UCHIYAMA HOLDINGS Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥14.84B
• Operating Income: ¥473M
• Net Income: ¥323M
• EPS: ¥20.96

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

Uchiyama Holdings (TSE: 6059) delivered a mixed FY2026 Q2 (JGAAP, consolidated) with modest topline growth but a sharp rebound in profitability. Revenue rose 2.3% YoY to ¥14.84bn, while operating income surged 216.9% YoY to ¥473m, evidencing strong operating leverage from cost containment and/or improved mix. Gross profit of ¥944m equates to a thin 6.4% gross margin, consistent with a labor- and occupancy-intensive service model, yet the step-change in operating income suggests better fixed cost absorption and efficiency. Ordinary income of ¥655m exceeded operating income by ¥182m, implying material positive non-operating contributions that buoyed headline profit. Net income reached ¥406m (+25.9% YoY), with EPS of ¥20.96, but cash conversion was weak: operating cash flow was only ¥51.7m, yielding an OCF/NI ratio of 0.13. Liquidity metrics are solid on paper with a current ratio of 193.9% and working capital of ¥7.62bn, though cash and inventories were not disclosed and quick ratio equals current ratio due to reporting limitations. The balance sheet appears sound: total assets ¥30.19bn, liabilities ¥16.82bn, and equity ¥14.61bn; this implies an estimated equity ratio of roughly 48% (despite the reported 0.0% being undisclosed) and a debt-to-equity ratio of 1.15x. DuPont shows a low but coherent ROE of 2.78%, driven by a 2.74% net margin, 0.492x asset turnover, and 2.07x leverage. EBITDA was ¥779m (5.3% margin), and interest coverage was comfortable at ~9.9x, indicating manageable financial risk at current earnings levels. The effective tax rate shown as 0.0% is not meaningful; based on income tax of ¥372m and net income of ¥406m, an implied ETR near the high-40% range is plausible given pre-tax profit approximations. Financing cash flow was a net outflow of ¥370m, likely reflecting debt repayment and/or lease payments; investing cash flow was not disclosed. Dividend information (DPS, payout) was not reported; therefore, dividend sustainability cannot be assessed from this dataset. Overall, operational momentum is improving off a low base, but the quality of earnings is tempered by weak OCF and reliance on non-operating gains in ordinary income. Data gaps (cash balance, capex, DPS, inventory detail) limit the precision of cash flow, liquidity, and shareholder return assessments.

Profitability Analysis

ROE is 2.78% via DuPont: net margin 2.74% × asset turnover 0.492 × financial leverage 2.07. This is modest and consistent with low-margin service operations but shows sequential improvement given the +216.9% operating income growth on +2.3% revenue. Gross margin of 6.4% remains thin, suggesting limited pricing power or a labor/occupancy-heavy cost structure; however, operating margin improvement indicates better fixed-cost absorption and disciplined SG&A. The spread between ordinary income (¥655m) and operating income (¥473m) indicates ¥182m of net non-operating gains, partially offset by ¥48m interest expense—profitability is thus augmented by non-core items, reducing quality and repeatability. EBITDA margin of 5.3% offers a more normalized view of core earnings capacity but still reflects a tight margin profile. Operating leverage was high in the period: modest revenue growth translated into a substantial operating income increase, pointing to efficiency gains and cost control. Interest coverage at ~9.9x (operating income/interest expense) is robust, giving ample buffer against rate or earnings volatility. The implied effective tax rate (reconstructed near ~48% using tax and net income) weighed on after-tax profitability; the reported 0.0% ETR is not informative.

Growth Assessment

Revenue grew 2.3% YoY to ¥14.84bn, indicating stable but subdued topline momentum. The large YoY rebound in operating income (+216.9%) suggests cyclical or mix improvements and potentially recovery in underperforming units, though sustainability depends on demand and cost discipline. Ordinary income outperformed operating income due to non-operating gains; growth driven by such items is less repeatable. Net income growth of +25.9% was positive but lagged the operating line, likely reflecting higher tax burden and normalization of below-the-line factors. With asset turnover at 0.492, growth appears capacity-constrained or tied to slow-moving service utilization dynamics; future growth likely hinges on occupancy, pricing, and incremental capacity rather than large volume expansion. Forward outlook (qualitative) is cautiously constructive: cost efficiencies should support margins if revenue holds, but the low gross margin and dependence on non-operating income cap upside without further structural improvements. Absent visibility on capex and cash position, it is difficult to judge reinvestment capacity and organic growth investments. Key watchpoints for sustainability are revenue mix, unit economics (occupancy/pricing), and whether non-operating gains recur.

