KOSAIDO Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥16.46B
• Operating Income: ¥2.79B
• Net Income: ¥2.61B
• EPS: ¥15.25

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

Kosaido Holdings (7868) reported FY2026 Q2 consolidated results under JGAAP showing resilient margins but weaker growth momentum and a sharp deterioration in operating cash flow. Revenue declined 6.0% YoY to ¥16.46bn, while operating income fell 22.9% YoY to ¥2.79bn, indicating meaningful operating leverage and cost sensitivity to top-line pressure. Gross profit of ¥7.38bn implies a solid gross margin of 44.8%, evidencing pricing power and/or a favorable service mix despite softer sales. Operating margin remained healthy at 17.0%, but compressed versus last year given the larger decline in operating profit relative to revenue. Ordinary income of ¥2.69bn suggests modest non-operating drag (roughly ¥0.10bn), primarily from interest expense of ¥0.14bn partly offset by other items. Net income declined 16.5% YoY to ¥2.15bn, with a net margin of 13.1%, still strong for a services-oriented portfolio. DuPont analysis yields ROE of 4.38%, driven by a 13.1% net margin, asset turnover of 0.234x, and financial leverage of 1.43x, indicating profitability is the main ROE driver while balance sheet leverage is moderate. The balance sheet appears conservatively positioned: D/E is 0.60x, current ratio 234% and quick ratio 234% (inventories are minimal at ¥0.12bn), reflecting ample short-term coverage. However, operating cash flow was a substantial outflow of ¥11.58bn in the first half, creating a disconnect with positive earnings and highlighting elevated working-capital intensity or timing effects; cash and investing CF figures were not disclosed, limiting full cash analysis. Interest coverage remains strong at 20.5x, indicating comfortable debt service capacity from operating earnings. Effective tax rate, inferred from reported income tax, is about 19% (¥0.52bn tax on c. ¥2.69bn pretax), despite an automated metric showing 0.0%—we rely on the non-zero reported values. Dividend data were not disclosed (DPS and payout ratio shown as zero indicate lack of disclosure rather than actual zero distributions). With revenue contracting and operating profit falling faster, the near-term outlook hinges on demand stabilization and tighter cost control to mitigate operating leverage. Despite the negative OCF, liquidity looks solid on a current basis, but the absence of reported cash balances and investing cash flows introduces uncertainty around funding. Overall, fundamentals show decent profitability and manageable leverage, offset by weak YoY momentum and poor cash conversion this period; we would prioritize monitoring working-capital trends and the durability of margins.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 13.09% (Net income ¥2,154m / Revenue ¥16,459m)
• asset_turnover: 0.234x (Revenue ¥16,459m / Total assets ¥70,275m)
• financial_leverage: 1.43x (Total assets ¥70,275m / Equity ¥49,188m)
• calculated_ROE: 4.38% (matches reported)
• interpretation: ROE is primarily supported by healthy margins; asset intensity is relatively high and leverage is moderate, constraining ROE uplift from turnover and gearing. margin_quality:
• gross_margin: 44.8% (¥7,377m / ¥16,459m) – robust, suggests favorable mix/pricing.
• operating_margin: 17.0% (¥2,793m / ¥16,459m) – healthy but down YoY given -22.9% OI vs -6.0% revenue.
• ordinary_margin: 16.4% (¥2,693m / ¥16,459m) – slight non-operating drag.
• net_margin: 13.1% – solid profitability at the bottom line.
• tax_rate: Approx. 19% (¥521m / ~¥2,693m), using reported non-zero items. operating_leverage: Operating income fell 22.9% on a 6.0% revenue decline, indicating high operating leverage and a meaningful fixed cost base. Protecting margins will require tighter cost control or revenue stabilization. interest_coverage: 20.5x (Operating income ¥2,793m / Interest expense ¥136m) – ample headroom.

