VT HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥184.12B
• Operating Income: ¥6.78B
• Net Income: ¥4.16B
• EPS: ¥30.60

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

VT Holdings (7593) reported FY2026 Q2 consolidated results under IFRS with steady topline growth and resilient cash generation despite thin margins and elevated leverage typical of the auto retail/importer model. Revenue rose 8.2% YoY to 1,841.24, while operating income increased 5.2% to 67.77, indicating slight margin compression as costs outpaced pricing/scale benefits. Gross profit was 265.62, implying a gross margin of 14.4%, consistent with a dealership-heavy mix where inventory and financing costs limit pricing power. Operating margin, calculated at 3.68% (67.77/1,841.24), declined modestly versus the prior period implied 3.79%, suggesting incremental SG&A pressure or a shift in sales mix. Net income rose 13.6% to 36.66, outpacing operating profit growth, aided by below-operating line factors and a normalized tax rate (effective tax 33.9%). DuPont analysis shows ROE of 4.7% driven by modest net margin (2.0%), moderate asset turnover (0.648x), and high financial leverage (3.61x). Cash generation was strong: operating cash flow (OCF) of 112.18 equated to 3.06x net income and 0.80x EBITDA, with free cash flow (OCF + investing CF) of 37.44 despite capex of 90.31. The balance sheet remains leveraged with a debt-to-equity proxy of 2.51x (total liabilities/equity) and an equity ratio reported at 25.4% (vs. 27.7% if using total equity), reflective of a capital-intensive, inventory-rich model. Current assets of 1,260.07 are dominated by inventories (718.27, or 57% of current assets) and receivables (315.80), while accounts payable of 591.10 helps fund working capital; liquidity ratios cannot be calculated due to unreported current liabilities and cash balance details. EBITDA reached 139.53, with D&A of 71.76 indicating ongoing asset intensity; capex exceeded D&A (1.26x), signaling continued reinvestment. Dividend distribution looks cautious on cash: dividends paid were 14.41, and calculated payout ratio is 80.2% with FCF coverage at 1.27x; however, DPS and full payout policy disclosures were unreported, limiting precision. Interest expense and coverage are unreported, constraining solvency stress testing in a rising rate environment. Overall, the company appears to be managing growth and reinvestment with solid cash conversion, but maintains thin operating margins and high leverage, leaving performance sensitive to demand cycles, inventory turns, and funding costs. Data gaps around non-operating items, liquidity metrics, and debt structure temper the confidence of the analysis. We assess profitability as stable but efficiency-dependent, cash flow quality as good this period, and the balance sheet as adequate but exposed to working capital and rate dynamics.

Profitability Analysis

ROE_decomposition: Calculated ROE is 4.7%, driven by net profit margin of 2.0%, asset turnover of 0.648x, and financial leverage of 3.61x (Assets/Equity). This profile indicates low margin, moderate efficiency, and high leverage underpinning equity returns. margin_quality: Gross margin is 14.4% (265.62/1,841.24), consistent with auto dealership/importer economics. Operating margin is 3.68% (calculated), with slight YoY contraction inferred as operating income (+5.2%) lagged revenue (+8.2%). Net margin improved to 2.0%, aided by below-operating items and tax normalization (effective tax 33.9%). operating_leverage: Revenue grew faster than operating income, implying modest negative operating leverage in the period. SG&A of 202.49 consumed 76% of gross profit, leaving limited buffer for shocks. EBITDA margin of 7.6% indicates some operating flexibility, but thin EBIT margin suggests sensitivity to mix, discounts, and inventory carrying costs.

Growth Assessment

revenue_sustainability: Topline expanded 8.2% YoY to 1,841.24, likely supported by unit volume and price/mix in new/used vehicles and ancillary services. Sustainability hinges on inventory availability, consumer demand, and financing conditions; inventories are ample (718.27), supporting near-term sales capacity. profit_quality: Operating income grew 5.2% to 67.77, trailing revenue growth and signaling mild pressure on incremental margins. Net income rose 13.6% to 36.66, with a 2.0% net margin; quality is supported by strong OCF (3.06x NI) and EBITDA conversion (OCF/EBITDA ≈ 0.80), though non-operating details are unreported. outlook: With capex above D&A (1.26x), the company is investing for capacity/efficiency, which could aid medium-term growth. However, thin margins, high working capital intensity, and interest rate sensitivity may cap operating leverage benefits. Continued revenue growth appears achievable if inventory turns normalize and financing conditions remain stable.

