Koukandekirukun,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.43B
• Operating Income: ¥-141M
• Net Income: ¥-101M
• EPS: ¥-14.16

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

Verdict: FY2026 Q2 shows top-line strength but continued operating losses; losses narrowed year-on-year while cash burn persists and leverage is elevated. Revenue rose 14.8% YoY to 54.32, with gross profit of 11.16 and a gross margin of 20.5%. Operating loss improved to -1.41 (up 22.5% YoY in profit terms), equating to an operating margin of -2.6%. Ordinary loss narrowed to -1.37 (+14.4% YoY), and net loss improved to -1.01 (+21.1% YoY), with basic EPS of -14.16 yen. Using the disclosed YoY rates, we estimate prior-year revenue at ~47.34, implying the operating margin improved by about +125 bps YoY from -3.9% to -2.6%. Ordinary margin similarly improved by roughly +86 bps from about -3.4% to -2.5%. EBITDA was -1.07 (margin -2.0%), reflecting SG&A (12.58) exceeding gross profit (11.16). Earnings quality is mixed: operating cash flow was -1.20 versus net loss of -1.01, yielding OCF/NI of 1.19x (mathematically positive) but both figures remain negative. Financing inflows of 4.07 funded the shortfall, indicating dependence on external capital while operations remain loss-making. Balance sheet shows total assets of 46.13, equity of 16.30, and D/E of 1.83x, with current ratio of 112%—liquidity is thin relative to our >150% comfort threshold. Intangibles are sizable at 11.92 (including goodwill 5.02), elevating impairment risk if growth underperforms. ROE is -6.2% per DuPont (NPM -1.9%, asset turnover 1.178x, leverage 2.83x), with the negative margin the primary drag. ROIC of -7.4% is well below a 7–8% target range, signaling value destruction this period. Interest coverage is deeply negative (-30.7x), highlighting limited buffer if rates rise or if lenders tighten conditions. Forward-looking, revenue momentum and improving loss trajectory are positives, but sustained improvement requires SG&A discipline and monetization of past investments (reflected in intangibles). The near-term focus should be on restoring positive operating margin and OCF, while managing leverage to avoid covenant or refinancing risk.

Profitability Analysis

ROE decomposition: ROE (-6.2%) = Net Profit Margin (-1.9%) × Asset Turnover (1.178x) × Financial Leverage (2.83x). The dominant negative driver is the net margin: gross margin is 20.5%, but SG&A (12.58) exceeds gross profit (11.16), yielding an operating margin of -2.6% and after minor non-operating items, a net margin of -1.9%. Asset turnover at 1.178x is reasonable for a service/commerce model and helps partially offset weak margins. Leverage at 2.83x amplifies the negative margin into a -6.2% ROE. Among components, the most meaningful YoY change appears in margin, as operating and ordinary losses narrowed while revenue expanded; leverage and turnover are likely more stable in the short term. Business reason: elevated SG&A (including personnel at 2.72 and other operating costs) outpace gross profit—likely reflecting growth investments (salesforce, marketing, platform, integration costs) and cost inflation. Sustainability: margin improvement could continue if operating leverage materializes on higher volume and SG&A growth moderates; however, current SG&A still exceeds gross profit, so breakeven is not yet secured. Concerning trends: (1) SG&A > gross profit indicates insufficient scale or cost/price pressure; (2) negative EBITDA and operating loss despite double-digit revenue growth suggests limited operating leverage so far; (3) interest coverage is highly negative, leaving little room for execution missteps.

Growth Assessment

Revenue growth of +14.8% YoY to 54.32 is solid and implies successful demand capture or price/mix, but conversion to profit remains weak. Operating loss narrowed ~22.5% YoY (from an estimated -1.82 to -1.41), showing improving unit economics or overhead absorption. Ordinary and net losses also improved (ordinary -1.37, net -1.01), aided modestly by limited non-operating items (income 0.09 vs expenses 0.05). Gross margin stands at 20.5%; without YoY gross margin data, we cannot confirm mix or pricing effects, but the margin level leaves relatively small room for SG&A absorption. EBITDA margin at -2.0% signals that current scale is insufficient. Outlook: if revenue growth persists near the teens and cost growth is contained, breakeven at operating level becomes plausible; conversely, any slowdown would quickly widen losses given the fixed-cost base. Key swing factors include personnel productivity (salaries 2.72), any marketing intensity embedded in SG&A (unreported), and potential cost savings from platform efficiencies. Absence of inventory data limits visibility into fulfillment efficiency and working-capital intensity. Overall, growth quality is moderate: topline is healthy, but profitability inflection is still pending.

