HitoMile Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥69.22B
• Operating Income: ¥909M
• Net Income: ¥282M
• EPS: ¥12.94

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

For FY2026 Q2 (JGAAP, consolidated), 株式会社ひとまいる delivered modest top-line growth with revenue of ¥69.221bn (+4.9% YoY), translating into gross profit of ¥15.189bn and an operating income of ¥0.909bn (+21.1% YoY). Operating margin improved to roughly 1.3%, indicating positive operating leverage despite still-thin profitability typical of a high-turnover, low-margin model. Ordinary income was ¥0.911bn, essentially in line with operating income, suggesting limited non-operating drag or lift. Net income reached ¥0.372bn (+31.6% YoY), implying a net margin of 0.54% and EPS of ¥12.94. DuPont decomposition shows ROE of 8.49%, driven primarily by high asset turnover of 1.85x and substantial financial leverage of 8.54x, as net margin remains very slim. Cash conversion was strong this half, with operating cash flow (OCF) of ¥1.19bn equating to an OCF/Net Income of 3.20x, a constructive indicator for earnings quality. Liquidity remains tight: current ratio at 82.4% and negative working capital of ¥4.76bn point to reliance on supplier credit and short-term funding. The balance sheet is highly leveraged with total liabilities of ¥31.829bn versus equity of ¥4.383bn (debt-to-equity 7.26x), implying an equity ratio around 11.7% (computed from disclosed assets and equity), although the reported equity ratio metric shows 0.0% due to data limitations. Interest burden is presently manageable (interest expense ¥24m; coverage ~37.9x), but thin margins leave limited buffer against shocks. EBITDA was ¥1.365bn (margin ~2.0%), underscoring limited operating cushion but improved YoY profitability. Tax expense of ¥349m versus net income suggests an implied effective tax rate near the high-40% range on a simple pre-tax reconstruction, which bears monitoring for sustainability. Dividend information shows DPS and payout as 0.00, but given the reporting caveat for zeros, dividend policy visibility is limited at this time. Free cash flow cannot be reliably assessed because investing cash flows and cash balances are not disclosed in the dataset. Overall, the company exhibits incremental margin expansion and solid cash conversion this period, but operates with high leverage, negative working capital, and structurally low margins. Sustaining ROE near 8–9% appears dependent on continued asset turnover strength and maintaining leverage at current levels, highlighting execution and financing discipline as key variables. Data gaps (notably inventories, cash, investing CF, shares outstanding) constrain the completeness of the assessment, and conclusions are based on the available non-zero items and standard interpretations of JGAAP line items.

Profitability Analysis

ROE of 8.49% decomposes into net margin 0.54% × asset turnover 1.849 × financial leverage 8.54. The core driver is high turnover, with leverage magnifying returns; profitability (margin) remains the key constraint. Gross margin is 21.9%, indicating value-add in the business model, but SG&A still absorbs most of gross profit, leaving operating margin at ~1.31%. Operating income growth of +21.1% outpaced revenue growth of +4.9%, evidencing positive operating leverage and some SG&A discipline. EBITDA of ¥1.365bn (margin ~2.0%) provides limited buffer; a modest deterioration in gross margin or uptick in opex could quickly compress EBIT. Ordinary income is very close to operating income, indicating minimal net non-operating impact in the period. A reconstructed effective tax rate (tax of ¥349m on an implied pre-tax of ~¥721m) is ~48%, which is elevated and could depress net margin if persistent; this figure should be treated cautiously given potential classification differences under JGAAP. Interest burden is low relative to EBIT (coverage ~37.9x), supporting near-term earnings resilience despite high leverage. Overall margin quality improved YoY, but the earnings model remains thin-margin and reliant on maintaining high throughput and cost control.

Growth Assessment

Revenue grew +4.9% YoY to ¥69.221bn, a steady but moderate pace that appears organic given the lack of material non-operating effects. Operating income grew +21.1% YoY, reflecting margin expansion from cost efficiencies or mix shift; however, the absolute margin is still ~1.3%, implying limited operating slack. Net income grew +31.6% YoY to ¥372m, aided by operating leverage; sustainability will hinge on maintaining gross margin and SG&A efficiency. With asset turnover at 1.85x, growth appears volume-driven and consistent with a high-velocity business model. The quality of growth is supported by strong cash conversion (OCF/NI 3.20x), suggesting earnings were backed by working capital inflows or disciplined receivables/payables management. Given missing disclosures on inventories and cash, it is difficult to fully assess whether working capital improvements are structural or timing-related. Outlook-wise, continued incremental gains in operating margin (even tens of basis points) would disproportionately support profit growth due to low base margins. Risks to sustainability include input cost volatility, wage inflation, and any slowdown in end-market demand that would reduce turnover and pressure net margin.

