Broad-Minded Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.40B
• Operating Income: ¥279M
• Net Income: ¥48M
• EPS: ¥27.56

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

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

Broadmind Co., Ltd. (TSE:7343) reported FY2026 Q2 consolidated results under JGAAP showing a mixed picture: top-line contraction but sharp profit recovery. Revenue declined 9.3% year over year to ¥2,397 million, yet operating income surged 85.2% to ¥279 million and net income rose 208.1% to ¥157 million, indicating meaningful operating leverage and cost discipline. DuPont analysis indicates ROE of 4.18%, driven by a 6.55% net profit margin, asset turnover of 0.499x, and modest financial leverage of 1.28x. The margin expansion amid lower revenue suggests effective expense control and possibly improved sales mix toward higher-margin services. Ordinary income of ¥289 million exceeded operating income, implying positive net non-operating contributions in the quarter. The reported gross profit margin of 99.3% is unusually high for non-financial sectors but can be seen in financial intermediation models; note that line-item labels (revenue, cost of sales, gross profit) may not be fully comparable, a common issue in agency/financial services reporting. Cash conversion was weak: operating cash flow was negative at -¥247 million against net income of ¥157 million (OCF/NI -1.58x), pointing to a working capital outflow or timing effects in receivables/payables. Liquidity appears strong with a current ratio of 327.7% and working capital of ¥2,495 million, supporting near-term obligations. The balance sheet is conservative: with total assets of ¥4,799 million and equity of ¥3,757 million, the implied equity ratio is approximately 78% (the reported 0.0% equity ratio appears undisclosed rather than true zero). Leverage is modest with a debt-to-equity ratio of 0.33x and negligible interest burden (interest expense ¥26 thousand; coverage 10,731x). Capital expenditures were not disclosed (investing cash flow shows as zero, likely undisclosed), limiting free cash flow visibility this quarter. Financing cash flow was an outflow of -¥222 million, reflecting debt reduction and/or shareholder returns; the exact composition is not provided. Dividend data are not disclosed in a reliable way (DPS and payout shown as zero likely indicate non-disclosure), so dividend policy assessment relies on earnings and cash flow capacity rather than stated distributions. Overall, despite revenue softness, the company delivered substantial profit growth and maintained a strong balance sheet; however, cash flow quality and sustainability of the margin gains warrant close monitoring. Data limitations—especially undisclosed line items and potential XBRL mapping differences—require caution in interpreting certain ratios.

Profitability Analysis

ROE_decomposition: Reported ROE is 4.18%, composed of a 6.55% net profit margin, 0.499x asset turnover, and 1.28x financial leverage (equity multiplier). The low leverage means ROE is primarily a function of margins and asset utilization rather than gearing. margin_quality: Operating income rose 85.2% YoY to ¥279 million despite a 9.3% revenue decline, implying sizable operating margin expansion. The reported gross margin of 99.3% suggests an agency/commission model where cost of sales is minimal or classified differently; line-item definitions likely drive this anomaly. Ordinary income exceeded operating income, indicating helpful non-operating items, but sustainability of these contributions is uncertain. operating_leverage: The divergence of revenue (-9.3% YoY) and operating income (+85.2% YoY) indicates strong operating leverage, likely from lower selling, general and administrative expenses and better mix. Depreciation and amortization are modest at ¥26.6 million, so EBITDA (¥305.6 million; 12.7% margin) closely tracks operating performance.

Growth Assessment

revenue_sustainability: Revenue of ¥2,397 million fell 9.3% YoY, suggesting softer demand or product mix shifts. In advisory/agency models, revenue volatility can reflect transaction timing and market conditions; visibility into recurring versus transactional components is not provided. profit_quality: The surge in operating and net income despite lower sales points to mix/efficiency improvements; however, reliance on non-operating income (ordinary > operating) and timing benefits cannot be ruled out. Effective tax rate appears modest based on taxes of ¥27.1 million versus pretax income proxied by ordinary income, but the reported 0% rate is likely a disclosure artifact. outlook: If expense discipline and mix improvements persist, margins could remain elevated even with moderate top-line pressure. Sustained improvement will depend on stabilizing revenue, maintaining productivity, and converting earnings to cash amid working capital swings.

