JAPAN CASH MACHINE CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥14.77B
• Operating Income: ¥820M
• Net Income: ¥2.49B
• EPS: ¥121.45

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

Japan Cash Machine Co., Ltd. (6418) reported FY2026 Q2 consolidated results under JGAAP showing a sharp top-line contraction but resilient cash generation and a bottom-line supported by non-operating/extraordinary items. Revenue declined 30.5% YoY to ¥14.77bn, while operating income fell 78.1% YoY to ¥0.82bn, indicating pronounced operating leverage and cost stickiness against the demand downturn. Despite the weak operating result, ordinary income reached ¥1.01bn, implying a sizable contribution from non-operating gains. Net income increased 32.1% YoY to ¥3.29bn, signaling the presence of material extraordinary income and/or valuation gains beyond ordinary operations. The calculated net margin of 22.3% is therefore not reflective of core profitability in the quarter and should be treated as non-recurring. Gross margin is indicated at 61.4%, though the reported cost of sales line is inconsistent with the gross profit figure; we anchor on the provided gross margin metric for analysis. DuPont analysis shows ROE of 9.78% driven by a high net margin (inflated by non-recurring gains), modest asset turnover of 0.297, and low financial leverage of 1.48x. Liquidity remains exceptionally strong with a current ratio of 513.9% and quick ratio of 382.1%, underpinned by working capital of ¥33.40bn. The balance sheet is conservative: using reported totals, the equity ratio approximates 67.6% (equity ¥33.63bn / assets ¥49.72bn), consistent with the low leverage factor. Operating cash flow of ¥3.56bn slightly exceeded net income (OCF/NI 1.08x), indicating decent cash conversion this period, though the sustainability is unclear given the likely one-off nature of earnings. Interest coverage is comfortable at 16.2x, reflecting low debt service burden. Inventories stand at ¥10.64bn, high relative to the half-year revenue base, which warrants monitoring in a softer demand environment. No dividend was recorded (DPS ¥0, payout 0%), suggesting either a back-half distribution policy or a defensive stance amid earnings volatility. Data gaps exist in cash and investing sections (reported as zero/unavailable), limiting free cash flow analysis and detailed capital allocation assessment. Overall, fundamentals point to strong liquidity and solvency but pressured core profitability, with headline ROE and net margin buoyed by non-operating/extraordinary items rather than operating momentum.

Profitability Analysis

ROE decomposition (DuPont): Reported/calculated ROE is 9.78%, comprised of net margin 22.26% x asset turnover 0.297 x financial leverage 1.48x. The net margin is elevated by non-operating/extraordinary gains given that operating margin is only ~5.6% (¥0.82bn / ¥14.77bn). Asset turnover at 0.297 indicates slow capital turnover for the half-year period, consistent with large working capital (notably inventories). Leverage is modest at 1.48x (assets/equity), typical of a strong balance sheet. Margin quality: the gap between operating income (¥0.82bn) and net income (¥3.29bn) indicates significant non-core contributions, undermining the quality of the bottom line. Ordinary income (¥1.01bn) exceeding operating income suggests positive non-operating items (e.g., FX, dividends, equity method), while the step-up to net income points to extraordinary gains. Gross margin is cited at 61.4%, implying healthy unit economics/mix, but reported cost of sales figures are inconsistent; we rely on the provided margin metric. Operating leverage: a 30.5% revenue decline vs. a 78.1% drop in operating income highlights high fixed-cost absorption and cost stickiness. EBITDA of ¥1.06bn yields a 7.2% margin, again signaling compressed core profitability relative to historical levels and the headline net margin.

Growth Assessment

Top-line fell 30.5% YoY to ¥14.77bn, signaling a pronounced cyclical or end-market slowdown. Operating profit contracted 78.1% YoY to ¥0.82bn, indicating that the revenue softness translated disproportionately into earnings pressure. Ordinary income at ¥1.01bn and net income at ¥3.29bn were supported by non-core/extraordinary items; therefore, reported profit growth (+32.1% YoY in net) is not reflective of underlying growth. With asset turnover at 0.297 and inventories at ¥10.64bn, the company appears to be carrying substantial working capital relative to the run-rate sales, suggesting cautious outlook for near-term growth or intentional inventory positioning. Revenue sustainability depends on normalization in core end-markets for cash handling and gaming/retail automation; current results imply weaker demand conditions. Profit quality is mixed: OCF/NI of 1.08x is solid, but the gap between operating and net income dilutes the recurring quality of earnings. Near-term outlook likely hinges on backlog conversion, new product cycles, customer capex in retail/gaming, and FX. Given limited disclosed segment detail in this dataset, we treat the back-half recovery as uncertain and emphasize monitoring orders and utilization.

