Ligua (7090) FY2026 Q3 Earnings Report

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Executive Summary

During the current period, revenue declined while the ability to absorb fixed costs weakened, resulting in a larger operating loss compared with the previous year. Revenue was ¥1.74B (¥2.22B in the previous year, YoY -21.7%), operating income was ¥-0.17B (¥-0.07B in the previous year), ordinary income was ¥-0.20B (¥-0.10B in the previous year), and net income was ¥-0.20B (¥-0.14B in the previous year, YoY -48.5%). In addition to the revenue decline, the increase in the SG&A expense ratio caused operating leverage to work in reverse, resulting in deterioration at all stages of the income statement.

Factors Affecting Earnings

【Revenue】Revenue was ¥1.74B, down 21.7% year on year. The Wellness Business (formerly OsteopathicSolutionSegments) generated ¥1.29B (down 12.7% year on year), with its core health support revenue falling sharply by 41.0%. The Financial Business generated ¥0.45B (down 39.3% year on year), largely reflecting the impact of the transfer of shares in FP Design Co., Ltd. in August 2025, which resulted in the IFA Business being recorded only from April through July. Meanwhile, Consulting (+11.1%), Billing Agency Services (+4.6%), and Insurance Agency Services (+1.5%) secured revenue growth.

【Income Statement】 The gross profit margin was 58.5%, remaining approximately in line with the same period of the previous year, indicating that deterioration in profitability at the cost level was limited. However, SG&A expenses were ¥1.19B, and the SG&A expense ratio rose to 68.4% from 61.9% in the previous year, causing the operating margin to deteriorate to -9.8% (previous year: -3.3%). The ¥0.06B in extraordinary income primarily comprised gains on the sale of shares in a subsidiary and temporarily reduced the loss before tax as a nonrecurring factor; however, the ¥0.20B ordinary loss indicates that the underlying earnings deficit remains. The results reflect declining revenue and lower earnings, with insufficient fixed-cost absorption being the primary cause of the deterioration in profitability.

Segment Analysis

The Wellness Business recorded revenue of ¥1.29B and a segment loss of ¥0.08B (margin: -6.5%), turning to a loss from income of ¥0.04B in the same period of the previous year. The primary cause was the 41.0% decline in health support revenue. The Financial Business recorded revenue of ¥0.45B and a segment loss of ¥0.09B (margin: -19.4%). Although the loss narrowed slightly from ¥0.12B in the previous year, this reflected a reduction in both revenue and expenses following the sale of the IFA Business and is difficult to characterize as an improvement in the profitability of the business itself. Both segments were loss-making and directly contributed to the deterioration in company-wide earnings.

Key Financial Indicators

【Profitability】 The operating margin deteriorated to -9.8% (previous year: -3.3%), while the net profit margin deteriorated to -11.7% (previous year: -6.2%). The gross profit margin remained approximately in line with the previous year at 58.5%; the deterioration was primarily attributable to a decline in fixed-cost absorption capacity caused by the increase in the SG&A expense ratio (61.9%→68.4%). 【Cash Quality】 Most of the ¥0.06B in extraordinary income comprised gains on the sale of shares in a subsidiary and does not indicate sustainable earnings power. 【Investment Efficiency】 Annualized ROE was -222.5%, while the Equity Ratio fell significantly to 4.6% from 10.2% in the previous year, with the metrics fluctuating extremely due to the erosion of net assets. 【Financial Soundness】 Total assets were ¥2.62B and net assets were ¥0.12B, indicating a thin equity base and continued high reliance on interest-bearing debt, including ¥0.55B in long-term borrowings.

Cash Flow Analysis

As detailed disclosure of the statement of cash flows is unavailable, cash flow trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥1.21B, down from ¥1.35B in the previous year, indicating an ongoing cash outflow associated with the accumulation of losses. Accounts receivable were ¥0.20B (¥0.27B in the previous year), and inventories were ¥0.19B (¥0.26B in the previous year), with both declining as working capital contracted in line with the revenue decrease. Long-term borrowings were ¥0.55B, down from ¥0.75B in the previous year, indicating efforts to reduce liabilities; however, financial flexibility remains limited because net assets declined substantially from ¥0.32B to ¥0.12B.

