EnBio Holdings (6092) FY2026 Q3 Earnings Report

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Executive Summary

For the nine months ended December 31, 2025, the key point was the shift to a quarterly net loss attributable to owners of the parent due to losses related to the withdrawal from the Renewable Energy Business, despite a trend toward higher operating income. Revenue increased to ¥91.0B (+11.1% year on year), Operating Income to ¥11.1B (+33.1%), and Ordinary Income to ¥10.9B (+25.7%), with all three items recording increases in both revenue and profit. However, Net Income attributable to owners of the parent fell into the red at ¥-0.7B (¥5.6B in the same period last year, YoY -112.8%). Extraordinary losses of ¥9.2B, including ¥1.2B in impairment losses on fixed assets of the Renewable Energy Business as part of the loss on business withdrawal, significantly exceeded extraordinary income of ¥2.4B, compressing Profit Before Tax to ¥4.2B. In addition, the high effective tax rate of 117.1% was a major factor behind the final loss.

Factors Affecting Performance

【Revenue】All three segments recorded higher revenue: the Soil Contamination Remediation Business (¥48.4B, +7.4%), Brownfield Utilization Business (¥23.5B, +22.0%), and Renewable Energy Business (¥19.2B, +8.9%). As a result, Revenue increased to ¥91.0B (+11.1% year on year). In particular, the Brownfield Utilization Business posted strong growth and was the main driver of the revenue increase.

【Profit and Loss】Operating Income increased to ¥11.1B (+33.1%), while the operating margin improved to 12.2% from 10.2% in the same period last year. The gross margin also improved to 28.8% from 26.0%. Higher revenue and a decline in the cost ratio supported the increase in Operating Income, although selling, general and administrative expenses rose +16.5%, outpacing revenue growth. Ordinary Income increased to ¥10.9B (+25.7%); however, extraordinary losses of ¥9.2B (loss on business withdrawal, including ¥1.2B in impairment losses on fixed assets of the Renewable Energy Business) significantly exceeded extraordinary income of ¥2.4B (gain on sale of investment securities), compressing Profit Before Tax to ¥4.2B. In addition, income taxes and other taxes of ¥4.9B resulted in Net Income attributable to owners of the parent of ¥-0.7B. On an operating basis, the Company recorded higher revenue and profit, but the final result was a decline in profit, including a shift into the red, due to temporary losses related to the business withdrawal.

Segment Analysis

The Brownfield Utilization Business recorded a significant increase in segment profit to ¥5.5B (+71.9% year on year), becoming the largest profit-contributing business and accounting for approximately 49% of total segment profit. The Soil Contamination Remediation Business also secured steady profit growth, with segment profit increasing to ¥4.6B (+16.6%). Meanwhile, despite an 8.9% increase in revenue, the Renewable Energy Business saw segment profit decline sharply to ¥1.1B (-43.2%), reflecting the pronounced impact of the business withdrawal and impairment losses. Segment profit margins, including intersegment sales, were 23.3% for the Brownfield Utilization Business, 8.6% for the Soil Contamination Remediation Business, and 5.9% for the Renewable Energy Business, indicating significant differences in profitability among the businesses.

Key Financial Metrics

【Profitability】The operating margin improved by 2.0pt to 12.2% from 10.2% in the same period last year, while the gross margin rose to 28.8% from 26.0%. In contrast, the net profit margin deteriorated to -0.8% from 6.8%, indicating a substantial gap between operating-level and bottom-line performance.【Cash Flow Quality】Inventories increased 33.8% year on year to ¥39.5B, representing 38.0% of current assets. Progress in collecting receivables from projects will therefore be a key focus going forward.【Investment Efficiency】Annualized ROE was -1.1%, basic EPS was -¥8.10 (¥69.81 in the same period last year), and BPS was ¥1,088.23 (¥1,128.81 in the same period last year), representing a slight decline.【Financial Soundness】The Equity Ratio was 41.0% (43.1% in the same period last year), while cash and deposits stood at ¥39.1B. The current ratio was approximately 222%, indicating sound short-term payment capacity. Long-term borrowings increased 14.1% year on year to ¥75.8B, making the trend in interest-bearing debt a point to monitor.

Cash Flow Analysis

As the cash flow statement was not disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits increased to ¥39.1B from ¥32.9B in the same period last year, while short-term borrowings declined 45.6% to ¥9.7B from ¥17.9B, indicating lower dependence on short-term financing. Meanwhile, inventories increased 33.8% year on year to ¥39.5B, and accounts payable increased 35.1% to ¥10.1B, suggesting that working capital has been built up in line with business expansion. Investments and other assets declined 35.9% to ¥19.0B from ¥29.6B in the previous year, consistent with the recognition of a ¥2.4B gain on the sale of investment securities and suggesting that asset replacement has progressed. Long-term borrowings increased 14.1% year on year to ¥75.8B, indicating that long-term financing may have been used to fund capital investment and the increase in working capital.

