KYORIN Pharmaceutical Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥58.73B
• Operating Income: ¥1.36B
• Net Income: ¥1.25B
• EPS: ¥26.01

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

Kyorin Pharmaceutical Co., Ltd. (4569) reported FY2026 Q2 consolidated results under JGAAP showing solid top-line growth but pressured operating profitability. Revenue rose 6.5% year over year to ¥58.7bn, supported by resilient product demand, while gross profit reached ¥23.6bn, implying a firm gross margin of 40.1%. Despite the healthy gross margin, operating income declined 12.0% YoY to ¥1.36bn, compressing the operating margin to about 2.3%, indicating elevated SG&A and/or R&D intensity during the period. Ordinary income of ¥1.58bn exceeded operating income by roughly ¥0.22bn, suggesting a meaningful positive non-operating contribution. Net income increased 19.0% YoY to ¥1.49bn, highlighting favorable below-OP items and disciplined financing costs (interest expense ¥54m, interest coverage 25.2x). DuPont metrics indicate a modest ROE of 1.09% driven by a low net margin of 2.54%, asset turnover of 0.316, and conservative leverage of 1.36x assets/equity. Cash conversion was strong: operating cash flow was ¥3.38bn, 2.26x net income, underlining solid earnings quality in the half. The balance sheet appears robust with total assets of ¥186.0bn and equity of ¥136.4bn, translating into low leverage (debt-to-equity 0.42x) and ample liquidity (current ratio 3.88x; quick ratio 3.24x). Working capital is sizeable at ¥101.0bn, supported by current assets of ¥136.1bn, including inventories of ¥22.6bn. EBITDA was ¥3.67bn, for a 6.2% EBITDA margin, evidencing a meaningful gap to operating margin due to depreciation and amortization of ¥2.31bn. Tax expense reported was ¥613m, which implies an effective tax rate near the high-20% range based on income flow, though the “effective tax rate” metric provided as 0.0% is an unreported placeholder. Dividend per share is shown as 0.00 and payout ratio as 0.0%, which should be treated as undisclosed rather than actual zero. Several items, including equity ratio, cash and equivalents, investing cash flow, outstanding shares, and treasury shares, are shown as zero and should be interpreted as unreported. Overall, the half shows decent revenue momentum and strong cash conversion, tempered by margin compression at the operating line. The company’s liquidity and solvency positions remain conservative relative to typical domestic mid-cap pharma peers. Future performance hinges on SG&A/R&D efficiency, product mix, and outcomes of non-operating items that supported net income this period. Given data limitations in certain key disclosures, conclusions focus on available non-zero data points.

Profitability Analysis

roe_decomposition: ROE 1.09% = Net margin 2.54% × Asset turnover 0.316 × Financial leverage 1.36. The primary drag is the thin net margin, while leverage is conservative and asset turnover modest. margin_quality: Gross margin is healthy at 40.1%, but the operating margin is just ~2.3% (¥1.36bn OP on ¥58.73bn revenue), indicating high SG&A/R&D intensity. Ordinary margin improves to ~2.7% due to positive non-operating items. Net margin at 2.54% is supported by low interest burden and non-operating income. operating_leverage: Despite 6.5% YoY revenue growth, operating income fell 12.0% YoY, evidencing negative operating leverage in the half. EBITDA margin of 6.2% versus operating margin of 2.3% shows D&A drag of ~390bps; however, the larger issue is elevated operating expenses relative to growth.

Growth Assessment

revenue_sustainability: Top-line grew 6.5% YoY to ¥58.7bn, suggesting steady demand and/or positive product mix; sustainability will depend on new product uptake and resilience against NHI price revisions. profit_quality: Net income rose 19.0% YoY to ¥1.49bn despite lower operating income, indicating reliance on non-operating tailwinds in the period. The core profitability trend (OP -12% YoY) is weaker, warranting caution on recurring earnings power. outlook: Key to margin recovery will be SG&A/R&D productivity and maintaining gross margin near 40%. If revenue momentum continues and cost discipline improves, ordinary to net income conversion can normalize without relying on non-operating support. Absent detail on pipeline milestones and price revisions, a cautious view on near-term operating leverage is appropriate.

