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

Financial Highlights

• Net Sales: ¥691M
• Operating Income: ¥17M
• Net Income: ¥16M
• EPS: ¥3.47

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

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

Plat’Home Co., Ltd. (68360) reported FY2026 Q2 consolidated results under JGAAP featuring stable topline but thin operating profitability and weak operating cash conversion. Revenue was 691 million yen, essentially flat year over year, indicating a pause in growth momentum. Gross profit was 283.6 million yen, implying a robust gross margin of 41.0%, which suggests continued pricing discipline and/or a favorable product/service mix. Despite healthy gross profitability, operating income was just 17 million yen, translating to an operating margin of roughly 2.5%, highlighting a heavy fixed-cost or SG&A burden. Ordinary income of 18 million yen and net income of 16 million yen were similarly modest and also flat year over year, pointing to limited operating leverage at current scale. The company’s DuPont ROE was 3.68%, driven by a 2.32% net margin, 0.877x asset turnover, and 1.81x financial leverage—adequate balance sheet efficiency but constrained by low margins. Liquidity appears strong with a current ratio of 233.6% and quick ratio of 225.5%, supported by 422.0 million yen of working capital. Capital structure looks conservative to moderate with a debt-to-equity ratio of 0.81x and an estimated equity ratio of about 55.2% (calculated as total equity of 435 million yen divided by total assets of 788 million yen). Operating cash flow was negative at -88.6 million yen, resulting in a very weak OCF/Net income ratio of -5.54x, which raises near-term cash conversion concerns. Inventories were a modest 25.6 million yen relative to current assets of 737.9 million yen, implying the OCF shortfall likely stemmed from increases in receivables or other current assets rather than inventory build. The effective tax rate was effectively 0%, likely reflecting loss carryforwards or timing items; reported tax expense was not disclosed as a positive amount. Dividends were not paid (annual DPS 0), and payout ratio was 0%, consistent with the company preserving cash amidst weak cash generation. Interest expense was not disclosed as a positive number, so interest coverage cannot be meaningfully assessed from the provided data. While the balance sheet provides a cushion, sustained negative operating cash flow would pressure liquidity over time if not reversed. Overall, the quarter depicts a business with solid gross margins but limited scale efficiency and weak cash conversion, warranting close monitoring of working capital dynamics. Data gaps exist in several line items reported as zero; analysis focuses on disclosed non-zero values and calculated ratios.

Profitability Analysis

ROE of 3.68% decomposes into a 2.32% net margin, 0.877x asset turnover, and 1.81x leverage, indicating that profitability is chiefly constrained by thin bottom-line margins rather than asset efficiency or balance sheet structure. Gross margin of 41.0% is healthy for an embedded/edge hardware and solutions provider, suggesting defensible value-add. However, SG&A intensity is high: with gross profit of 283.6 million yen and operating income of 17.0 million yen, implied SG&A and other operating costs total about 266.6 million yen (approximately 38.6% of revenue). The resulting operating margin (~2.5%) leaves little buffer against cost inflation or demand volatility. EBITDA was 17.1 million yen (2.5% margin), indicating limited operating leverage at current revenue scale. With ordinary income only slightly above operating income, non-operating items had minimal impact. The effective tax rate was near 0% given no reported income tax, which supported net margin, but this benefit is not guaranteed to persist. Overall margin quality looks mixed: strong gross margin but weak operating margin due to high overheads; any revenue acceleration could flow through meaningfully if fixed costs are largely covered, but current scale remains a constraint.

Growth Assessment

Topline growth was flat year over year at 691 million yen, signaling a pause in revenue expansion. With stable gross margin at 41.0%, the pricing/mix backdrop seems intact, but demand growth is not evident in this period. Operating income and net income were also flat, underscoring limited operating leverage and lack of earnings momentum. Profit quality is modest: net margin of 2.32% is thin, and negative operating cash flow suggests earnings are not converting into cash this period. Given inventories are relatively small versus current assets, the OCF shortfall likely stems from receivables or other working capital items, which may reverse if collections normalize, but this remains uncertain. Outlook hinges on order pipeline in edge/IoT gateways and related solutions, component supply stability, and execution on cost discipline. If revenue can re-accelerate while maintaining gross margin, earnings leverage could improve; conversely, flat or declining revenue would keep profits subdued. Near-term, the growth profile appears neutral with execution dependency on working capital normalization and SG&A efficiency.

