AKIBA Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.41B
• Operating Income: ¥275M
• Net Income: ¥-73M
• EPS: ¥17.47

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

AKIBA Holdings (68400) delivered a solid FY2026 Q2 performance with clear signs of operating leverage and profitability improvement. Revenue rose 20.6% year over year to ¥9,414 million, outpacing cost growth and lifting gross profit to ¥1,657.6 million and gross margin to 17.6%. Operating income more than doubled (+108.7% YoY) to ¥275 million, driving an operating margin of 2.9% despite a still-low EBITDA margin of 3.3%, implying tight but improving cost control. Ordinary income was ¥261 million, slightly below operating income due to non-operating costs including ¥18.1 million in interest expense. Net income reached ¥160 million (+256.3% YoY), with EPS at ¥17.47, underscoring a strong rebound in earnings. DuPont analysis indicates ROE of 3.84%, composed of a 1.70% net margin, 0.701x asset turnover, and 3.23x financial leverage, pointing to moderate efficiency and leverage but still-thin margins. The asset turnover of 0.701x and leverage of 3.23x (assets ¥13.427 billion vs. equity ¥4.162 billion) suggest the company is leaning on balance sheet efficiency and gearing to augment returns. Liquidity remains healthy with a current ratio of 185.7% and a quick ratio of 172.3%, supported by sizeable current assets of ¥12.658 billion and working capital of ¥5.84 billion. Nevertheless, operating cash flow was negative at ¥21.5 million, implying earnings did not fully translate into cash during the half and that working capital movements likely absorbed cash. Financing cash flow was a sizeable inflow of ¥687.5 million, indicating reliance on external funding during the period, likely to support growth and working capital. Cash and equivalents were reported as 0 (unreported), limiting visibility on the immediate liquidity buffer; similarly, investing cash flow was shown as 0 (unreported), constraining free cash flow analysis. The effective tax rate metric is shown as 0.0%, but income tax expense is ¥32.5 million; we flag this as a disclosure limitation and focus on reported net profit. The balance sheet shows a 31.0% equity-to-asset ratio (computed) and a debt-to-equity ratio of 2.32x, reflecting a moderately leveraged structure. Interest coverage of 15.2x (EBIT/interest) indicates manageable debt service capacity at current earnings levels. Dividend distribution remains suspended (DPS ¥0.00; payout 0%), consistent with reinvestment and balance sheet preservation amid growth investments. Overall, the company is executing on top-line growth with improving operating leverage, but needs to demonstrate consistent cash conversion to reinforce the quality and sustainability of earnings.

Profitability Analysis

ROE of 3.84% is driven by a net profit margin of 1.70%, asset turnover of 0.701x, and financial leverage of 3.23x. Operating margin stands at 2.9% (¥275m OI on ¥9,414m sales), up sharply as operating income grew +108.7% YoY on +20.6% sales growth, evidencing operating leverage from fixed cost dilution. Gross margin is 17.6%, leaving a relatively narrow OPEX envelope; EBITDA margin of 3.3% underscores limited buffer but improving efficiency. Ordinary income (¥261m) trailing operating income (¥275m) reflects non-operating costs including ¥18.1m interest; EBIT/interest coverage is 15.2x, indicating solid serviceability. The margin structure indicates primary improvements at the operating level rather than gross margin expansion (prior-period gross margin not disclosed), suggesting SG&A efficiency gains. Low D&A (¥38.5m) implies limited depreciation drag, so operating improvements largely translate to net income, barring financing and tax effects. Net margin at 1.70% remains thin for the sector, leaving returns sensitive to mix, pricing, or cost fluctuations. Overall, profitability momentum is positive, but the earnings base is still modest and dependent on sustaining volume and cost discipline.

Growth Assessment

Revenue grew 20.6% YoY to ¥9.414bn, indicating healthy demand or share gains. Operating income surged 108.7% YoY to ¥275m, signaling strong operating leverage. Net income rose 256.3% to ¥160m, reflecting both operating improvement and relatively modest below-the-line burdens. Sustainability hinges on maintaining volume and price realization; with gross margin at 17.6% and EBITDA margin 3.3%, incremental gross profit conversion to operating profit is improving but not yet robust. Asset turnover of 0.701x shows reasonable utilization, but further efficiency gains could support growth without proportional asset expansion. Financing inflow of ¥687.5m likely supported working capital to underpin growth; normalization of OCF will be key to sustaining expansion without additional leverage. Outlook depends on demand in core end-markets (not disclosed) and supply chain stability; revenue momentum is favorable, but margin resilience will be tested by input costs and pricing conditions. Given data limitations (no split by segment/geography and some unreported items), our growth view remains cautiously constructive on execution but contingent on cash conversion.