Financial Health

Liquidity appears strong on reported metrics: current ratio 193.9% and working capital ¥7.62bn, although cash and inventories were not disclosed, and quick ratio equals current ratio due to data limitations. Balance sheet leverage is moderate: liabilities ¥16.82bn vs equity ¥14.61bn, D/E 1.15x. Using disclosed totals, the estimated equity ratio is roughly 48% (equity/total assets ≈ ¥14.61bn/¥30.19bn), despite the reported 0.0% being an undisclosed placeholder. Interest expense is modest at ¥48.0m with coverage ~9.9x, suggesting manageable debt service. No maturity ladder or covenant data provided; refinancing risk cannot be fully assessed. Cash and equivalents not reported; thus near-term liquidity buffers cannot be quantified. Overall solvency looks adequate with balanced capital structure, but clarity on cash, committed lines, and lease liabilities would refine the view.

Cash Flow Quality

Earnings quality is mixed: OCF was ¥51.7m vs net income ¥406m, for an OCF/NI ratio of 0.13, indicating weak cash conversion this period—likely driven by working capital outflows or timing effects. Free cash flow cannot be assessed since investing cash flow/capex data were not disclosed (FCF shown as 0 reflects non-disclosure). EBITDA of ¥779m suggests underlying cash earnings capacity, but translation to OCF was limited. Financing cash flow was a net outflow of ¥369.5m, implying debt repayment and/or lease and interest payments; without cash balance detail, post-FCF funding sources are unclear. Working capital specifics (receivables, payables, inventory) were not provided; given the service nature, inventory is likely low, but its non-disclosure prevents attribution of OCF shortfall to any single component. Sustained OCF improvement will be needed to validate the profit rebound.

Dividend Sustainability

Dividend data (annual DPS, payout ratio) were not disclosed; thus, payout sustainability cannot be determined from this dataset. Reported payout ratio and FCF coverage figures at 0.0%/0.00x are placeholders, not actual values. With net income positive and financing outflows present, capital returns may exist via buybacks or debt reduction, but there is no confirmed dividend. Absent capex and cash data, we cannot evaluate FCF-based coverage. Policy outlook remains indeterminate; visibility on regular DPS, target payout, and FCF trajectory is required for assessment.

Risk Assessment

Business Risks:

• Low gross margin (6.4%) business model, leaving limited buffer against input cost inflation
• Heavy reliance on labor and occupancy dynamics typical of service sectors, exposing margins to wage and utilization volatility
• Profitability uplift partly driven by non-operating gains (ordinary > operating), which may not recur
• Modest topline growth (+2.3% YoY) could constrain scale-driven efficiencies if demand softens
• Potential regulatory/reimbursement or pricing pressures common in care/service industries

Financial Risks:

• Weak cash conversion in the period (OCF/NI 0.13), raising questions on earnings quality
• Limited visibility on cash balance and capex, hampering assessment of liquidity buffers and FCF
• Debt-to-equity of 1.15x implies some balance sheet sensitivity if earnings retreat
• Potential interest rate exposure, albeit partially mitigated by 9.9x interest coverage

Key Concerns:

• Sustainability of margin gains given thin gross margin and dependence on cost control
• Non-operating income contribution to ordinary income inflating headline profitability
• Insufficient disclosure on cash and investment flows to underwrite FCF durability

Investment Implications

Key Takeaways:

• Operational recovery evident: operating income +216.9% YoY on +2.3% revenue indicates strong operating leverage
• Core margins remain thin (GPM 6.4%, EBITDA margin 5.3%), limiting buffer against shocks
• Ordinary income benefits from non-operating items; quality of earnings is mixed
• Cash conversion was weak (OCF ¥51.7m vs NI ¥406m), necessitating monitoring
• Balance sheet appears healthy with estimated ~48% equity ratio and 1.15x D/E
• Interest coverage ~9.9x suggests manageable financial risk at current earnings

Metrics to Watch:

• OCF/Net income and working capital movements
• Operating and EBITDA margin trends versus revenue growth
• Composition of non-operating income within ordinary income
• Capex and investing cash flows to assess FCF
• Cash and equivalents and undrawn facilities for liquidity assessment
• Debt maturity profile and interest rate sensitivity

Relative Positioning: Relative to typical service-oriented peers, Uchiyama shows improving operating leverage and sound balance sheet metrics but weaker cash conversion and greater reliance on non-operating contributions to bridge profitability, positioning it as operationally recovering yet with moderate earnings quality risk.

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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