RESOL HOLDINGS Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥15.12B
• Operating Income: ¥1.49B
• Net Income: ¥1.04B
• EPS: ¥241.79

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Resol Holdings (52610) delivered solid FY2026 Q2 results with revenue of ¥15.115bn, up 8.6% YoY, indicating steady demand recovery across its businesses. Gross profit reached ¥9.842bn, translating to a high gross margin of 65.1%, which signals favorable mix and/or strong pricing power in fee-based or asset-light segments. Operating income rose 23.8% YoY to ¥1.490bn, showcasing positive operating leverage as opex grew slower than revenue. The operating margin improved to roughly 9.9%, reflecting better cost discipline and utilization. Ordinary income of ¥1.400bn sits below operating income, largely due to interest expense of ¥84m, implying manageable financial costs. Net income increased 29.3% YoY to ¥1.343bn, yielding a net margin of 8.89%, which is robust for the industry profile. EPS printed at ¥241.79; based on net income, this implies a rough weighted-average share count of about 5.6 million, given the lack of disclosed share data. The DuPont decomposition shows calculated ROE of 7.91%, driven by an 8.89% net margin, 0.348x asset turnover, and 2.56x financial leverage. ROA implied by the DuPont inputs is approximately 3.1%, consistent with an asset-light tilt but also indicating room for further efficiency gains. Cash generation was healthy: operating cash flow (OCF) of ¥1.734bn equates to 1.29x net income, suggesting quality earnings with good cash conversion. Financing cash flow was an outflow of ¥584m, consistent with debt reduction or shareholder returns, though item-level details were not disclosed. The current ratio of 89.3% implies a modest short-term liquidity gap, with negative working capital of about ¥1.1bn, warranting monitoring of payable/receivable cycles. Despite the reported equity ratio showing 0.0% (likely undisclosed), the balance sheet indicates equity of ¥16.975bn against total assets of ¥43.476bn, implying an estimated equity ratio near 39%. Interest coverage of 17.7x (operating income/interest expense) underscores ample buffer against rising rates. The effective tax burden appears low (tax expense ¥66m versus pre-tax income near ¥1.4bn implies ~4.7%), potentially reflecting NOL utilization or tax credits. Several disclosures, including inventories, cash and equivalents, investing cash flow, share count, and equity ratio, appear unreported in XBRL; conclusions are thus based on available figures and reasonable inferences.

Profitability Analysis

roe_decomposition: ROE 7.91% = Net margin 8.89% × Asset turnover 0.348 × Financial leverage 2.56. This implies ROA around 3.1% and moderate leverage uplift to equity returns. margin_quality: Gross margin of 65.1% is high, consistent with fee-based revenues or asset-light services. Operating margin near 9.9% benefited from scale and cost control, while net margin of 8.89% reflects limited non-operating drag (interest expense ¥84m) and a light tax charge (~4.7%). operating_leverage: Revenue grew +8.6% YoY while operating income rose +23.8% YoY, indicating positive operating leverage from fixed-cost absorption and/or mix shift toward higher-margin lines.

Growth Assessment

revenue_sustainability: Top-line growth of +8.6% YoY suggests steady recovery; sustainability will depend on demand in core hospitality/leisure/asset-light services and retention in recurring revenue streams. profit_quality: EBITDA of ¥2.052bn (13.6% margin) and OCF/NI of 1.29 indicate underlying earnings are supported by cash flow. Ordinary income trails operating income mainly due to interest, signaling the core business is the primary driver. outlook: With positive operating leverage and high gross margins, further incremental growth should translate disproportionately into operating profit, assuming cost discipline persists and financing costs remain contained. Key swing factors include seasonality, pricing power, and macro leisure/travel demand in Japan.

