YA-MAN LTD. FY2026 Q2 Earnings Report

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Executive Summary

The most important point in this earnings report is the turnaround from an operating loss in the same period of the previous year to operating profitability, with both revenue growth and improved cost efficiency progressing simultaneously. Revenue was ¥137.2B (+19.2% YoY), Operating Income was ¥0.7B (improving from △¥11.6B in the previous year), Ordinary Income was ¥2.0B (improving from △¥11.3B in the previous year), and Net Income was ¥1.3B (improving from △¥12.0B in the previous year). The primary drivers of revenue growth were the Overseas Business, with sales up +75.2%, and StoreSales, up +23.3%. The decline in the SG&A ratio (from 68.0% in the previous year to 56.9%) also supported the improvement in earnings.

Factors Affecting Performance

【Revenue】Revenue was ¥137.2B, representing a +19.2% increase YoY. By segment, Overseas recorded the highest growth rate at ¥54.4B (+75.2%), followed by StoreSales at ¥39.1B (+23.3%). In contrast, DirectSales declined to ¥30.2B (△17.4%), while OnLine remained broadly flat at ¥11.9B (+2.9%). Strong growth in Overseas and StoreSales drove overall revenue growth.

【Earnings】Operating Income was ¥0.7B, turning profitable from △¥11.6B in the previous year. Although the gross margin declined slightly to 57.4% from 58.0% in the previous year, the SG&A ratio fell significantly to 56.9% from 68.0%, driving the improvement in operating earnings. Ordinary Income was ¥2.0B, supported by non-operating income including dividend income of ¥0.4B and foreign exchange gains of ¥0.3B. Net Income was ¥1.3B, with the difference from Ordinary Income attributable to an income tax burden of ¥0.7B. Both revenue and earnings improved substantially from the previous year, marking a return to revenue and profit growth.

Segment Analysis

StoreSales was the largest profit-contributing segment, with Operating Income of ¥11.1B and a profit margin of 28.4%, representing a +287.1% increase in profit YoY. Overseas stood out for its expansion in scale, with revenue of ¥54.4B (+75.2%), while Operating Income remained at ¥3.3B and its profit margin at 6.1%, indicating that profitability remains low as growth takes priority. Despite a revenue decline of △17.4%, DirectSales improved Operating Income to ¥7.7B (+105.9%), raising its profit margin to 25.4%. OnLine maintained the highest profitability among all segments, with revenue of ¥11.9B and a profit margin of 34.7%. The company-wide expense adjustment of △¥26.2B was deducted from the total profit of ¥26.8B reported for the segments, resulting in consolidated Operating Income of ¥0.7B.

Key Financial Indicators

【Profitability】The Operating Income margin was 0.5% and the Net Income margin was 1.0%. Although both improved substantially from the previous year (△10.1% and △10.4%, respectively), they remain at low levels. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥14.3B, substantially exceeding Net Income of ¥1.3B, primarily due to a decrease in trade receivables (+¥25.1B). 【Investment Efficiency】ROE was 0.5%. Net profit margin, total asset turnover, and financial leverage all remained low, indicating room for improvement in capital efficiency. 【Financial Soundness】The Equity Ratio was extremely high at 89.5% (87.4% in the previous year). Against cash and deposits of ¥156.4B, interest-bearing debt consisted solely of long-term borrowings of ¥1.0B, indicating a robust financial base.

Cash Flow Analysis

Operating Cash Flow was ¥14.3B, a substantial improvement from △¥10.9B in the previous year and approximately 10 times Net Income of ¥1.3B. The primary factor was the conversion of trade receivables into cash following a decrease of +¥25.1B; OCF remained substantially positive even after offsetting the decrease in trade payables of △¥15.9B. Investing Cash Flow was △¥0.4B, including capital expenditures of ¥0.5B, while Financing Cash Flow was △¥2.7B due to dividend payments and other items. Free Cash Flow was positive at ¥13.8B, a level sufficient to cover dividends and capital expenditures, indicating strong cash-generating capacity.