Financial Health

Total assets are ¥13.427bn against total liabilities of ¥9.650bn and equity of ¥4.162bn, implying an equity ratio of ~31.0% (computed; reported equity ratio 0.0% is unreported). Debt-to-equity is 2.32x (liabilities/equity), indicating moderate leverage for a trading/industrial context. Liquidity is strong: current assets ¥12.658bn vs. current liabilities ¥6.818bn yields a current ratio of 185.7% and quick ratio of 172.3%; inventories are ¥912m, about 7.2% of current assets, suggesting limited inventory risk relative to receivables/cash (cash unreported). Working capital stands at ¥5.84bn, providing a meaningful buffer to support operations and growth. Interest coverage at 15.2x (EBIT/interest) reflects comfortable near-term solvency. Financing cash inflow of ¥687.5m and slightly negative OCF indicate reliance on external funding in the period; absent disclosed cash balances, short-term liquidity headroom cannot be precisely assessed. Overall, the balance sheet appears capable of supporting current operations, with leverage manageable but requiring monitoring if growth continues to consume cash.

Cash Flow Quality

Operating cash flow was -¥21.5m versus net income of ¥160.0m, yielding an OCF/NI ratio of -0.13, signaling weak cash conversion for the half—likely driven by working capital absorption (details not disclosed). Free cash flow is reported as 0 due to unreported investing cash flows; actual FCF cannot be determined. Low D&A (¥38.5m) suggests earnings are not heavily influenced by non-cash charges; the gap between NI and OCF likely stems from receivables growth or other WC items. Financing inflow of ¥687.5m points to external funding bridging operating and investment needs. With cash and equivalents reported as 0 (unreported), we cannot reconcile period-end liquidity. Key takeaway: earnings quality appears improving at the P&L level, but cash realization needs to catch up; subsequent quarters should show normalization of working capital and positive OCF to validate sustainability.

Dividend Sustainability

The company did not pay dividends (DPS ¥0.00) and has a payout ratio of 0.0%. With OCF negative and FCF undisclosed, maintaining a conservative dividend stance is prudent. Given moderate leverage (2.32x liabilities/equity) and the need to finance growth and working capital, internal cash retention appears aligned with balance sheet stewardship. Future dividend capacity will depend on turning OCF positive and demonstrating consistent FCF after working capital and capex (currently unreported). Policy outlook: likely to prioritize reinvestment and balance sheet flexibility until cash conversion strengthens and earnings base widens.

Risk Assessment

Business Risks:

• Thin net margin (1.70%) exposes earnings to pricing and cost volatility
• Reliance on operating leverage; a slowdown in revenue growth could compress profitability
• Supply chain and component availability risks (sector-typical) could affect gross margin
• Customer concentration or project timing risk (not disclosed) potentially amplifying quarterly volatility
• Limited disclosure granularity (segment/geography) impedes assessment of mix and resilience

Financial Risks:

• Negative OCF in the period; dependence on external financing (¥687.5m inflow)
• Moderate leverage with liabilities/equity at 2.32x; potential for rising interest costs
• Unreported cash balance and investing CF obscure liquidity runway and FCF profile
• Working capital intensity risk amid rapid growth, potentially straining cash conversion

Key Concerns:

• Cash conversion (-0.13x OCF/NI) needs improvement to validate earnings quality
• Visibility on cash and capex is limited due to unreported items
• Sustaining margin gains from 2.9% operating margin while scaling

Investment Implications

Key Takeaways:

• Strong top-line growth (+20.6% YoY) with substantial operating leverage (+108.7% OI)
• ROE 3.84% supported by moderate asset turnover (0.701x) and leverage (3.23x), but constrained by low net margin
• Healthy liquidity (current ratio 185.7%, quick 172.3%) and ample working capital (¥5.84bn)
• Interest coverage robust at 15.2x; debt service manageable at current earnings
• Cash conversion weak this half (OCF -¥21.5m), with reliance on financing inflow (¥687.5m)

Metrics to Watch:

• OCF trend and OCF/NI ratio (target sustained >1.0 over time)
• Working capital movements (receivables and inventories turnover; details when disclosed)
• Gross and operating margin progression (17.6% GP margin; 2.9% OP margin trajectory)
• Leverage and interest coverage (liabilities/equity 2.32x; coverage 15.2x under rate scenarios)
• Capex and investing CF once disclosed to establish true FCF
• Revenue growth durability and mix effects on profitability

Relative Positioning: Within Japan small/mid-cap electronics/industrial distributors and EMS peers, AKIBA shows above-average revenue growth in the period and improving operating leverage, but operates with thinner margins and lower ROE than top-tier peers; liquidity is strong, leverage moderate, and proof of sustainable cash generation is pending.

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