SANIX HOLDINGS INCORPORATED FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥21.50B
• Operating Income: ¥-19M
• Net Income: ¥269M
• EPS: ¥-12.84

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

Sanix Holdings reported FY2026 Q2 consolidated results under JGAAP showing modest top-line growth but a continued loss at the operating and bottom-line levels. Revenue rose 1.1% YoY to ¥21.5bn, while gross profit reached ¥7.76bn, implying a solid gross margin of 36.1%. Despite this, operating income was a slight loss of ¥19mn, indicating that SG&A and other operating costs effectively consumed the gross profit uplift. Ordinary income deteriorated to a loss of ¥407mn, reflecting non-operating burdens including ¥131mn of interest expense and additional non-operating losses. Net income was a loss of ¥613mn (EPS -12.84), a deeper loss YoY, which, alongside negative operating and ordinary income, underscores ongoing profitability challenges. The EBITDA margin was 3.7%, highlighting limited operating cushion despite significant non-cash depreciation of ¥824mn. DuPont analysis shows a negative net margin (-2.85%), modest asset turnover (0.571x), and high financial leverage (3.96x), resulting in a negative ROE of -6.45%. Liquidity appears tight with a current ratio of 82.0% and negative working capital of ¥3.04bn, pointing to near-term refinancing and cash management pressure. Interest coverage was negative at -0.1x, emphasizing vulnerability to financing costs. Operating cash flow was positive at ¥1.14bn despite the net loss, driven by non-cash charges and likely working capital movements; however, investing and cash balances were undisclosed, limiting free cash flow assessment. The balance sheet shows total assets of ¥37.7bn, liabilities of ¥26.5bn, and equity of ¥9.50bn, for a debt-to-equity of 2.79x, indicating elevated leverage. Inventories were small at ¥158mn, and quick liquidity metrics (quick ratio 81.1%) are broadly in line with the current ratio, implying limited reliance on inventory for liquidity. Reported income tax expense of ¥230mn despite losses suggests one-off items or valuation allowance effects under JGAAP. Dividends remain suspended (DPS ¥0), consistent with loss-making status and balance sheet constraints. Data limitations exist: several line items, including cash, equity ratio, investing cash flow, and share data, were not disclosed in the feed (zeros indicate unreported, not actual zero), constraining certain ratio and coverage analyses. Overall, the quarter reflects stable gross profitability but insufficient operating efficiency and high leverage, leaving the company exposed to small revenue or cost shifts.

Profitability Analysis

ROE_decomposition: Net Profit Margin (-2.85%) x Asset Turnover (0.571x) x Financial Leverage (3.96x) = ROE (-6.45%). Negative margin is the primary driver of negative ROE; turnover is moderate and leverage amplifies equity volatility. margin_quality: Gross margin of 36.1% is solid, but the operating margin is approximately -0.1% (operating loss ¥19mn on ¥21.5bn sales), indicating that SG&A and other operating costs nearly offset gross profit. EBITDA margin of 3.7% shows limited buffer after depreciation, suggesting cost rigidity. The presence of ¥230mn tax expense despite losses likely reflects non-recurring or valuation allowance effects under JGAAP. operating_leverage: High: a small YoY revenue increase (+1.1%) accompanied by a deterioration in operating income points to high fixed cost intensity. With EBITDA only ¥805mn against D&A of ¥824mn, modest top-line or gross margin fluctuations can swing operating profit materially.

Growth Assessment

revenue_sustainability: Revenue grew 1.1% YoY to ¥21.5bn, indicating stability but not strong growth. Given the thin operating margin, sustaining or improving gross margin and sales mix will be critical. profit_quality: Ordinary income of -¥407mn (vs operating income -¥19mn) signals additional non-operating burdens, including interest (¥131mn) and other losses. EBITDA positive but small versus D&A implies limited underlying earnings power this period. outlook: Absent disclosed backlog or segment details, near-term profit recovery hinges on cost discipline and non-operating expense control. Any incremental gross margin pressure or slower collections could quickly pressure earnings given operating leverage and financing costs.