Quality of Earnings

The current-period results include nonrecurring factors. Most of the ¥0.06B in extraordinary income comprised gains on the sale of shares in a subsidiary, temporarily mitigating the loss before tax; however, underlying earnings power, as indicated by the ¥0.17B operating loss and ¥0.20B ordinary loss, remains in deficit. Non-operating expenses primarily comprised ¥0.02B in interest expense, and the addition of interest costs to the operating loss further expanded the ordinary loss. Comprehensive income was ¥-0.20B, approximately in line with net income attributable to owners of the parent, with no significant divergence arising from valuation differences on other securities or similar items. Overall, the current-period loss reflects a structural decline in earnings power that could not be offset by a temporary gain on sale.

Earnings Forecast and Guidance

Progress against the full-year revenue forecast of ¥2.45B (down 14.7% year on year) was 71.0%, below the standard progress rate of approximately 75% for the first three quarters. Meanwhile, the ¥0.17B operating loss has already exceeded the full-year forecast operating loss of ¥0.14B, and the ¥0.20B net loss also exceeds the full-year forecast loss of ¥0.19B. In addition to the delay in revenue progress, losses are accumulating at a pace exceeding the full-year forecast, making substantial earnings improvement in Q4 necessary.

Shareholder Returns

The Q2 dividend was ¥0 per share, and the full-year forecast dividend is also ¥0, with the company continuing to pay no dividends. As the company recorded a cumulative net loss of ¥0.20B and retained earnings were ¥-0.89B, the Payout Ratio is effectively not calculable. Given the continued operating loss and the financial position represented by an Equity Ratio of 4.6%, the no-dividend policy is consistent with capital allocation aimed at conserving funds.

Risk Factors

1. Vulnerable capital structure: Interest-bearing debt reached approximately ¥1.40B against net assets of ¥0.12B, and the Equity Ratio declined to 4.6%. The company has limited resilience against additional losses.

2. Deterioration in the profitability of the core business: Health support revenue in the Wellness Business declined 41.0% year on year, and the business turned to a segment loss of ¥0.08B. Delays in demand recovery or service restructuring could lead to continued insufficient fixed-cost absorption.

3. Shrinking earnings base following business restructuring: The Financial Business’s revenue base contracted following the sale of the IFA Business. Growth in insurance agency revenue is limited, and the ability of the remaining businesses to absorb fixed costs remains a key challenge.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Return

The company’s profitability is significantly below the industry median, with both its operating margin and net profit margin ranking in the lower tier of the industry.

Growth and Capital Efficiency

While many companies in the industry are generally achieving revenue growth, the company recorded a substantial revenue decline and also ranks in the lower tier of the industry in terms of growth.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. Although the gross profit margin of 58.5% was maintained from the same period of the previous year, the SG&A expense ratio rose to 68.4%, causing the operating margin to deteriorate to -9.8%. The fact that the decline in fixed-cost absorption capacity, rather than the cost structure, was the primary cause of the deterioration in earnings is noteworthy as a structural change in profitability.

2. The narrowing of the Financial Business’s loss was accompanied by a reduction in both revenue and expenses following the sale of the IFA Business; therefore, it must be evaluated separately from a straightforward improvement in the business.

3. Although revenue progress is somewhat behind the full-year forecast, the operating loss and net loss have already exceeded the full-year forecast. Whether earnings improve in Q4 will be a key factor determining whether the full-year plan can be achieved.

Theoretical Share Price (Reference Value)

Sensitivity: -¥38 to -¥37 at Cost of Equity ±1%, and -¥37 to -¥37 at ω±0.1.

Notes:

• As forecast ROE is below the Cost of Equity, the theoretical value will be below book value per share.
• The ratio of goodwill to net assets is high, and the assumptions would change substantially if impairment were recognized.
• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest Rate Reference Month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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