UKAI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.68B
• Operating Income: ¥17M
• Net Income: ¥-227M
• EPS: ¥-40.62

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

Ukai Co., Ltd. (single-entity, JGAAP) delivered modest top-line growth in FY2026 Q2 with revenue of ¥6.677bn (+3.1% YoY), but profitability deteriorated sharply. Gross profit was ¥3.621bn, implying a robust gross margin of 54.2%, yet operating income collapsed to ¥17m (-93.0% YoY), highlighting severe cost pressure and/or negative operating leverage. Ordinary income was ¥15m, but net income swung to a sizeable loss of ¥227m (NPM -3.4%), indicating the presence of non-operating and/or extraordinary items and tax effects that overwhelmed operating results. Depreciation and amortization totaled ¥203m, and EBITDA was ¥220m (3.3% margin), underscoring a thin cash earnings profile relative to sales. Despite the net loss, operating cash flow was positive at ¥485m, suggesting supportive non-cash items and/or working capital inflows; the OCF/NI ratio of -2.14 indicates cash generation materially outpaced accounting earnings this period. Liquidity appears sound: current assets of ¥6.876bn vs. current liabilities of ¥3.049bn yields a current ratio of 225.5% and quick ratio of 219.5%, backed by sizable working capital of ¥3.827bn. The balance sheet shows total assets of ¥10.262bn and equity of ¥4.486bn, implying financial leverage (A/E) of 2.29x and a debt-to-equity ratio of 1.37x, which is moderate but requires monitoring given weak earnings. Interest expense was ¥20m and interest coverage is sub-1x (~0.9x), reflecting limited headroom should rates rise or profits remain depressed. DuPont analysis points to ROE of -5.06% driven by a negative net margin (-3.4%) despite reasonable asset turnover (0.651x) and moderate leverage (2.29x). The reported income tax expense of ¥105m alongside a net loss suggests non-deductible items, fixed statutory taxes, or timing differences under JGAAP. Dividend data are not disclosed; DPS and payout ratios show as zero but should be treated as unreported. Investing cash flows and cash balances are also not disclosed, constraining free cash flow and liquidity runway assessment. Overall, the quarter highlights resilient revenue but acute margin compression and limited operating profit, likely from elevated SG&A (labor, utilities, rents) and potentially extraordinary items. With positive OCF but negative earnings and sub-1x interest coverage, the company’s immediate liquidity looks adequate, yet sustained profit recovery is needed to stabilize coverage and ROE. Data gaps (cash, capex, share count, equity ratio) limit precision; conclusions are based only on disclosed non-zero items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -0.034
• asset_turnover: 0.651
• financial_leverage: 2.29
• calculated_ROE: -0.0506
• drivers_commentary: Negative ROE is entirely margin-driven; asset turnover is modestly efficient and leverage is moderate. Restoring operating margin is the key lever to normalize ROE. margin_quality: Gross margin of 54.2% is strong for food service, indicating pricing power and mix; however, the sharp drop in operating income to ¥17m implies SG&A inflation (labor, energy, rents), one-off costs, or insufficient utilization offsetting the healthy gross spread. EBITDA margin at 3.3% is thin, leaving little buffer for non-operating costs. operating_leverage: With revenue up +3.1% YoY but operating income down -93.0% YoY, the company experienced pronounced negative operating leverage. This suggests fixed-cost intensity and possibly step-up costs (wage hikes, utilities) or temporary inefficiencies (renovations, reopening costs).

Growth Assessment

revenue_sustainability: Revenue grew +3.1% YoY to ¥6.677bn, indicating steady demand. Without segment detail, sustainability likely depends on customer traffic, average check, and store openings. High gross margin suggests mix/pricing strength may be helping offset input costs. profit_quality: Ordinary income remained positive (¥15m), but net loss (¥-227m) indicates below-the-line drag (extraordinary items and/or taxes) overshadowing operations. EBITDA of ¥220m vs. D&A of ¥203m points to low cash earnings after maintenance needs, constraining reinvestment capacity absent improvement. outlook: Near-term outlook hinges on SG&A normalization and cost pass-through. If wage/utilities pressures persist, operating leverage could remain negative. A gradual recovery is plausible if traffic stabilizes and price/mix actions endure, but interest coverage (<1x) and negative ROE highlight the need for earnings recovery.

