| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1184.3B | ¥1299.0B | -8.8% |
| Operating Income | ¥18.5B | ¥19.2B | -3.6% |
| Ordinary Income | ¥22.8B | ¥22.8B | +0.0% |
| Net Income | ¥16.2B | ¥15.9B | +2.0% |
| ROE | 4.9% | 5.0% | - |
Cumulative results for FY2026 Q3 were Revenue ¥1,184.3B (YoY -¥114.7B, -8.8%), Operating Income ¥18.5B (YoY -¥0.7B, -3.6%), Ordinary Income ¥22.8B (YoY ±¥0.0B, +0.0%), and Net Income ¥16.2B (YoY +¥0.3B, +2.0%). Despite lower revenue, contributions from non-operating income kept Ordinary Income flat YoY, with a slight increase at the bottom line. Gross Profit Margin remained low at 5.5%, and Operating Margin was a thin 1.6%. Meanwhile, Non-operating Income of ¥6.9B, including ¥3.7B in dividends received, supported ordinary profit. The full-year forecast assumes a recovery from Q3 onward, with Revenue ¥1,687.7B (YoY -2.5%), Operating Income ¥26.7B (+6.1%), Ordinary Income ¥29.1B (+1.9%), and Net Income ¥20.2B.
[Profitability] ROE 4.9% (slight decrease from 5.0% a year ago); Total Asset Turnover 1.43x; Net Profit Margin 1.4%; Operating Margin 1.6% (+0.1pt from 1.5% a year ago); EBIT (Operating Income) ¥18.5B with an EBIT margin of 1.6%, remaining low; Interest Coverage 9.7x, indicating manageable interest burden. [Cash Quality] Cash and Cash Equivalents ¥57.2B; cash coverage of short-term debt 0.21x; Current Ratio 163.4%; Quick Ratio 114.1%, with headline liquidity metrics in the healthy range. [Investment Efficiency] Total Asset Turnover 1.43x, indicating relatively high turnover efficiency. [Financial Soundness] Equity Ratio 40.0% (+3.9pt from 36.1% a year ago); Debt-to-Equity Ratio 1.50x; Interest-bearing Debt ¥272.8B; Debt/Capital ratio 45.1%; Short-term Borrowings ¥212.0B with a short-term debt ratio of 77.7%, reflecting high reliance on short-term funding. Investment Securities ¥126.3B with Valuation Difference on Other Securities of ¥75.9B in unrealized gains.
As detailed data on Operating Cash Flow (OCF) and investing cash flow are not disclosed, funding trends are analyzed from balance sheet trends. Cash and deposits remained around ¥57.2B YoY, and given limited operating profit growth, operating cash accumulation is estimated to be modest. In working capital, Accounts Payable decreased from ¥154.6B to ¥114.5B, a decline of -¥40.1B (-25.9%), potentially reflecting a change in payment cycle or reduced procurement volumes as a cash outflow factor. Short-term Borrowings were ¥212.0B, nearly flat from ¥214.7B, indicating no significant financing or repayment activities. Treasury stock at book value changed from -¥20.4B to -¥13.3B (+¥7.1B), suggesting disposal of treasury stock during the period or book adjustments affecting capital structure. Cash coverage of short-term debt is low at 0.21x, making the generation of operating cash flow and smooth short-term refinancing critical to maintaining liquidity.
With Ordinary Income at ¥22.8B and Operating Income at ¥18.5B, the net non-operating increase was approximately ¥4.3B. This is derived from Non-operating Income of ¥6.9B less Non-operating Expenses of ¥2.6B, with dividends received of ¥3.7B as a key component. Non-operating Income accounted for 0.6% of revenue, with financial income such as interest and dividends underpinning earnings. Against Investment Securities of ¥126.3B, there are substantial unrealized gains of ¥75.9B in Valuation Difference on Other Securities, implying latent price fluctuation risk in securities. Operating Income remains low, and cash generation from core operations is limited, indicating an earnings structure dependent on external income such as dividends received. Based on the levels of cash and deposits and trade receivables on the balance sheet, OCF is estimated to be within a standard range relative to net income; however, due to the lack of detailed data, certainty regarding earnings quality is limited.
Refinancing risk due to reliance on short-term debt. With Short-term Borrowings at ¥212.0B, a short-term debt ratio of 77.7%, and a cash/short-term debt ratio of 0.21x, liquidity headroom is limited, raising the risk of cash flow stress if financial conditions deteriorate or refinancing becomes difficult. Risk of deterioration in operating profitability due to declining revenue and low gross margin structure. With an Operating Margin of 1.6% and Gross Margin of 5.5%, the fixed nature of SG&A expenses is worsening operating leverage amid a -8.8% revenue decline. Risk of valuation losses on investment securities. Against Investment Securities of ¥126.3B, the company holds unrealized gains of ¥75.9B in valuation difference; a market downturn could trigger valuation losses, pressuring Other Comprehensive Income and net assets.
[Position within Industry] (Reference information / Our survey) Profitability: Operating Margin of 1.6% is -1.2pt below the industry median of 2.8% (2025 Q3, n=14). Net Profit Margin of 1.4% is -0.4pt below the industry median of 1.8%. ROE of 4.9% exceeds the industry median of 4.0%, placing the company in the mid to slightly upper tier within the industry, largely amplified by financial leverage of 2.50x. Soundness: Equity Ratio of 40.0% is -7.3pt below the industry median of 47.3% (IQR 41.8–53.2%), positioning it toward the lower end within the industry. The Current Ratio of 163.4% (1.63x) is below the industry median of 184.0% (1.84x), but near the lower bound of the industry IQR (1.61–2.31x), keeping liquidity metrics within industry standards. Efficiency: Operating Margin of 1.6% is well below the industry median of 2.8%, placing profitability in the lower group within the industry. ROA (Return on Assets) is 2.0% (Net Income ¥16.2B / Total Assets ¥827.9B), slightly below the industry median of 2.2%, though the gap is small. Growth: Revenue growth of -8.8% is well below the industry median of +1.1% (IQR -5.7–+8.6%), placing the company in the lower group of revenue-declining peers within the industry. In sum, within the wholesale/trading industry, the company lags the industry average in profitability and growth, while maintaining mid-tier ROE due to financial leverage. Soundness indicators are somewhat weaker than the industry average, characterized by high dependence on short-term borrowings. Industry: Wholesale (n=14 companies), comparison: 2025 Q3 period, source: Our compilation
Room to improve operating efficiency under a low-margin structure. With an Operating Margin of 1.6% below the industry median of 2.8%, there is scope to improve profitability through revisiting the SG&A ratio and optimizing product mix. Trends in short-term debt management. Short-term Borrowings are ¥212.0B, with a short-term debt ratio of 77.7% and cash coverage of 0.21x; towards period-end, whether cash flow improves or maturities are extended will be a focal point affecting financial stability. Confirmation of dividend sustainability. The full-year dividend forecast is ¥52.0, with a Payout Ratio of approximately 70.0%. Given the low cash balance at Q3 and the company’s operating cash generation, maintaining the dividend presupposes higher operating profit and expansion of Free Cash Flow (FCF).
This report is an automatically generated earnings analysis created by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any decisions.