Financial Health

Liquidity is strong on reported metrics: current ratio 233.6%, quick ratio 225.5%, and working capital of 422.0 million yen. This suggests ample short-term coverage without heavy reliance on inventory, consistent with inventories of 25.6 million yen. Solvency appears sound with total equity of 435.0 million yen and total assets of 788.0 million yen, implying an estimated equity ratio around 55.2%. The debt-to-equity ratio is 0.81x (liabilities/equity), a moderate level for a small-cap hardware/solutions business. Interest expense was not disclosed as a positive value; thus, interest coverage cannot be reliably computed, but the modest leverage and solid equity base reduce near-term solvency risk. The main financial health watchpoint is cash generation: negative operating cash flow, if persistent, could erode liquidity even with strong working capital today.

Cash Flow Quality

Operating cash flow of -88.6 million yen against net income of 16.0 million yen yields an OCF/Net Income ratio of -5.54x, signaling poor cash conversion in the period. With investing and financing cash flows not disclosed as positive amounts, we cannot derive a definitive free cash flow figure; however, negative OCF suggests FCF likely negative absent asset sales or other inflows. Given inventories are only 25.6 million yen and current assets are 737.9 million yen, the working capital drag likely arose from receivables growth or other current assets, not inventory build. Earnings quality is therefore weak this quarter, pending evidence of collection in subsequent periods. Depreciation and amortization were modest at 73 thousand yen relative to EBITDA of 17.1 million yen, indicating a relatively light capital intensity signal in the quarter, but lack of disclosed capex limits assessment of structural cash needs. Key to watch will be the reversal of working capital outflows and consistency between reported profits and cash receipts.

Dividend Sustainability

No dividend was paid (annual DPS 0) and payout ratio is 0%, consistent with prioritizing balance sheet strength and reinvestment or cash preservation. With operating cash flow negative this period, initiating or increasing dividends would be difficult to justify without a clear turnaround in cash generation. Free cash flow coverage cannot be assessed due to missing investing cash flow details, but negative OCF implies weak coverage in the period. Policy-wise, given the company’s size and cash conversion volatility, a conservative stance appears likely until scale efficiencies and cash flow stability improve.

Risk Assessment

Business Risks:

• Demand cyclicality in enterprise/industrial edge computing and IoT gateways
• Component procurement constraints and lead-time volatility affecting deliveries and margins
• Foreign exchange exposure on imported components (USD-denominated costs)
• Product obsolescence and rapid technology transitions
• Customer concentration risk typical of small-cap hardware solutions
• Pricing pressure from larger competitors and ODMs
• Project timing risk in solution deployments impacting quarterly revenue recognition

Financial Risks:

• Negative operating cash flow and weak cash conversion versus accounting earnings
• Working capital volatility, particularly receivables collection risk
• Operating leverage risk given thin operating margin (~2.5%)
• Moderate leverage (D/E ~0.81x) could become problematic if profits weaken
• Low effective tax rate may normalize, reducing net margin

Key Concerns:

• Sustained negative OCF (-88.6 million yen) despite positive net income
• Flat revenue growth limiting operating leverage realization
• High SG&A ratio (~38.6% of sales) capping profitability

Investment Implications

Key Takeaways:

• Topline flat at 691 million yen; momentum paused
• Strong gross margin (41.0%) but thin operating margin (~2.5%) due to high SG&A
• ROE modest at 3.68%, constrained by net margin
• Liquidity strong (current ratio 233.6%) and equity ratio estimated ~55.2%
• Operating cash flow weak at -88.6 million yen; cash conversion a key watchpoint

Metrics to Watch:

• Operating cash flow and OCF/Net income ratio
• Accounts receivable levels and days sales outstanding
• Order backlog/pipeline and quarterly revenue growth
• Gross margin stability and SG&A ratio
• Inventory turnover and write-downs
• Equity ratio and debt-to-equity
• Ordinary income versus operating income (non-operating swings)

Relative Positioning: Relative to small-cap Japanese edge computing/embedded hardware peers, Plat’Home exhibits healthy gross margins and solid liquidity but lags on operating margin and cash conversion; scaling revenue and normalizing working capital are critical to improve competitiveness.

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