Financial Health

Liquidity is very strong: current ratio 513.9%, quick ratio 382.1%, and working capital ¥33.40bn. Solvency is robust with low financial leverage (assets/equity 1.48x). Using reported balances, the implied equity ratio is approximately 67.6% (¥33.63bn / ¥49.72bn), indicating a conservative capital structure despite a reported 0% equity ratio data field. Debt-to-equity stands at 0.52x, and interest coverage is 16.2x, suggesting manageable debt service and limited refinancing risk. Inventories at ¥10.64bn represent a sizeable share of current assets and a high proportion relative to the half-year revenue base, which could pose working capital risk if demand remains soft. Overall, the balance sheet provides flexibility to absorb cyclical volatility.

Cash Flow Quality

Operating cash flow of ¥3.56bn exceeds net income of ¥3.29bn (OCF/NI 1.08x), indicating acceptable cash conversion in the period. Earnings quality is mixed, as bottom-line strength is non-operating/extraordinary-driven while OCF reflects working capital dynamics and core operations. Depreciation/amortization totaled ¥0.24bn, implying limited non-cash add-backs relative to OCF; working capital releases likely supported cash. Investing cash flow is not disclosed in this dataset (shown as zero), so free cash flow cannot be reliably calculated, and the listed FCF value should be viewed as unavailable rather than zero. Financing cash flow of -¥1.60bn suggests net outflows (e.g., debt repayment, share repurchases, or dividends), but details are not provided here. Working capital: inventories are high, and any subsequent destocking or demand recovery will materially influence OCF trajectory.

Dividend Sustainability

No dividend was recorded for the period (DPS ¥0; payout 0%). Given positive net income and positive OCF, the absence of a payout likely reflects timing (e.g., interim vs. year-end policy) or prudence amid earnings volatility. FCF coverage cannot be assessed due to missing investing cash flow data; consequently, payout capacity should be evaluated cautiously until capex/FCF details are available. Balance sheet strength (implied equity ratio ~68%, interest coverage 16.2x) supports long-term capacity for distributions, but near-term sustainability hinges on normalization of operating profits rather than one-off gains. Policy outlook cannot be inferred from this dataset; monitor management guidance and historical payout practices.

Risk Assessment

Business Risks:

• Demand cyclicality in retail automation, gaming, and currency-handling equipment end-markets
• High operating leverage leading to outsized profit swings on volume declines
• Inventory risk amid weaker sales, potential for write-downs or margin pressure
• Product mix and pricing pressure from competition and customer capex constraints
• Supply chain and component availability affecting deliveries and costs
• FX volatility impacting revenues and non-operating items

Financial Risks:

• Earnings reliance on non-operating/extraordinary gains in the period
• Potential working capital outflows if inventories normalize without matching sales
• Exposure to interest rate changes despite current comfortable coverage
• Limited visibility on capex and investing cash flows (data not disclosed here)

Key Concerns:

• Sharp YoY revenue decline (-30.5%) with operating income down (-78.1%) indicating stressed core profitability
• Net income uplift driven by non-recurring items, inflating ROE and net margin
• Large inventories (¥10.64bn) relative to half-year revenue, posing cash and margin risks if demand remains soft

Investment Implications

Key Takeaways:

• Core profitability weakened materially despite high reported net margin, which is non-recurring in nature
• Balance sheet strength and liquidity provide resilience and optionality
• Cash conversion was solid this period, but sustainability depends on working capital normalization and operating recovery
• Operating leverage is high; revenue trajectory will disproportionately drive earnings
• Large inventory position is a pivotal variable for both margins and cash flows in the coming quarters

Metrics to Watch:

• Order intake/backlog and revenue run-rate recovery
• Operating margin and EBITDA margin normalization
• Inventory levels and inventory turnover days
• OCF versus NI and disclosure of capex/FCF
• Non-operating and extraordinary items versus core earnings
• FX impacts on ordinary income

Relative Positioning: Within equipment suppliers to cash-handling/gaming and retail automation niches, the company appears more conservatively capitalized than many peers, with superior liquidity but currently weaker core operating momentum and elevated dependence on non-operating/extraordinary items to support net income.

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