MINATO HOLDINGS INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥12.52B
• Operating Income: ¥700M
• Net Income: ¥235M
• EPS: ¥55.41

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

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

Minato Holdings (TSE: 68620) delivered solid top-line growth in FY2026 Q2 with revenue of ¥12.52bn, up 5.4% YoY, while demonstrating strong operating leverage as operating income rose 50.4% to ¥0.70bn. Gross profit of ¥2.27bn implies an 18.1% gross margin, and operating margin expanded to roughly 5.6%, evidencing improved cost discipline or a richer mix. Ordinary income of ¥0.62bn trailed operating income, indicating modest non-operating headwinds, though interest expense remained low at ¥25.5m. Net income surged 75.4% to ¥0.41bn, lifting net margin to 3.29% and EPS to ¥55.41. DuPont analysis indicates a reported ROE of 6.47%, driven by a 3.29% net margin, 0.63x asset turnover, and a 3.12x equity multiplier. Liquidity is adequate with a current ratio of 126.8% and a quick ratio of 96.1%, supported by working capital of ¥2.64bn. The capital structure shows leverage with total liabilities of ¥11.64bn versus equity of ¥6.37bn (debt-to-equity 1.83x), consistent with the equity multiplier used in DuPont. Cash flow quality is a key watch point: operating cash flow was negative at -¥1.22bn despite positive earnings, yielding an OCF/net income ratio of -2.96, which suggests significant working capital outflows or timing effects. Financing cash inflow of ¥2.16bn likely bridged the OCF shortfall, but investing cash flow was not disclosed, limiting free cash flow assessment. Interest coverage is comfortable at 27.5x (EBITDA basis), indicating ample headroom against interest costs. The reported equity ratio field is zero (unreported), but balance sheet figures imply an equity ratio around the low-30% range, which is moderate. No dividend was disclosed this period (DPS ¥0, payout 0.0%), and per-share balance-sheet metrics were not provided (BVPS, shares outstanding reported as zero/unreported). Overall, profitability momentum is favorable and leverage manageable, but negative operating cash flow and reliance on financing inflows temper quality of earnings. Data limitations (several items reported as zero due to non-disclosure) constrain precision, particularly for cash and FCF analysis. Outlook hinges on sustaining margin gains while normalizing working capital to convert earnings into cash.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.29%
• asset_turnover: 0.63
• financial_leverage: 3.12
• calculated_ROE: 6.47%
• commentary: ROE improvement is primarily margin- and leverage-supported; asset turnover of 0.63x is modest, consistent with a hardware/solutions mix requiring working capital. margin_quality: Gross margin at 18.1% and operating margin near 5.6% reflect improved mix and/or better overhead absorption. Ordinary margin of ~5.0% trails operating due to non-operating items; interest burden is small relative to EBITDA. Net margin at 3.29% is healthy given modest top-line growth. operating_leverage: Revenue grew 5.4% YoY while operating income increased 50.4%, indicating strong operating leverage and cost scalability. EBITDA of ¥1.03bn (8.2% margin) suggests improved operating efficiency; sustaining this depends on volume stability and pricing.

Growth Assessment

revenue_sustainability: Top-line growth of 5.4% appears steady; sustainability will depend on order intake, backlog, and end-market demand in industrial/electronics customers. No segment detail was provided, limiting assessment of concentration risk. profit_quality: Profit growth outpaced revenue primarily via margin expansion. However, OCF was negative (-¥1.22bn) against net income of ¥0.41bn, indicating weaker cash conversion this period likely due to working capital build. outlook: If operating leverage persists and non-operating drag remains contained, earnings can grow faster than sales. Normalization of inventories/receivables would be key to translating profit gains into cash. Macro and supply-chain stability remain important to sustain mix and pricing.