Financial Health

liquidity: Current ratio 82.0% and quick ratio 81.1% indicate sub-par short-term coverage; working capital is negative at -¥3.04bn. Cash and equivalents were undisclosed, limiting assessment of immediate liquidity buffers. solvency: Debt-to-equity of 2.79x (liabilities ¥26.5bn / equity ¥9.50bn) reflects elevated leverage. Interest coverage is -0.1x (EBIT/interest), highlighting sensitivity to borrowing costs and potential refinancing risk. capital_structure: Total assets ¥37.7bn funded 70% by liabilities and 30% by equity (implied by balances). Financial leverage of 3.96x (assets/equity) is high, amplifying earnings volatility.

Cash Flow Quality

earnings_quality: OCF of ¥1.14bn versus net loss of ¥613mn yields an OCF/NI ratio of -1.86, indicating favorable cash conversion this period driven by non-cash D&A (¥824mn) and likely working capital inflows. Sustainability is uncertain without detail on working capital components. FCF_analysis: Free cash flow could not be determined because investing cash flow/capex were undisclosed in the feed (reported as 0 = unreported). Thus FCF coverage of obligations cannot be reliably assessed. working_capital: Negative working capital (−¥3.04bn) supports OCF when payables expand or inventory remains low, but it increases liquidity risk and can reverse if supplier terms tighten or receivables increase.

Dividend Sustainability

payout_ratio_assessment: Dividend per share is ¥0 and payout ratio shows as 0.0%, consistent with loss-making results (net income -¥613mn). With negative ROE and weak coverage metrics, resumption would require sustained profitability. FCF_coverage: Not assessable this quarter due to unreported investing cash flows and capex. Positive OCF is a constructive sign, but limited visibility prevents concluding on FCF coverage. policy_outlook: Given losses, high leverage, and liquidity constraints, a conservative policy (no dividend) is likely to persist until operating profitability and ordinary income return to positive territory and balance sheet flexibility improves.

Risk Assessment

Business Risks:

• High operating leverage: small revenue or gross margin changes can swing operating income.
• Exposure to non-operating items and financing costs pressuring ordinary income.
• Potential demand variability across core businesses (e.g., environmental services/energy-related solutions) affecting utilization.
• Cost inflation (materials, labor, logistics) compressing margins.
• Execution risk in cost controls and SG&A efficiency.
• Regulatory and policy changes impacting environmental/energy-related revenue streams.

Financial Risks:

• Tight liquidity with current ratio 82% and negative working capital of ¥3.04bn.
• Elevated leverage: debt-to-equity 2.79x and financial leverage 3.96x.
• Negative interest coverage (-0.1x) and sensitivity to interest rate increases.
• Refinancing and covenant risk if lenders tighten terms.
• Potential reversal of working capital tailwinds reducing OCF.

Key Concerns:

• Sustained losses at operating and ordinary income levels despite solid gross margin.
• Limited EBITDA headroom relative to D&A.
• Insufficient disclosure of cash, investing cash flows, and capex limiting FCF visibility.

Investment Implications

Key Takeaways:

• Revenue stable (+1.1% YoY) but operating loss persists (¥19mn).
• Gross margin healthy at 36.1%, yet cost structure yields negative operating margin.
• Ordinary and net losses (¥407mn and ¥613mn) driven by financing and non-operating costs.
• Liquidity tight: current ratio 82%, working capital -¥3.04bn.
• Leverage high (D/E 2.79x) with negative interest coverage (-0.1x).
• OCF positive (¥1.14bn) despite loss, helped by non-cash items and working capital.
• FCF not assessable due to undisclosed investing flows.
• Dividend suspended; resumption contingent on earnings recovery and balance sheet improvement.

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio
• Ordinary income trajectory and non-operating gains/losses
• Interest coverage and effective borrowing costs
• Working capital changes (receivables, payables) and OCF sustainability
• Gross margin stability and pricing/mix
• Leverage (debt-to-equity) and financial leverage (assets/equity)
• Disclosure of cash position and capex/investing cash flows

Relative Positioning: Relative to domestic small/mid-cap industrial and environmental services peers, Sanix exhibits weaker profitability (negative operating/ordinary income), tighter liquidity (current ratio <100%), and higher leverage, leaving it more exposed to macro and financing headwinds despite a competitive gross margin profile.

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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