Ligua Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.29B
• Operating Income: ¥-35M
• Net Income: ¥-81M
• EPS: ¥-34.37

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

Rigua Co., Ltd. (7090) reported FY2026 Q2 consolidated results under JGAAP showing a contraction in topline and continued losses, but with positive operating cash flow. Revenue declined 14.7% year over year to ¥1,291 million, indicating a meaningful demand slowdown or deliberate pruning of lower-quality sales. Despite the weaker revenue, the company maintained a very high gross margin of 70.1% based on the provided metric, suggesting resilience in pricing, mix, or service-based revenue composition. Operating income remained negative at ¥-35 million, essentially unchanged YoY (indicated as +0.0% YoY), implying some cost flex or cost controls offsetting the revenue decline. Ordinary income deteriorated to ¥-58 million, reflecting financial costs and non-operating items, with interest expense of ¥13.5 million weighing on results. Net income was ¥-51 million (EPS ¥-34.37), flat YoY per the provided indicator, underscoring ongoing breakeven challenges at the operating line. DuPont metrics show a calculated ROE of -18.75% driven by a negative net margin (-3.95%), moderate asset turnover (0.462x), and very high financial leverage (10.27x), highlighting equity sensitivity to small swings in profitability. Liquidity appears adequate on the surface with a current ratio of 133.6% and positive working capital of approximately ¥687 million, but solvency is stretched with a debt-to-equity ratio of 10.38x and weak interest coverage (-2.6x). Notably, operating cash flow was positive at ¥105 million versus a net loss of ¥51 million, implying cash conversion supported by working capital movements; however, investing cash flows were unreported (shown as zero), limiting free cash flow assessment. The company reported zero values for several items (e.g., cash and equivalents, investing CF, inventories, shares outstanding), which should be interpreted as not disclosed or reported under different line items, rather than true zeros. There are also apparent internal inconsistencies between certain line items (e.g., gross profit versus revenue and cost of sales, and liabilities versus assets), so conclusions are based primarily on the supplied calculated metrics and the non-zero disclosures. The elevated leverage combined with ongoing losses heightens equity risk, even though the absolute scale of the loss is modest relative to revenue. Operating leverage appears contained in the near term, given that the operating loss did not widen despite a double-digit revenue decline. With dividend payments at zero and a negative bottom line, internal cash generation and liquidity management remain central to funding operations. The near-term outlook will depend on stabilizing revenue, preserving gross margins, and improving operating efficiency to restore positive EBIT. Monitoring financing conditions and the cost of debt is also critical given the thin equity base and ordinary loss. Overall, while cash generation from operations in the period is a positive, structural solvency risk persists until profitability and coverage metrics improve.

Profitability Analysis

ROE_decomposition: Calculated ROE is -18.75%, comprised of a net profit margin of -3.95%, asset turnover of 0.462x, and financial leverage of 10.27x. The negative margin is the primary driver of the negative ROE, while high leverage amplifies the impact of small profit changes on equity returns. margin_quality: Gross margin is reported at 70.1%, indicating strong unit economics or a service-heavy mix. Operating margin is approximately -2.7% (operating loss of ¥35 million on ¥1,291 million revenue), showing that SG&A still overwhelms gross profit despite solid gross margins. The ordinary margin is -4.5% and net margin -3.95%, reflecting additional pressure from financing and non-operating items. The presence of positive income tax expense alongside a net loss suggests non-deductible items or timing differences. operating_leverage: Revenue fell 14.7% YoY while the operating loss remained flat (indicated +0.0% YoY), pointing to some cost flexibility and limited negative operating leverage in the period. EBITDA of approximately ¥-5.3 million (-0.4% margin) versus EBIT of ¥-35 million indicates modest D&A (¥29.7 million) and suggests that cash operating profitability is near breakeven. A small improvement in revenue or further SG&A rationalization could move EBIT toward breakeven, but conversely a further revenue decline could quickly widen losses due to the fixed cost base.

Growth Assessment

revenue_sustainability: Revenue decreased to ¥1,291 million (-14.7% YoY), signaling demand headwinds or strategic pruning. Sustaining the high gross margin suggests the company avoided aggressive discounting, but volume softness or customer churn may be present. profit_quality: Despite negative net income (¥-51 million), EBITDA is only slightly negative, indicating near-cash breakeven operations. Ordinary income is more negative than operating income due to financing costs, highlighting the drag from leverage. The tax expense despite a loss introduces noise to after-tax comparability. outlook: Near-term growth hinges on stabilizing core demand, improving utilization of fixed costs, and maintaining pricing discipline. Given leverage, returning to low-single-digit positive operating margin is important to rebuild coverage. Without visibility into order backlog or segment trends (not disclosed), the base case is cautious stabilization rather than immediate re-acceleration.

