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

HANATOUR JAPAN reported solid FY2025 Q3 consolidated results under JGAAP, with revenue of ¥5,043 million (+4.8% YoY) and operating income of ¥1,214 million (+5.5% YoY), indicating mild positive operating leverage. Net income rose 6.8% YoY to ¥1,066 million, outpacing revenue growth and reflecting improved cost discipline and lower non-operating drag versus the prior period. Profitability remains strong: gross margin was a high 73.7%, operating margin was approximately 24.1%, and net margin stood at 21.1%. The DuPont framework shows an ROE of 25.6% driven by a healthy net margin, moderate asset turnover of 0.489x, and financial leverage of 2.48x. Liquidity appears adequate with a current ratio of 165% and quick ratio also 165% (no inventories reported), supporting near-term obligations. While the reported equity ratio field is 0.0%, balance sheet figures imply equity of ¥4,165 million against total assets of ¥10,309 million, suggesting an implied equity ratio of roughly 40% and a balanced capital structure. Interest coverage is robust at about 20x (operating income/interest expense), indicating manageable financial burden. Ordinary income (¥1,161 million) is slightly below operating income due to net non-operating expenses including ¥60 million of interest. Based on provided income tax expense (¥96.7 million) versus ordinary income, the implied effective tax rate appears to be in the high single digits, not 0% as the placeholder metric suggests. Cash flow data were not disclosed (zeros indicate undisclosed), so operating cash flow, free cash flow, and cash balances cannot be assessed from this dataset. EPS was ¥85.31; this implies an approximate share count of ~12.5 million, which in turn suggests an indicative BVPS around ¥330–335 using reported equity, although BVPS was not disclosed. The company paid no dividends during the period (DPS 0, payout 0%), consistent with a reinvestment or balance-sheet rebuilding stance, or simply no update. Overall, the quality of earnings appears sound given the margin structure and interest coverage, though the absence of cash flow disclosures limits assessment of cash conversion and working capital dynamics. Revenue growth was steady despite a travel sector still normalizing, suggesting resilient demand, likely supported by cross-border travel tailwinds. Risks remain tied to travel volume volatility, FX, and airline/hotel capacity, but financial metrics indicate reasonable resilience. Data limitations around cash flows, depreciation, and share statistics require caution in interpreting efficiency and payout metrics.

Profitability Analysis

ROE decomposition (DuPont): net margin 21.14% × asset turnover 0.489 × financial leverage 2.48 = ~25.6% ROE, indicating strong return generation largely driven by high margins and moderate leverage. Gross margin is elevated at 73.7%, reflecting an asset-light, intermediary/travel-service model with high contribution from service fees. Operating margin of ~24.1% (¥1,214m/¥5,043m) demonstrates solid operating efficiency; SG&A is inferred at ~¥2,502m, or ~49.6% of revenue, implying decent cost control. Net margin at 21.1% benefits from limited non-operating drag; ordinary income is only ~¥53m below operating income, mainly due to interest expense of ¥60m. Interest coverage of ~20.1x underscores that financing costs are not materially diluting profitability. Depreciation and amortization were undisclosed (reported as zero), so EBITDA metrics are not meaningful; operating income serves as the primary profitability gauge. Operating leverage appears modestly positive given revenue growth of +4.8% YoY versus operating income growth of +5.5% YoY and net income +6.8% YoY. The margin mix suggests pricing power or a resilient take-rate, with limited gross margin compression. Effective tax rate, using available numbers (¥96.7m tax / ~¥1,161m pre-tax), is roughly 8–9%, lower than standard statutory levels, possibly reflecting loss carryforwards or tax credits; the 0.0% metric should be treated as not meaningful.

Growth Assessment

Top-line growth of +4.8% YoY indicates steady expansion, likely underpinned by continued recovery in international travel and resilient demand in core routes. Profit growth outpaced sales (OP +5.5%, NI +6.8%), suggesting improved operating efficiency and positive mix effects. The high gross margin and relatively contained non-operating expenses point to good profit quality from core operations. Sustainability of revenue growth will depend on travel volumes, seat capacity, and FX-sensitive demand, particularly within Japan–Korea and broader Asia corridors. The asset turnover of 0.489x is moderate for an asset-light operator, implying some room to enhance utilization as volumes scale. Given robust margins, incremental revenue should translate well into operating profit if SG&A scales efficiently. Outlook hinges on macro factors (yen level, fuel surcharges, airfare trends) and supply constraints (airline/hotel capacity). Absent cash flow data and D&A, we cannot assess growth investment intensity or capex needs, but the model appears service-driven with limited capital intensity. The slight improvement in operating leverage this quarter suggests potential for further earnings expansion if demand remains firm. Non-operating items are manageable; thus, earnings trajectory is likely to track operating performance. Any policy changes affecting inbound travel or visa regimes could materially impact growth.

