KANADEN CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥61.66B
• Operating Income: ¥1.68B
• Net Income: ¥896M
• EPS: ¥53.76

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

Kanaden Co., Ltd. (8081) delivered solid topline momentum in FY2026 Q2, with revenue of ¥61.66bn, up 19.0% YoY, driven by strong demand across its core industrial and electrical equipment trading businesses. Gross profit reached ¥7.91bn, implying a gross margin of 12.8%, which is respectable for a trading-oriented model but indicates limited pricing power and a need for scale to drive earnings. Operating income was ¥1.68bn (+10.5% YoY), translating to an operating margin of 2.7%, suggesting some operating leverage but also SG&A pressure relative to sales growth. Ordinary income of ¥1.81bn and net income of ¥1.20bn (+34.4% YoY) indicate improved below-OP line contributions and/or lower one-off costs versus the prior year. Net margin stood at 1.94%, consistent with the low-margin profile of trading houses, yet the YoY profit outperformance versus OP suggests better financial income or reduced non-operating drag. DuPont analysis yields ROE of 2.47%, reflecting conservative leverage (assets/equity 1.65x), modest asset turnover (0.77x), and thin net margins. Liquidity remains robust: current ratio 178% and quick ratio 157% are healthy, supported by substantial working capital of ¥31.58bn. The balance sheet is strong with total equity of ¥48.52bn against total liabilities of ¥41.09bn, implying a debt-to-equity ratio of 0.85x and an implied equity ratio around 60% (equity/assets), despite the reported equity ratio showing 0.0% due to disclosure limitations. Cash generation is aligned with earnings quality: operating cash flow was ¥1.22bn, roughly 1.02x net income, suggesting reasonable accrual discipline for the half. Financing cash outflow of ¥1.40bn likely reflects shareholder returns or debt service, but the absence of disclosed dividends and detailed financing components limits attribution. Capex and investing cash flows were not disclosed, preventing a definitive free cash flow assessment; therefore, the reported FCF of 0 should be treated as “not available,” not as zero. Interest burden remains negligible (interest expense ¥9m) with coverage at 186x on an EBITDA basis, underscoring low financial risk. Tax expense of ¥0.75bn suggests an estimated effective tax rate in the high 30% range for the half, inconsistent with the “0.0%” marker in the calculated section, which should be treated as missing data. Overall, Kanaden’s Q2 shows healthy revenue growth, decent cash conversion, and a strong balance sheet, albeit with modest profitability and ROE typical of distributors. The key to improving returns will be mix upgrades, solution-oriented offerings, and tighter SG&A control to lift OP margin closer to 3%+. Data gaps (cash balance, investing CF, dividend details, shares outstanding) limit certain ratio and per-share analyses.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 1.94% (¥1,198m / ¥61,657m)
• asset_turnover: 0.768x (Revenue ¥61,657m / Assets ¥80,290m; using period-end assets due to lack of averages)
• financial_leverage: 1.65x (Assets ¥80,290m / Equity ¥48,519m)
• calculated_ROE: 2.47% (aligns with provided DuPont calculation) margin_quality:
• gross_margin: 12.8% (¥7,908m / ¥61,657m)
• EBITDA_margin: 3.0% (¥1,853m / ¥61,657m)
• operating_margin: 2.7% (¥1,676m / ¥61,657m)
• net_margin: 1.94%
• commentary: Gross margin is stable for a trading model; OP margin trails gross margin by ~10.1pp, indicating notable SG&A and other operating costs. Net margin benefited from low interest cost and likely manageable non-operating items. operating_leverage: Revenue grew 19.0% YoY while operating income rose 10.5% YoY, implying negative mix or increased SG&A intensity; operating margin compressed on a YoY basis (exact prior margin not disclosed), indicating limited operating leverage in the period.

Growth Assessment

revenue_sustainability: Topline growth of 19.0% YoY is robust; sustainability will depend on capital investment cycles in factory automation, social infrastructure, and construction/electrical equipment demand. No segment detail disclosed to assess breadth of growth. profit_quality: Net income outpaced operating income growth, suggesting supportive non-operating balance or lower one-offs. Interest expense is minimal, and ordinary income exceeded operating income, which is constructive. However, low OP margin points to vulnerability if growth moderates. outlook: With healthy order activity implied by revenue growth and strong liquidity, near-term prospects are stable. Margin expansion will require value-added solutions and disciplined SG&A; absent these, earnings growth may track revenue less than 1:1.

