StemCell Institute FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥1.42B
• Operating Income: ¥130M
• Net Income: ¥85M
• EPS: ¥8.38

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

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

Stemcell Institute Inc. (70960) reported FY2026 Q2 consolidated results under JGAAP with flat top line and profits year over year, highlighting a stable but subdued growth profile. Revenue was ¥1,415 million (+0.0% YoY), with cost of sales of ¥543.7 million, resulting in a robust gross profit of ¥871.4 million and a gross margin of 61.6%. Operating income held at ¥130 million (+0.0% YoY), translating to an operating margin of 9.2%, while ordinary income was ¥136 million and net income ¥84 million (+0.0% YoY), implying a net margin of 5.94%. DuPont decomposition points to a modest ROE of 2.80%, driven by relatively low asset turnover (0.180) and moderate financial leverage (assets/equity of 2.62), with profitability a mid‑single‑digit net margin. EBITDA was ¥201.9 million, yielding a 14.3% EBITDA margin, underscoring high gross profitability but a sizable SG&A burden that caps operating leverage. Interest expense is small at ¥2.68 million and interest coverage is strong at 48.5x, indicating minimal financial strain from debt servicing. The effective tax rate inferred from disclosed figures is approximately 38.4% (¥52.3 million on pre‑tax income proxied by ordinary income of ¥136 million), higher than the 0.0% metric shown; we rely on the computed rate due to apparent template limitations. Liquidity remains adequate with a current ratio of 122.2% and positive working capital of ¥960 million, though current liabilities are sizable relative to current assets, which may reflect contract liabilities typical of prepayment business models. Cash conversion is weak this half: operating cash flow was ¥33.7 million (OCF/NI ~0.40), suggesting working capital drag or timing effects. Free cash flow cannot be reliably assessed because investing cash flows and cash balances are undisclosed in the XBRL (zeros indicate unreported, not actual zero). Financing cash inflow of ¥266.5 million implies the company tapped external funding (debt or equity), but details are not provided. Capital structure is moderate with total liabilities of ¥4.85 billion versus equity of ¥2.999 billion (D/E 1.62x), and overall leverage appears manageable given coverage levels. With revenue and profits flat YoY and cash conversion soft, the near‑term outlook hinges on stabilizing new enrollments, sustaining storage fee retention, and controlling SG&A to unlock operating leverage. Overall, the company exhibits high gross margin economics, conservative interest burden, and adequate liquidity, but low asset turnover and subdued operating margin constrain ROE. Data gaps (cash, investing CF, inventories, equity ratio disclosure, share counts) limit depth of analysis, so the conclusions emphasize available non‑zero data and computed ratios.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.94% (NI ¥84m / Rev ¥1,415m)
• asset_turnover: 0.180 (Rev ¥1,415m / Assets ¥7,852m)
• financial_leverage: 2.62 (Assets ¥7,852m / Equity ¥2,999m)
• calculated_ROE: 2.80% (matches reported 2.80%)
• interpretation: Low ROE is primarily a function of low asset turnover; margins are positive but modest, while leverage is moderate. margin_quality:
• gross_margin: 61.6% (¥871.4m/¥1,415m) — strong, indicative of a scalable service model
• operating_margin: 9.2% (¥130m/¥1,415m) — constrained by SG&A; room for operating leverage if growth resumes
• ordinary_margin: 9.6% (¥136m/¥1,415m) — slightly above operating due to non-operating income
• net_margin: 5.94% — compressed by taxes and below-the-line items
• ebitda_margin: 14.3% — supports healthy unit economics before D&A and interest operating_leverage: Limited in the period: flat revenue (+0.0% YoY) and flat operating income suggest cost base did not flex down; high gross margin provides potential operating leverage if top-line growth re-accelerates, but current SG&A absorption caps EBIT expansion.

Growth Assessment

revenue_sustainability: Top line was flat at ¥1.415bn, signaling stable demand but no visible expansion; recurring storage fees likely underpin stability, while new enrollment momentum is unclear from disclosed data. profit_quality: Profitability is steady with consistent operating and net income YoY. The high gross margin indicates resilient core economics, but the gap from gross to operating margin highlights ongoing cost intensity. outlook: Near-term growth will depend on net new contract additions, price discipline, and churn management. With moderate leverage and high gross margin, incremental revenue could translate into disproportionate EBIT gains, but the weak OCF conversion this half tempers confidence in immediate acceleration.

