KOYOSHA INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.19B
• Operating Income: ¥-8M
• Net Income: ¥8M
• EPS: ¥0.86

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

Koyosha Co., Ltd. (79460) reported FY2026 Q2 consolidated results under JGAAP showing stable top-line performance but weak profitability and cash generation. Revenue was ¥2,190 million, down a marginal 0.1% YoY, indicating resilient demand but no growth momentum. Gross profit was ¥469 million, implying a gross margin of 21.4%, which suggests modest value-add in a likely price-competitive printing/processing niche. Operating income came in at a loss of ¥8 million, an improvement of 15.7% YoY, reflecting some cost control and operating leverage, but not yet reaching break-even at the operating level. Ordinary income was positive at ¥12 million, indicating non-operating gains (e.g., financial income or subsidies) offset the operating loss. The reported net income is shown as 0, which likely reflects an unreported figure in XBRL rather than an actual zero; EPS of ¥0.86 implies a small profit, although outstanding shares are unreported, limiting precision. Depreciation and amortization were ¥77.84 million, yielding EBITDA of ¥69.84 million (3.2% margin), highlighting that cash earnings before D&A are thin relative to revenue. Operating cash flow was negative at ¥118.83 million, pointing to earnings quality concerns and/or working capital drag in the period. Financing cash flow was an outflow of ¥76.40 million, suggesting some combination of debt repayment or shareholder returns (dividends are reported as zero, so likely repayments or lease liabilities). Investing cash flow and cash balance are shown as zero (not disclosed), constraining full cash analysis; however, liquidity appears strong with current assets of ¥2,090 million against current liabilities of ¥724 million. The balance sheet remains conservative with total assets of ¥2,932 million and total liabilities of ¥1,393 million, implying an equity base of ¥1,768 million and a leverage ratio (assets/equity) of 1.66x. The reported equity ratio of 0.0% is clearly an unreported placeholder; based on disclosed totals, the economic equity ratio is approximately 60%. Interest expense was only ¥0.95 million, but interest coverage based on EBIT is negative due to the operating loss, underscoring the imperative to restore operating profitability. DuPont inputs show asset turnover of 0.747x and financial leverage of 1.66x; the net margin component is unreported (0%), so calculated ROE is 0% by convention, but the true ROE is likely near zero and low. The company paid no dividends (DPS 0), with a payout ratio of 0% and FCF coverage shown as 0x due to unreported FCF; given negative OCF, the capacity for distributions appears constrained near term. Overall, the story is one of stable sales, modest gross margins, near-breakeven operations supported by non-operating income, negative operating cash flow, and solid liquidity. Data limitations (notably net income, cash and equivalents, investing cash flow, and inventories) constrain deeper conclusions, but available figures indicate a focus on margin recovery and working capital discipline is needed.

Profitability Analysis

ROE decomposition via DuPont is limited by unreported net income; reported components show asset turnover at 0.747x and financial leverage at 1.66x, which together would support only a modest ROE if net margin were low single digits. The implied net margin is near zero: ordinary income is ¥12 million on ¥2,190 million revenue (0.5%), offset by an operating loss and taxes of ¥8.22 million, suggesting bottom-line profitability around breakeven. Gross margin at 21.4% is modest for printing/processing, indicating limited pricing power or high input costs. The operating margin is slightly negative (-0.4%), but improving YoY, hinting at emerging operating leverage if revenue stabilizes or grows. EBITDA margin of 3.2% is thin, reflecting limited cost absorption and likely a high fixed-cost base; converting EBITDA to operating profit remains challenging. Interest burden is low (¥0.95 million), but EBIT interest coverage is negative (-8.4x) due to the operating loss; this should improve quickly with even small operating profit recovery. Non-operating items drove ordinary profit into positive territory; this is not a durable source of profitability and underscores the need to lift core operating margin. Effective tax rate is shown as 0% due to unreported net income; tax expense of ¥8.22 million despite near-breakeven ordinary profit implies tax timing/adjustments or non-deductible items. Overall margin quality is weak, with dependence on non-operating gains and thin gross-to-OP conversion.

Growth Assessment

Revenue declined 0.1% YoY to ¥2,190 million, essentially flat, suggesting stable demand but no pricing or volume uplift. The slight improvement in operating income (still a loss, +15.7% YoY) points to incremental cost actions or mix shifts rather than top-line growth. With asset turnover at 0.747x, efficiency is moderate; scope exists to lift turnover via tighter working capital or higher utilization. Profit quality is mixed: ordinary income is positive, but core operating profit is negative and OCF is meaningfully negative, indicating earnings are not yet converting to cash. Without reported investing cash flows, capex trajectory is unclear; stable D&A (~¥78 million) implies maintenance-level investments may be ongoing. Near-term outlook hinges on margin recovery from cost optimization, procurement discipline, and potential selective price adjustments rather than volume-led growth. Sustained growth will require either improving gross margin (through mix/process upgrades) or scaling revenue to absorb fixed costs; current data favors a margin-first recovery path.

