SIIX CORPORATION FY2026 Q2 Earnings Report

Quick View

Executive Summary

The first half of FY2026 recorded increases in both revenue and profit, with the particularly strong growth in net income indicating high-quality earnings growth accompanied by improved margins. Revenue was ¥1507.3B (+5.5% YoY), Operating Income was ¥55.8B (+16.8%), Ordinary Income was ¥64.1B (+34.6%), and Net Income was ¥45.6B (+46.1%). The main drivers of earnings growth were an improvement in the gross margin (10.4%, +0.4pt) and an improvement in non-operating income and expenses, including gains on the sale of securities and interest-rate differentials, which boosted Ordinary Income. Progress toward the full-year forecast was 53–56% on a profit basis, exceeding the standard 50% benchmark, indicating solid first-half earnings progress.

Factors Affecting Performance

【Revenue】Revenue was ¥1507.3B, an increase of +5.5% YoY. By region, the Americas (+18.7%) and Japan (+16.3%) led growth, while Southeast Asia was also resilient at +3.0%. In contrast, Greater China declined by ▲1.8% and Europe by ▲8.6%. Revenue composition was Southeast Asia 37.1%, Japan 35.1%, the Americas 29.2%, Greater China 24.4%, and Europe 7.2% (based on the total of reportable segments before elimination of inter-segment transactions). Southeast Asia, Japan, and the Americas led company-wide growth.

【Profit and Loss】Operating Income was ¥55.8B (+16.8% YoY), Ordinary Income was ¥64.1B (+34.6%), and Net Income was ¥45.6B (+46.1%). The gross margin improved to 10.4% (10.0% in the previous year), while the SG&A expense ratio was nearly flat at 6.7%, indicating limited operating leverage. The significant increase in Ordinary Income was supported by improved non-operating income and expenses, including a ¥3.1B gain on the sale of securities and higher interest income, and therefore included temporary factors. By region, Japan’s Operating Income improved significantly by +121.4%, while Greater China experienced a sharp earnings decline of ▲87.3%, with its margin falling to 0.2%. Although the company achieved increases in both revenue and profit, part of the earnings growth was supported by non-operating, non-recurring factors.

Segment Analysis

Segment profit was concentrated in Southeast Asia at ¥23.2B (4.2% margin) and the Americas at ¥23.1B (5.3% margin), with the two regions generating approximately 83% of consolidated Operating Income. Japan improved sharply, with revenue up +16.3% and profit up +121.4%, while its margin expanded from 0.9% to 1.9%. Greater China experienced a sharp earnings decline of ▲87.3% against a revenue decline of ▲1.8%, with its margin falling to just 0.2%, weighing on company-wide profitability. Europe recovered, with profit up +149.7% despite an ▲8.6% decline in revenue, and its margin improved to 2.6%; however, its asset scale contracted following the exclusion of the Hungarian subsidiary from consolidation. The significant margin disparity across regions means that restoring profitability in Greater China is the key to improving the company-wide profit margin.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 3.7% (3.3% in the previous year), while the Net Income margin improved to 3.0% (2.2% in the previous year), supported by the improvement in the gross margin and non-operating income and expenses.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥74.5B, or 1.63 times Net Income of ¥45.6B, indicating strong cash support for earnings; however, OCF declined ▲43.3% YoY due to the reversal of the previous year’s working capital improvement effect.【Investment Efficiency】ROE was 4.1% (3.1% in the previous year), supported by improvements in the Net Income margin and total asset turnover. However, the decline in financial leverage associated with the higher Equity Ratio partially offset the improvement in ROE.【Financial Soundness】The Equity Ratio rose to 53.2% (49.7% in the previous year), and the capital base strengthened, with net assets of ¥1106.3B against total assets of ¥2081.0B.

Cash Flow Analysis

Operating Cash Flow was ¥74.5B, down from the equivalent of ¥132.5B in the previous year (refer to the previous-year SubtotalOperatingCFJGAAP and related data), representing a decline of ▲43.3% YoY. The subtotal before changes in working capital was ¥97.7B, exceeding Net Income, but the increase in trade receivables resulted in a cash outflow of ¥17.4B, partially offsetting the support provided by the decrease in inventories (+¥5.3B) and the increase in trade payables (+¥15.6B). Investing Cash Flow was positive at ¥8.1B, as proceeds from the sale of investment securities and other recoveries exceeded capital expenditures of ¥13.0B. Financing Cash Flow was ▲¥87.0B, primarily due to the reduction of short-term borrowings (▲35.5% YoY) and dividend payments (▲¥11.8B). Free Cash Flow was a robust ¥82.6B, a level sufficient to cover dividends and near-term investment requirements.