Financial Health

Total assets are ¥37.438bn against total liabilities of ¥31.829bn and equity of ¥4.383bn, implying a computed equity ratio around 11.7% and leverage of 7.26x liabilities/equity. Liquidity is tight: current assets of ¥22.248bn vs current liabilities of ¥27.003bn yield a current ratio of 82.4% and negative working capital of ¥4.755bn. Quick ratio equals the current ratio given undisclosed inventories, suggesting dependence on receivables and cash (cash not disclosed) to meet obligations. Interest expense is modest at ¥24m with coverage ~37.9x, so current servicing capacity is adequate despite high balance sheet leverage. The capital structure appears heavily tilted toward liabilities, consistent with a working-capital-financed model; however, the low equity buffer heightens sensitivity to earnings or valuation shocks. Absence of disclosed cash and debt composition (short vs long) limits visibility into refinancing and liquidity risk profiles.

Cash Flow Quality

Operating cash flow of ¥1.19bn versus net income of ¥0.372bn yields OCF/NI of 3.20x, indicating strong cash backing for reported earnings this period. D&A of ¥456m (~50% of EBIT) supports non-cash coverage within EBITDA; however, without investing cash flows (not disclosed) we cannot assess maintenance vs growth capex or calculate free cash flow with confidence. Working capital seems to have contributed positively to OCF given the negative working capital position and the OCF/NI ratio, but the magnitude and sustainability cannot be confirmed without line-item detail (AR/AP/inventories not fully disclosed). Financing cash flow was a small net outflow of ¥53m, suggesting limited balance sheet actions during the period. Reported free cash flow and cash balances are undisclosed/zero in the dataset; hence FCF analysis is constrained and should be treated as not available rather than zero.

Dividend Sustainability

Dividend data show DPS and payout ratio as 0.00, but zeros may reflect non-disclosure rather than actual zeros. On the available earnings base (EPS ¥12.94, net income ¥372m), there appears room for a modest payout if liquidity permits; however, tight current ratio (82.4%), negative working capital (¥4.755bn), and high leverage (7.26x liabilities/equity) argue for balance sheet reinforcement. Without investing cash flow and cash balance disclosure, free cash flow coverage of dividends cannot be assessed. Policy outlook remains unclear due to missing disclosures; in the near term, prudence would suggest prioritizing liquidity and leverage management over distributions if the working capital structure remains stretched.

Risk Assessment

Business Risks:

• Thin operating and net margins amplify sensitivity to small changes in pricing, input costs, or SG&A.
• Potential demand volatility impacting high asset turnover model.
• Procurement and supplier terms risk given reliance on negative working capital.
• Cost inflation (materials, logistics, labor) that could compress gross margin.
• Customer concentration risk (not disclosed) typical in some trading/wholesale models.
• Tax rate volatility given elevated implied effective tax rate.

Financial Risks:

• High leverage (liabilities/equity 7.26x) with a low computed equity ratio (~11.7%).
• Sub-1.0 current ratio (82.4%) and negative working capital (¥4.755bn) indicating liquidity pressure.
• Refinancing and covenant risks if short-term funding tightens (debt composition not disclosed).
• Limited operating margin buffer to absorb shocks despite currently strong interest coverage.
• Data gaps on cash, investing CF, and inventories obscure true liquidity and FCF.

Key Concerns:

• Sustainability of margin gains given structurally low margins.
• Reliance on leverage and working capital liabilities to drive ROE.
• Visibility on cash, capex, and FCF due to non-disclosure of investing CF and cash balances.
• Potentially high effective tax rate weighing on net profitability.

Investment Implications

Key Takeaways:

• ROE of 8.49% is chiefly driven by high asset turnover (1.85x) and leverage (8.54x), not margin strength.
• Operating leverage is evident: +4.9% revenue translated into +21.1% operating income growth.
• Cash conversion is strong this half (OCF/NI 3.20x), but FCF cannot be confirmed without capex data.
• Liquidity is tight (current ratio 82.4%, negative working capital ¥4.755bn) despite strong interest coverage.
• Computed equity ratio is ~11.7% versus reported 0.0% metric, reflecting data limitations in reported metrics.

Metrics to Watch:

• Gross margin trend and SG&A ratio (to validate continuing operating leverage).
• Working capital days (DSO/DPO/DIO) and OCF/NI to confirm cash conversion quality.
• Equity ratio and net debt/EBITDA (once cash and debt details are disclosed).
• Effective tax rate and any one-off tax items affecting net margin.
• Capex versus D&A and investing cash flows to establish sustainable FCF.
• Interest coverage and maturity profile to monitor refinancing risk.

Relative Positioning: Relative to TSE-listed wholesale/distribution peers, the company appears to operate a high-turnover, low-margin model with leverage above typical peers and ROE in the mid–high single digits supported by balance sheet gearing rather than margin leadership.

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