Financial Health

Liquidity: current ratio 112% and quick ratio 112% are above 1.0 but below the >1.5 comfort benchmark, indicating a thin cushion. No explicit warning trigger (CR < 1.0) is met, but caution is warranted. Cash and deposits are 9.83 versus current liabilities 22.36; receivables are 8.14; inventories unreported—aggregate current assets (25.04) cover current liabilities with limited headroom. Solvency: D/E is 1.83x (above a conservative 1.5x), though below the explicit 2.0x warning threshold; total interest-bearing loans reported: short-term 2.00, long-term 5.65. Interest coverage ratio is -30.69x, a material red flag for debt service capacity despite currently manageable absolute debt. Maturity mismatch: short-term loans (2.00) are small relative to cash (9.83) and receivables (8.14), but ongoing negative OCF heightens rollover risk if access to financing tightens. Off-balance sheet obligations: none reported; data limitations prevent assessment of lease commitments or guarantees. Intangible-heavy balance sheet (intangibles 11.92 including goodwill 5.02) reduces tangible coverage and raises impairment sensitivity.

Cash Flow Quality

OCF of -1.20 versus net loss of -1.01 yields OCF/NI of 1.19x, which nominally exceeds the >1.0 benchmark but is not reassuring because both figures are negative. Financing CF of +4.07 funded the operating deficit, pointing to reliance on external capital while the business scales. Investing CF and capex are unreported, preventing true FCF calculation; thus dividend and capex coverage cannot be assessed. Working capital detail is limited (no inventory figures), making it difficult to diagnose whether the OCF shortfall stems from receivables build, payable timing, or core earnings. No clear signs of WC manipulation are visible from the limited snapshot, but the combination of growing sales and negative OCF suggests growth is not yet self-funding.

Dividend Sustainability

Dividend data are unreported for the period, so payout metrics cannot be calculated. Given negative net income and negative OCF, internal coverage of any cash dividends would be weak without drawing on the balance sheet or external financing. With ROE at -6.2% and ROIC at -7.4%, capital is currently better directed toward achieving profitability and strengthening liquidity. Policy outlook cannot be inferred from disclosures; we assume a conservative stance until OCF turns sustainably positive.

Risk Assessment

Business Risks:

• Profitability risk: SG&A exceeds gross profit, keeping operating margin negative.
• Execution risk: need to translate double-digit revenue growth into operating leverage.
• Intangible asset impairment risk: goodwill 5.02 and other intangibles 11.92 are sizable relative to equity.
• Customer acquisition and labor cost inflation risk pressuring margins (partly reflected in salaries 2.72).
• Demand cyclicality in home equipment replacement/installation services could slow volumes.

Financial Risks:

• Interest coverage is deeply negative (-30.69x), indicating weak debt-servicing capacity.
• Elevated leverage: D/E 1.83x, with reliance on financing CF (+4.07) to fund operations.
• Liquidity buffer is thin: current ratio 112% and cash 9.83 vs current liabilities 22.36.
• Refinancing/rollover risk if credit conditions tighten while OCF remains negative.

Key Concerns:

• Sustained negative OCF alongside negative EBITDA.
• Need for SG&A discipline to achieve breakeven.
• Potential covenant headroom unknown; off-BS obligations unreported.
• Limited visibility due to several unreported items (capex, inventories, dividend policy).

Investment Implications

Key Takeaways:

• Top-line growth is robust (+14.8% YoY), and losses are narrowing.
• Operating margin improved by ~125 bps YoY to -2.6%, but EBITDA and OCF remain negative.
• Balance sheet carries elevated leverage (D/E 1.83x) with very weak interest coverage.
• Intangibles are high (11.92), increasing downside risk if growth slows.
• Path to self-funded growth requires positive OCF and tighter SG&A control.

Metrics to Watch:

• Operating margin and SG&A-to-sales ratio (seek sustained sub-18–19% SG&A if gross margin ~20.5%).
• OCF and FCF trajectory; cash conversion of earnings.
• Receivable days and payable terms (working-capital intensity), once disclosed.
• Net debt to EBITDA and interest coverage improvement.
• ROIC vs WACC to confirm value creation as scale increases.

Relative Positioning: Within small-cap growth-oriented service/commerce peers, the company exhibits stronger-than-average revenue growth but weaker profitability and cash conversion, coupled with higher leverage and lower interest cover—positioning it as higher risk/higher execution dependent until operating breakeven and OCF inflection are demonstrated.

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