Quality of Earnings

The earning power of the core business is reflected in the improvement in the operating margin to 12.2% from 10.2% and the increase in the gross margin to 28.8% from 26.0%, indicating that the recurring earnings base has strengthened from the previous year. Nevertheless, Ordinary Income of ¥10.9B was compressed to Profit Before Tax of ¥4.2B. The difference resulted from extraordinary losses of ¥9.2B, consisting of losses on business withdrawal and including ¥1.2B in impairment losses on the Renewable Energy Business, exceeding extraordinary income of ¥2.4B from the gain on sale of investment securities. Temporary factors therefore significantly depressed final earnings. Furthermore, income taxes and other taxes of ¥4.9B exceeded Profit Before Tax of ¥4.2B, resulting in an effective tax rate above 100%. This indicates the asymmetry of the tax burden during a period in which temporary losses are recognized, creating a structure in which fluctuations in Profit Before Tax have a significant impact on final earnings. Comprehensive income was ¥-2.5B, primarily due to foreign currency translation adjustments of ¥-2.2B. The divergence from Net Income of ¥-0.7B reflects overseas assets and foreign exchange factors.

Earnings Forecast and Guidance

The progress rates for the nine months ended December 31, 2025, against the full-year Company forecasts of Revenue of ¥128.0B, Operating Income of ¥14.3B, and Ordinary Income of ¥13.2B were 71.1%, 77.7%, and 82.7%, respectively. Compared with the standard nine-month progress benchmark of 75%, Revenue was slightly below the benchmark, while Operating Income and Ordinary Income exceeded it, indicating that profit progress is ahead of schedule. However, against the full-year forecast of ¥1.0B in profit attributable to owners of the parent, the nine-month cumulative result was a loss of ¥-0.7B. A return to profitability in Q4 is therefore a prerequisite for achieving the plan. Cumulative EPS was -¥8.10, compared with forecast EPS of ¥12.35.

Shareholder Returns

The Q2 dividend was ¥0 per share, while the full-year dividend forecast remains unchanged at ¥9.00 per share. Based on the average number of shares outstanding during the period of 8,102 thousand shares, the estimated total annual dividend is approximately ¥0.73B, implying a Payout Ratio of approximately 73% against the full-year forecast of ¥1.0B in profit attributable to owners of the parent. As the nine-month cumulative result was a net loss attributable to owners of the parent of ¥-0.7B, this Payout Ratio is based on the assumption that the full-year earnings forecast will be achieved. Performance in Q4 will therefore be important from the perspective of securing funds for dividends.

Risk Factors

1. Deterioration in the profitability of the Renewable Energy Business: Although Revenue increased +8.9% year on year, segment profit declined 43.2% to ¥1.1B, and a ¥9.2B loss on business withdrawal, including ¥1.2B in impairment losses, was recognized. The profitability of renewable energy projects and trends in facility operations will be factors affecting future earnings volatility.

2. Increase in inventories and working capital: Inventories increased 33.8% year on year to ¥39.5B, accounting for 38.0% of current assets. Accounts payable also increased +35.1%, making project progress and the cash collection cycle important areas to monitor from the perspective of working capital efficiency.

3. Earnings volatility due to the high effective tax rate and extraordinary losses: Income taxes and other taxes of ¥4.9B were incurred against Profit Before Tax of ¥4.2B, resulting in an effective tax rate above 100%. Final earnings moved into the red because extraordinary losses of ¥9.2B exceeded extraordinary income of ¥2.4B, confirming the significant impact that temporary factors can have on performance.

Industry Benchmarks (For Reference; Compiled by the Company)

Profitability and Returns

The operating margin exceeds the industry median, while the net profit margin is significantly below the industry median due to the impact of extraordinary losses.

Growth and Capital Efficiency

The Revenue growth rate is broadly in line with the industry median.

※Source: Compiled by the Company

Key Points from the Financial Results

1. The operating margin improved to 12.2% from 10.2%, while the gross margin rose to 28.8% from 26.0%. In addition to higher revenue, the earnings base of the core business has strengthened qualitatively.

2. The Brownfield Utilization Business has grown into the core business, accounting for approximately 49% of segment profit. Meanwhile, the Renewable Energy Business is experiencing deteriorating profitability accompanied by impairment and withdrawal losses, making the change in the composition of the business portfolio clear.

3. Profit progress against the full-year plan is ahead of schedule, at 77.7% for Operating Income and 82.7% for Ordinary Income. However, achieving the Net Income plan requires a return to profitability in Q4 and the avoidance of additional extraordinary losses.

Theoretical Share Price (For Reference)

Sensitivity: ¥800–¥844 for ±1% in the cost of equity, and ¥814–¥826 for ±0.1 in ω.

Notes:

• Net Income is substantially compressed relative to Operating Income due to tax expenses, acquisition-related expenses, and non-controlling interests (Net Income ÷ Operating Income 7%). This value reflects that compression at face value; if the factors are temporary, normalized earnings power may be higher.
• Because forecast ROE is below the cost of equity, the theoretical value is below Book Value per Share.
• Net assets as of the quarter-end are used, resulting in a timing difference from the full-year forecast.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

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