YAGI & CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥39.54B
• Operating Income: ¥1.38B
• Net Income: ¥714M
• EPS: ¥199.49

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

Yagi Co., Ltd. (TSE: 74600) delivered modest top-line growth and strong profit expansion in FY2026 Q2 on a consolidated JGAAP basis. Revenue rose 0.6% YoY to ¥39.5bn, while operating income climbed 26.6% YoY to ¥1.38bn, reflecting improved operating efficiency and cost discipline. Gross profit reached ¥9.97bn with a gross margin of 25.2%, indicating stable value-add despite a soft demand backdrop. Operating margin improved to approximately 3.5%, and ordinary income was ¥1.71bn, suggesting healthy non-operating contributions (e.g., financial income or equity-method gains) relative to low interest expense. Net income surged 134.4% YoY to ¥1.68bn, lifting the reported net margin to 4.24%, above the operating margin and pointing to meaningful non-operating gains and/or one-off items. DuPont analysis shows ROE of 3.74% with components: net margin 4.24%, asset turnover 0.497x, and financial leverage 1.78x, consistent with a balance sheet equity ratio of roughly 56%. Liquidity remains strong with a current ratio of 227% and quick ratio of 186%, underpinned by sizable working capital of ¥31.3bn. Solvency is solid: debt-to-equity is 0.80x, interest expense is only ¥22m, and interest coverage is a robust 62.7x. Operating cash flow was negative (¥-0.96bn) despite positive earnings, suggesting interim working capital consumption, likely in receivables and/or inventories (inventories ¥9.99bn). The OCF/Net income ratio of -0.57 flags weak near-term cash conversion, albeit common in trading-oriented models with seasonal cash swings. Free cash flow is not disclosed (investing CF not reported), and cash & equivalents was not disclosed; financing inflow of ¥2.68bn likely helped fund working capital needs. Equity ratio shown as 0.0% in the data appears to be undisclosed; based on reported equity and assets, economic equity ratio is approximately 56%. Dividend per share and payout ratio are not disclosed for the period; hence dividend capacity assessment relies on qualitative balance sheet strength rather than reported distributions. Overall, Yagi demonstrates resilient profitability and balance sheet strength, but near-term cash conversion is weak due to working capital, and profit quality includes non-operating and possibly one-off elements elevating net margin. Key watchpoints are sustainability of margin gains, normalization of working capital and OCF in H2, and visibility on dividend policy. Data limitations exist where items are reported as zero; analysis focuses on disclosed non-zero metrics.

Profitability Analysis

ROE_decomposition: ROE 3.74% = Net margin 4.24% × Asset turnover 0.497 × Financial leverage 1.78. The leverage factor implies equity/asset ~56%, consistent with balance sheet totals (equity ¥44.8bn; assets ¥79.6bn). margin_quality: Gross margin 25.2% (¥9.97bn/¥39.54bn) is healthy and stable for a trading-centric model. Operating margin ~3.5% (¥1.38bn/¥39.54bn) improved YoY, signaling cost control and mix improvements. Net margin 4.24% exceeds operating margin, indicating contribution from non-operating gains and/or low financing costs; profit quality at the bottom line is therefore partly non-operational. operating_leverage: Operating income grew 26.6% on only 0.6% revenue growth, indicating positive operating leverage from SG&A efficiency and/or mix. EBITDA of ¥1.68bn (margin 4.3%) versus operating income of ¥1.38bn shows modest D&A intensity (D&A ¥0.30bn), limiting depreciation-driven volatility.

Growth Assessment

revenue_sustainability: Revenue growth was modest at +0.6% YoY to ¥39.5bn, consistent with a subdued demand environment. Sustainability hinges on order momentum and price/mix in core categories; no signs of contraction but limited acceleration visible in H1. profit_quality: Net income grew 134.4% YoY to ¥1.68bn, outpacing operating income growth, implying tailwinds from non-operating items. With interest expense just ¥22m and ordinary income above operating income, financial and other non-operating contributions boosted earnings; durability is less certain than operating improvements. outlook: If operating discipline persists, full-year margins could remain above the prior year. However, normalization of non-operating gains may temper net margin. H2 revenue seasonality and working capital unwinding will be key to sustaining profitability and cash conversion.