Quality of Earnings

Recurring earning power is centered on Operating Income of ¥55.8B, while part of the difference between Ordinary Income of ¥64.1B and Operating Income includes temporary factors such as a ¥3.1B gain on the sale of securities and ¥0.7B in subsidy income. Non-operating income represented approximately 1.0% of revenue and is not large enough to materially distort the earnings structure. The difference between Net Income of ¥45.6B and Ordinary Income of ¥64.1B was attributable to the ¥18.5B income tax burden, resulting in an effective tax rate of approximately 28.8%, a reasonable level. OCF was 1.63 times Net Income, indicating limited accruals—the difference between accounting profit and cash—and strong cash support for earnings. However, gains on sales in non-operating income have limited recurrence potential, making improvement in operating-stage margins the key to sustainable earnings growth from the next fiscal year onward.

Earnings Forecast and Guidance

Progress toward the full-year forecast was 48.6% for Revenue, 53.1% for Operating Income, 55.8% for Ordinary Income, and 55.7% for Net Income (first-half actual results ÷ full-year forecast). Profit metrics exceeded the standard progress level of 50% for the first half. The full-year forecasts are Revenue of ¥3100.0B (+7.1% YoY), Operating Income of ¥105.0B (+18.6%), and Ordinary Income of ¥115.0B (+24.6%). No revisions to the earnings or dividend forecasts were made during the quarter. The above-plan first-half profit progress was primarily attributable to the improved gross margin and non-operating income and expenses. In the second half, working capital trends and the restoration of profitability in Greater China will be key inflection points for progress.

Shareholder Returns

The interim dividend is ¥25 per share, and the full-year dividend forecast is ¥50 (an increased dividend from ¥24 in the previous year). Based on first-half Net Income attributable to owners of the parent of ¥45.65B, the Payout Ratio is approximately 28%, calculated against forecast full-year Net Income of ¥82.0B and the assumed annual dividend amount based on the average number of shares during the period. Dividend coverage against Free Cash Flow of ¥82.6B is also high, and no concerns are evident regarding dividend sustainability. No disclosure regarding share repurchases has been made, and shareholder returns are centered on dividends.

Risk Factors

1. Deterioration in Greater China’s profitability: Revenue in Greater China was limited to ▲1.8% YoY, but Operating Income declined sharply by ▲87.3%, with the margin falling to 0.2%. This is a factor weighing on the company-wide Operating Income margin of 3.7%, and progress in restoring profitability will determine the potential for improvement in the overall margin.

2. Prolonged working capital cycle: Trade receivables stood at ¥619.6B and inventories at ¥222.2B, while the increase in trade receivables during the first half reduced OCF by ¥17.4B. Although OCF remained at 1.63 times Net Income, it declined ▲43.3% YoY, making the reduction of working capital a key determinant of future cash-generation capacity.

3. Dependence on temporary non-operating factors: The +34.6% YoY increase in Ordinary Income was supported by improved non-operating income and expenses, including a ¥3.1B gain on the sale of securities. These factors have limited recurrence potential, and sustainable earnings growth from the next fiscal year onward will require improvement in operating-stage margins.

Industry Benchmark (For Reference; Company Research)

Profitability and Returns

The company’s Net Income margin is significantly below the industry median, placing its profitability in the lower tier of the industry.

Growth and Capital Efficiency

The Revenue growth rate is slightly above the industry median, placing the company’s growth profile in the middle to upper tier of the industry.

※Source: Company research

Key Points from the Financial Results

1. In the first half, Operating Income increased +16.8% and Net Income increased +46.1%, substantially exceeding revenue growth of +5.5%. This confirms high-quality earnings growth accompanied by an improved gross margin and improved non-operating income and expenses. Full-year progress is also above the standard level on a profit basis, making whether this structure continues into the second half a key point of focus.

2. By region, Southeast Asia and the Americas maintained high profitability, and Japan’s margin improved from 0.9% to 1.9%, while Greater China’s margin deteriorated to 0.2%. Regional profitability disparities have widened, and the potential for improvement in company-wide ROE of 4.1% depends on restoring profitability in Greater China.

3. Short-term borrowings declined ▲35.5% YoY and the Equity Ratio rose to 53.2%, indicating an improving trend in financial soundness. Meanwhile, capital expenditures were restrained at ¥13.0B against depreciation and amortization of ¥44.4B, making medium-term investment trends a key monitoring point.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type, explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥2,147–¥2,273 at ±1% for the cost of equity, and ¥2,204–¥2,212 at ±0.1 for ω.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing gap relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee the future share price.)

---

This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional as necessary.

---End of Report---