ICHIBANYA CO.,LTD. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥48.48B
• Operating Income: ¥3.77B
• Net Income: ¥2.31B
• EPS: ¥14.16

Income Statement

Balance Sheet

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

Verdict: Solid top-line growth but weaker profitability; margins compressed and net income declined despite revenue strength. Revenue rose 7.7% YoY to 484.8 (100M JPY), driven likely by price/mix and steady store traffic, while operating income fell 3.0% YoY to 37.69. Gross profit reached 241.12 with a gross margin of 49.7%, indicating robust merchandise economics for a restaurant/food service operator. SG&A increased to 203.42, lifting the SG&A ratio to 42.0% and pressuring operating profit. Operating margin declined to 7.8% (from ~8.6% a year ago), a compression of about 86 bps. Ordinary income was resilient at 40.38 (-0.4% YoY), aided by non-operating gains (9.41) exceeding non-operating expenses (6.72). Net income fell 13.3% YoY to 22.60, with net margin compressing to 4.7% (down roughly 113 bps YoY). ROE stands at 7.0%, below the 8–10% comfort range and well under best-in-class retail benchmarks. Effective tax rate is elevated at 33.5%, further dampening bottom-line conversion (tax burden 0.651). Balance sheet remains strong: current ratio 264.8%, quick ratio 252.3%, and negligible interest-bearing debt (0.56), resulting in an interest coverage of 71x. Cash and deposits of 137.34 provide ample liquidity to navigate cost volatility and fund routine capex. Dividend outlay appears aggressive relative to earnings: an indicated annual 16 JPY DPS equates to a ~113% payout of year-to-date net income. With operating cash flow unreported, the dividend is effectively being underwritten by the net cash position rather than earnings this period. Forward-looking, management likely needs to tighten SG&A and further optimize pricing/mix to restore operating margin to the 8–9% range. The key swing factors into year-end are input costs (commodities), labor inflation, and traffic durability; execution on cost containment will determine whether margins stabilize or compress further.

Profitability Analysis

DuPont (3-factor): ROE 7.0% = Net Profit Margin 4.7% × Asset Turnover 1.035 × Financial Leverage 1.45x. The largest adverse change appears in net profit margin (down ~113 bps YoY to 4.7%), outweighing relatively stable asset turnover and low leverage. Operating margin deterioration (to 7.8%) was primarily driven by SG&A expansion to 42.0% of sales, likely reflecting wage inflation, utilities, promotions, and franchise support costs. Interest burden remains benign (EBT/EBIT 0.921) due to minimal debt; thus financing did not cause the profit compression. Tax burden (NI/EBT 0.651) is heavier than the >0.70 ‘normal’ benchmark, exacerbating the drop from EBT to NI. Sustainability: cost inflation and wage pressure are structural, but selective pricing, menu optimization, and productivity initiatives could gradually offset over the next 2–4 quarters; the tax rate may normalize only modestly. Concerning trends: SG&A growth outpaced revenue growth (ratio up to 42.0%), and operating margin at 7.8% is below the 8–15% ‘good’ range, placing profitability in the lower band for the sector.

Growth Assessment

Revenue rose 7.7% YoY, indicating healthy demand and/or pricing power; however, profit growth lagged due to cost pressures. Gross margin at 49.7% remains strong for a food service operator, suggesting product economics are intact but being offset by overheads. Operating income declined 3.0% YoY and ordinary income was nearly flat (-0.4%), implying non-operating support cushioned the operating shortfall. Net income fell 13.3% YoY as a higher effective tax rate and weaker operating margin filtered through. Without same-store sales, store count, or e-commerce data, we cannot decompose growth between traffic vs ticket size or new vs existing stores; this is a key data gap. Outlook hinges on cost normalization and SG&A discipline; incremental pricing and productivity could restore 50–100 bps of operating margin if input cost pressures ease. Near-term growth quality is mixed: top-line is solid, but margin headwinds limit earnings scalability.

