PLAZA HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.35B
• Operating Income: ¥28M
• Net Income: ¥-90M
• EPS: ¥-3.10

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

Plaza Holdings (7502) reported FY2026 Q2 consolidated results under JGAAP showing solid top-line expansion but extremely thin profitability and a small net loss. Revenue rose 13.7% year over year to ¥9,349 million, indicating healthy demand momentum. Gross profit reached ¥3,008.6 million with a gross margin of 32.2%, but operating income was only ¥28 million, translating to an operating margin of approximately 0.3%. Ordinary income was ¥27 million, and the company posted a net loss of ¥7 million (EPS: -¥3.10), pointing to ongoing pressure below the operating line. Despite the accounting loss, operating cash flow was robust at ¥763.3 million, implying favorable working capital movements and solid non-cash add-backs. Leverage remains elevated: total liabilities are ¥9,404.2 million against equity of ¥2,099.0 million, yielding a debt-to-equity ratio of 4.48x and implied equity ratio of roughly 18.5% (the reported equity ratio field shows 0.0%, which appears undisclosed rather than zero). Interest coverage is weak at 0.8x (EBIT/interest), underscoring sensitivity to financing costs. Liquidity is moderate with a current ratio of 124% and a quick ratio of 88.6%, supported by ¥1,431.3 million in working capital. EBITDA was ¥161.1 million and the EBITDA margin 1.7%, highlighting a high fixed-cost structure and limited operating leverage-to-margin conversion so far. DuPont decomposition shows a net margin of -0.07%, asset turnover of 0.825x, and financial leverage of 5.40x, resulting in a reported and calculated ROE of -0.33%. The combination of rising sales, thin margins, and high leverage suggests that small changes in gross margin or SG&A efficiency can meaningfully impact earnings. The strong OCF compared to accounting income suggests decent earnings quality from a cash standpoint this quarter, likely driven by working capital initiatives, though the sustainability of this is unclear. Dividends remain suspended (DPS ¥0), which is appropriate given the loss and leverage profile. Several items (equity ratio field, cash balance, investing cash flows, share counts) appear undisclosed in XBRL and limit precision of some assessments. Overall, the quarter shows positive revenue traction but underscores the need to improve margin structure and interest coverage to translate growth into durable profitability.

Profitability Analysis

ROE_decomposition: ROE is -0.33% based on a net profit margin of -0.07%, asset turnover of 0.825x, and financial leverage of 5.40x. The negative margin is the primary drag; leverage is high and amplifies any earnings volatility. margin_quality: Gross margin stands at 32.2%, but operating margin is just ~0.3% (¥28m OI on ¥9,349m sales), indicating heavy SG&A and/or other operating costs absorbing most of gross profits. EBITDA margin of 1.7% reflects a high fixed-cost base; D&A of ¥133.1m is sizeable relative to EBIT, further compressing operating profitability. operating_leverage: Revenue grew 13.7% YoY while operating income increased only 4.0% YoY, implying weak drop-through and limited positive operating leverage in the period. With interest expense at ¥33.8m exceeding EBIT coverage (0.8x), incremental margin improvement is needed to translate growth into net profitability.

Growth Assessment

revenue_sustainability: Double-digit revenue growth (+13.7% YoY to ¥9.35bn) suggests stable demand or footprint expansion. Without segment or like-for-like data, sustainability cannot be confirmed; watch gross margin trends and inventory metrics for clues on pricing power and sell-through. profit_quality: Ordinary income of ¥27m and a small net loss of ¥7m indicate profit fragility. The negligible tax charge (¥0.095m) and negative bottom line suggest that non-operating items and financing costs largely offset operating profit. outlook: If gross margin can be maintained and SG&A efficiency improves, modest upticks could swing to a sustainable net profit. However, with interest coverage below 1x, any adverse mix, cost inflation, or traffic softness could quickly erase operating gains.

