Cocolonet CO., LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.80B
• Operating Income: ¥351M
• Net Income: ¥127M
• EPS: ¥86.64

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

こころネット株式会社 FY2026 Q2 shows resilient profitability despite a mild top-line contraction. Revenue declined 1.5% YoY to ¥4.804bn, yet operating income rose 30.7% YoY to ¥351m, signaling effective cost control and mix improvement. Gross margin stands at a healthy 33.7%, and operating margin improved to roughly 7.3%, evidencing better operating leverage. Net income surged 138.1% YoY to ¥301m (EPS ¥86.64), aided by robust operations and minimal interest burden. DuPont analysis indicates ROE of 3.40%, driven by a 6.27% net margin, 0.248x asset turnover, and 2.19x financial leverage; while modest, this ROE is improving alongside rising operating profit. Ordinary income of ¥413m suggests stable non-operating items, with a negligible interest expense of ¥0.125m and extraordinarily high interest coverage of ~2,808x. Liquidity is strong, with a current ratio of 389.5% and a quick ratio of 356.5%, reflecting substantial working capital (¥3.748bn). The balance sheet appears conservatively structured: liabilities-to-equity is ~1.20x and assets-to-equity is 2.19x, implying an equity ratio around the mid-40% range by calculation, though the reported equity ratio field shows zero (likely undisclosed). Cash flow quality is solid: operating cash flow (¥298m) is nearly aligned with net income (OCF/NI ≈ 0.99), indicating limited accrual risk this period. D&A of ¥190m supports EBITDA of ¥541m (11.3% margin), providing non-cash support to earnings. Working capital remains ample, suggesting low short-term refinancing risk. Reported free cash flow is shown as zero due to missing investing cash flow disclosure; capex data are not available, so true FCF cannot be assessed. The company reported no dividends for the period; payout ratio and FCF coverage metrics are therefore not meaningful for policy assessment. While revenue softness raises questions on demand momentum, the magnitude of profit improvement points to sustainable internal efficiencies. Overall, the company demonstrates defensive cash generation, improving profitability, and a sound capital structure, though incomplete disclosures (investing CF, cash balance, share data, equity ratio) limit precision in several assessments.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.27%
• asset_turnover: 0.248x
• financial_leverage: 2.19x
• calculated_ROE: 3.40%
• commentary: ROE is primarily constrained by modest asset turnover, while margin improvements are the key positive driver in the period. Leverage is moderate and not a major contributor to ROE. margin_quality: Gross margin at 33.7% and operating margin at ~7.3% indicate improved cost discipline and/or favorable mix versus last year’s weaker profitability (OI +30.7% on -1.5% revenue). Ordinary margin is ~8.6%, with negligible financing drag. The magnitude of net income growth suggests non-recurring drags present last year have rolled off or operations have normalized favorably. operating_leverage: Evidence of positive operating leverage: small revenue decline accompanied by a sizable increase in operating income implies SG&A efficiencies and fixed-cost absorption improvements. D&A (¥190m) supports EBITDA margin of 11.3%, indicating room for further operating leverage if revenue stabilizes or grows.

Growth Assessment

revenue_sustainability: Revenue declined 1.5% YoY to ¥4.804bn. This modest contraction suggests a soft demand environment or pricing/mix headwinds, but not a structural collapse. Monitoring regional demand trends and volume/unit price mix is warranted. profit_quality: Net income growth (+138% YoY) far outpaced revenue, driven by gross margin resilience and SG&A control. Interest expense is de minimis, and OCF/NI ≈ 0.99 indicates earnings are cash-convertible this period. outlook: If current cost discipline persists, profitability should remain supported even with flattish revenue. A return to positive top-line growth would likely translate efficiently into operating profit given demonstrated leverage. The near-term outlook hinges on sustaining gross margins and containing SG&A amid a potentially subdued demand backdrop.

Financial Health

liquidity: Current ratio 389.5% and quick ratio 356.5% reflect strong short-term liquidity with working capital of ¥3.748bn. Inventory levels are modest (¥427m) relative to current assets, reducing obsolescence risk. solvency: Debt-to-equity (proxied by total liabilities/equity) is ~1.20x; assets/equity is 2.19x. Interest coverage at ~2,808x highlights minimal financial burden. Calculated equity ratio (equity/assets) is approximately 45.7% despite the reported metric being undisclosed. capital_structure: Leverage is moderate and conservative for a services model. The company appears to fund operations primarily through equity and working capital rather than heavy debt.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥298m compares closely to net income of ¥301m (OCF/NI ≈ 0.99), suggesting limited accrual distortions and high-quality earnings for the period. FCF_analysis: Investing cash flow is undisclosed (reported as zero), preventing a reliable free cash flow calculation; the presented FCF of zero reflects missing data rather than economic reality. Capex levels are unknown, so sustainability of cash generation after reinvestment cannot be assessed. working_capital: Strong working capital position (¥3.748bn). With inventories at ~¥427m and high quick ratio, the cash conversion cycle risk appears contained. Changes in receivables/payables were not disclosed, limiting cycle diagnostics.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are reported as zero, indicating no dividend for the period or undisclosed interim policy. With EPS at ¥86.64, there is theoretical capacity for distributions, but policy remains unclear. FCF_coverage: FCF coverage is shown as 0.00x due to missing investing CF/capex data; this should not be interpreted as a deficit. Without capex disclosure, dividend coverage by FCF cannot be evaluated. policy_outlook: Given improving profitability and modest leverage, the balance sheet could support shareholder returns; however, the company may prioritize reinvestment and balance sheet resilience until revenue growth normalizes. Absent explicit guidance, dividend visibility is low.

Risk Assessment

Business Risks:

• Top-line softness (-1.5% YoY) indicating potential demand or pricing pressure
• Exposure to regional and demographic trends impacting life-event services demand
• Competition and potential price discounting in local markets
• Cost inflation (labor, utilities) that could pressure margins
• Execution risk on any new facility openings or refurbishments

Financial Risks:

• Partial disclosure of cash and investing flows limits visibility on reinvestment needs
• Potential capex requirements that could absorb OCF and constrain FCF
• Asset turnover remains modest (0.248x), dampening ROE
• Tax and non-operating items disclosure granularity insufficient to reconcile effective rate

Key Concerns:

• Sustainability of margin gains if revenue remains flat or declines
• Lack of disclosed investing cash flows and cash balance obscures true liquidity buffer and FCF
• Reported equity ratio and share data are undisclosed, constraining capital policy analysis

Investment Implications

Key Takeaways:

• Profitability improved markedly despite slightly lower revenue, demonstrating operating leverage
• Strong liquidity and minimal interest burden reduce financial risk
• OCF closely tracks net income, supporting earnings quality
• ROE remains modest due to low asset turnover; margin gains are the primary driver
• Incomplete disclosures (investing CF, cash balance, equity ratio, share count) restrict precision

Metrics to Watch:

• Revenue growth trajectory and unit price/mix
• Gross margin and SG&A-to-sales ratio
• Capex and investing cash flows to derive true FCF
• Asset turnover and working capital turns
• ROE progression versus cost of equity
• Cash and equivalents balance and net cash/debt position

Relative Positioning: Relative to domestic small-cap service peers, the company exhibits stronger near-term margin momentum and conservative leverage, but with softer top-line growth and lower asset turnover; disclosure gaps temper comparative clarity.

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