Financial Health

liquidity: Current ratio of 133.6% and quick ratio of 133.6% indicate adequate short-term liquidity, supported by working capital of approximately ¥687 million. Operating cash flow was positive at ¥105 million, providing additional liquidity support in the period. solvency: Debt-to-equity of 10.38x and financial leverage of 10.27x indicate a thin equity buffer. Interest coverage is -2.6x, underscoring that current operating earnings do not cover interest costs. The equity ratio was shown as 0.0% (likely a placeholder/undisclosed figure), so solvency assessments rely on the leverage metrics provided. capital_structure: High reliance on liabilities (both operating and financial) relative to equity. The negative ordinary result combined with interest expense of ¥13.5 million illustrates sensitivity to financing conditions. Equity at ¥272 million is small relative to total assets of ¥2,794 million per the disclosure.

Cash Flow Quality

earnings_quality: OCF of ¥104.9 million versus net loss of ¥51 million (OCF/NI = -2.06 due to negative NI) suggests cash generation benefited from working capital inflows, despite reported losses. EBITDA at ¥-5.3 million supports the view that non-cash charges and working capital drove positive OCF. FCF_analysis: Investing cash flow is shown as zero (interpreted as undisclosed), and therefore free cash flow cannot be reliably determined from the provided data (reported FCF shown as 0 reflects data limitations, not true zero). Absent capex data, structural cash generation remains uncertain. working_capital: The positive OCF likely stems from favorable movements in receivables and/or payables; however, detailed components were not disclosed. With a current ratio of 133.6%, the company has some cushion, but sustainability of these working capital inflows is unclear if revenue continues to contract.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is reported as ¥0 with a payout ratio of 0.0%, consistent with a net loss and the priority of preserving liquidity. FCF_coverage: FCF coverage is shown as 0.00x due to unreported investing cash flows; hence, true dividend coverage cannot be assessed. Given negative earnings and high leverage, resumed dividends would likely require sustained positive EBIT and OCF. policy_outlook: With elevated leverage and negative earnings, the near-term stance is likely to prioritize balance sheet stability over distributions. Any future policy shift would depend on restoring profitability and clearer visibility on recurring free cash flow.

Risk Assessment

Business Risks:

• Demand softness leading to double-digit revenue contraction (-14.7% YoY).
• High operating cost base relative to revenue, keeping EBIT negative.
• Potential customer churn or segment-specific weakness (details not disclosed).
• Reliance on maintaining high gross margins to offset volume pressure.

Financial Risks:

• High leverage (debt-to-equity 10.38x; financial leverage 10.27x) with thin equity base.
• Negative interest coverage (-2.6x) and ordinary loss indicate limited debt service capacity from operations.
• Sensitivity to borrowing costs and refinancing conditions.
• Cash flow dependence on working capital movements; limited visibility on capex and investing needs.

Key Concerns:

• Sustained losses at operating and ordinary levels.
• Revenue decline pace versus ability to reduce fixed costs.
• Data limitations and internal inconsistencies in reported line items, which constrain precision of analysis.
• Potential erosion of equity if losses persist given high leverage.

Investment Implications

Key Takeaways:

• Revenue contracted 14.7% YoY to ¥1,291 million, but operating loss remained flat YoY at ¥-35 million.
• Gross margin is high at 70.1%, supporting unit economics despite topline pressure.
• ROE is -18.75% driven by a -3.95% net margin and very high leverage (10.27x).
• Liquidity appears adequate (current ratio 133.6%; working capital ~¥687 million), but solvency is strained (interest coverage -2.6x).
• OCF was positive at ¥105 million despite a net loss, likely aided by working capital inflows.
• Investing cash flows and cash balance were not disclosed (zeros should not be taken as actual), limiting FCF assessment.
• Dividend remains suspended (DPS ¥0), consistent with losses and balance sheet priorities.

Metrics to Watch:

• Quarterly revenue trajectory and order inflows to gauge stabilization.
• Operating margin/EBIT trend and SG&A efficiency.
• Interest coverage and ordinary income as indicators of financing drag.
• Working capital turns (receivables, payables) and sustainability of OCF.
• Capex and investing cash flows to assess true FCF.
• Leverage metrics (debt-to-equity, net debt/EBITDA once disclosed).

Relative Positioning: Within small/mid-cap service-oriented peers on the Tokyo Stock Exchange, Rigua exhibits comparatively strong gross margins but weaker operating profitability and materially higher leverage, resulting in elevated equity risk until a clear path to positive EBIT and improved coverage is established.

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
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