Financial Health

Liquidity: current ratio 165% and quick ratio 165% (no inventories reported) indicate comfortable short-term coverage. Working capital stands at ~¥1,833 million (current assets ¥4,654m minus current liabilities ¥2,821m), supporting operations through seasonal fluctuations. Solvency: total liabilities of ~¥7,258m against equity of ~¥4,165m imply a debt-to-equity of 1.74x (all liabilities basis), with implied equity ratio ~40% (despite the equity ratio field showing 0.0% as undisclosed). Interest expense is modest at ¥60m with interest coverage ~20x, indicating low refinancing stress under current earnings. Capital structure appears balanced with moderate leverage that supports a 2.48x financial leverage factor in DuPont. We cannot parse interest-bearing debt versus other liabilities from the provided data; however, the manageable interest burden suggests limited financial risk currently. Cash and equivalents were undisclosed, so absolute liquidity buffers cannot be evaluated.

Cash Flow Quality

Operating cash flow, investing cash flow, financing cash flow, and cash balances were not disclosed (zeros indicate undisclosed, not actual zeros), so cash conversion and free cash flow cannot be assessed from this dataset. Earnings quality must therefore be inferred from accrual metrics: strong operating margin and limited non-operating leakage point to solid underlying profitability. Without depreciation data, we cannot adjust for non-cash expenses, so OCF/NI and FCF metrics shown as 0.00 are not meaningful. Working capital appears positive given the current ratio, but the direction of receivables, payables, and customer advances is unknown; travel agencies often carry significant customer prepayments and supplier payables, which can swing OCF. In the absence of cash data, we treat earnings quality as operationally sound but unverified by cash conversion.

Dividend Sustainability

The company reported no dividend (DPS 0, payout 0%) for the period. With net income of ¥1,066m and strong profitability, capacity for future distributions may exist, but assessment of sustainability requires OCF and cash balances, which were undisclosed. Free cash flow coverage cannot be computed; thus, any payout stance should be considered conservative until cash generation is evidenced. Policy-wise, the current zero payout suggests prioritization of reinvestment, balance sheet fortification, or simply no update on shareholder return policy this quarter. If the company maintains margins and demonstrates consistent positive OCF when disclosed, a moderate payout could be serviceable given low interest burden; however, visibility is limited.

Risk Assessment

Business Risks:

• Exposure to travel demand volatility due to macroeconomic conditions and geopolitical events.
• Dependence on airline and hotel capacity; supply constraints can cap growth or pressure margins.
• FX sensitivity (JPY/KRW and other Asian currencies) affecting demand and pricing.
• Seasonality of travel leading to quarter-to-quarter volatility in bookings and cash flows.
• Concentration in specific corridors (e.g., Japan–Korea) potentially heightening regional risk.
• Competitive pressures from large incumbents and online travel platforms compressing take-rates.
• Regulatory and public health risks affecting cross-border travel policies.

Financial Risks:

• Limited visibility on cash balances and cash generation due to undisclosed cash flow statements.
• Potential working capital swings typical in travel agencies (customer advances vs. supplier payables).
• Interest rate risk on any floating-rate borrowings, albeit current interest burden is modest.
• Currency risk impacting both demand and reported financials.
• Uncertain effective tax rate trajectory given the low implied rate this quarter.

Key Concerns:

• Absence of operating, investing, and financing cash flow disclosures limits earnings quality validation.
• Depreciation and amortization not disclosed, obscuring EBITDA and capex needs.
• Equity ratio field reported as 0.0% despite implied ~40%, highlighting disclosure gaps in certain XBRL items.

Investment Implications

Key Takeaways:

• Solid topline growth (+4.8% YoY) with operating income growing slightly faster (+5.5%), indicating positive operating leverage.
• High profitability profile: 73.7% gross margin, ~24% operating margin, and 21.1% net margin.
• Strong ROE at 25.6% driven by high margins and moderate leverage (2.48x), with asset turnover at 0.489x.
• Comfortable liquidity (current ratio 165%) and robust interest coverage (~20x) support financial resilience.
• Cash flow and D&A data are undisclosed, limiting assessment of cash conversion and investment intensity.
• No dividend payout this period; future distribution capacity depends on demonstrated OCF and capital needs.

Metrics to Watch:

• Bookings growth, passenger volumes, and gross booking value (GBV).
• Take-rate and gross margin stability.
• SG&A-to-revenue ratio and operating leverage as volumes scale.
• Operating cash flow and free cash flow once disclosed; OCF/NI conversion.
• Interest-bearing debt levels and interest coverage trajectory.
• FX trends (JPY/KRW) and airline/hotel capacity indicators.
• Effective tax rate normalization and any changes in tax expense.

Relative Positioning: The company appears to operate an asset-light, high-margin travel services model with niche strength likely in Japan–Korea flows, positioning it favorably on profitability versus diversified peers (e.g., large travel agencies/OTAs) but with sensitivity to corridor-specific demand and capacity constraints.

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