Financial Health

liquidity: Current ratio 126.8% and quick ratio 96.1% indicate adequate near-term coverage; inventories of ¥3.03bn are material to liquidity. Cash and equivalents were not disclosed (reported as zero), which limits granularity on immediate liquidity. solvency: Debt-to-equity is 1.83x, and the equity multiplier is 3.12x, indicating moderate leverage for the business model. Interest coverage is strong at 27.5x, providing a buffer against rate or earnings volatility. capital_structure: Total assets are ¥19.88bn with equity of ¥6.37bn and liabilities of ¥11.64bn. The disclosed equity ratio field is unreported, but balance sheet implies an equity ratio around the low-30% level, consistent with a leveraged yet manageable structure.

Cash Flow Quality

earnings_quality: OCF/Net Income ratio of -2.96 indicates weak cash conversion in the period, likely driven by working capital outflows (e.g., inventory or receivable increases). Earnings quality is thus mixed despite strong margins. FCF_analysis: Investing cash flow was not disclosed (reported as zero), so free cash flow cannot be reliably determined. Given OCF was -¥1.22bn, FCF likely faced pressure absent asset sales or low capex, but data is insufficient to quantify. working_capital: Working capital stands at ¥2.64bn; the negative OCF points to a build in operating assets or reduction in operating liabilities. Inventory levels (¥3.03bn) are sizable; turnover and receivables collection are key watch items.

Dividend Sustainability

payout_ratio_assessment: No dividend was disclosed (DPS ¥0; payout 0.0%). With net income positive, the lack of payout suggests a stance toward reinvestment or conservatism amid cash flow volatility. FCF_coverage: Free cash flow was not determinable due to undisclosed investing CF. Given negative OCF, dividend coverage from internal cash generation would have been weak this period if a dividend were paid. policy_outlook: Future distributions will likely depend on stabilization of operating cash flow and visibility on growth investments. The company may prioritize balance sheet flexibility until cash conversion improves.

Risk Assessment

Business Risks:

• End-market cyclicality in industrial/electronics demand affecting order flow
• Pricing pressure and product mix shifts impacting gross margins
• Supply chain lead times and component availability influencing inventories and delivery
• Customer concentration risk (not disclosed) potentially amplifying volatility
• Technological obsolescence requiring ongoing R&D and product refresh

Financial Risks:

• Negative operating cash flow requiring reliance on financing (¥2.16bn inflow in the period)
• Moderate leverage (D/E 1.83x; EM 3.12x) increasing sensitivity to earnings downturns
• Working capital intensity driving cash conversion volatility
• Potential interest rate increases, though current interest burden is low

Key Concerns:

• Weak cash conversion in FY2026 Q2 (OCF/NI -2.96)
• Non-operating income below operating income, indicating external drags on earnings
• Limited disclosure on cash, investing flows, and share-related data constrains analysis

Investment Implications

Key Takeaways:

• Healthy revenue growth (+5.4% YoY) with strong operating leverage (+50.4% operating income)
• Margins improved: gross 18.1%, operating ~5.6%, EBITDA margin 8.2%
• ROE of 6.47% supported by margin gains and moderate leverage
• Liquidity adequate (CR 126.8%, QR 96.1%), but cash not disclosed
• OCF negative (-¥1.22bn), signaling working capital drag and weaker earnings quality
• Financing inflow of ¥2.16bn bridged cash needs; sustainability depends on OCF normalization
• Leverage moderate (D/E 1.83x) with strong interest coverage (27.5x)

Metrics to Watch:

• Operating cash flow and OCF/NI ratio
• Inventory and receivables turnover
• Order backlog and book-to-bill (if disclosed)
• Gross and operating margin trajectory
• Net non-operating gains/losses and interest expense
• Leverage and liquidity buffers (cash balance, undrawn facilities if disclosed)

Relative Positioning: Profitability momentum and interest coverage compare favorably to many small-to-mid-cap industrial/electronics peers, but cash conversion and reliance on financing inflows currently lag best-in-class operators.

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