Earnings Quality

Recurring earnings consist of revenue and Operating Income generated by product sales. Extraordinary income of ¥0.1B (gain on sale of fixed assets) and extraordinary loss of ¥0.1B (loss on disposal of fixed assets) were largely offset, resulting in a minimal impact on Net Income. Meanwhile, foreign exchange gains of ¥0.3B accounted for approximately half of Operating Income of ¥0.7B among non-operating income of ¥1.5B, indicating a structure in which Operating Income itself is susceptible to foreign exchange movements. The difference between Ordinary Income of ¥2.0B and Net Income of ¥1.3B was attributable to income taxes and other taxes of ¥0.7B, with no other unusual factors identified. The fact that OCF substantially exceeded Net Income indicates high earnings quality from an accruals perspective; however, because this was driven by a working capital factor—the decrease in trade receivables—whether this level will continue requires monitoring.

Earnings Forecasts and Guidance

Progress toward the Full-Year plan varies across indicators. Revenue progress was 49.9% against the Full-Year forecast of ¥275.0B, which is broadly at a standard level. In contrast, Operating Income progress was only 15.1% against the Full-Year forecast of ¥4.5B, making profit accumulation in the second half a prerequisite for achieving the plan. Ordinary Income progress was 40.4% against the Full-Year forecast of ¥5.0B, while Net Income progress was 37.7% against the Full-Year forecast of ¥3.5B; both were below revenue progress. The earnings forecasts and dividend forecasts remain unchanged, with no revisions.

Shareholder Returns

An interim dividend of ¥4.25 per share was paid, and the Full-Year dividend forecast remains unchanged at ¥9.00. Based on the Full-Year EPS forecast of ¥6.36, the Payout Ratio is approximately 141.5% (¥9.00 ÷ ¥6.36), a high level. Dividend payments were limited to ¥2.6B against Free Cash Flow of ¥13.8B, indicating ample payment capacity based on cash generation. However, the high earnings-based Payout Ratio requires monitoring for consistency with future profit growth.

Risk Factors

1. Foreign Exchange Sensitivity: Foreign exchange gains of ¥0.3B included in non-operating income amount to approximately half of Operating Income of ¥0.7B, creating a structure in which foreign exchange movements can significantly affect earnings at the operating level.

2. Dependence on Advertising Investment: Advertising expenses were ¥31.4B, accounting for 22.9% of revenue and approximately 40% of total SG&A expenses. Advertising efficiency has a significant impact on earnings, and fluctuations in investment effectiveness can be directly reflected in profitability.

3. Differences in Segment Profitability: Overseas is growing rapidly, with revenue up +75.2%, but its profit margin remains at 6.1%, while DirectSales revenue has declined by △17.4%. Achieving both growth and profitability will be a key challenge going forward.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Profitability is substantially below the industry median, placing the company in the lower tier within the industry.

Growth and Capital Efficiency

The revenue growth rate exceeds the industry median, positioning the company relatively high within the industry in terms of growth.

※Source: Compiled by the Company

Key Earnings Takeaways

1. The turnaround from a substantial loss in the same period of the previous year to operating profitability indicates structural improvement driven by revenue growth and a decline in the SG&A ratio (68.0%→56.9%).

2. The Operating Income margin of 0.5% remains substantially below the industry median of 9.7%, while the low profitability of Overseas, where growth precedes earnings generation (profit margin of 6.1%), is weighing on overall profitability. Full-Year Operating Income progress of 15.1% is below revenue progress of 49.9%, making the extent to which profit can be accumulated in the second half a key focus.

3. The Payout Ratio is high at approximately 141.5% based on the Full-Year forecast. Although Free Cash Flow provides ample payment capacity, continued monitoring is required regarding consistency with the level of earnings.

Theoretical Share Price (Reference Value)

Sensitivity: ¥339–¥358 at ±1% for the cost of equity, and ¥345–¥350 at ±0.1 for ω.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing difference from the Full-Year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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