Koukandekirukun,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.43B
• Operating Income: ¥-141M
• Net Income: ¥-30M
• 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

Koukan Dekirukun (7695) reported FY2026 Q2 consolidated results under JGAAP with solid top-line growth but continued operating losses. Revenue rose 14.8% year over year to ¥5,432 million, indicating resilient demand and effective commercial execution. Gross profit reached ¥1,065.9 million, translating to a gross margin of 19.6%, which is reasonable for an installation/e-commerce-like model but leaves limited buffer to absorb fixed costs. Operating income was a loss of ¥141 million, improving by approximately 22.5% YoY, suggesting early operating leverage as scale builds. Ordinary loss was ¥137 million, and net loss was ¥101 million, also narrowing by roughly 21.1% YoY. EBITDA was negative at ¥121.3 million, with low D&A (¥19.7 million) underscoring an asset-light model. DuPont analysis shows an ROE of -6.20% driven by a net margin of -1.86%, asset turnover of 1.178x, and financial leverage of 2.83x; the principal pressure point remains margin. Operating cash flow was negative at ¥91.8 million, producing an OCF/Net Income ratio of 0.91, which indicates cash tracking earnings reasonably well despite the loss. The balance sheet shows total assets of ¥4,613 million, liabilities of ¥2,285 million, and equity of ¥1,630 million, implying a liabilities-to-equity ratio of 1.40x and positive working capital of ¥237 million. Liquidity is adequate with a current ratio of 112.6%, though headroom is not large. Interest expense is modest at ¥1.4 million, but interest coverage is negative due to operating losses. No dividend was declared (DPS ¥0), which is appropriate given losses and negative operating cash flow. Several line items such as inventories, cash and equivalents, investing cash flow, and share data are shown as zero, indicating they were not disclosed or labeled differently in XBRL; conclusions are therefore based only on available non-zero data. Overall, the narrative is one of healthy sales expansion with improving but still negative profitability, manageable leverage, and constrained but positive working capital. Sustained gross margin discipline and SG&A efficiency will be key to reaching break-even and stabilizing cash flows in subsequent periods.

Profitability Analysis

ROE is -6.20% on a DuPont basis, decomposed into a net margin of -1.86%, asset turnover of 1.178x, and financial leverage of 2.83x. The negative ROE is primarily explained by the operating loss; leverage modestly amplifies the effect but is not the core issue. Gross margin of 19.6% indicates limited pricing power relative to cost of sales and a business mix that likely includes significant subcontracting/material costs. EBITDA margin of -2.2% and an operating loss of ¥141 million point to SG&A intensity; D&A is low (¥19.7 million), so losses are predominantly operating in nature, not depreciation-driven. Interest expense is small (¥1.4 million), confirming financing costs are not the main driver of losses. The YoY improvement in operating loss (+22.5% better) implies some early operating leverage as revenue scales faster than fixed cost growth. Ordinary loss (¥137 million) closely tracks operating loss, suggesting limited non-operating noise this quarter. Effective tax rate appears 0.0% due to losses, with minimal tax burden. Overall profitability hinges on improving contribution margin per order and better absorption of fixed overhead.

Growth Assessment

Revenue increased 14.8% YoY to ¥5,432 million, signaling continued demand momentum. The expansion appears organic, as there is no disclosed investing cash flow indicative of large acquisitions in the period (investing CF is unreported). Gross profit growth and margin at 19.6% indicate the core model remains intact but still margin-sensitive. Profit quality is improving as operating and net losses narrowed by ~22% and ~21% YoY, respectively, consistent with early-stage operating leverage. With EBITDA at -¥121.3 million and low D&A, break-even is achievable if revenue growth continues and SG&A is kept in check. Asset turnover of 1.178x supports a relatively efficient use of the asset base for sales generation. Outlook: sustaining double-digit revenue growth with stable-to-improving gross margins should drive further loss narrowing; however, execution risk remains around cost inflation (materials/subcontracting) and marketing efficiency.