Financial Health

Liquidity is strong: current assets ¥2,090 million vs current liabilities ¥724 million yields a current ratio of 2.89x, with quick ratio reported equal due to unreported inventories. Working capital is ample at ¥1,366 million, providing a cushion despite negative OCF. Solvency appears sound: total liabilities ¥1,393 million vs equity ¥1,768 million implies a debt-to-equity of ~0.79x and an economic equity ratio around 60% (reported 0% is an unreported placeholder). Financial leverage at 1.66x is moderate, offering flexibility but not excessive risk. Interest expense is low (¥0.95 million), containing financial risk despite negative EBIT coverage in the period. The absence of reported cash and investing CF limits visibility on cash runway and capex commitments; however, the sizable current asset base mitigates immediate liquidity concerns.

Cash Flow Quality

Operating cash flow was negative at ¥118.83 million despite near-breakeven earnings, indicating working capital outflows and/or non-cash profit components; detailed drivers are not disclosed. EBITDA of ¥69.84 million contrasted with negative OCF highlights weak cash conversion and potential buildup in receivables or other current assets. Free cash flow is not computable due to unreported investing cash flows; the provided FCF figure of 0 should be treated as undisclosed rather than zero. Earnings quality is therefore questionable in the short term, as cash generation lags accrual earnings and ordinary income. With working capital sizable (¥1,366 million), management attention to collections and inventory turns (inventory not disclosed) could materially improve OCF. Sustained positive OCF is a prerequisite for restoring capex capacity and any future shareholder distributions.

Dividend Sustainability

The company reported no dividends (DPS 0), and payout ratio is shown as 0% due to unreported net income and no distributions. Given negative operating cash flow and thin EBITDA margin (3.2%), internal funding capacity for dividends appears limited near term. FCF coverage is shown as 0x but is not meaningful due to unreported investing CF; however, OCF weakness suggests limited room for distributions without drawing on balance sheet. Policy-wise, management likely prioritizes liquidity preservation and operating turnaround over payouts until cash generation stabilizes. Any resumption of dividends would require sustained positive OCF, visibility on maintenance capex, and restoration of operating margins above breakeven.

Risk Assessment

Business Risks:

• Low gross and EBITDA margins indicating limited pricing power and high operating leverage
• Dependence on non-operating income to offset operating losses
• Potential demand cyclicality in printing/processing end markets
• Cost inflation in materials and energy that cannot be fully passed through
• Customer concentration risk typical in B2B printing/services (not disclosed but sector-relevant)

Financial Risks:

• Negative operating cash flow despite near-breakeven earnings
• Negative EBIT interest coverage in the period
• Visibility gaps due to unreported cash, inventories, and investing cash flows
• Working capital volatility potentially stressing cash conversion
• Potential covenant constraints if borrowings exist (details not disclosed)

Key Concerns:

• Sustained operating losses at the core level
• Weak cash conversion and negative OCF
• Reliance on non-operating items to deliver ordinary profit
• Limited evidence of top-line growth catalysts
• Data limitations hinder precise assessment of bottom-line and FCF

Investment Implications

Key Takeaways:

• Top line stable but no growth: revenue ¥2,190 million (-0.1% YoY)
• Gross margin modest at 21.4%; operating margin slightly negative and improving
• Ordinary income positive (¥12 million) but driven by non-operating factors
• EBITDA margin thin at 3.2%; operating leverage not yet achieved
• OCF negative at ¥118.83 million, highlighting cash conversion issues
• Balance sheet strength with economic equity ratio ~60% and current ratio 2.89x
• Interest burden low, but EBIT coverage negative due to operating loss
• Dividend suspended; payout capacity constrained until OCF recovery

Metrics to Watch:

• Operating margin trajectory and return to positive EBIT
• OCF and working capital movements (receivables, payables, inventories when disclosed)
• Gross margin resilience and pricing/mix improvements
• Capex/investing cash flows to gauge maintenance vs. growth spend
• Ordinary vs. operating income mix to assess reliance on non-operating gains
• Asset turnover improvements and utilization
• Cash balance and liquidity buffers once disclosed

Relative Positioning: Within Japan small-cap industrial/printing peers, Koyosha exhibits similar top-line stability but weaker cash conversion and thinner operating margins, offset by a comparatively solid balance sheet and liquidity. Near-term positioning hinges on executing a margin and cash conversion turnaround rather than pursuing aggressive growth.

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
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