SUN-LIFE HOLDING CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.79B
• Operating Income: ¥512M
• Net Income: ¥312M
• EPS: ¥52.02

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

For FY2026 Q2 (consolidated, JGAAP), Sun-Life Holdings delivered steady top-line growth with revenue of ¥6,788 million (+3.9% YoY), translating into operating income of ¥512 million (+6.3% YoY) and net income of ¥318 million (+2.3% YoY). Gross margin stood at 22.9%, while operating margin was 7.5% and ordinary margin 8.7%, indicating modest operating leverage relative to revenue growth. The DuPont breakdown shows net profit margin of 4.68%, asset turnover of 0.188x, and financial leverage of 5.33x, yielding an ROE of 4.68%. Leverage is the primary ROE driver amid modest profitability and slow asset turnover. Liquidity appears strong on headline metrics, with a current ratio of 4.95x and working capital of approximately ¥9.75 billion, though the lack of disclosed cash and inventories limits interpretation. Solvency is more mixed: total liabilities of ¥29.55 billion versus equity of ¥6.79 billion imply a debt-to-equity of 4.35x, and an implied equity ratio of roughly 18.8% (equity/total assets), despite an equity ratio field showing 0.0% which reflects non-disclosure rather than a true zero. Cash generation lagged earnings, with operating cash flow (OCF) of ¥139 million (OCF/NI ~0.44), suggesting weaker earnings quality in the period due to working capital movements or timing effects. EBITDA was ¥773 million (11.4% margin), providing a reasonable buffer over depreciation and amortization of ¥261 million. Non-operating items modestly supported results, with ordinary income exceeding operating income by ¥76 million. Based on income tax of ¥174 million and ordinary income as a proxy for pre-tax income, the implied effective tax rate is roughly 30%, rather than 0.0% as shown in the summary metrics (the latter reflects non-disclosure). Dividend payout was nil, consistent with capital retention in light of leverage and muted cash conversion; FCF cannot be reliably assessed because investing cash flows were undisclosed. The combination of manageable profit growth, high financial leverage, and low cash conversion warrants attention to working capital discipline and the sustainability of margins. Overall, the company maintained profitability growth and liquidity headroom but remains exposed to balance sheet leverage and cash flow execution. Data limitations (notably several 0 fields representing non-disclosure) constrain precision on per-share, cash, and capex dynamics. Monitoring the trajectory of operating cash flow relative to net income and any changes in non-operating contributions will be key to assessing the durability of earnings. The outlook hinges on sustaining gross margin discipline and converting earnings into cash amid a leveraged capital structure.

Profitability Analysis

ROE decomposition: ROE 4.68% = Net margin 4.68% × Asset turnover 0.188× × Financial leverage 5.33×. Leverage is the largest positive contributor, offsetting modest margins and low asset turns. margin_quality: Gross margin 22.9% and operating margin 7.5% indicate reasonable cost control with some operating leverage (OP +6.3% vs revenue +3.9%). Ordinary margin 8.7% benefits from net non-operating gains (~¥76 million). Net margin at 4.68% is consistent with the sector’s mid-single-digit profitability profile, but cash conversion is weak this period. operating_leverage: Operating income growth (+6.3% YoY) outpaced revenue growth (+3.9% YoY), implying modest positive operating leverage, likely from fixed-cost absorption and efficiency gains. EBITDA margin of 11.4% versus operating margin of 7.5% suggests D&A burden of ~3.9ppt; incremental margin appears healthy but needs validation over subsequent quarters.

Growth Assessment

revenue_sustainability: Top-line grew 3.9% YoY to ¥6.79 billion, indicating stable demand. Sustainability will depend on price/mix and volume resilience; no segment detail was disclosed. profit_quality: Ordinary income (+¥76 million above operating income) indicates reliance on non-operating items to a small extent. The implied effective tax rate (~30%) is in line with statutory norms, supporting the quality of reported net income. However, OCF/NI of 0.44 indicates earnings did not translate into cash this period. outlook: Continuation of mid-single-digit revenue growth with disciplined cost control could maintain 7–8% operating margins. Key to outlook is improving working capital efficiency to lift cash conversion and reduce reliance on leverage. Absent disclosure on capex/investing, growth capex needs are unclear.

