ANYCOLOR (5032) FY2026 Q3 Earnings Report

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Executive Summary

The cumulative results for FY2026 Q3 represent a highly profitable period, with increased revenue and earnings accompanied by margin expansion. Revenue was ¥420.2B (+45.4% YoY), Operating Income was ¥169.1B (+54.2%), Ordinary Income was ¥169.2B (+54.9%), and Net Income was ¥117.9B (+55.5%). The Operating Income margin improved to 40.2%, up 2.3pt from 37.9% in the same period of the previous year, with the decline in the SG&A expense ratio accompanying revenue growth leading the margin expansion.

Factors Affecting Performance

【Revenue】Revenue was ¥420.2B, representing a +45.4% increase YoY. Cost of sales increased by 43.0% to ¥220.1B, below the revenue growth rate, and the gross profit margin improved to 47.6% from 46.8% in the same period of the previous year.

【Profit and Loss】SG&A expenses increased by only 21.7% to ¥31.0B, approximately half the rate of revenue growth, allowing operating leverage to take effect. Operating Income was ¥169.1B (+54.2%), and the Operating Income margin expanded by 230bp to 40.2%. Non-operating income and expenses resulted in a slight net gain (income of 0.4B against expenses of 0.2B), and Ordinary Income of ¥169.2B was approximately at the same level as Operating Income, indicating limited impact from temporary factors. After recording income taxes of ¥51.3B, Net Income was ¥117.9B (+55.5%). Revenue, Operating Income, and Net Income all posted double-digit growth, resulting in higher revenue and earnings.

Key Financial Indicators

【Profitability】The Operating Income margin of 40.2% (37.9% in the same period of the previous year) and Net Income margin of 28.1% (26.2% in the same period of the previous year) both improved, primarily due to the increase in the gross profit margin to 47.6% and the decline in the SG&A expense ratio to 7.4% (8.8% in the previous year).【Cash Quality】Non-operating income and expenses resulted in a small net gain, and the gap between Ordinary Income and Operating Income was limited. The effective tax rate was approximately 30.3%, a standard level.【Investment Efficiency】Annualized ROE was extremely high at 54.6%, driven by the Net Income margin of 28.1% and high total asset turnover.【Financial Soundness】The Equity Ratio increased to 79.2% (75.4% in the same period of the previous year), while cash and deposits of ¥209.8B provided ample liquidity, substantially exceeding current liabilities of ¥75.6B.

Cash Flow Analysis

Although a statement of cash flows was not disclosed, changes in the balance sheet indicate abundant funding capacity. Cash and deposits increased by +¥51.6B YoY to ¥209.8B, while retained earnings increased by +¥76.7B to ¥263.7B. The accumulation of Net Income of ¥117.9B is directly reflected in the expansion of cash and net assets. Meanwhile, inventories increased substantially to ¥52.2B (+44.7%), indicating that funds are increasingly being invested in inventory, which warrants attention from the perspective of capital efficiency. The increase in accounts payable was limited to ¥28.2B (+13.6%), indicating that the inventory increase is not being absorbed solely through an expansion of trade payables.

Quality of Earnings

The difference between Ordinary Income of ¥169.2B and Operating Income of ¥169.1B was minimal, indicating high earnings quality, with the majority of earnings generated by core operating activities. Non-operating income was 0.4B, while non-operating expenses were 0.2B, including foreign exchange losses of 0.2B. Both were small in scale, and there is no indication that temporary factors materially affected performance. On the other hand, from a balance sheet perspective, inventories increased at a faster pace than revenue growth. The potential impact of inventory sell-through on the sustainability of the gross profit margin should therefore be closely monitored from an accrual perspective.

Shareholder Returns

The annual dividend forecast is ¥75.00 per share, comprising a Q2 dividend of ¥35.00 and an expected remaining year-end dividend of ¥40.00. Based on cumulative Q3 Net Income of ¥117.9B and the Q2 dividend of ¥35.00, the Payout Ratio is 18.1%. This is a Payout Ratio based solely on dividends and does not represent the Total Return Ratio, which includes share repurchases. With retained earnings of ¥263.7B and cash and deposits of ¥209.8B, the Company has a substantial source of funds. Together with a low debt-to-equity ratio of 0.26x, this confirms the financial foundation supporting dividend stability.

Risk Factors

1. Deterioration in inventory efficiency: Inventories increased by +44.7% YoY to ¥52.2B. Inventory days were approximately 65 days, creating a risk that delays in selling through products related to intellectual property (IP), which are subject to significant demand fluctuations, could lead to valuation losses or a decline in the gross profit margin.

2. Earnings volatility factors specific to the IP business: In the entertainment and licensing business, the acquisition and retention of affiliated talent, content competitiveness, copyright and portrait rights management, and changes to platform terms and conditions may affect the sustainability of revenue.

3. Impact of foreign exchange fluctuations: The Company recorded foreign exchange losses of 0.2B during the period. Where overseas businesses are involved, foreign exchange fluctuations, regional regulations, and policy changes by payment and distribution platforms may affect profitability.

Industry Benchmark (For Reference; Compiled by the Company)

Key Takeaways from the Financial Results

1. The Operating Income growth rate was +54.2%, compared with revenue growth of +45.4%, resulting in a 2.3pt expansion in the Operating Income margin to 40.2%. The Company achieved higher revenue and earnings alongside a decline in the SG&A expense ratio, indicating a qualitative improvement in its earnings structure.

2. With an Equity Ratio of 79.2%, cash and deposits of ¥209.8B, and a current ratio of 432.8%, financial soundness was at an extremely high level, and financial capacity, including the capacity for capital returns, has expanded.

3. The +44.7% YoY increase in inventories and inventory days of approximately 65 days are key monitoring points in assessing the sustainability of the high profit margins. Confirmation of future inventory sell-through will therefore be useful.

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This report is an automatically generated earnings analysis document produced by AI based on XBRL financial results summary data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial results data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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