Financial Health

Liquidity is strong: current ratio 264.8% and quick ratio 252.3% well exceed healthy thresholds; no warning on short-term liquidity. Solvency is conservative: interest-bearing debt is only 0.56 against equity of 322.40 (Debt/Capital 0.2%), and interest coverage is 71x; D/E is well below 1.0. There is no maturity mismatch risk evident: current assets (205.91) cover current liabilities (77.76) by 2.6x, and cash alone (137.34) exceeds all current liabilities. Off-balance sheet obligations are not disclosed here; typical restaurant lease liabilities under JGAAP may reside in operating commitments, but they are unreported in this dataset. No explicit covenant risks are visible given minimal leverage.

Cash Flow Quality

Operating cash flow is unreported, so OCF/NI cannot be assessed; accordingly, we cannot validate earnings quality via cash conversion metrics. Working capital appears conservative: inventories are modest at 9.69 relative to cost of sales, consistent with fast-turn food service; accounts receivable are limited for a consumer cash business, which supports clean revenue recognition. No signs of working capital-driven earnings management are evident from the limited data. Free cash flow cannot be determined due to missing OCF and capex, constraining our view on the durability of cash returns. Given large cash reserves and negligible debt, liquidity cushions near-term cash flow uncertainty, but structural earnings-to-cash alignment remains unverified this quarter.

Dividend Sustainability

Indicated annual DPS of 16 JPY (Q2 8 + YE 8) implies a payout ratio of about 113% against reported year-to-date net income, above the <60% sustainable benchmark. With OCF and capex unreported, FCF coverage of dividends cannot be confirmed; based on balance sheet strength (cash 137.34 and minimal debt), the company can fund the dividend in the short term even if earnings are temporarily light. However, sustaining a >100% payout over time would not be prudent without a rebound in earnings or demonstrably strong free cash flow. The year-to-date payout policy thus elevates capital return risk if margin pressure persists into FY-end.

Risk Assessment

Business Risks:

• Cost inflation in food ingredients and utilities compressing margins
• Labor cost pressures raising SG&A and limiting operating leverage
• Same-store sales volatility (traffic sensitivity to consumer sentiment)
• Execution risk in pricing/mix optimization to offset costs
• Franchise performance dispersion impacting consolidated profitability
• Potential adverse weather or event-driven footfall impacts

Financial Risks:

• Dividend payout above 100% of year-to-date earnings
• Tax rate elevation (33.5%) reducing net income conversion
• Potential lease/other off-balance commitments not disclosed in this dataset

Key Concerns:

• Operating margin compressed to 7.8%, below the ‘good’ range
• Net margin fell to 4.7% with a 13.3% YoY NI decline
• ROE at 7.0% is below the 8% threshold, signaling subpar capital efficiency near term

Investment Implications

Key Takeaways:

• Healthy revenue growth (+7.7% YoY) offset by SG&A pressure, leading to operating margin compression of ~86 bps
• Ordinary income held up better than operating income due to net non-operating gains
• Net income down 13.3% YoY; net margin 4.7% and ROE 7.0% below preferred ranges
• Balance sheet is very strong with substantial cash (137.34) and negligible debt (0.56)
• Dividend payout at ~113% of YTD earnings is elevated and reliant on cash reserves absent OCF confirmation

Metrics to Watch:

• Same-store sales growth (traffic vs ticket) and store count changes
• SG&A ratio, especially labor and utilities components
• Gross margin stability and commodity cost trends
• Operating cash flow and capex to assess FCF dividend coverage
• Effective tax rate trajectory and any structural tax items

Relative Positioning: Within Japanese casual dining/restaurant peers, Ichibanya’s balance sheet is best-in-class conservative with strong liquidity, but its current profitability metrics (OPM ~7.8%, ROE 7.0%) place it mid-to-lower tier on returns; improvement hinges on SG&A control and cost pass-through.

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