WASHHOUSE CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥1.93B
• Operating Income: ¥11M
• Net Income: ¥-1M
• EPS: ¥0.85

Income Statement

Balance Sheet

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

WASH House Co., Ltd. (6537) reported FY2025 Q3 consolidated results under JGAAP showing solid top-line expansion but only marginal bottom-line profitability. Revenue rose 31.0% YoY to ¥1,927 million, indicating strong activity in the company’s coin laundromat-related business (likely driven by store openings, utilization, and/or franchise-related revenues). Operating income improved to ¥11 million (+748.8% YoY), implying a very low base last year and highlighting operating leverage, but the margin remains thin at roughly 0.6%. Ordinary income was ¥9 million and net income ¥5 million (+190.1% YoY), with EPS of ¥0.85, underscoring that profitability is positive but still fragile. Gross profit is disclosed at ¥556 million, which equates to a 28.9% gross margin; however, the disclosed cost of sales of ¥914 million is not arithmetically consistent with the gross profit figure. We therefore rely on the gross profit and margin figures for analysis and treat the cost-of-sales line as potentially defined under a different account classification. DuPont shows a net margin of 0.26%, asset turnover of 0.459x, and financial leverage of 2.31x, yielding a calculated ROE of 0.27%—accurately matching the reported value and confirming very low shareholder returns for the period. The balance sheet appears sound with total assets of ¥4,201 million and total equity of ¥1,820 million, implying an equity ratio of about 43.3% (despite a reported 0.0% placeholder), and a current ratio of 195% evidencing ample near-term liquidity. Interest coverage is thin at 1.6x (operating income vs. interest expense), highlighting limited headroom if operating conditions weaken. Working capital is healthy at ¥1,153 million, which supports operations and potential seasonality. The company reports zeroes for depreciation, cash flow statements, and share data—these should be viewed as undisclosed items rather than actual zeros; hence, we refrain from drawing conclusions from missing CF line items or per-share balance sheet metrics. Dividend per share is zero, consistent with the very low profit level and priority on balance sheet strength. Overall, the quarter marks continued recovery with operating profit turning positive and revenue momentum intact, but profitability quality is modest and interest coverage remains tight. Sustaining revenue growth while improving cost discipline will be crucial to lift operating and net margins. Given data gaps (notably CF and D&A) and a cost of sales inconsistency, our analysis emphasizes the disclosed non-zero values and derived ratios that reconcile internally. The outlook hinges on the company’s ability to manage SG&A intensity, improve unit economics per store, and maintain healthy franchise receivables and equipment costs. We view the financial position as adequate, but ongoing execution is required to convert top-line momentum into durable returns.

Profitability Analysis

ROE_decomposition: ROE 0.27% = Net Margin 0.26% × Asset Turnover 0.459 × Financial Leverage 2.31. Net income of ¥5m on revenue of ¥1,927m yields a very slim net margin. Asset turnover of ~0.46x indicates moderate asset intensity for the business model. Leverage of ~2.31x (assets/equity = ¥4,201m/¥1,820m) provides some ROE lift but remains within a reasonable range. margin_quality: Gross profit of ¥556m implies a 28.9% gross margin; we rely on this disclosed gross profit figure given the inconsistency with the cost-of-sales line. Operating income of ¥11m implies an operating margin of ~0.6%, pointing to a heavy SG&A burden and/or elevated cost structure. Net margin is 0.26%, affected by interest expense (¥7m) and a relatively high tax charge versus small pretax income. operating_leverage: Operating income growth (+748.8% YoY) versus revenue growth (+31.0% YoY) indicates positive operating leverage from a low base. However, the small absolute operating profit suggests that further scale and tighter cost control are required to achieve sustainable mid-single-digit operating margins. Interest coverage at 1.6x constrains the cushion from leverage.