Growth Assessment

revenue_sustainability: Revenue contracted 6.0% YoY to ¥16.46bn, signaling softer demand or mix shifts. Without segment disclosure, sustainability by business line cannot be assessed. profit_quality: Margins remain comparatively strong (GP 44.8%, OP 17.0%, NI 13.1%) despite the top-line decline, implying underlying pricing/mix support. However, the steep OI drop vs revenue points to sensitivity to volumes. outlook: Near-term growth depends on demand recovery and execution on cost discipline. Non-operating items are manageable; the key swing factor is operating leverage and cash conversion. Lack of segment and backlog visibility limits forward assessment.

Financial Health

liquidity:

• current_ratio: 234% (¥38,021m / ¥16,234m)
• quick_ratio: 234% (minimal inventories of ¥121m)
• cash_position: Cash and equivalents not disclosed; absolute liquidity buffer cannot be determined.
• working_capital: ¥21,787m – ample short-term coverage but needs to be reconciled with negative OCF. solvency_capital_structure:
• total_assets: ¥70,275m
• total_liabilities: ¥29,317m
• equity: ¥49,188m
• debt_to_equity: 0.60x (using total liabilities as a proxy for interest-bearing debt due to disclosure limits)
• equity_ratio_note: Equity ratio reported as 0.0% is a non-disclosure placeholder; based on balances, equity/asset is approx. 70%. assessment: Balance sheet appears conservative with moderate leverage and strong current metrics. Absence of cash and debt detail constrains full solvency analysis.

Cash Flow Quality

earnings_quality: OCF of -¥11,581m versus net income of ¥2,154m implies OCF/NI of -5.38x, indicating very weak cash conversion in the period. FCF_analysis: Investing CF not disclosed; FCF cannot be reliably derived. The reported ‘0’ should not be interpreted as actual zero. working_capital_dynamics: Given minimal inventories, the OCF shortfall likely stems from receivables growth and/or other current assets, or outflows in other operating items. Without detail, the magnitude raises caution on timing and collection risk. capex_visibility: No investing cash flow data disclosed; capex intensity cannot be assessed.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio appear as zero due to non-disclosure; actual distributions are unknown. With NI positive but OCF materially negative, cash coverage for dividends, if any, would be questionable in the period. FCF_coverage: Not assessable due to lack of investing CF and cash balance data. policy_outlook: Without guidance or historical payout data, we cannot infer policy changes. Sustained dividends would depend on restoring positive OCF and maintaining current balance sheet strength.

Risk Assessment

Business Risks:

• Revenue softness (-6% YoY) amid potential demand or mix headwinds.
• High operating leverage evidenced by disproportionate OI decline (-22.9% YoY).
• Margin pressure risk if volumes weaken further or cost inflation persists.
• Limited visibility due to lack of segment and order/backlog disclosure.

Financial Risks:

• Substantial negative operating cash flow in the period (¥11.58bn).
• Unreported cash position and investing cash flows, obscuring liquidity runway and capex needs.
• Potential working capital build or collections risk affecting cash conversion.
• Moderate interest burden (¥136m) manageable now, but sensitivity rises if OI falls further.

Key Concerns:

• Cash conversion gap: NI positive but OCF sharply negative.
• Operating leverage: earnings sensitivity to revenue declines.
• Data limitations on cash, investing, and dividend details hinder full evaluation.

Investment Implications

Key Takeaways:

• Profitability remains solid (OPM 17.0%, NPM 13.1%) despite revenue decline.
• ROE at 4.38% is margin-driven; asset intensity and modest leverage cap returns.
• Operating leverage is high; further revenue softness could disproportionately hit profits.
• Liquidity looks strong on current metrics, but cash balance is undisclosed.
• OCF was significantly negative; improving working-capital discipline is critical.

Metrics to Watch:

• Revenue trajectory and order/booking trends by segment (when available).
• Operating margin progression and cost control initiatives.
• OCF and working capital movements (receivables, other current assets/liabilities).
• Cash and net debt disclosure; interest-bearing debt schedule.
• Capex/investing CF to gauge FCF sustainability.
• Tax rate normalization and non-operating income/expense stability.

Relative Positioning: Within Japanese diversified services/solutions peers, Kosaido shows comparatively healthy margins and moderate leverage but weaker cash conversion this period; clarity on cash and investing flows is needed to benchmark FCF and dividend capacity.

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