Financial Health

liquidity: Current assets ¥6.876bn vs. current liabilities ¥3.049bn implies a current ratio of 225.5% and quick ratio of 219.5%, with working capital of ¥3.827bn—ample near-term liquidity. Cash and equivalents are not disclosed, which limits granularity on immediate cash headroom. solvency: Total liabilities ¥6.132bn and equity ¥4.486bn yield D/E of 1.37x and financial leverage of 2.29x—manageable but not low. Interest coverage ~0.9x signals limited cushion; sustained weak EBIT could pressure covenant headroom or refinancing costs. capital_structure: Liabilities fund ~60% of assets; equity ~40%. With modest ordinary income and negative net income, deleveraging relies on operational turnaround; absent capex data, the trajectory of net debt is unclear.

Cash Flow Quality

earnings_quality: OCF of ¥485m versus net loss of ¥227m (OCF/NI = -2.14) suggests strong cash conversion this period, driven by non-cash charges (D&A ¥203m) and likely working capital release. Quality appears better in cash terms than accrual earnings imply, but durability depends on future working capital trends. FCF_analysis: Investing cash flow is not disclosed; thus, free cash flow cannot be reliably computed. The reported FCF as zero should be treated as unreported, not an actual zero. working_capital: With inventories of ¥183m and large current assets, working capital management likely contributed to OCF. Without receivables/payables detail, the sustainability of this inflow cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are not disclosed (zeros indicate unreported). Given negative net income and sub-1x interest coverage, the capacity to pay dividends from earnings is limited absent a profit rebound. FCF_coverage: FCF coverage cannot be evaluated due to missing investing cash flows. Any dividend capacity would need to rely on cash on hand (undisclosed) and operating inflows. policy_outlook: In a loss-making period with thin EBITDA and the need to preserve liquidity, a conservative dividend stance would be typical until profitability normalizes.

Risk Assessment

Business Risks:

• Negative operating leverage from fixed-cost intensity in restaurants (labor, utilities, rents).
• Input cost inflation and wage pressure potentially outpacing price increases.
• Demand volatility tied to discretionary dining and tourism flows.
• Exposure to extraordinary losses (e.g., impairments, restoration costs) under JGAAP.
• Competition and brand positioning in premium dining segments.

Financial Risks:

• Sub-1x interest coverage (≈0.9x) limits buffer against rate or earnings shocks.
• Moderate leverage (D/E 1.37x) amid negative ROE increases balance-sheet risk if losses persist.
• Tax expense incurred despite a net loss suggests potential ongoing non-deductible or fixed tax burdens.
• Information gaps (cash balance, capex) impede assessment of liquidity runway and FCF.

Key Concerns:

• Sharp deterioration in operating income despite revenue growth.
• Sustainability of positive OCF without recurring working capital tailwinds.
• Visibility on capex and cash balances to gauge true FCF and liquidity.

Investment Implications

Key Takeaways:

• Revenue grew modestly (+3.1% YoY) but operating income fell -93% YoY, highlighting cost pressures.
• Gross margin is strong (54.2%), but SG&A intensity compressed operating and net margins.
• ROE is negative (-5.06%) driven by a -3.4% net margin; asset turnover (0.651x) and leverage (2.29x) are reasonable.
• OCF is positive (¥485m) despite a net loss, indicating supportive non-cash/working capital effects.
• Interest coverage is weak (~0.9x), warranting close monitoring until earnings improve.
• Liquidity appears ample (current ratio 225.5%), but cash and capex are undisclosed.

Metrics to Watch:

• Operating margin and SG&A ratio trend (labor and utilities).
• Same-store sales/traffic and average check (pricing/mix) to sustain revenue.
• Interest coverage and ordinary income trajectory.
• Working capital movements (receivables, payables, inventory days).
• Capex and investing CF to infer maintenance vs. growth spending.
• Any extraordinary gains/losses and tax expense behavior under JGAAP.

Relative Positioning: Within Japanese food-service peers, Ukai shows resilient top line and superior gross margin but significantly weaker operating margin and earnings coverage this quarter, leaving it more sensitive to fixed-cost pressures than peers with leaner cost bases or higher scale.

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