Financial Health

liquidity: Current ratio 227.1% and quick ratio 186.5% reflect ample liquidity. Working capital is ¥31.32bn, with inventories of ¥9.99bn supporting sales but tying cash during slower turns. solvency: Debt-to-equity 0.80x alongside minimal interest expense (¥22m) and coverage of 62.7x indicates comfortable solvency headroom. Equity/asset is approximately 56% (economic), despite the equity ratio field being undisclosed. capital_structure: Leverage (financial leverage 1.78x) is moderate. Financing CF inflow of ¥2.68bn suggests tactical use of borrowings or liability management to support working capital during the period.

Cash Flow Quality

earnings_quality: OCF/Net income is -0.57, signaling weak cash conversion in H1 due to working capital consumption despite positive earnings. This is consistent with trading models where receivables and inventories expand seasonally. FCF_analysis: Free cash flow is not disclosed (investing CF not reported). Given negative OCF and typically positive maintenance capex, underlying FCF was likely negative in H1, but data are insufficient for a precise figure. working_capital: Inventories ¥9.99bn and strong current assets vs. current liabilities (CA ¥55.97bn; CL ¥24.65bn) indicate capacity to support growth; however, the negative OCF suggests increases in receivables or inventories outpaced payables in the period.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio were not disclosed (values shown as 0 indicate non-disclosure). On earnings capacity alone (NI ¥1.68bn in H1), there is room for distributions, but lack of policy disclosure limits analysis. FCF_coverage: With OCF negative and investing CF undisclosed, FCF coverage of dividends cannot be assessed from available data. Near-term coverage appears constrained by working capital. policy_outlook: Given a solid balance sheet and low interest burden, medium-term capacity for dividends appears adequate, but sustainability depends on normalization of OCF and clarity on management’s capital allocation policy.

Risk Assessment

Business Risks:

• Low topline growth momentum (+0.6% YoY) exposes earnings to demand softness.
• Reliance on non-operating gains to lift net margin above operating margin.
• Working capital intensity in trading businesses, with potential for cash flow volatility.
• Inventory and receivables management risk amid changing customer demand.
• Input price and FX fluctuations affecting gross margin and pricing.

Financial Risks:

• Negative operating cash flow in H1 requires funding (financing inflow ¥2.68bn).
• Potential capex or investment needs not visible due to undisclosed investing CF.
• Possible interest rate risk on short-term funding despite currently low interest burden.

Key Concerns:

• Sustainability of profit improvement given limited revenue growth.
• Normalization of OCF and reduction of working capital drag in H2.
• Visibility on dividend policy and capital allocation.

Investment Implications

Key Takeaways:

• Revenue grew modestly to ¥39.5bn (+0.6% YoY) while operating profit rose 26.6% YoY, indicating positive operating leverage.
• Net margin (4.24%) exceeds operating margin (~3.5%), implying non-operating profit contribution.
• ROE at 3.74% reflects moderate profitability, constrained mainly by low asset turnover (0.497x).
• Liquidity and solvency are strong (current ratio 227%, D/E 0.80x, interest coverage 62.7x).
• OCF was negative (¥-0.96bn), highlighting near-term cash conversion risk from working capital.
• Dividend and equity ratio figures are undisclosed; balance sheet infers ~56% equity ratio.

Metrics to Watch:

• H2 operating cash flow and working capital turns (receivables, inventories, payables).
• Sustainability of operating margin improvements vs. SG&A and gross margin trends.
• Ordinary income composition (recurring vs. one-off non-operating gains).
• Borrowings and interest expense trajectory as financing supports working capital.
• Disclosure on dividend policy and investing cash flows.

Relative Positioning: Within Japanese trading/distribution peers, Yagi exhibits solid balance sheet strength and improved operating efficiency but lags on cash conversion in the interim and maintains moderate ROE driven by low asset turnover.

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