Bestone.Com Co.,Ltd FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥489M
• Operating Income: ¥-4M
• Net Income: ¥33M
• EPS: ¥-5.54

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

Best One.com Co., Ltd. (TSE:6577) reported FY2026 Q1 consolidated results under JGAAP showing soft top-line and near break-even operating performance. Revenue was 4.89 (100M JPY), down 5.2% YoY, reflecting a slower sales pace at the start of the fiscal year. Gross profit was 1.36 (100M JPY), implying a gross margin of 27.8%, which is adequate for an OTA/intermediary model but indicates limited pricing power in the quarter. SG&A was 0.93 (100M JPY), or 19.0% of sales, suggesting disciplined operating expense control, though reported operating income of -0.04 (100M JPY) points to additional operating items not captured in the SG&A line as presented. Non-operating income and expenses netted to +0.05 (100M JPY), yet ordinary income is reported at -0.06 (100M JPY), indicating classification differences or other non-operating items not itemized. Profit before tax is listed at +0.49 (100M JPY) while net income is -0.08 (100M JPY) despite income tax expense of 0.16 (100M JPY), implying the presence of sizable extraordinary items, valuation allowances, or other below-the-line adjustments; this is a material data limitation for interpreting earnings quality this quarter. DuPont metrics show a calculated ROE of -0.7% driven by a -1.6% net margin, low asset turnover of 0.120 (quarterly), and leverage of 3.67x. Liquidity is a relative strength: current assets of 34.55 (100M JPY) with cash and deposits of 25.03 (100M JPY) against current liabilities of 12.26 (100M JPY) yield a current and quick ratio of 281.9%. However, solvency is constrained by noncurrent liabilities of 16.40 (100M JPY), primarily long-term loans of 16.29 (100M JPY), resulting in a debt-to-equity ratio of 2.57x and negative interest coverage (-1.96x). Total equity stands at 11.13 (100M JPY), with retained earnings of only 1.20 (100M JPY), indicating a modest buffer for losses. Working capital is solid at 22.30 (100M JPY), providing operating flexibility. Cash flow statements were not disclosed, preventing assessment of operating cash conversion or free cash flow. Dividend data were unreported; the displayed payout ratio figure is not reliable for analysis in this context. Earnings visibility is clouded by unreported line items and the inconsistency between ordinary income, profit before tax, and net income. Overall, the quarter suggests cautious demand momentum, stable gross take rates, and tight cost discipline, but the capital structure and coverage metrics highlight sensitivity to interest costs and scale. Outlook will hinge on booking recovery, take-rate resilience, and the path of debt service, with a particular need for clarity on extraordinary items and cash generation.

Profitability Analysis

• ROE decomposition (DuPont): Net profit margin -1.6% × Asset turnover 0.120 × Financial leverage 3.67x = ROE -0.7% (matches reported).
• Operating margin proxy: Operating income -0.04 / Revenue 4.89 ≈ -0.8%, indicating near break-even operations with slight negative operating leverage in the quarter.
• Gross margin: 27.8% (1.36 / 4.89), consistent with intermediary/ticketing economics but below high-margin digital platforms, leaving limited buffer for fixed costs.
• Expense intensity: SG&A ratio ≈ 19.0% (0.93 / 4.89). The gap between gross profit and SG&A would suggest positive operating income, but reported operating income is -0.04, implying additional operating costs or reclassifications not itemized; this limits margin quality assessment.
• Non-operating result: Income 0.08 vs expenses 0.03; ordinary income nevertheless reported at -0.06, pointing to classification differences or other non-operating items not detailed.
• Below-the-line effects: Profit before tax at +0.49 and tax at 0.16 would ordinarily imply positive net income, yet net income is -0.08, suggesting extraordinary losses, valuation allowances, or consolidation effects; these weigh on bottom-line quality.
• Interest burden: Interest expense 0.02 (100M JPY) with negative EBIT yields interest coverage of -1.96x, highlighting vulnerability of profitability to financing costs at current scale.
• Operating leverage: With revenue down 5.2% YoY and operating loss improving by 63.3% YoY, cost actions appear to have reduced fixed cost drag; however, the near-zero margin means small revenue fluctuations can swing operating income materially.

Growth Assessment

• Revenue contracted 5.2% YoY to 4.89 (100M JPY), indicating softer demand or booking timing effects at quarter start.
• Gross profit held at 1.36 (100M JPY) with a 27.8% margin, suggesting stable take rates; any mix shift between higher- and lower-commission products could still be a hidden driver, but details are unreported.
• Operating income improved to -0.04 (100M JPY), +63.3% YoY, demonstrating cost discipline and potentially better variable cost alignment.
• Ordinary income at -0.06 and net income at -0.08 show that non-operating and below-the-line factors remain a swing factor; sustainability of improvement depends on reducing these drags.
• Asset turnover is low at 0.120 for the quarter, reflecting early-year seasonality and/or balance sheet scaling ahead of demand; improving turnover will be key for ROE.
• Outlook hinges on booking recovery, FX dynamics affecting outbound/inbound cruise demand, and the cadence of departures; without order/backlog data, revenue sustainability beyond Q1 cannot be confirmed.
• Given the inconsistency between PBT and net income, we assume extraordinary items impacted the quarter; normalization of such items would improve reported growth optics.

