HABA LABORATORIES,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.55B
• Operating Income: ¥257M
• Net Income: ¥-16M
• EPS: ¥49.71

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

Harbor Research Institute Co., Ltd. (TSE: 49250) reported FY2026 Q2 consolidated results under JGAAP with modest top-line growth but pressured profitability. Revenue was 5,550 million yen, up 1.7% year over year, indicating stable demand but limited momentum. Gross profit reached 3,662.6 million yen, translating to a robust gross margin of 66.0%, consistent with a high-value, brand-led cosmetics/skin-care mix. Despite strong gross margin, operating income declined 15.2% YoY to 257 million yen, implying higher SG&A intensity and negative operating leverage in the half. Ordinary income was 252 million yen, very close to operating income, suggesting minimal non-operating impacts; interest expense was modest at 7.6 million yen. Net income was 187 million yen, down 16.7% YoY, with EPS at 49.71. The DuPont framework shows net margin of 3.37%, asset turnover of 0.461x, and financial leverage of 1.34x, yielding a calculated ROE of 2.09%, which matches the reported figure. Operating cash flow of 310.4 million yen exceeded net income (OCF/NI 1.66x), indicating sound cash conversion from earnings in the period. Liquidity appears strong with a current ratio of 339.9% and a quick ratio of 287.3%, supported by 9,035.5 million yen in current assets versus 2,658.5 million yen in current liabilities. The balance sheet is conservative: total liabilities of 3,417.2 million yen versus total equity of 8,963.0 million yen equates to liabilities-to-equity of about 0.38x. While the equity ratio is undisclosed in the dataset, total equity of 8,963.0 million yen against total assets of 12,028.0 million yen implies an equity-to-asset ratio of roughly 74.5%, underscoring solvency strength. EBITDA was 327.4 million yen and the EBITDA margin was 5.9%, highlighting a sizeable gap between gross margin (66.0%) and EBITDA margin due to elevated operating costs. Interest coverage was ample at 33.9x, reflecting low financial risk from debt servicing. Revenue growth of 1.7% alongside a 15.2% decline in operating profit suggests cost inflation or increased marketing/logistics outlays not fully offset by sales growth. Investing cash flow and cash/equivalents were not disclosed (recorded as zero), limiting free cash flow analysis and cash position visibility; therefore, FCF was not derivable from the provided data. The company reported no dividend (DPS 0.00) and a payout ratio of 0.0% for the period, with financing cash outflow of 224.96 million yen likely related to debt service or other financing uses, though the specific components are not disclosed. Overall, the company remains liquid and conservatively capitalized, but near-term profitability is under pressure from higher operating costs despite stable gross margin.

Profitability Analysis

ROE is 2.09% per DuPont: 3.37% net margin × 0.461x asset turnover × 1.34x financial leverage. Operating margin is 4.63% (257 million yen operating income / 5,550 million yen revenue), down YoY given the 15.2% decline in operating income vs. +1.7% revenue growth. Gross margin is strong at 66.0%, indicating product mix and pricing remain solid; however, the sizable gap to EBITDA margin (5.9%) and operating margin (4.63%) points to heavy SG&A burden. Ordinary income margin is 4.54% (252/5,550), close to operating margin, confirming limited non-operating drag/benefit. Interest expense is low at 7.6 million yen, and interest coverage of 33.9x indicates minimal financing cost pressure. The negative operating leverage this half (OP down more than sales up) likely stems from marketing, distribution, or personnel expenses scaling faster than revenue. Depreciation and amortization were 70.4 million yen (about 1.3% of sales), suggesting a relatively light asset base and limited fixed cost absorption benefit. Overall profitability quality appears mixed: healthy gross margin but weaker operating efficiency, compressing returns.

Growth Assessment

Revenue grew 1.7% YoY to 5,550 million yen, indicating steady but modest expansion. Profitability lagged growth: operating income declined 15.2% YoY to 257 million yen and net income fell 16.7% to 187 million yen, evidencing cost pressures. The close alignment of ordinary income to operating income suggests the earnings decline is primarily operational rather than financial. Given the strong gross margin, the key constraint is likely SG&A efficiency rather than pricing or product economics. The sustainability of revenue growth will depend on effective marketing ROI, channel/customer acquisition costs, and inventory turnover normalization. With asset turnover at 0.461x in the period, efficient utilization is moderate; improving turnover could support ROE without added leverage. Outlook hinges on controlling operating expenses relative to sales, maintaining premium pricing, and preventing discounting that could erode the 66% gross margin. Without disclosure of capex or store/e-commerce investments (Investing CF not reported), visibility into capacity-driven growth initiatives is limited. Near-term guidance inference is constrained by missing investing and cash data; nonetheless, stabilization or improvement in operating margin would be the primary lever for profit recovery if top-line remains low single-digit.