Financial Health

Total assets are ¥4,613 million, liabilities ¥2,285 million, and equity ¥1,630 million, implying a liabilities-to-equity ratio of 1.40x. Liquidity is adequate with a current ratio of 112.6% and positive working capital of ¥237 million; however, the buffer is not large for a scaling business. Quick ratio equals current ratio due to inventories being unreported, so interpretations should be cautious. Interest expense is low at ¥1.4 million, but losses render interest coverage negative. Equity ratio was shown as 0.0% in the data feed, which should be treated as undisclosed rather than zero; the reported balance sheet components suggest a meaningful equity base. The data set does not fully reconcile total assets to liabilities plus equity, indicating partial disclosures; conclusions are drawn from the available items. Overall solvency appears manageable near term, but ongoing losses necessitate careful cash management.

Cash Flow Quality

Operating cash flow was -¥91.8 million versus net loss of -¥101.0 million, yielding an OCF/Net Income ratio of 0.91, which suggests earnings are reasonably reflective of cash performance with limited accrual distortion this period. Free cash flow is shown as zero due to unreported investing cash flows; thus, FCF cannot be precisely assessed. D&A is modest (¥19.7 million), indicating an asset-light model with limited non-cash charges. Working capital is positive at ¥237 million; however, the absence of line-item details (AR, AP, inventories) limits assessment of cash conversion cycles. Financing cash flow of -¥84.3 million implies outflows (e.g., debt repayment or other financing uses), but details are not provided. Overall, cash flow quality is fair given close alignment between OCF and NI, though absolute cash burn persists.

Dividend Sustainability

DPS is ¥0.00 and the payout ratio is 0.0%, appropriate given negative earnings and negative operating cash flow. With unreported investing cash flow, FCF coverage metrics are not calculable; the displayed FCF coverage of 0.00x should be read as not disclosed rather than literal. Near-term dividend capacity appears constrained by operating losses and ongoing growth investments. Policy-wise, the company likely prioritizes reinvestment and balance sheet resilience over distributions until sustained profitability and positive OCF are achieved.

Risk Assessment

Business Risks:

• Margin pressure from material and subcontracting cost inflation
• Execution risk in scaling installation/logistics capacity with quality control
• Marketing efficiency and customer acquisition costs amid competition
• Demand sensitivity to housing-related and renovation cycles
• Seasonality in home improvement activity
• Potential supply chain delays impacting project scheduling and revenue recognition
• Reliance on third-party contractors/vendors

Financial Risks:

• Continued operating losses leading to ongoing cash burn
• Thin liquidity headroom despite a >1.1x current ratio
• Negative interest coverage (profitability risk if rates rise)
• Potential need for external financing if losses persist
• Working capital swings due to receivables/payables timing

Key Concerns:

• Gross margin at 19.6% leaves limited cushion to cover SG&A
• EBITDA and operating losses remain negative despite growth
• Unreported cash and investing data constrain visibility on runway
• Limited disclosure of inventories and share data hampers per-share and CCC analysis

Investment Implications

Key Takeaways:

• Double-digit revenue growth (+14.8% YoY) with narrowing operating and net losses
• Gross margin stable at 19.6%, but SG&A absorption remains the swing factor
• Asset-light model (low D&A) implies path to break-even relies on operating efficiency, not capex
• Liquidity adequate (current ratio 112.6%, working capital ¥237m) but requires ongoing discipline
• OCF tracks NI (0.91x), suggesting fair earnings quality despite losses

Metrics to Watch:

• Gross margin progression and take-rate per project
• SG&A ratio to sales and marketing ROI
• Operating cash flow trend and cash burn rate
• Asset turnover and order-to-cash cycle metrics
• Liabilities-to-equity (1.40x) and any changes in financing flows
• EBITDA trajectory and break-even timing

Relative Positioning: Relative to small-cap Japanese home equipment replacement/installation peers, the company exhibits strong top-line growth and an asset-light profile with modest leverage, but profitability lags, leaving execution on margin expansion and cost control as the key differentiator.

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