Miyakoshi Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥304M
• Operating Income: ¥-39M
• Net Income: ¥75M
• Earnings per Unit (EPU): ¥1.75

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Unit Information

Distribution 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: FY2026 Q2 was weak on core operations but supported by hefty non-operating gains, resulting in a small net profit amid very strong balance sheet liquidity. Revenue was 3.04 (100M JPY), with operating income at -0.39, indicating an operating margin of approximately -12.8%. Non-operating income was material at 1.36, of which 1.34 came from interest income, pivoting ordinary income to 0.97. Net income was 0.70, down 65.6% YoY, implying a sharp contraction in profitability despite positive bottom line. Ordinary income fell 69.7% YoY, indicating pressure both on operating and non-operating contributors relative to the prior year. Total comprehensive income was -7.47, signaling sizable unrealized valuation or currency losses through OCI that more than offset reported net profit. The DuPont snapshot shows a net margin of 23.0%, asset turnover of 0.011x, and financial leverage of 1.02x, culminating in a very low ROE of 0.3%. ROIC was reported at -0.2%, well below a basic cost of capital, highlighting capital inefficiency. SG&A was 2.49 against revenue of 3.04, underscoring a lack of operating scale in the current period. Margins: operating margin is -12.8%, ordinary margin ~31.9%, and net margin 23.0%; YoY basis-point changes cannot be computed due to missing prior-period revenue and gross profit data. Earnings quality is mixed: the absence of operating cash flow disclosure prevents OCF/NI validation, while the negative comprehensive income suggests mark-to-market or FX-driven volatility underneath reported profit. Liquidity and solvency are exceptionally strong with a current ratio of 56.7x and D/E of 0.02x, driven by cash and deposits of 109.44 against minimal liabilities of 6.62. Profit composition is skewed toward financial income, making profits sensitive to interest rate conditions and treasury allocation rather than core business momentum. The divergence between net income (+0.70) and total comprehensive income (-7.47) raises caution about underlying asset valuation volatility. Forward-looking, scaling revenue and improving operating efficiency are critical, while managing OCI volatility and redeploying excess cash into ROIC-accretive opportunities could lift structural returns. Near-term earnings trajectory will likely hinge on the sustainability of interest income and any normalization of OCI swings, given thin operating activity. Overall, the company remains financially safe but needs to rebuild operating momentum to improve ROE/ROIC.

Profitability Analysis

ROE decomposition: ROE ≈ Net Profit Margin (23.0%) × Asset Turnover (0.011x) × Financial Leverage (1.02x) = ~0.3%. The weakest link is asset turnover: revenue of 3.04 on assets of 279.09 yields only ~1.1% turnover, severely capping return generation. Net margin is inflated by non-operating interest income (1.34), while operating margin is -12.8%, indicating the core business is loss-making at current scale. The component that likely deteriorated most YoY is net margin, consistent with the -65.6% YoY drop in net income and -69.7% YoY in ordinary income; leverage is almost unchanged (assets/equity ~1.02x), and asset turnover is structurally low. Business drivers: (1) limited revenue scale vs SG&A (2.49) produced an operating loss, and (2) lower non-operating contributions relative to last year likely compressed overall margins. Sustainability: reliance on interest income is inherently volatile with rate cycles and treasury mix; without operating scale-up, current margin profile is not durable. Concerning trend: SG&A is very high relative to revenue (SG&A/revenue ~82%), pointing to negative operating leverage; without revenue growth or cost base reduction, operating losses could persist.

Growth Assessment

Top-line sustainability is uncertain given the very small revenue base (3.04) and lack of disclosed YoY growth. Profit quality is heavily non-operating; interest income (1.34) drove the profit swing from operating loss to net profit. With ordinary and net income down 69.7% and 65.6% YoY, respectively, earnings momentum has weakened. No segment or gross profit details were disclosed, limiting visibility into mix or unit economics. Absent catalysts to lift revenue run-rate or materially right-size SG&A, operating profit recovery looks challenging. Outlook hinges on: (1) the stability of interest income (cash level, yields, duration) (2) potential OCI normalization (valuation/FX) and (3) management’s ability to redeploy cash into ROIC-accretive projects or reduce fixed costs. In the near term, expect earnings variability tied to financial income and OCI rather than core operations.

