HANATOUR JAPAN CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥5.04B
• Operating Income: ¥1.21B
• Net Income: ¥998M
• EPS: ¥85.31

Income Statement

Balance Sheet

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

Verdict: Solid quarter with steady top-line growth and modest margin expansion translating into higher earnings and robust ROE. Revenue rose 4.8% YoY to 50.43, with operating income up 5.5% YoY to 12.14 and net income up 6.8% to 10.66. Gross profit reached 37.16, implying a high gross margin of 73.7%, consistent with a service-light, asset-light inbound travel model. Operating margin printed at 24.1%, while net margin was 21.1%, both slightly improved versus last year. Based on YoY math, operating margin expanded by roughly 20 bps and net margin by about 40 bps. Ordinary income grew 6.6% YoY to 11.61 (a 23.0% margin), despite net non-operating expense of 0.63. Interest coverage remains very strong at around 20x, reflecting low financial stress. Liquidity is healthy with a current ratio of 204% and cash of 23.92 comfortably exceeding short-term loans of 4.00. Leverage on a liabilities-to-equity basis is moderate at 1.48x, but interest-bearing debt is light (loans totaling 5.68), supporting balance sheet resilience. ROE is a standout at 25.6%, driven primarily by a high net margin and moderate financial leverage (assets/equity 2.48x). The effective tax rate of 8.8% is unusually low and likely a tailwind this quarter; sustainability should be monitored. Earnings quality cannot be fully assessed due to unreported cash flow statements; OCF/NI and FCF are not available. Dividend payout is estimated at 35.6%, which appears conservative relative to earnings, but FCF coverage is unknown. Forward-looking, sustained inbound demand and operating discipline underpin the outlook, but sensitivity to travel flows, currency, and tax normalization remains.

Profitability Analysis

ROE decomposition: ROE (25.6%) = Net Profit Margin (21.1%) × Asset Turnover (0.489x) × Financial Leverage (2.48x). The largest positive contributor is the high net margin; asset turnover is below 0.5x, typical for service platforms with cash-heavy balance sheets, and leverage is moderate. Versus last year, operating margin expanded by ~20 bps (from ~23.9% to 24.1%) and net margin by ~40 bps (from ~20.7% to 21.1%), implying incremental operating leverage and better cost discipline within SG&A (SG&A ratio is 50.8% of revenue). Business drivers include resilient inbound travel volumes and favorable product mix supporting a 73.7% gross margin. Non-operating items were a small drag (net -0.63), but not enough to offset operating gains; the unusually low effective tax rate (8.8%) also lifted after-tax returns. Sustainability: modest operating margin gains appear repeatable if demand stays firm and costs remain controlled; however, the low tax rate may normalize, tempering net margin. Watch for SG&A growth outpacing revenue; current SG&A intensity (50.8% of sales) is high in absolute terms and could pressure margins if volumes soften.

Growth Assessment

Revenue grew 4.8% YoY to 50.43, consistent with steady recovery/expansion in inbound travel services. Operating income rose 5.5% to 12.14, slightly outpacing revenue, indicating positive operating leverage. Ordinary income (+6.6% YoY) and net income (+6.8% YoY) outgrew sales, aided by cost discipline and a low tax rate. Margin trends: operating margin ~24.1% (+~20 bps YoY), ordinary margin 23.0% (+~40 bps YoY), net margin 21.1% (+~40 bps YoY). Quality of growth skews toward core operations: non-operating income ratio is low (0.7%), and the quarter is not reliant on one-time gains. Near-term outlook hinges on inbound travel demand, airline capacity, and currency dynamics supporting Japan as a destination; management’s ability to maintain SG&A efficiency will be key to sustaining margin expansion.

Financial Health

Liquidity is strong: current ratio 204% and quick ratio 204%, with working capital of 22.03. Cash and deposits (23.92) comfortably cover short-term loans (4.00), reducing rollover risk. Solvency appears sound: liabilities-to-equity (reported D/E) is 1.48x, and assets/equity leverage is 2.48x; calculated equity ratio is approximately 40.4% (41.65/103.09). Interest-bearing debt is modest (loans totaling 5.68), and interest coverage is robust at ~20x, indicating ample buffer. Maturity mismatch risk looks limited given current assets of 43.17 against current liabilities of 21.14. Noncurrent liabilities are sizable (40.30) relative to long-term loans (1.68), suggesting the presence of other obligations (e.g., leases or deferred items), but details are not disclosed. No off-balance sheet obligations were reported in the provided data.

Cash Flow Quality

Operating cash flow, investing cash flow, and free cash flow were not disclosed, preventing a direct assessment of earnings-to-cash conversion. As a result, OCF/Net Income and FCF coverage cannot be calculated. The lack of cash flow data means we cannot validate whether working capital contributed to or detracted from OCF nor assess sustainability of cash generation relative to dividends and capex. Cash on hand (23.92) and low interest-bearing debt provide a buffer, but without OCF and capex figures, we cannot definitively judge cash flow quality. No signs of working capital manipulation can be inferred from the limited data provided.

Dividend Sustainability

Payout ratio is calculated at 35.6%, which is conservative and comfortably below the 60% benchmark. With net income at 10.66 and strong cash balances, the dividend appears covered by earnings; however, FCF coverage is unknown due to unreported OCF and capex. Absent cash flow disclosure, our assessment relies on earnings coverage and balance sheet strength rather than cash generation. Policy outlook: if earnings growth and liquidity remain stable, the current payout looks maintainable, but visibility would improve with disclosed OCF and capital allocation plans.

Risk Assessment

Business Risks:

• Inbound travel demand volatility due to macro conditions, pandemics, or geopolitical events
• Airline capacity and airfare levels affecting tour volume and profitability
• Currency fluctuations impacting inbound attractiveness and cost structures
• Supplier concentration and contracting risk with hotels/transport partners
• Potential normalization of the unusually low effective tax rate (8.8%)

Financial Risks:

• Limited visibility on operating cash flow and capex, constraining FCF assessment
• Exposure to non-interest-bearing liabilities or advances not fully detailed in the notes
• Potential increase in SG&A intensity if growth slows, pressuring margins
• Currency translation risk affecting reported results

Key Concerns:

• Absence of cash flow statement and segment detail limits earnings quality analysis
• Non-operating expense remains a drag (net -0.63), though small relative to EBIT
• High SG&A ratio (50.8% of revenue) could become a headwind in a downturn

Investment Implications

Key Takeaways:

• Steady top-line growth (+4.8% YoY) with modest margin expansion
• High profitability profile: OP margin 24.1%, NPM 21.1%
• ROE is strong at 25.6%, driven by high margins and moderate leverage
• Balance sheet is liquid (current ratio 204%) with low interest-bearing debt
• Tax rate tailwind (8.8%) boosted net income; watch for normalization

Metrics to Watch:

• Operating cash flow and free cash flow disclosure (OCF/NI > 1.0 target)
• SG&A growth vs revenue growth and SG&A ratio trajectory
• Effective tax rate trend and any NOL utilization
• Booking volumes, conversion, and cancellation rates tied to inbound demand
• Interest coverage and any change in lease/long-term obligation mix

Relative Positioning: Within Japan travel/inbound operators, the company exhibits above-average margins, strong ROE, and a solid liquidity profile, though transparency on cash flows is below peers that consistently disclose OCF/FCF.

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