Financial Health

• Liquidity: Current assets 34.55 vs current liabilities 12.26 yield a current ratio and quick ratio of 281.9%; cash and deposits of 25.03 cover ~204% of current liabilities, indicating strong short-term liquidity.
• Solvency: Total liabilities 28.66 vs equity 11.13 produce a debt-to-equity ratio of 2.57x. Long-term loans are 16.29 (100M JPY), nearly 146% of total equity, concentrating solvency risk in noncurrent debt.
• Equity buffer: Owners' equity 11.06 with retained earnings 1.20 suggests limited capacity to absorb repeated losses without diluting or restructuring.
• Implied equity ratio: Approximately 27.2% (11.13 / 40.88), despite XBRL not providing it; a moderate but not high capital adequacy for a small-cap service business.
• Interest coverage: -1.96x indicates operating earnings are insufficient to cover interest this quarter; reliance on cash reserves mitigates near-term risk but is not a long-term solution.
• Maturity profile: Noncurrent liabilities (16.40) dominate, implying scheduled amortization beyond one year; actual repayment schedule and covenants are undisclosed (data limitation).

Cash Flow Quality

• Operating cash flow: Not disclosed; OCF-to-net-income and working capital cash conversion cannot be calculated.
• Free cash flow: Not reported; capex is also unreported, limiting assessment of reinvestment needs vs cash generation.
• Earnings quality: The mismatch among ordinary income (-0.06), profit before tax (+0.49), and net income (-0.08) suggests one-off or classification effects; absent cash flow data, we cannot confirm cash earnings quality.
• Working capital: Current assets 34.55 vs current liabilities 12.26 yield working capital of 22.30, providing operational flexibility; the large cash balance reduces immediate liquidity risk.
• Key data limitations: No OCF, no capex, no detail on other operating items; therefore, any inference on cash conversion is tentative.

Dividend Sustainability

• Dividend policy: Dividend amounts are unreported for the quarter and year-to-date; the reported payout ratio metric (-343.1%) is not reliable given missing DPS/FCF data.
• Earnings basis: Q1 net loss of -0.08 (100M JPY) would not support cash dividends on an earnings basis; any dividend would rely on retained earnings (1.20) and cash (25.03), both finite resources.
• FCF coverage: Not calculable due to missing OCF and capex. With negative operating income and negative interest coverage, cautious stance on distribution capacity is warranted until cash generation evidence emerges.
• Outlook: Absent explicit guidance and given small retained earnings, a conservative dividend posture would be consistent with balance sheet preservation; confirmation requires management disclosure.

Risk Assessment

Business Risks:

• Demand volatility and seasonality in cruise and travel bookings impacting revenue predictability.
• Commission/take-rate pressure from suppliers and competitive OTAs reducing gross margin.
• FX sensitivity affecting outbound travel affordability and consumer demand.
• Dependence on third-party operators and inventory availability.
• Potential regulatory and geopolitical disruptions affecting travel itineraries.

Financial Risks:

• High leverage relative to equity (D/E 2.57x) and negative interest coverage (-1.96x).
• Limited retained earnings (1.20) reducing loss-absorption capacity.
• Refinancing and covenant risks tied to 16.29 (100M JPY) in long-term loans.
• Earnings sensitivity to non-operating and extraordinary items, as evidenced by PBT vs net income mismatch.
• Concentration of liquidity in cash balances; absent OCF data, sustainability of cash is unverified.

Key Concerns:

• Inconsistency between ordinary income (-0.06), profit before tax (+0.49), and net income (-0.08), obscuring earnings quality.
• Negative operating income and negative interest coverage despite adequate gross margin.
• Revenue decline of 5.2% YoY with low asset turnover (0.120), limiting ROE.
• Lack of cash flow disclosure (OCF/FCF) and dividend data, constraining assessment of capital allocation.
• High noncurrent debt relative to equity and unclear amortization schedule.

Investment Implications

Key Takeaways:

• Top line softened 5.2% YoY; margin structure stable but insufficient to offset fixed costs in Q1.
• Operating performance near break-even, but below-the-line items drove a net loss.
• Liquidity strong (cash 25.03; current ratio 281.9%), yet solvency pressured by long-term loans (16.29) and D/E 2.57x.
• ROE is negative (-0.7%) due to weak net margin and low asset turnover.
• Data gaps (cash flows, dividend details, expense breakdown) and line-item inconsistencies limit confidence in earnings quality.

Metrics to Watch:

• Booking volume, gross booking value, and cancellation rates.
• Gross margin (take rate) and SG&A ratio trajectory.
• Operating income to interest expense (coverage) and any change in borrowing rates.
• OCF and FCF once disclosed; working capital movements (customer advances vs payables).
• Extraordinary items reconciliation between ordinary income, PBT, and net income.
• Debt amortization schedule and covenant headroom.

Relative Positioning: Within Japan-listed travel intermediaries, Best One.com appears sub-scale with adequate liquidity but elevated financial leverage and earnings sensitivity to volume and financing costs; sustained recovery in bookings and clearer cash generation would be needed to narrow the gap versus larger, more diversified peers.

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