MATCHING SERVICE JAPAN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.92B
• Operating Income: ¥912M
• Net Income: ¥610M
• EPS: ¥23.71

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

Verdict: A solid but slightly softer FY2026 Q2, with resilient operating profitability and strong cash/liquidity, offset by minor margin compression and flat bottom-line growth. Revenue increased 1.3% YoY to 39.18, while operating income rose 1.0% YoY to 9.12, indicating steady core execution. Gross profit was 30.50, implying a very high gross margin of 77.8%, consistent with a high-value-added staffing/solutions model. Operating margin was 23.3% (9.12/39.18), down a negligible 6 bps YoY. Ordinary income declined 2.2% YoY to 9.63, compressing the ordinary income margin by roughly 88 bps to 24.6%, reflecting less support from non-operating items and a higher tax burden. Net income was essentially flat at 5.89 (-0.1% YoY), with net margin at 15.0%, down approximately 26 bps from an estimated 15.3% in the prior year. The effective tax rate was elevated at 36.4%, weighing on net earnings conversion. Earnings quality was strong: operating cash flow of 7.60 exceeded net income (OCF/NI = 1.29x), indicating healthy cash conversion. Balance sheet quality remains a standout with cash and deposits of 34.97 and minimal leverage (D/E 0.12x), driving a very high current ratio of 523%. ROE calculated at 6.6% reflects low financial leverage (1.12x) and moderate asset turnover (0.391), despite a solid 15.0% net margin. ROIC of 10.7% is above common 7–8% targets, signaling efficient capital deployment in core businesses. Financing cash outflow of -14.33 includes share repurchases of -1.66, suggesting continued shareholder returns; capex needs are light (0.07), supporting FCF generation. Reported payout ratio (calculated) of 237.7% appears elevated but dividend data are unreported; this metric should be treated cautiously due to disclosure gaps. Intangibles (27.91) and goodwill (25.39) are sizeable, creating medium-term impairment risk if growth stalls. Forward-looking, modest top-line growth, tight cost control, and cash strength provide flexibility, but sustaining margin resilience and managing tax/ordinary income variability will be key to re-accelerating EPS.

Profitability Analysis

DuPont breakdown: ROE (6.6%) = Net Profit Margin (15.0%) × Asset Turnover (0.391) × Financial Leverage (1.12x). The component moving most this quarter appears to be the margin layer: operating margin compressed slightly (~6 bps), and ordinary income margin compressed more (~88 bps), while leverage stayed very low and likely stable, and asset turnover is modest for an asset-light, cash-heavy balance sheet. Business drivers: slight pressure from higher effective tax (36.4%) and a softer contribution from non-operating items (ordinary income down 2.2% YoY) constrained bottom-line leverage despite flat-to-up operating profit. Sustainability: operating margin around 23% looks structurally supported by high gross margins (77.8%) and modest capex needs; the main swing factors are tax rate normalization and non-operating income variability. The very low leverage (1.12x) caps ROE upside unless earnings accelerate or buybacks increase. Watch for any SG&A growth outpacing revenue; while current SG&A was 21.38 (ratio 54.6%), prior-period SG&A is unreported, limiting definitive trend analysis.

Growth Assessment

Revenue growth of 1.3% YoY is modest, but positive given market conditions; operating income growth of 1.0% indicates limited operating leverage in the quarter. Ordinary income fell 2.2% YoY, implying reduced tailwinds from non-operating items and/or higher expenses below operating line. Net income was essentially flat (-0.1% YoY), with net margin down ~26 bps to 15.0%. Profit quality is supported by high gross margin (77.8%) and tight capex (0.07), keeping EBITDA margin at 25.2%. ROIC at 10.7% suggests that incremental investments are earning above the typical cost of capital, reinforcing sustainability of core growth. Outlook hinges on demand in professional staffing/placement and solution adjacencies; with strong cash and minimal debt, the company can continue selective growth investments and shareholder returns. However, the elevated tax rate and ordinary income weakness dampened EPS momentum, suggesting limited near-term acceleration without stronger top-line or cost discipline.