Financial Health

liquidity: Current ratio of 124% and quick ratio of 88.6% indicate adequate short-term liquidity, supported by ¥1,431.3m working capital. Cash and equivalents were undisclosed, limiting precision on cash buffers. solvency: Debt-to-equity is 4.48x, reflecting a leveraged balance sheet. Based on disclosed totals, implied equity ratio is approximately 18.5% (equity ¥2,099m / assets ¥11,338m), even though the equity ratio field shows 0.0% (undisclosed). Interest coverage at 0.8x signals solvency risk if rates rise or earnings weaken. capital_structure: Total liabilities of ¥9,404.2m versus equity of ¥2,099.0m point to a highly geared profile. Financial flexibility hinges on maintaining positive OCF and stabilizing margins.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥763.3m far exceeds the accounting net loss (OCF/NI is -109.0 due to negative NI), indicating strong cash conversion driven by working capital and non-cash charges (notably ¥133.1m D&A). Persistence of this gap is uncertain without detail on receivables, payables, and inventory turns. FCF_analysis: Investing cash flow is undisclosed (recorded as 0), preventing a reliable free cash flow calculation and capex assessment. While OCF is strong, FCF cannot be concluded without capex data. working_capital: Current assets ¥7,389.2m include inventories of ¥2,108.3m. The strong OCF implies either inventory normalization, receivables collection, or payables extension; exact drivers are not disclosed. Monitoring inventory levels vs. sales and days working capital will be key.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0 and payout ratio shows 0.0% (dividends undisclosed). Given a net loss and thin interest coverage, a conservative stance on shareholder returns is prudent. FCF_coverage: FCF coverage cannot be assessed as FCF is unreported due to undisclosed investing cash flows. Even with strong OCF, dividend capacity should consider leverage and interest coverage constraints. policy_outlook: Resumption of dividends likely requires sustained positive net income, improved interest coverage well above 1x, and clearer visibility on capex/FCF. Management may prioritize balance sheet resilience and profitability restoration before distributions.

Risk Assessment

Business Risks:

• Thin operating margin (~0.3%) leaves little buffer against cost inflation or demand softening.
• Potential gross margin volatility due to product mix, pricing, and FX on imports (typical for retail/consumer goods models).
• Execution risk around SG&A control and store productivity/like-for-like sales.
• Dependence on working capital dynamics to support cash generation.

Financial Risks:

• High leverage: D/E 4.48x and implied equity ratio ~18.5%.
• Weak interest coverage at 0.8x exposes earnings to financing cost increases.
• Limited disclosure on cash balance and capex reduces visibility on liquidity runway.
• Sensitivity of ROE to small changes in net margin due to high financial leverage.

Key Concerns:

• Sub-1x interest coverage despite revenue growth.
• Operating income not scaling with sales growth (limited operating leverage).
• Reliance on working capital movements for OCF; sustainability uncertain.
• Data gaps (cash, investing CF, equity ratio field, shares) constrain precise analysis.

Investment Implications

Key Takeaways:

• Top-line growth is robust (+13.7% YoY) but profitability remains marginal with a small net loss.
• Leverage is high (D/E 4.48x) and interest coverage is below 1x, elevating financial risk.
• OCF is strong this quarter (¥763m), likely from working capital, but durability is unclear.
• Improving SG&A efficiency and gross margin is critical to restoring net profitability and ROE.

Metrics to Watch:

• Gross margin and SG&A-to-sales ratio quarterly trend.
• Interest coverage (EBIT/interest) and average borrowing costs.
• Inventory turnover and days working capital vs. sales growth.
• OCF to EBITDA conversion and capex/Investing CF disclosure to gauge FCF.
• Implied equity ratio and D/E trajectory.

Relative Positioning: Within Japan small-cap retail/consumer peers, Plaza Holdings shows stronger near-term sales momentum but weaker profitability and interest coverage, with above-average leverage and incomplete disclosure constraining visibility.

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