• Potential pricing pressure or client budget cycles in healthcare/data services impacting revenue visibility.
• Talent and wage inflation risk affecting SG&A and delivery capacity.

Financial Risks:

• High Debt/EBITDA at 7.91x elevates refinancing and interest-rate sensitivity.
• Low ROIC at 2.1% (<5% warning) signals capital efficiency weakness vs potential cost of capital.
• Non-operating drag (PBT below OI by 3.68) could persist, weighing on net income.
• Goodwill impairment risk if growth slows or synergies underdeliver.

Key Concerns:

• Capital efficiency: ROE 3.0% and ROIC 2.1% are well below typical targets for data/IT businesses.
• Visibility: many line items unreported (interest expense, SG&A breakdown, current liabilities), limiting analysis granularity.
• Tax rate at 35.9% dampens NI growth; any further increase would pressure EPS leverage.
• Asset turnover at 0.151 is low, constraining ROE despite decent margins.

Investment Implications

Key Takeaways:

• Solid quarter: revenue +24.4% and operating income +27.7% with ~44 bps operating margin expansion to 17.4%.
• High-quality cash earnings: OCF/NI 2.88x and positive FCF 18.47 despite investing outflows.
• Balance sheet is liquid (cash 358.63) with moderate D/E of 0.91x, but leverage vs EBITDA is high at 7.91x.
• Capital efficiency is the core weakness: ROIC 2.1% and ROE 3.0% require improvement via synergies and organic scaling.
• Dividend appears sustainable at a 44% payout with 1.76x FCF coverage.

Metrics to Watch:

• ROIC trajectory toward >5% (and ideally >7-8% longer term).
• Debt/EBITDA reduction from 7.91x via EBITDA growth and/or deleveraging.
• OCF/NI sustainability and working capital trends (AR collection, deferred revenue).
• Operating margin progression from 17.4% and non-operating items impact on PBT.
• Goodwill-to-assets ratio and any signs of impairment risk.
• Effective tax rate normalization from 35.9%.

Relative Positioning: Within domestic healthcare data/IT peers, JMDC exhibits above-peer top-line growth and healthy operating/EBITDA margins, but lags on capital efficiency (low ROIC/ROE) and carries higher leverage relative to EBITDA due to an acquisition-led strategy.

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