Financial Health

Liquidity is very strong: current ratio 523%, quick ratio 523%, working capital 41.50; no warning flags (>>1.0). Solvency also looks conservative with D/E of 0.12x and interest coverage at 191.5x; no leverage-related stress. Cash and deposits of 34.97 provide ample buffer vs current liabilities of 9.81, minimizing any maturity mismatch risk. Interest-bearing debt details are unreported, but coverage and D/E suggest minimal debt burden. Off-balance sheet obligations are not disclosed in the provided data; none identified. No explicit warnings triggered (Current Ratio is well above 1.0; D/E far below 2.0).

Cash Flow Quality

OCF/Net Income at 1.29x indicates good earnings quality and healthy cash conversion. With capex of just 0.07, an implied proxy for FCF is approximately 7.53, comfortably positive and supportive of shareholder returns. Financing CF of -14.33 includes share repurchases of -1.66; dividends are unreported but likely contributed to the financing outflow. Working capital details are not disclosed, limiting insight into specific drivers; however, the positive OCF despite flat net income suggests no aggressive working-capital pull-forward. No manipulation signs identified from the available aggregates.

Dividend Sustainability

Dividend amounts are unreported; the provided calculated payout ratio of 237.7% appears elevated but cannot be validated without DPS. Given OCF of 7.60 and minimal capex, underlying FCF capacity looks adequate to fund a reasonable ordinary dividend. The large financing outflow (-14.33) and buybacks (-1.66) indicate ongoing capital returns strategy; sustainability depends on maintaining OCF near current levels. Coverage of total shareholder returns (dividends + buybacks) by FCF cannot be confirmed due to missing dividend data; monitor upcoming disclosures. Policy-wise, the strong balance sheet provides room for stable dividends, but any special dividends or stepped-up buybacks could temporarily exceed FCF.

Risk Assessment

Business Risks:

• Demand cyclicality in professional staffing/placement end-markets impacting placements and fees
• Competitive pressure in HR/recruitment solutions potentially compressing pricing and margins
• High intangibles and goodwill (27.91 and 25.39) pose impairment risk if growth slows
• Talent acquisition and retention costs could lift SG&A and pressure operating margin
• Regulatory/labor market changes affecting hiring trends and fee structures

Financial Risks:

• Elevated effective tax rate (36.4%) suppresses net margin and EPS conversion
• Ordinary income down 2.2% YoY increases reliance on stable operating profit
• Potential valuation volatility in investment securities (16.29) affecting non-operating line
• Disclosure gaps on interest-bearing debt and dividends limit full cash obligation visibility

Key Concerns:

• Margin compression at the ordinary and net levels despite stable operating margin
• Slowing earnings momentum with net income -0.1% YoY
• Large proportion of intangible assets increasing downside in adverse scenarios

Investment Implications

Key Takeaways:

• Core profitability resilient: operating margin ~23.3% with high gross margin 77.8%
• Cash generation healthy: OCF 7.60 exceeds NI; capex light (0.07)
• Balance sheet conservative: current ratio 523%, D/E 0.12x, interest coverage 191x
• ROIC 10.7% exceeds common targets, indicating efficient capital deployment
• Ordinary income down 2.2% and high tax rate curbed EPS growth; net margin dipped ~26 bps
• Shareholder returns ongoing (buybacks -1.66), but total payout visibility limited due to dividend disclosure gaps

Metrics to Watch:

• Revenue growth re-acceleration and placement volumes/fees
• SG&A trend versus revenue to confirm operating leverage
• Effective tax rate trajectory and any tax normalization
• Non-operating income/expense volatility and securities-related gains/losses
• Cash conversion (OCF/NI) and working capital movements
• Intangible/goodwill impairment indicators

Relative Positioning: Within domestic professional staffing/recruitment peers, MS-Japan exhibits stronger-than-average margins and cash/liquidity with low leverage, but shows slower near-term growth and sensitivity at the ordinary income/net level; capital returns capacity is solid, contingent on sustaining OCF.

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
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