Financial Health

Total assets were 12,028.0 million yen and total equity 8,963.0 million yen, implying an equity-to-asset ratio near 74.5% (equity ratio not disclosed in the dataset). Total liabilities were 3,417.2 million yen (liabilities-to-equity ~0.38x), indicating a conservative capital structure. Current assets of 9,035.5 million yen against current liabilities of 2,658.5 million yen yield a current ratio of 339.9% and quick ratio of 287.3%, demonstrating strong liquidity. Working capital is ample at 6,376.95 million yen. Interest-bearing debt details are not provided; however, low interest expense (7.6 million yen) and high coverage (33.9x) suggest limited leverage burden. Ordinary income and operating income are close, implying minimal exposure to non-operating volatility in the period. Cash and equivalents were not disclosed (recorded as zero), so immediate cash buffer cannot be assessed from the dataset. Overall solvency appears strong and liquidity abundant, with no signs of near-term refinancing risk based on the provided metrics.

Cash Flow Quality

Operating cash flow was 310.4 million yen, exceeding net income of 187.0 million yen, for an OCF/NI of 1.66x, indicating solid earnings-to-cash conversion this half. Depreciation and amortization were 70.4 million yen, modest relative to revenue and EBITDA, supporting the view of a light capital intensity business. Working capital dynamics are only partially inferable: inventories stood at 1,397.6 million yen; without period-over-period inventory and receivables/payables movements, we cannot decompose OCF drivers. Investing cash flow was not disclosed (recorded as zero), so free cash flow cannot be reliably calculated; the reported FCF of 0 reflects missing capex data rather than true zero spend. Financing cash flow was an outflow of 224.96 million yen, likely related to debt service, lease, or equity-related flows, but specifics are not provided. Given the strong liquidity and positive OCF, cash flow quality appears adequate for operations, though the absence of cash and capex disclosures limits full assessment of sustainability and reinvestment needs.

Dividend Sustainability

The company reported no dividend for the period (annual DPS 0.00) and a payout ratio of 0.0%. With investing cash flow undisclosed, free cash flow coverage cannot be assessed; the reported FCF of 0 reflects data unavailability. Financing cash outflows of 224.96 million yen occurred, but without details we cannot attribute them to dividends, buybacks, or debt repayments. Given positive operating cash flow and a conservative balance sheet, the capacity to fund distributions exists in principle, but the stated policy and actual distributions are not disclosed in this dataset. Dividend outlook therefore remains indeterminate based solely on the provided figures.

Risk Assessment

Business Risks:

• Operating leverage risk: SG&A growth outpacing sales, compressing operating margin despite strong gross margin
• Competitive intensity in cosmetics/skin-care potentially requiring higher marketing spend to sustain growth
• Demand elasticity and potential need for promotions that could pressure margins
• Product mix and channel shift risks impacting gross margin sustainability
• Inventory management risk given inventories of 1.40 billion yen relative to H1 sales

Financial Risks:

• Limited visibility on cash balance and capex due to undisclosed investing CF and cash equivalents
• Potential working capital swings affecting OCF despite strong liquidity
• Modest interest expense exposure, though currently well covered (33.9x)
• Concentration risk if reliant on specific channels or products (not disclosed in data)

Key Concerns:

• Negative operating leverage: operating income -15.2% YoY vs. revenue +1.7% YoY
• Low ROE of 2.09% due to modest asset turnover and compressed net margin
• Absence of investing CF and cash disclosures limiting FCF and liquidity visibility
• EBITDA margin of 5.9% vs. gross margin of 66.0% highlights heavy operating cost base

Investment Implications

Key Takeaways:

• Sales growth was modest at 1.7% YoY, while operating profit declined 15.2% YoY, indicating cost pressure
• Gross margin remains strong at 66.0%, but SG&A intensity is elevated, driving EBITDA margin to 5.9%
• ROE is low at 2.09%, constrained by modest net margin and asset turnover of 0.461x
• Liquidity and solvency are strong (current ratio 340%, liabilities/equity ~0.38x), reducing financial risk
• OCF/NI of 1.66x suggests healthy cash conversion, though capex/FCF visibility is limited

Metrics to Watch:

• SG&A ratio to sales and operating margin trajectory
• Inventory turnover and working capital efficiency
• Top-line growth by channel/product (when disclosed) and marketing ROI
• Capex and investing cash flow disclosure to assess FCF and reinvestment
• Cash and equivalents balance and any changes in financing cash flows

Relative Positioning: Within Japan consumer/beauty peers, the company exhibits strong gross margins and a conservative balance sheet but comparatively lower operating and EBITDA margins; near-term positioning hinges on improving SG&A efficiency to convert high gross margin into stronger operating profitability.

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