Financial Health

liquidity:

• current_ratio: 122.2% (CA ¥5,283.8m / CL ¥4,323.5m)
• quick_ratio: 122.2% (inventories unreported; assume minimal for the model)
• working_capital: ¥960.4m — positive buffer though not excessive given the size of current liabilities solvency:
• debt_to_equity: 1.62x (Liabilities ¥4,853.8m / Equity ¥2,999.0m)
• interest_coverage: 48.5x — strong ability to service interest
• equity_ratio: Not disclosed (0.0% shown reflects non-disclosure); implied equity/asset ~38.2% using totals capital_structure: Moderate leverage with manageable interest burden; liabilities are significant relative to assets, potentially reflecting contract liabilities/prepayments common in subscription-like models.

Cash Flow Quality

earnings_quality: OCF/Net income at ~0.40 (¥33.7m/¥84.0m) indicates weak cash conversion in H1, likely due to working capital timing (e.g., receivables build or revenue deferrals). free_cash_flow: Not assessable — investing cash flow and capex are undisclosed in the XBRL (zeros indicate unreported), so FCF cannot be reliably computed. working_capital_dynamics: Positive working capital (¥960m) supports liquidity; however, OCF softness suggests period-specific outflows (e.g., SG&A cash timing, tax payments, or deferred income movements). Monitoring receivable days, deferred revenue changes, and payables is key once disclosed.

Dividend Sustainability

payout_ratio_assessment: Reported payout ratio of 0.0% should be treated as non-disclosure rather than actual zero; EPS is ¥8.38, but DPS is not reliably provided. fcf_coverage: FCF coverage cannot be evaluated due to unreported investing CF/capex; hence dividend coverage metrics are indeterminate. policy_outlook: With low ROE (2.8%) and flat earnings, a conservative payout policy would be consistent with capital preservation, but absent confirmed DPS or policy disclosures, no conclusion can be drawn.

Risk Assessment

Business Risks:

• Flat revenue trajectory indicating potential demand stagnation or competitive pressure
• Customer acquisition and retention risk in a niche healthcare service (enrollment flow and churn sensitivity)
• Regulatory and compliance risk in medical/biobank operations
• Pricing and reimbursement environment for ancillary services
• Concentration risk if revenue is dependent on a limited set of channels or partners

Financial Risks:

• Weak OCF/NI conversion (0.40) in the period, implying working capital or timing risk
• Moderate leverage (D/E 1.62x) with reliance on current liabilities; potential refinancing/timing exposure
• Data gaps on cash balances and capex obscure true liquidity runway and reinvestment needs
• Potential tax rate volatility (computed ~38.4% this half) affecting net margins

Key Concerns:

• Sustained flat growth alongside limited operating leverage
• Low asset turnover (0.180) dampening ROE despite healthy gross margins
• Incomplete disclosures (cash, investing CF, inventories, equity ratio) limiting visibility into cash runway and capital allocation

Investment Implications

Key Takeaways:

• High gross margin (61.6%) supports attractive unit economics, but SG&A burden caps operating margin at 9.2%
• ROE is low at 2.8% due to low asset turnover and modest net margin
• Liquidity is adequate (current ratio 122%) with positive working capital (~¥960m)
• Interest burden is light (coverage 48.5x), supporting solvency
• Cash conversion is weak in H1 (OCF/NI ~0.40), warranting close monitoring
• Financing inflow of ¥266.5m indicates reliance on external funding in the period
• Dividend capacity cannot be assessed due to undisclosed DPS and FCF

Metrics to Watch:

• New enrollments, churn, and total stored units (volume drivers)
• ARPU/pricing trends and contract duration mix
• SG&A ratio and operating margin progression (evidence of operating leverage)
• OCF/NI, changes in receivables and contract liabilities, and tax payments
• Capex and investing cash flows (to gauge FCF and reinvestment needs)
• Leverage (D/E), cash balances, and maturity profile of liabilities
• ROE improvement via margin expansion or asset turnover gains

Relative Positioning: Within domestic niche healthcare services, the company exhibits superior gross margins and modest leverage but underperforms on ROE and cash conversion relative to quality compounders; growth visibility appears limited in the reported half.

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