Financial Health

liquidity: Current assets ¥12.22 billion vs current liabilities ¥2.47 billion yield a current ratio of ~4.95x and working capital of ~¥9.75 billion. Quick ratio appears equal to current ratio due to undisclosed inventories. Cash and equivalents were undisclosed; thus near-term liquidity relies on the composition of current assets, which is not provided. solvency: Total liabilities ¥29.55 billion and equity ¥6.79 billion imply a debt-to-equity proxy of 4.35x (using total liabilities as a proxy for interest-bearing debt). Implied equity ratio is ~18.8% (¥6.79b/¥36.16b), indicating a leveraged balance sheet. Interest expense was undisclosed; therefore, interest coverage metrics reported as 0.0x are not meaningful. capital_structure: High financial leverage (DuPont leverage 5.33x) boosts ROE but reduces balance sheet resilience. Without detail on interest-bearing debt versus other liabilities, the risk profile depends on the mix and maturity schedule, which are not disclosed.

Cash Flow Quality

earnings_quality: OCF of ¥139 million versus net income of ¥318 million yields OCF/NI of ~0.44, pointing to weaker cash realization, likely due to working capital outflows or timing effects. FCF_analysis: Free cash flow cannot be reliably calculated because investing cash flows (and capex) were undisclosed (reported as 0 indicates not reported). EBITDA of ¥773 million provides capacity to fund maintenance capex, but visibility is insufficient. working_capital: Current assets significantly exceed current liabilities; however, the sustainability of OCF depends on receivables collection and payables management. No breakdown was provided, so the specific drivers of the OCF shortfall cannot be identified.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is reported as ¥0.00, with a payout ratio of 0%. Given net income of ¥318 million and limited OCF, retaining earnings appears consistent with preserving balance sheet flexibility. FCF_coverage: FCF coverage is not assessable due to undisclosed investing cash flows. As such, any payout policy evaluation should await clearer capex and OCF trends. policy_outlook: With high leverage (implied equity ratio ~18.8%) and sub-1.0x OCF/NI in the period, a conservative dividend posture is likely until cash conversion improves and leverage moderates.

Risk Assessment

Business Risks:

• Margin sensitivity to input costs and pricing power, given a 22.9% gross margin and 7.5% operating margin profile
• Potential demand cyclicality affecting volume growth (revenue +3.9% YoY)
• Execution risk in improving working capital and cash conversion
• Dependence on non-operating items for a portion of profit (ordinary income > operating income)

Financial Risks:

• High leverage: total liabilities/equity ~4.35x and implied equity ratio ~18.8%
• Low OCF/NI (0.44) indicating weaker earnings-to-cash conversion
• Limited visibility on liquidity buffers due to undisclosed cash and inventories
• Interest rate and refinancing risk cannot be quantified due to undisclosed interest expense and debt structure

Key Concerns:

• Sustaining operating margin gains while converting earnings into cash
• Balance sheet resilience given high leverage and limited disclosure on debt composition
• Lack of disclosure on investing cash flows and capex, constraining FCF assessment

Investment Implications

Key Takeaways:

• Steady growth with modest operating leverage: revenue +3.9% YoY, operating income +6.3% YoY
• Profitability is adequate but supported modestly by non-operating gains (ordinary > operating by ~¥76 million)
• ROE of 4.68% is primarily leverage-driven amid low asset turnover (0.188x) and mid-single-digit net margin
• Headline liquidity is strong (current ratio ~4.95x), but cash composition is undisclosed
• Leverage is high (liabilities/equity ~4.35x; implied equity ratio ~18.8%), elevating financial risk
• Cash conversion is weak this period (OCF/NI ~0.44), limiting confidence in earnings quality
• Dividend suspended (DPS ¥0), consistent with preserving cash under leverage and OCF constraints

Metrics to Watch:

• OCF/NI and operating cash flow trend vs. EBITDA
• Working capital days (receivables, payables, and any inventory once disclosed)
• Operating margin and gross margin progression
• Composition and cost of debt (interest expense, maturities) once disclosed
• Capex and investing cash flows to assess FCF generation
• Ordinary vs operating income gap to gauge reliance on non-operating items
• Equity ratio and net debt (once cash and interest-bearing debt are disclosed)

Relative Positioning: Within a mid-margin, service-oriented peer set, the company exhibits comparable operating margins but weaker cash conversion and higher financial leverage; liquidity appears ample on current assets, yet transparency on cash and debt mix is limited.

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