Growth Assessment

revenue_sustainability: Revenue increased 31.0% YoY to ¥1,927m, reflecting strong momentum in the laundromat/franchise ecosystem. Sustainability will depend on store pipeline execution, utilization rates, same-store performance, and franchisee health. profit_quality: Operating margin remains ~0.6% and net margin 0.26%, suggesting that earnings quality is still developing. The mismatch between disclosed cost of sales and gross profit cautions that cost allocation or classification may be evolving; we prioritize the reported gross profit and margin figures for assessing profitability. outlook: If revenue growth persists and SG&A intensity normalizes, incremental margins could improve. Key levers include procurement and maintenance costs for equipment, utility and consumable cost management, and franchising terms. We expect gradual margin improvement contingent on cost discipline and stable demand.

Financial Health

liquidity: Current assets ¥2,367m vs. current liabilities ¥1,214m yields a current ratio of ~195% and quick ratio ~183.5%, indicating ample short-term liquidity. Working capital is ¥1,153m. solvency: Total liabilities are ¥2,263m against equity of ¥1,820m (debt-to-equity ~1.24x). Equity ratio calculated from the balance sheet is ~43.3%, suggesting a balanced capital structure for the business risk profile. capital_structure: Financial leverage of ~2.31x (assets/equity) provides modest ROE support but raises sensitivity to earnings volatility given interest coverage of 1.6x.

Cash Flow Quality

earnings_quality: Operating CF, investing CF, and financing CF are undisclosed (zeros are placeholders), preventing reconciliation of earnings to cash. As such, we cannot assess non-cash charges (D&A unreported) or working capital drag versus earnings. FCF_analysis: Free cash flow cannot be computed due to missing OCF and capex data. With low operating margin, conversion to FCF is a key uncertainty pending disclosure. working_capital: Working capital stands at ¥1,153m, which appears adequate, but without CF details we cannot assess cash conversion cycles or the impact of receivables/payables on cash generation.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0.00 with a payout ratio of 0.0%, consistent with the modest net income of ¥5m and the need to preserve capital for operations and potential growth investments. FCF_coverage: FCF coverage cannot be evaluated due to undisclosed OCF and capex; therefore, dividend capacity should be considered constrained by low profitability until sustained cash generation is demonstrated. policy_outlook: Given thin margins and limited interest coverage, a conservative dividend stance is appropriate. Any future policy change will likely depend on demonstrable improvement in operating margin and positive, consistent FCF.

Risk Assessment

Business Risks:

• Execution risk in new store openings and franchise network expansion.
• Sensitivity to utility costs, equipment procurement/pricing, and maintenance expenses.
• Demand variability in laundry services and potential competition in key regions.
• Dependence on franchisee health and credit, including receivables collection risk.
• Potential reputational and operational risks tied to store quality and uptime.

Financial Risks:

• Thin interest coverage (1.6x) leaves limited cushion against earnings volatility.
• Low net margin (0.26%) increases sensitivity to cost inflation or revenue shortfall.
• Data gaps on cash flows and D&A hinder assessment of cash earnings and capex needs.
• Potential working capital swings that could pressure liquidity if receivables build.

Key Concerns:

• Sustaining revenue growth while improving operating margin from ~0.6%.
• Clarifying cost structure given the inconsistency between cost of sales and gross profit.
• Demonstrating positive, repeatable operating cash flow and FCF.

Investment Implications

Key Takeaways:

• Revenue growth is strong at +31% YoY, indicating solid underlying demand/execution.
• Profitability is positive but fragile, with operating margin ~0.6% and ROE ~0.27%.
• Balance sheet liquidity is adequate (current ratio ~195%, equity ratio ~43%).
• Interest coverage is tight at 1.6x, limiting tolerance for earnings shocks.
• Cash flow disclosure is absent, leaving FCF and earnings quality unverified.

Metrics to Watch:

• Operating margin trajectory and SG&A-to-sales ratio.
• Interest coverage (EBIT/interest) and any changes in financing costs.
• Store count growth, same-store sales/utilization, and franchise fee trends.
• Working capital movements (receivables/inventories/payables) and OCF.
• Capex intensity and D&A disclosure to gauge maintenance vs. growth investment.

Relative Positioning: Within domestic service/franchise peers, the company exhibits stronger top-line momentum but lags in margin and ROE; balance sheet resilience is reasonable, yet limited coverage of interest and absent CF disclosure temper comparative quality.

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