Financial Health

liquidity: Current assets ¥3,591 million vs. current liabilities ¥1,096 million yield a current ratio of 327.7% and strong working capital of ¥2,495 million. Quick ratio equals current ratio given no inventories disclosed, supporting robust short-term solvency. solvency: Total equity ¥3,757 million vs. total assets ¥4,799 million implies an equity ratio of ~78% (reported 0% is likely undisclosed). Debt-to-equity is 0.33x with minimal interest expense (¥26 thousand), indicating low financial risk from leverage. capital_structure: Leverage is conservative with substantial equity funding. Ordinary > operating income suggests non-operating items are additive; balance sheet capacity exists, but management appears to prioritize balance sheet strength over aggressive gearing.

Cash Flow Quality

earnings_quality: OCF of -¥247 million versus net income of ¥157 million (OCF/NI -1.58x) signals weak cash conversion this period, likely due to working capital outflows (e.g., receivables growth) common in commission-based models. Depreciation is low, so accruals mainly relate to working capital rather than non-cash charges. FCF_analysis: Investing cash flow is undisclosed (shown as zero), preventing a reliable free cash flow calculation; the provided FCF value of zero should be treated as not available. Absent capex data, underlying FCF capacity cannot be assessed for the quarter. working_capital: The magnitude of negative OCF suggests a sizable build in operating assets or reduction in operating liabilities. Monitoring receivables days, advances, and timing of commission settlements is critical for future cash conversion.

Dividend Sustainability

payout_ratio_assessment: Payout ratio and DPS are shown as zero, which likely reflects non-disclosure rather than actual zero payments. Using reported earnings alone (¥157 million) without reliable cash flow and policy data precludes a firm payout assessment. FCF_coverage: With OCF negative and investing cash flows undisclosed, free cash flow coverage of dividends cannot be determined. Near-term distributions would depend on reversal of working capital outflows or existing cash balances (cash and equivalents are not disclosed). policy_outlook: Given low leverage and solid equity base, the capacity for returns exists over the medium term, but current-quarter cash generation was weak. Dividend policy clarity from management guidance would materially improve the assessment.

Risk Assessment

Business Risks:

• Revenue volatility due to market-dependent transaction volumes and commission flows
• Product mix and commission rate changes affecting margins
• Regulatory changes in financial/insurance intermediation
• Dependence on advisor productivity and client acquisition/retention
• Concentration risk in key partners or products if present
• Potential mismatch between reported gross profit and economic margin due to accounting classification

Financial Risks:

• Weak cash conversion this quarter (OCF negative vs. positive earnings)
• Working capital swings tied to receivables and settlement timing
• Reliance on non-operating income to bridge operating performance in some periods
• Rising interest rate environment could modestly increase financing costs (though current interest burden is minimal)
• Data disclosure gaps (cash balance, investing CF) reduce transparency

Key Concerns:

• Sustainability of margin gains amid declining revenue
• Normalization of operating cash flow and reversal of working capital outflows
• Clarity on dividend policy and capital allocation given financing outflows

Investment Implications

Key Takeaways:

• Top line declined 9.3% YoY to ¥2,397 million, but profitability improved sharply (OP +85.2%, NI +208.1%).
• ROE of 4.18% is driven by margin gains and moderate asset turnover, not leverage.
• Liquidity and solvency are strong with an implied equity ratio of ~78% and D/E of 0.33x.
• Cash flow quality is a weak spot: OCF -¥247 million vs. NI ¥157 million.
• Non-operating income supports ordinary income above operating income; sustainability uncertain.
• Disclosure gaps (cash balance, investing CF, dividend data) limit precision of FCF and payout analysis.

Metrics to Watch:

• Operating cash flow trajectory and OCF/NI conversion ratio
• Receivables days and commission settlement timing
• Operating margin and expense ratio (SG&A to revenue)
• Asset turnover (sales to assets) to gauge productivity
• Ordinary income components (non-operating gains/losses) and their recurrence
• Capital allocation signals (buybacks, dividends, debt movements) once disclosed

Relative Positioning: Within small-cap Japanese financial advisory/agency peers, Broadmind exhibits improving profitability and conservative leverage, but lags on cash conversion this quarter; overall positioning is balance-sheet-strong with execution-dependent earnings quality.

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