ASANTE INCORPORATED FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.93B
• Operating Income: ¥809M
• Net Income: ¥711M
• EPS: ¥55.31

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

Asante Co., Ltd. (6073) reported FY2026 Q2 consolidated results under JGAAP with modest top-line growth but significant profit compression. Revenue grew 1.1% year over year to ¥7.934 billion, while operating income declined 29.7% to ¥809 million, indicating material margin pressure despite stable sales. Gross profit of ¥5.569 billion implies a robust gross margin of 70.2%, but high SG&A intensity (approximately 60.0% of sales) weighed on operating leverage. Ordinary income was ¥811 million and net income was ¥540 million, bringing net margin to 6.81%. DuPont analysis shows ROE of 5.38% driven by a moderate net margin, asset turnover of 0.541x, and conservative financial leverage of 1.46x. Cash generation was a relative bright spot: operating cash flow reached ¥1.060 billion, equating to 196% of net income, which implies solid earnings-to-cash conversion this half. The company’s balance sheet appears conservative, with total liabilities of ¥4.601 billion versus total equity of ¥10.040 billion (debt-to-equity 0.46x) and ample working capital of ¥7.286 billion. Liquidity ratios are strong (current and quick ratios of 453%), although several components (e.g., cash, inventories) were not disclosed in the XBRL and show as zero in the dataset. Interest expense is immaterial at ¥2.763 million, supporting a very high interest coverage ratio of ~293x. The decline in operating income despite positive sales growth suggests cost inflation, pricing discipline, sales mix shifts, or increased customer acquisition costs; however, the precise drivers cannot be isolated from the available summary. The net income decline (-24.0% YoY) is meaningful for interim period performance and implies lower interim ROE versus prior year. The reported effective tax rate metric of 0.0% in the derived dataset is not reliable given reported income tax expense of ¥383 million; tax analysis is limited by disclosure granularity. Free cash flow and investing cash flow were not disclosed in this dataset; hence, FCF shown as zero should not be interpreted as actual zero. Dividend data (DPS and payout ratio) also appear undisclosed in this extract; we refrain from drawing conclusions on distributions. Overall, Asante exhibits healthy liquidity and low financial risk, but margin compression and weaker operating leverage are the key issues to monitor into the second half. Seasonality and residential-services demand patterns could influence full-year outcomes; interim results may not fully reflect the annual run-rate. Data limitations (unreported items) necessitate caution in interpreting certain ratios and coverage measures.

Profitability Analysis

ROE of 5.38% is decomposed into: net profit margin 6.81% × asset turnover 0.541 × financial leverage 1.46. Operating margin is approximately 10.2% (¥809m/¥7,934m), down sharply YoY given operating income fell 29.7% on +1.1% revenue, indicating negative operating leverage this half. Gross margin remains high at 70.2%, but SG&A expense is estimated at ~¥4.760 billion (gross profit minus operating income), or roughly 60.0% of sales, implying elevated overhead and/or higher selling costs. EBITDA is ¥883 million with an EBITDA margin of 11.1%, only modestly above the operating margin, reflecting low D&A (¥74 million) relative to sales. Interest expense is minimal (¥2.763 million), driving an interest coverage ratio of ~293x, so financial costs are not a profit headwind. The compression from gross to operating margin suggests cost inflation (labor, subcontracting, materials), mix shifts, or promotional intensity; with revenue nearly flat, fixed-cost absorption likely contributed to the decline. Ordinary income (¥811m) closely tracks operating income, indicating limited non-operating drag/benefit in the period. The reported effective tax rate in the summary metrics is unreliable; using disclosed income tax (¥383m) and net income (¥540m) indicates tax effects were material, but reconciliation to pretax is not possible with the extract provided.

Growth Assessment

Revenue grew 1.1% YoY to ¥7.934 billion, suggesting stable demand but no material acceleration. The divergence between modest revenue growth and a 29.7% decline in operating income points to unfavorable operating leverage this half. Profit quality appears mixed: while cash conversion (OCF/NI 1.96x) is strong, earnings contracted and margins narrowed, indicating either cost pressures or mix headwinds. Sustainability of revenue depends on recurring service uptake, retention, and average unit pricing in core home-related services; with limited segment disclosure, we cannot parse mix effects. Given the high gross margin, pricing power likely exists, but the period’s SG&A intensity implies higher selling effort or support costs to sustain growth. Outlook hinges on cost control in H2, seasonality in residential services, and potential normalization of selling costs; if revenue growth remains low single-digit, margin recovery will require SG&A discipline. Near-term growth in profits will be sensitive to small changes in volume and pricing due to the current cost structure. Without disclosed backlog or order indicators, forward visibility is limited; however, the low financial leverage provides flexibility to pursue operational adjustments.