Financial Health

Liquidity is exceptionally strong: current assets 119.12 vs current liabilities 2.10 implies a current ratio of ~56.7x and quick ratio ~56.7x, with cash and deposits at 109.44. Solvency is robust: total liabilities 6.62 vs equity 272.47 yields D/E of ~0.02x. There is no warning on Current Ratio (<1.0) or D/E (>2.0). Maturity mismatch risk is minimal given current assets dwarf current liabilities (working capital 117.02). Interest-bearing debt, payables, and loan details are unreported; however, the tiny liability base mitigates immediate refinancing risk. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

OCF was not disclosed; therefore OCF/Net Income cannot be assessed (N/A), and we cannot confirm accrual quality. Free cash flow also unreported, preventing dividend/CapEx coverage analysis. Earnings composition is skewed toward non-operating interest income, which is cash-based but sensitive to rate and allocation decisions; sustainability depends on treasury yields and cash levels. The large negative comprehensive income (-7.47) points to valuation or FX swings affecting equity outside profit and loss. Working capital manipulation signs cannot be evaluated due to missing receivables/inventories/payables and OCF details.

Dividend Sustainability

Dividend data (DPS, payout, dividends paid) were unreported. With net income at 0.70 and a very strong net cash position implied by cash of 109.44 and low liabilities, capacity exists, but sustainability should be judged against FCF, which is unavailable. Given ROIC of -0.2% and operating losses, priority may sensibly be on reinvestment discipline and improving core profitability before committing to higher payouts. Without OCF and CapEx visibility, payout sustainability cannot be assessed.

Risk Assessment

Business Risks:

• Operating loss (-0.39) indicates insufficient revenue scale versus fixed SG&A, risking continued negative operating leverage.
• Extremely low asset turnover (0.011x) depresses ROE/ROIC and signals underutilized asset base.
• Profit dependence on interest income (1.34 of 1.36 non-operating income) exposes earnings to rate and treasury allocation shifts.
• Large negative OCI (-7.47) suggests valuation/FX volatility affecting equity outside earnings.
• Lack of segment and gross profit disclosure reduces visibility into drivers and unit economics.

Financial Risks:

• Earnings volatility from financial income and OCI despite strong liquidity.
• Potential reinvestment risk: deploying substantial cash (109.44) into projects with subpar ROIC could dilute returns.
• Concentration risk if cash is held in limited instruments or currencies (FX exposure not disclosed).

Key Concerns:

• ROIC at -0.2% well below cost of capital; structural return profile is weak.
• Net income declined 65.6% YoY; ordinary income fell 69.7% YoY.
• SG&A/revenue at ~82% is elevated, sustaining operating losses without growth.
• Earnings quality uncertain due to absent OCF and heavy reliance on non-operating items.
• Negative comprehensive income overwhelms reported net profit, indicating underlying valuation headwinds.

Investment Implications

Key Takeaways:

• Core operations are loss-making; bottom-line profitability is primarily driven by interest income.
• Massive liquidity and low leverage provide resilience but also depress ROE given low asset turnover.
• ROE of ~0.3% and ROIC of -0.2% underscore poor capital efficiency.
• Comprehensive income negative (-7.47) highlights valuation/FX volatility risk in equity.
• Improving revenue scale and/or resizing SG&A are prerequisites for sustainable operating profit.
• Earnings trajectory near term will track interest income and OCI, not operating momentum.

Metrics to Watch:

• Operating cash flow and OCF/NI ratio (target >1.0 for quality).
• Revenue trajectory and gross margin disclosure to gauge operating leverage.
• SG&A trend versus revenue growth (aim for SG&A growth below revenue).
• Interest income run-rate and cash balance/yield dynamics.
• OCI components (securities valuation, FX) and their sensitivity.
• ROIC and asset turnover improvements via capital deployment or asset rationalization.

Relative Positioning: Versus TSE small-cap peers, the company exhibits a fortress balance sheet and minimal leverage but lags materially on profitability and capital efficiency; earnings quality is lower due to heavy reliance on non-operating income and significant OCI volatility.

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