Financial Health

liquidity:

• current_ratio: 178.1% (¥72,011m / ¥40,434m)
• quick_ratio: 157.3% ((¥72,011m - ¥8,422m) / ¥40,434m)
• working_capital: ¥31,577m
• commentary: Ample liquidity cushion supports procurement cycles and credit terms for customers. solvency:
• debt_to_equity: 0.85x (Total liabilities ¥41,092m / Equity ¥48,519m)
• interest_coverage: 186.2x (EBITDA-based; reflects ¥9m interest expense and ¥1,853m EBITDA)
• equity_ratio: Approximately 60.4% (computed as equity/assets; reported 0.0% is a disclosure placeholder) capital_structure: Conservative leverage with strong equity base; low interest burden reduces refinancing risk. Balance sheet can support working capital needs and selective investments.

Cash Flow Quality

earnings_quality: OCF/Net income at 1.02x (¥1,223m / ¥1,198m) indicates earnings are broadly cash-backed for the half, with limited accrual build. FCF_analysis: Investing cash flow not disclosed; thus, true FCF cannot be determined. The reported FCF of 0 should be treated as ‘not available.’ Given modest D&A (¥177m), maintenance capex is likely manageable, but no inference is made without data. working_capital: Inventories are ¥8,422m; receivables and payables not disclosed, preventing a cash conversion cycle analysis. Positive OCF suggests working capital was not a material cash drag in the period.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are shown as 0.0%, which indicates non-disclosure rather than actual zero. Withholding judgment on payout until DPS is provided. FCF_coverage: Not assessable due to missing investing cash flow; OCF alone is positive, but FCF coverage of dividends cannot be calculated. policy_outlook: Financing cash outflow of ¥1.40bn may include shareholder returns or debt repayment; absent explicit DPS and share count, policy and sustainability cannot be evaluated. Balance sheet strength suggests capacity for distributions, subject to cash needs and policy.

Risk Assessment

Business Risks:

• Cyclical exposure to capital investment in factory automation, construction, and infrastructure end-markets
• Margin pressure from price competition and supplier terms typical in trading businesses
• Supply chain disruptions affecting delivery timing and gross margin
• Project execution risk on solution-type orders with fixed pricing
• Customer credit risk in periods of macro stress

Financial Risks:

• Earnings sensitivity to working capital swings (receivables and inventories) despite current strong liquidity
• Potential FX exposure on imported equipment (not disclosed) affecting margins
• Concentration risk to key vendors or customers (not disclosed)
• Tax rate volatility; estimated effective rate appears high-30% range

Key Concerns:

• Low operating margin (~2.7%) and modest ROE (2.47%) limit value creation absent mix improvement
• Data gaps on cash, investing CF, and dividends impede full cash return assessment
• Operating leverage appeared limited this half as OP growth lagged revenue growth

Investment Implications

Key Takeaways:

• Strong revenue growth (+19% YoY) with positive, cash-backed earnings (OCF/NI ~1.02x)
• Margins remain thin (OP margin 2.7%), indicating limited operating leverage
• Balance sheet is robust (implied equity ratio ~60%, D/E 0.85x) with minimal interest burden
• ROE at 2.47% is constrained by low net margin and moderate asset turnover
• Free cash flow and dividend capacity cannot be fully assessed due to missing investing CF and DPS data

Metrics to Watch:

• Operating margin trajectory toward or above 3.0%
• Gross margin stability and mix of value-added solutions
• Working capital intensity (AR and inventory days when disclosed)
• Order backlog/booking trends (if disclosed) to gauge sustainability of 19% revenue growth
• Investing cash flow and capex to determine FCF and dividend coverage
• Effective tax rate normalization and any one-off items

Relative Positioning: Within Japan’s electrical/industrial equipment trading peers, Kanaden exhibits healthy growth and a strong balance sheet but delivers margins and ROE on the lower side of the group; improvement hinges on mix upgrades and SG&A discipline.

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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