PLAT'HOME CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥691M
• Operating Income: ¥17M
• Net Income: ¥16M
• Earnings per Unit (EPU): ¥3.47

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

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 modestly profitable at the P/L level but weak in cash generation, with solid liquidity and a still-rebuilding equity base. Revenue was 6.91 (100M JPY), generating gross profit of 2.84 and operating income of 0.17, implying a gross margin of 41.0% and operating margin of about 2.5%. Ordinary income reached 0.18 and net income was 0.16, translating to a net margin of 2.3%. ROE is calculated at 3.7%, driven by low net margin, moderate asset turnover (0.877x), and modest leverage (1.81x). Liquidity appears strong with current assets of 7.38 against current liabilities of 3.16, yielding a current ratio of 233.6% and a quick ratio of 225.5%. Equity stands at 4.35 versus assets of 7.88, indicating an equity ratio near 55%, a comfortable solvency position. Operating cash flow, however, was -0.89 despite positive net income, flagging a material divergence in earnings quality (OCF/NI of -5.54x). Working capital is sizable (4.22), with cash of 2.66, receivables of 2.13, and inventories of 0.26, suggesting cash burn is likely tied to collections timing and project/phased deliveries. Depreciation, interest expense, and tax details were unreported, limiting visibility into cost structure and coverage. Margin comparison versus prior periods is not available due to lack of YoY or sequential disclosures; hence basis-point expansion/compression cannot be quantified. ROIC is indicated at 7.1%, within the common management target band (7–8%), suggesting reasonable capital efficiency despite thin operating margins. The balance sheet shows negative retained earnings (-2.16), indicating cumulative deficits despite current-period profitability, which may constrain near-term shareholder returns. Dividend information was not disclosed, and with negative OCF, near-term distributions (if any) would rely on balance sheet cash rather than internally generated cash. Forward-looking, stabilizing working capital and improving conversion of earnings to cash will be key to sustaining growth investments and potential dividends. Overall, the quarter shows operational profitability but highlights the need to normalize cash conversion and rebuild retained earnings.

Profitability Analysis

ROE decomposition: ROE (3.7%) = Net Profit Margin (2.3%) × Asset Turnover (0.877x) × Financial Leverage (1.81x). The weakest link is net margin at 2.3%, which caps the overall ROE despite reasonable asset turnover and modest leverage. The margin profile reflects a 41.0% gross margin offset by high SG&A intensity (SG&A of 2.66 vs gross profit of 2.84), yielding a low operating margin (~2.5%). Without YoY benchmarks, we cannot quantify basis-point changes, but the structure implies limited operating leverage at current scale. Business drivers likely include project-based revenue recognition and a cost base that is relatively fixed near term, constraining incremental margins. The sustainability of profitability depends on leveraging the cost base (revenue growth outpacing SG&A growth) and improving pricing/mix. A concerning trend is SG&A consuming 93.7% of gross profit (2.66/2.84), leaving a narrow operating spread; if SG&A growth were to exceed revenue growth, margins would compress further. Non-operating income is minimal (0.01), so core operating performance remains the main profit driver. Absent evidence of one-time gains or losses, the current profitability appears recurring but fragile given cash conversion issues.

Growth Assessment

Revenue of 6.91 with gross margin at 41.0% indicates a healthy value-add on sales, but operating margin of ~2.5% suggests limited operating leverage at current scale. Profit sustainability hinges on stabilizing SG&A as a percentage of revenue and improving project execution to reduce working capital drag. Given negative OCF despite positive earnings, growth funded by internal cash generation appears constrained until collections improve. No YoY data were provided, so we cannot assess growth trajectory or market share dynamics. The reported ROIC of 7.1% is in the target range, implying disciplined investment returns; maintaining or improving ROIC will require either higher NOPAT margins or better asset turns. Outlook depends on backlog quality, customer concentration, and timing of receivable collections; near-term improvements in DSO and inventory turns would support scalable growth.

Financial Health

Liquidity is strong: current ratio 233.6% and quick ratio 225.5%, supported by cash of 2.66 versus current liabilities of 3.16. Solvency appears comfortable with equity of 4.35 and assets of 7.88 (equity ratio ~55%). Reported D/E of 0.81x suggests moderate leverage, but interest-bearing debt details are unreported; thus, debt composition and coverage cannot be confirmed. No warning on current ratio (<1.0) or excessive leverage (D/E > 2.0) is triggered. Maturity mismatch risk looks limited given current assets exceed current liabilities by 4.22, but the negative OCF points to timing risk on receivables. Off-balance sheet obligations were not disclosed in the provided data.

Cash Flow Quality

OCF/Net Income is -5.54x, a material red flag for earnings quality (threshold <0.8). The negative operating cash flow despite positive net income likely reflects working capital build or delayed collections, consistent with sizable accounts receivable (2.13) relative to the scale of the business. Free cash flow is not calculable due to missing capex data; therefore, we cannot assess FCF coverage for dividends or growth capex. Signs that warrant monitoring include potential extension of DSO, low inventory levels relative to payables, and any quarter-end shifts in payables that might temporarily bolster cash (no explicit manipulation detected from available data, but visibility is limited). Sustainability will require converting earnings to cash and normalizing working capital cycles.

Dividend Sustainability

Dividend data were unreported; payout ratio and FCF coverage are not calculable. With retained earnings at -2.16 (accumulated deficits) and OCF negative this quarter, capacity for sustainable cash dividends appears constrained in the near term absent a turnaround in cash generation. Policy outlook cannot be inferred from the data; if a dividend exists, it would likely rely on balance sheet cash rather than recurring free cash flow until OCF normalizes.

Risk Assessment

Business Risks:

• Low operating margin (~2.5%) leaves limited buffer against revenue or cost shocks.
• Potential project timing/customer concentration risk common to niche hardware/software integrators.
• Dependence on timely collections; elevated receivables relative to cash generation.
• Supply chain and component price volatility affecting gross margin.
• Execution risk in scaling revenue without proportional SG&A growth.

Financial Risks:

• Negative operating cash flow despite profitability (OCF/NI -5.54x).
• Accumulated deficit (retained earnings -2.16) limits distribution flexibility.
• Debt composition unreported; interest coverage not measurable.
• Working capital volatility could pressure liquidity despite headline ratios.

Key Concerns:

• Earnings-to-cash conversion is weak; sustained negative OCF would erode cash reserves.
• Thin operating spread with SG&A absorbing ~94% of gross profit.
• Lack of disclosure on capex, dividends, and interest-bearing debt reduces visibility.

Investment Implications

Key Takeaways:

• Profitable quarter at the P/L level but cash burn from operations is significant.
• Liquidity is currently strong, mitigating near-term funding stress.
• ROIC of 7.1% is acceptable, but margin expansion and better asset turns are needed to lift ROE above mid-single digits.
• Cumulative losses persist (negative retained earnings), limiting shareholder return flexibility.
• Non-operating items are minimal; core operations drive results.

Metrics to Watch:

• OCF trend and OCF/NI ratio (target >1.0).
• DSO and receivables trend versus revenue.
• SG&A growth relative to revenue (aim for operating leverage).
• Gross margin stability amid component cost and FX moves.
• Equity ratio and any disclosure on interest-bearing debt and capex.

Relative Positioning: Within small-cap tech hardware/solutions peers, the company shows respectable gross margins and adequate liquidity but lags on cash conversion and operating leverage, yielding a mid-single-digit ROE that trails peers with stronger recurring revenue or service mix.

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