Financial Health

liquidity: Current assets ¥9.279bn vs current liabilities ¥10.396bn yields a current ratio of 89.3% and working capital of about -¥1.117bn, indicating a tight near-term liquidity position. Quick ratio equals current ratio due to inventories being unreported. solvency: Total liabilities ¥27.300bn vs equity ¥16.975bn implies D/E of 1.61x and financial leverage (A/E) of 2.56x. Interest coverage at 17.7x suggests solid debt service capacity. capital_structure: Estimated equity ratio is ~39% (¥16.975bn/¥43.476bn), despite the reported 0.0% likely reflecting non-disclosure. The structure appears balanced, though moderately leveraged relative to equity.

Cash Flow Quality

earnings_quality: OCF of ¥1.734bn exceeds net income of ¥1.343bn (OCF/NI 1.29), indicating good cash conversion and limited accrual risk in the period. fcf_analysis: Investing cash flow was not disclosed; therefore, free cash flow cannot be reliably determined despite the provided FCF placeholder being 0. Based on OCF, internal funding capacity appears constructive, but capex intensity remains unknown. working_capital: Negative working capital suggests efficient use of supplier credit and/or advance receipts; however, it raises sensitivity to collection cycles and short-term funding needs. The favorable OCF likely benefited from working capital management alongside non-cash charges (D&A ¥562m).

Dividend Sustainability

payout_ratio_assessment: Payout ratio shown as 0.0% and DPS 0.00 appear undisclosed rather than true zeros. Without confirmed dividends or share count details, a precise payout assessment is not possible. fcf_coverage: FCF coverage cannot be calculated given missing investing cash flow data. On an OCF basis, coverage of hypothetical dividends would likely be reasonable, contingent on capex needs. policy_outlook: Dividend policy signals are not provided. Sustainability would hinge on maintaining OCF>NI, stable leverage, and no step-up in capex; clarity from management guidance is needed.

Risk Assessment

Business Risks:

• Demand sensitivity to domestic travel, leisure, and corporate activity cycles
• Seasonality and event risk affecting occupancy and utilization rates
• Pricing power and mix risk impacting high gross margins
• Competitive pressure in hospitality/asset-light services
• Operational execution risk in scaling services while maintaining service quality

Financial Risks:

• Tight short-term liquidity (current ratio 89.3%, negative working capital)
• Refinancing and interest rate risk despite strong interest coverage
• Potential volatility in cash flows if working capital reverses
• Limited disclosure of cash balance and investing cash flows complicates FCF visibility

Key Concerns:

• Negative working capital and sub-1.0 current ratio necessitate vigilant liquidity management
• Unknown capex profile due to undisclosed investing cash flows
• Low effective tax rate (~4.7%) may not be sustainable, creating potential future margin headwinds if it normalizes

Investment Implications

Key Takeaways:

• Solid topline growth (+8.6% YoY) with stronger operating profit growth (+23.8% YoY) evidences operating leverage
• High gross margin (65.1%) and healthy EBITDA margin (13.6%) underpin profitability
• ROE of 7.91% driven by robust margin and moderate leverage; room to improve asset turnover
• OCF/NI of 1.29 indicates good earnings quality
• Interest coverage of 17.7x shows ample buffer against rate increases
• Short-term liquidity is tight (current ratio 89.3%), requiring careful cash management
• Equity ratio estimated around 39% despite reported non-disclosure
• Dividend capacity unclear due to missing investing cash flow and dividend disclosures

Metrics to Watch:

• Revenue growth trajectory and RevPAR/occupancy or equivalent utilization KPIs
• Operating margin sustainability and opex discipline
• Working capital turns (DSO/DPO) and current ratio improvement
• Capex and investing cash flows to gauge FCF and capital intensity
• Net debt, cash balance, and interest coverage amid rate environment
• Tax rate normalization from the low current level (~4.7%)

Relative Positioning: Compared with typical domestic service-oriented peers, Resol exhibits superior gross margin and strong operating leverage, a moderate leverage profile, but tighter near-term liquidity; overall profitability and cash conversion are competitive, while FCF visibility is constrained by limited disclosure.

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