Daikokuya Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.98B
• Operating Income: ¥-444M
• Net Income: ¥-463M
• EPS: ¥-2.28

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

Daikokuya Holdings reported FY2026 Q2 (cumulative) revenue of ¥4.98bn, down 0.5% YoY, indicating broadly flat topline momentum. Gross profit of ¥1.56bn implies a gross margin of 31.4%, which remains relatively solid for a trading/retail-heavy model, but insufficient to offset operating cost pressure. Operating income was a loss of ¥444m (operating margin -8.9%), essentially unchanged YoY, signaling that cost discipline and/or sales mix improvements have not yet translated into operating breakeven. Ordinary loss widened to ¥506m, reflecting financing costs (¥94m interest expense) that weigh on earnings amid a leveraged balance sheet. Net loss was ¥449m (net margin -9.0%), with a modest tax benefit (¥39m) partially cushioning the bottom line. DuPont analysis shows ROE of -26.0%, driven by negative margins and relatively high leverage (financial leverage 3.86x) despite a reasonable asset turnover of 0.746x. Liquidity is tight but not distressed: current ratio stands at 107.3% and quick ratio at 75.6%, with working capital of ¥333m. Inventories are ¥1.44bn (about 29% of revenue), implying inventory management remains a key driver of cash conversion. Operating cash flow was negative at -¥643m, outpacing the accounting loss, suggesting working capital and/or non-cash items pressured cash generation. Financing cash inflow of ¥651m effectively plugged the operating outflow for the period, pointing to reliance on external liquidity while the business resets. Depreciation is modest at ¥17.6m, indicating a relatively light asset base and limited non-cash cushion to EBITDA. Interest coverage based on EBITDA is negative (-4.7x), underscoring sensitivity to financing costs until profitability normalizes. Balance sheet leverage is material: total liabilities of ¥5.28bn vs equity of ¥1.73bn (debt-to-equity 3.06x), though the implied equity ratio from totals is roughly 25.9% despite the reported equity ratio field being zero in disclosures. Dividend remains suspended (DPS ¥0), consistent with loss-making operations and the need to preserve liquidity. Data limitations exist for certain line items (e.g., cash and equivalents, investing cash flows, shares outstanding), which were not disclosed under this filing; analysis focuses on available non-zero items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -0.0902
• asset_turnover: 0.746
• financial_leverage: 3.86
• calculated_ROE: -0.26
• commentary: Negative margin is the dominant driver of the -26% ROE. Asset turnover is decent for a trading/retail-heavy model, but leverage amplifies losses into equity erosion. margin_quality: Gross margin of 31.4% is healthy relative to revenue contraction, implying sourcing/pricing held up. However, operating margin of -8.9% and ordinary margin of -10.2% indicate elevated SG&A and financing burden. Net margin of -9.0% includes a small tax benefit; underlying core profitability remains negative. operating_leverage: Revenue declined only 0.5% YoY, yet operating loss persisted, suggesting unfavorable operating leverage—fixed costs are not covered at current sales levels. Modest depreciation (¥17.6m) implies most cost base is cash SG&A, limiting non-cash cushion. Improvement requires either gross profit expansion (mix, pricing) or SG&A rationalization.

Growth Assessment

revenue_sustainability: Topline is essentially flat (-0.5% YoY). Stability suggests customer demand is holding, but no evident growth catalysts are visible in the short term from the reported figures. profit_quality: Gross profit generation is adequate, but conversion to operating profit is weak due to SG&A and financing costs. EBITDA of -¥426m (-8.6% margin) underscores negative operating cash earnings. outlook: Near-term earnings inflection depends on cost restructuring, improving product mix/margins, and normalizing financing costs. With inventories sizeable relative to sales, improvements in turnover could support margin and cash conversion. Absent revenue acceleration or cost takeout, sustained losses remain a risk.

Financial Health

liquidity: Current ratio 107.3% and quick ratio 75.6% indicate tight liquidity but manageable near-term obligations. Working capital is ¥333m; inventory reliance is high, making liquidity sensitive to turnover speed. solvency: Debt-to-equity is 3.06x, indicating elevated leverage. Interest expense of ¥94m against negative EBITDA results in negative interest coverage (-4.7x), highlighting refinancing and rate sensitivity. capital_structure: Total assets ¥6.67bn vs equity ¥1.73bn implies an equity ratio around 25.9% based on available totals, despite the equity ratio field showing 0% (undisclosed). Liability base (¥5.28bn) dominates funding; ongoing access to financing is critical while OCF is negative.

Cash Flow Quality

earnings_quality: OCF of -¥643m vs net loss of -¥449m yields an OCF/NI ratio of 1.43, but this is not a positive signal given both are negative; cash outflow exceeded accounting loss, implying working capital drag and limited non-cash add-backs. FCF_analysis: Investing CF is undisclosed (reported as 0). With negative OCF and lack of capex visibility, Free Cash Flow is effectively negative for analytical purposes, though the provided FCF metric shows 0 due to data limitations. working_capital: Inventories at ¥1.44bn are significant (29% of revenue), making cash generation sensitive to sell-through and pricing. The rise/fall of receivables and payables is not disclosed, but negative OCF suggests net working capital consumed cash in the period.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 and payout ratio 0%, appropriate given negative earnings (EPS -¥2.28). FCF_coverage: With OCF negative and investing CF undisclosed, FCF coverage of dividends is not meaningful; conservatively, dividends are not covered by cash generation. policy_outlook: Given losses, leverage, and reliance on financing cash inflows, distribution resumption appears unlikely until sustained positive OCF and operating profit are achieved.

Risk Assessment

Business Risks:

• Weak operating leverage if sales remain flat, leading to persistent operating losses
• Inventory valuation and turnover risk impacting margins and cash conversion
• Competitive pricing pressure that could compress gross margins
• Macroeconomic sensitivity of discretionary purchasing and resale markets

Financial Risks:

• High leverage (D/E 3.06x) and negative interest coverage (-4.7x)
• Reliance on external financing to fund operating cash outflows
• Refinancing and interest rate risk impacting ordinary income
• Liquidity tightness with quick ratio at 75.6%

Key Concerns:

• Sustained negative EBITDA and operating income
• Negative OCF exceeding the accounting loss
• Dependency on financing inflows to maintain liquidity
• Limited disclosure for cash, investing CF, and share data

Investment Implications

Key Takeaways:

• Topline broadly stable but insufficient to cover fixed costs; operating margin -8.9%
• Gross margin resilient at 31.4% but offset by SG&A and financing costs
• OCF -¥643m with financing inflow of ¥651m plugging the gap
• Leverage elevated (D/E 3.06x), ROE -26% driven by negative margins
• Inventory levels sizable relative to sales, making cash conversion critical

Metrics to Watch:

• Operating income and EBITDA trajectory toward breakeven
• Gross margin mix and pricing spread versus COGS inflation
• Inventory turnover and aging, and its impact on OCF
• Interest expense run-rate and access to financing
• Current and quick ratios as indicators of liquidity buffer

Relative Positioning: The company exhibits weaker profitability and cash generation versus a typical profitable retail/trading peer set, with higher leverage and tighter liquidity, though gross margin resilience provides a base for recovery if operating costs and financing burden can be reduced.

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