Financial Health

liquidity: Current ratio 387.7% and quick ratio 323.5% indicate strong liquidity. Working capital totals ¥101.0bn (current assets ¥136.1bn vs. current liabilities ¥35.1bn). Cash balance is unreported in the dataset. solvency: Debt-to-equity ratio is a conservative 0.42x; total liabilities of ¥57.33bn versus equity of ¥136.45bn. Interest coverage is ample at 25.2x, reflecting low financing risk. capital_structure: Assets ¥186.01bn funded primarily by equity (assets/equity leverage 1.36x). The reported equity ratio of 0.0% is an undisclosed placeholder; based on available balances, the implied equity ratio would be high.

Cash Flow Quality

earnings_quality: Operating CF of ¥3.38bn is 2.26x net income (¥1.49bn), signaling good cash conversion and limited accrual risk this period. fcf_analysis: Free cash flow is shown as 0 due to unreported investing CF and capex details. With OCF positive, FCF directionally appears positive unless capex was unusually high, which is not disclosed here. working_capital: Inventories stand at ¥22.56bn; overall current assets are ample. The strength in OCF suggests either stable or improving working capital, but component movements (AR/AP/inventory turns) are not disclosed.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% due to undisclosed DPS; EPS is ¥26.01. Without actual dividend declarations, payout sustainability cannot be concluded from this dataset. fcf_coverage: FCF coverage is shown as 0.00x because FCF is unreported. Given positive OCF, dividend coverage would likely be adequate for a modest payout, contingent on capex and policy, both undisclosed. policy_outlook: No dividend policy detail is provided. Given the conservative balance sheet and cash generation, the capacity exists for distributions, but policy will be influenced by R&D needs, pipeline investments, and pricing environment.

Risk Assessment

Business Risks:

• NHI drug price revisions pressuring margins
• Patent expirations and generic competition in key franchises
• Pipeline execution risk and clinical/regulatory setbacks
• Product mix shifts impacting gross margin
• Sales force productivity and SG&A efficiency challenges
• Supply chain and quality/compliance risks in manufacturing

Financial Risks:

• Potential operating deleverage if costs outpace revenue growth
• Working capital swings affecting cash flow timing
• Non-operating income volatility that supported net income this period
• FX exposure on imports/exports if applicable (not disclosed here)

Key Concerns:

• Operating income down 12% YoY despite 6.5% revenue growth
• Low operating margin (~2.3%) relative to 40.1% gross margin
• Dependence on non-operating gains to support bottom line in the half

Investment Implications

Key Takeaways:

• Revenue growth of 6.5% YoY with resilient gross margin at 40.1%
• Operating margin compressed to ~2.3%; OP down 12% YoY
• Net income up 19% YoY aided by non-operating items and low interest burden
• Strong liquidity (current ratio 3.88x) and conservative leverage (D/E 0.42x)
• OCF of ¥3.38bn (2.26x NI) supports earnings quality
• EBITDA margin 6.2% highlights room for cost optimization

Metrics to Watch:

• SG&A and R&D ratios to sales and their trajectory
• Operating margin recovery and OP growth vs. revenue growth
• OCF/Net income ratio sustainability
• Inventory levels and working capital turns
• Non-operating income/expenses and their recurrence
• Impact of NHI price revisions and product mix on gross margin
• Capex levels to assess true FCF and dividend capacity

Relative Positioning: Compared to domestic mid-cap pharma peers, the company exhibits stronger liquidity and low leverage, but lags on operating margin and ROE this half; sustained top-line growth with improved cost discipline would be needed to close the profitability gap.

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
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