NEW ART HOLDINGS Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥14.91B
• Operating Income: ¥1.96B
• Net Income: ¥440M
• EPS: ¥57.35

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

NEW ART HOLDINGS delivered strong year-to-date results for FY2026 Q2 under JGAAP on a consolidated basis, highlighted by double‑digit top-line and outsized bottom-line growth. Revenue grew 27.4% YoY to ¥14,907m, while operating income rose 40.4% to ¥1,959m, evidencing positive operating leverage. Net income surged 127.4% YoY to ¥986m, implying a meaningful improvement in non-operating and/or tax items relative to the prior year. Profitability remains robust with a 48.8% gross margin and a 13.1% operating margin, and EBITDA margin reached 14.7% (EBITDA of ¥2,194m). DuPont analysis indicates a calculated ROE of 8.85% driven by a 6.61% net margin, 0.521x asset turnover, and 2.57x financial leverage. Liquidity is adequate with a 141.3% current ratio, though the 74.4% quick ratio reflects a heavy inventory mix typical for specialty retail/luxury. Working capital stands at ¥5,128m, supporting ongoing operations and growth initiatives. Operating cash flow of ¥1,392m exceeded net income (OCF/NI = 1.41x), signaling good earnings quality in the half. Interest coverage is comfortable at 18.0x (EBIT/interest), and leverage is moderate with a 1.49x debt‑to‑equity ratio. Inventory of ¥8,306m versus cost of sales of ¥4,422m implies elevated inventory intensity and a focus area for turnover management. Ordinary income of ¥1,846m sits slightly below operating income due to interest expense and other non‑operating items, consistent with the reported ¥109m interest cost. While the reported “effective tax rate: 0.0%” appears as an unreported metric, actual income tax expense of ¥649m suggests a normalized tax burden. Several disclosures are not available or reported as zero in XBRL (e.g., equity ratio, cash & equivalents, investing cash flows, dividends, shares outstanding), and should not be interpreted as actual zeros. Given the first‑half timing, seasonality may influence margins and cash flows, so full‑year trends could differ. Overall, the company demonstrates solid momentum, improving operating leverage, and healthy cash conversion, with the main monitoring points being inventory turnover, capital allocation, and the trajectory of store expansion and SG&A efficiency.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.61%
• asset_turnover: 0.521x
• financial_leverage: 2.57x
• calculated_ROE: 8.85%
• notes: ROE improvement is supported by higher operating margin and stable asset efficiency; leverage at 2.57x amplifies returns without appearing excessive. margin_quality:
• gross_margin: 48.8%
• operating_margin: 13.1%
• EBITDA_margin: 14.7%
• observations: Strong gross margin suggests solid pricing power/mix; SG&A discipline drove operating margin expansion alongside revenue growth. operating_leverage:
• revenue_growth_YoY: 27.4%
• operating_income_growth_YoY: 40.4%
• commentary: Operating income outpaced revenue, indicating positive operating leverage from scale benefits and fixed-cost absorption.

Growth Assessment

revenue_sustainability: Top-line growth of 27.4% YoY likely reflects strong demand and/or footprint expansion; durability will depend on consumer discretionary conditions and same-store performance. profit_quality: Net income +127.4% YoY exceeds operating income growth, implying favorable non-operating/tax effects; core profitability remains sound as evidenced by 13.1% OPM. outlook: If current momentum persists into H2, full-year margins could remain elevated; key watchpoints include macro demand, promotional intensity, and FX/material input costs.

Financial Health

liquidity:

• current_ratio: 141.3%
• quick_ratio: 74.4%
• working_capital: ¥5,127,671,000
• commentary: Liquidity is adequate, though dependence on inventory is high; cash and equivalents were not disclosed in XBRL. solvency:
• debt_to_equity: 1.49x
• interest_coverage: 18.0x (EBIT/interest)
• financial_leverage: 2.57x assets/equity
• commentary: Leverage appears manageable given coverage; continued earnings growth should support further de-risking. capital_structure: Total assets ¥28,597m; total liabilities ¥16,656m; total equity ¥11,142m. Equity ratio was not disclosed (reported as 0.0% in XBRL).

Cash Flow Quality

earnings_quality: Operating cash flow of ¥1,392m vs net income of ¥986m (1.41x) indicates good cash conversion in the half. FCF_analysis: Investing cash flow was not disclosed (reported as 0); hence free cash flow could not be reliably derived. EBITDA of ¥2,194m provides capacity for organic investments. working_capital: Inventories ¥8,306m vs H1 COGS ¥4,422m suggests elevated inventory intensity (inventory/COGS ≈ 1.88x); inventory days are likely high (~340 days on a simple run-rate basis), a focus area for turnover and cash cycle management.

Dividend Sustainability

payout_ratio_assessment: Dividend and payout ratio were not disclosed (reported as 0 in XBRL); EPS is ¥57.35 YTD, providing potential capacity depending on policy. FCF_coverage: Free cash flow coverage cannot be assessed due to unreported investing cash flows. policy_outlook: Absent disclosure of dividend policy/trajectory, assessment hinges on full-year earnings, capex needs, and leverage targets.

Risk Assessment

Business Risks:

• Exposure to consumer discretionary demand and wedding/bridal cycles affecting traffic and conversion
• Inventory obsolescence risk and markdowns in a fashion/luxury-driven category
• Input cost and FX volatility for imported materials (e.g., diamonds, precious metals)
• Execution risk in store expansion, format optimization, and staffing
• Competitive intensity from domestic and online jewelry/luxury retailers
• Seasonality around holiday/bridal peaks impacting H2 performance

Financial Risks:

• Inventory-heavy working capital and potential cash flow volatility
• Interest rate risk given leverage (D/E 1.49x) despite solid coverage
• Refinancing and covenant headroom not disclosed
• Limited visibility on cash, capex, and investing cash flows due to unreported items
• Tax rate variability (actual tax expense present but effective tax rate not reported)

Key Concerns:

• High inventory relative to H1 COGS implies sensitivity to turnover and pricing discipline
• Several key disclosures unreported (cash, investing CF, dividends, shares), limiting precision of capital allocation analysis
• Sustainability of outsized net income growth versus operating growth as one-offs normalize

Investment Implications

Key Takeaways:

• Strong H1 operating momentum with positive operating leverage (OP +40.4% vs sales +27.4%)
• Healthy profitability profile (48.8% GPM, 13.1% OPM, 14.7% EBITDA margin)
• ROE of 8.85% supported by moderate leverage (2.57x) and improving margins
• Adequate liquidity but inventory‑dependent (quick ratio 74.4%)
• Cash conversion solid (OCF/NI 1.41x), though FCF not ascertainable
• Interest coverage robust at 18.0x, suggesting manageable financial risk

Metrics to Watch:

• Same-store sales growth and traffic/conversion trends
• Inventory turnover and days on hand; inventory-to-COGS ratio trajectory
• SG&A ratio and store-level productivity metrics
• Capex and investing cash flows to gauge FCF and expansion pace
• Effective tax rate normalization vs prior periods
• Net debt and cash balances; interest coverage under rate scenarios

Relative Positioning: Within Japanese specialty retail/luxury peers, the company exhibits above-average gross margins and solid operating leverage, with moderate leverage and an inventory-intensive working capital model that warrants close monitoring.

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