Financial Health

liquidity: Current ratio and quick ratio are not calculable due to unreported current liabilities and cash details. Cash and equivalents total 146.43, but detailed liquidity buffers are unclear. Accounts payable (591.10) substantially funds inventories (718.27), highlighting reliance on trade credit. solvency: Total liabilities are 1,974.93 against total equity of 787.98, yielding a debt-to-equity proxy of 2.51x and financial leverage of 3.61x. The reported equity ratio is 25.4% (vs. 27.7% using total equity/total assets), indicating modest equity cushion. Interest coverage cannot be assessed due to unreported interest expense. capital_structure: Noncurrent assets are 1,518.93 (53.4% of assets), with significant working capital on the asset side (current assets 1,260.07). The company likely utilizes a mix of bank borrowings and trade payables, but absence of short/long-term loan details constrains a fuller appraisal of refinancing and rate risks.

Cash Flow Quality

earnings_quality: OCF of 112.18 is 3.06x net income and approximately 0.80x EBITDA, indicating strong cash realization and limited accrual pressure this period. Effective tax cash burden aligns with the P&L rate (33.9%), supporting earnings quality. FCF_analysis: Free cash flow defined as OCF + investing CF is 37.44, after investing outflows of 74.74. On a maintenance view, OCF minus capex is 21.87 (112.18 - 90.31), still positive, implying adequate internal funding for reinvestment. working_capital: Inventories (718.27) form 57% of current assets; accounts receivable are 315.80 and accounts payable 591.10. OCF strength suggests favorable working capital movements or disciplined collection, but sustainability depends on inventory turns and payable terms. Lack of current liabilities detail limits precise liquidity inference.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 80.2%, which is high relative to a 2.0% net margin and 4.7% ROE, leaving limited retained earnings for balance sheet reinforcement if sustained. DPS details are unreported, and total dividend paid in the period via cash flow is 14.41. FCF_coverage: FCF coverage is 1.27x on a reported basis, indicating dividends are currently covered by free cash flow. On an OCF-minus-capex basis, coverage appears tighter (21.87 vs. dividends paid of 14.41), but still positive. policy_outlook: Given thin operating margins and leverage, maintaining a high payout could constrain deleveraging. Absent explicit policy disclosure (DPS and DOE unreported), we assume a stable-to-prudent stance contingent on cash flow stability and capex needs.

Risk Assessment

Business Risks:

• Auto demand cyclicality and sensitivity to consumer financing conditions
• Inventory valuation and aging risk in new/used vehicles
• Supply chain volatility (e.g., semiconductor supply affecting new vehicle availability)
• Residual value and used-car price fluctuations impacting margins
• FX exposure on imported models and parts affecting gross margin
• Competitive pricing pressure among domestic dealerships
• Regulatory/ESG trends affecting vehicle mix and compliance costs

Financial Risks:

• High leverage (liabilities/equity 2.51x) and modest equity cushion (equity ratio 25.4%)
• Interest rate risk with potential floating-rate debt; interest coverage unassessable due to unreported interest expense
• Working capital intensity and dependence on trade credit (AP funds ~82% of inventories)
• Cash flow sensitivity to inventory turns and receivable collections
• Refinancing risk given unreported debt maturity profile

Key Concerns:

• Sustained thin operating margins (EBIT margin ~3.7%) amid rising cost pressures
• Data gaps on non-operating items and debt structure limiting solvency analysis
• Potential margin compression if demand softens or inventory carrying costs increase

Investment Implications

Key Takeaways:

• Solid top-line growth (+8.2% YoY) with slight operating margin compression
• Net income growth (+13.6% YoY) and strong cash conversion (OCF/NI 3.06x)
• High leverage and modest equity ratio necessitate disciplined working capital and cost control
• Capex above D&A indicates ongoing reinvestment with manageable FCF
• Dividend appears covered by FCF but payout ratio is elevated, limiting flexibility if conditions tighten

Metrics to Watch:

• Operating margin trend and SG&A intensity
• Inventory levels and turnover, and AP coverage of inventories
• OCF/EBITDA and OCF/NI as cash conversion indicators
• Capex-to-D&A and FCF sustainability
• Equity ratio and liabilities/equity as leverage gauges
• Interest expense and coverage once disclosed
• DPS/payout policy disclosures and FCF coverage of dividends

Relative Positioning: Within Japan’s auto dealership/importer cohort, VT Holdings exhibits typical thin margins and working capital intensity but demonstrates comparatively strong cash conversion this period; leverage is on the higher side, making disciplined inventory management and stable financing terms key to maintaining returns.

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