Financial Health

Liquidity appears strong with a current ratio of 453% and quick ratio of 453%, supported by working capital of ¥7.286 billion. Several current asset components (e.g., cash, inventories) are not disclosed in this dataset and show as zero; conclusions rely on the aggregate current assets of ¥9.351 billion versus current liabilities of ¥2.064 billion. Solvency is solid: total liabilities are ¥4.601 billion against total equity of ¥10.040 billion, implying a debt-to-equity ratio of 0.46x. Asset base totals ¥14.665 billion, with equity representing roughly 68% of capital (based on liabilities/equity relationship; the reported equity ratio of 0.0% is an undisclosed metric in this dataset). Interest burden is negligible, and coverage is very high, reducing refinancing risk. There is ample capacity to absorb short-term volatility without balance sheet stress.

Cash Flow Quality

Operating cash flow of ¥1.060 billion is 1.96x net income, signaling strong cash conversion from earnings in the interim period. The favorable OCF/NI ratio suggests limited non-cash gains and/or beneficial working capital movements; however, the absence of detailed working capital line items prevents precise attribution. Investing cash flow is undisclosed in this dataset (shown as zero), so free cash flow cannot be reliably calculated; the reported FCF of zero in the derived metrics should be treated as not available. Financing cash flow of -¥277 million indicates net cash outflows (potentially dividends, lease, or debt repayments), but the composition is not provided here. Depreciation and amortization are modest at ¥74 million, consistent with a relatively asset-light service model, which typically supports cash conversion. Overall, earnings quality appears good this half given the strong OCF relative to NI, though sustainability depends on maintaining working capital discipline and stabilizing margins.

Dividend Sustainability

Dividend per share and payout ratio are not disclosed in this dataset (values shown as zero indicate non-disclosure). Consequently, we cannot compute payout or FCF coverage for the period. From a capacity standpoint, net income of ¥540 million and strong operating cash flow of ¥1.060 billion suggest room for distributions, contingent on capex and other investing needs that are not disclosed here. Historical policy and full-year guidance would be required to assess stability or potential changes. Until investing cash flows and actual distributions are available, we refrain from drawing conclusions on dividend sustainability.

Risk Assessment

Business Risks:

• Margin pressure from rising labor, subcontracting, or material costs in residential services
• Demand cyclicality tied to housing activity, consumer sentiment, and seasonal weather patterns
• Price competition in home maintenance and pest-control markets affecting unit economics
• Execution risk in salesforce productivity and customer acquisition/retention costs
• Geographic concentration risk if exposure is skewed to specific regions (undisclosed here)
• Regulatory and safety compliance in home services operations

Financial Risks:

• Operating leverage risk given high SG&A intensity and low revenue growth
• Potential working capital swings affecting cash generation between quarters
• Limited disclosure of investing cash flows creating uncertainty around FCF
• Tax rate variability given differences between ordinary income and reported tax expense

Key Concerns:

• Operating income decline of 29.7% YoY despite +1.1% revenue highlights negative operating leverage
• SG&A estimated at ~60% of sales constraining profitability
• Lack of disclosed FCF and DPS data reduces visibility on capital allocation
• Interim period results may be affected by seasonality; sustainability into H2 is uncertain

Investment Implications

Key Takeaways:

• Top line stable (+1.1% YoY) but profitability compressed; operating margin ~10.2%
• ROE at 5.38% with conservative leverage (1.46x), primarily driven by margin, not leverage
• Strong cash conversion (OCF/NI 1.96x) offsets weaker earnings quality concerns this half
• Balance sheet conservative: debt-to-equity 0.46x and substantial working capital
• Visibility limited by undisclosed items (cash, investing CF, DPS), warranting cautious interpretation

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio trend in H2
• Revenue growth rate and pricing/mix indicators
• OCF to NI ratio and working capital movements (receivables and advances)
• Capex and investing cash flows to assess true FCF
• Order intake/backlog or contract renewal rates (if disclosed)
• Tax rate normalization and reconciliation to pretax profits

Relative Positioning: Within Japan’s residential service providers, Asante exhibits a conservative balance sheet and strong gross margins but currently weaker operating leverage. Its financial risk is low, but near-term relative profitability may lag peers if cost pressures persist without offsetting price/mix or efficiency gains.

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