Mitsuuroko Group Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥162.02B
• Operating Income: ¥5.55B
• Net Income: ¥1.80B
• EPS: ¥83.84

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

Mitsuuroko Group Holdings (8131) delivered solid FY2026 Q2 consolidated results under JGAAP, with revenue of ¥162.0bn up 4.6% YoY and a sharp recovery in profitability. Operating income rose to ¥5.55bn (+259.4% YoY), lifting operating margin to roughly 3.4%, reflecting improved gross margin discipline (gross profit ¥18.54bn; GPM ~11.4%) and better cost control. Ordinary income exceeded operating income at ¥6.35bn, indicating meaningful non-operating contributions (e.g., financial income, equity-method gains, or other income) more than offsetting interest expense of ¥184m. Net income reached ¥4.73bn (+164.0% YoY), translating to an OCF/NI of 1.70x as operating cash flow came in at ¥8.06bn, which supports the quality of earnings. EBITDA of ¥8.07bn implies an EBITDA margin of 5.0% and robust interest coverage (EBIT/interest ~30x), highlighting comfortable debt service capacity. Balance sheet strength is evident: total assets ¥184.4bn and equity ¥101.6bn imply a computed equity ratio near 55%, despite the reported equity ratio line showing 0.0% (likely undisclosed in XBRL). Liquidity appears strong with a current ratio of 183% and a quick ratio of 172%, aided by a modest inventory balance of ¥5.69bn. Working capital is ample at ¥42.84bn, giving operational flexibility in a seasonally variable energy and commodities environment. The DuPont framework (NPM 2.92%, asset turnover 0.879x, leverage 1.81x) yields an ROE of 4.66%, indicating mid–single-digit returns with room for improvement through margin expansion and asset efficiency. Tax expense of ¥524m on pre-tax income of about ¥5.26bn implies a low effective tax rate near 10%, potentially reflecting tax credits or profit mix; the 0.0% metric appears to be a placeholder. Free cash flow was not disclosed (investing cash flows unreported), limiting visibility on reinvestment intensity and capital allocation, though OCF strength suggests capacity for disciplined investment. Dividend data (DPS and payout) are unreported this period, so distribution policy cannot be inferred from these figures alone. The earnings profile suggests improving margin quality and operating leverage benefits, but a portion of profit uplift stems from non-operating gains, which may be less repeatable. Financial leverage is moderate (debt-to-equity 0.86x), and cash generation relative to earnings is healthy, mitigating solvency concerns. Overall, the company exhibits improving profitability, sound liquidity, and adequate solvency, while data constraints (unreported investing CF, equity ratio, cash and share data) limit precision in FCF and per-share analyses.

Profitability Analysis

ROE of 4.66% decomposes into net margin 2.92% × asset turnover 0.879 × financial leverage 1.81. The main driver of YoY improvement is operating margin expansion, with operating income up 259% on 4.6% sales growth, indicating significant operating leverage and/or improved procurement and SG&A control. Gross margin stands at ~11.4% (¥18.54bn/¥162.02bn), modest but consistent with an energy and materials-heavy mix. Operating margin is ~3.4% (¥5.55bn/¥162.02bn), up materially YoY, while ordinary margin is ~3.9% due to non-operating gains exceeding interest expense. EBITDA margin is 5.0%, providing a cushion for interest (30.1x EBIT coverage) and suggesting resilience to modest cost inflation. The mix of operating vs non-operating profit (ordinary > operating by ~¥0.8bn) indicates some reliance on non-core contributions; sustainability may depend on recurring financial income or equity-method earnings. Depreciation of ¥2.53bn implies D&A at roughly 1.6% of sales and ~45% of EBIT, pointing to a capital intensity that does not overly burden earnings at current levels. Overall margin quality improved, but the degree of repeatability will hinge on pricing discipline in energy-related segments and stability of non-operating income.

Growth Assessment

Revenue grew 4.6% YoY to ¥162.0bn, a healthy pace given a potentially competitive energy retail backdrop. The outsized growth in operating income (+259% YoY) suggests that the bulk of earnings uplift came from better spreads and/or SG&A leverage rather than sheer volume growth. Net income growth (+164% YoY) reflects both operating improvement and support from non-operating items, partially offset by taxes. The sustainability of revenue growth depends on customer retention in energy retail, pass-through of commodity costs, and demand trends in industrial and residential segments. Profit quality is supported by OCF exceeding net income (1.70x), implying that accruals are not inflating earnings. However, because investing cash flows and capex are not disclosed, it is difficult to gauge the reinvestment needed to sustain growth, especially in infrastructure-heavy or renewable-related initiatives. Outlook drivers include commodity price normalization, regulatory changes in electricity/gas markets, and potential contributions from non-operating lines (which are inherently more volatile). In sum, growth momentum is favorable, but forward visibility would benefit from disclosures on segment drivers, hedging effectiveness, and planned capital expenditures.

Financial Health

Liquidity is strong: current ratio 183% and quick ratio 172% indicate ample short-term coverage, supported by low inventory (¥5.69bn) relative to current assets. Working capital of ¥42.84bn provides buffer against commodity price volatility and seasonal cash needs. Solvency appears sound: computed equity ratio ~55% (¥101.6bn/¥184.4bn) despite the reported 0.0% field, and debt-to-equity at 0.86x suggests moderate leverage. Interest coverage at ~30x indicates low near-term refinancing risk and comfortable headroom under rate increases. Asset base of ¥184.4bn versus equity of ¥101.6bn yields financial leverage of 1.81x, consistent with the DuPont inputs and a conservative balance sheet posture for an energy distributor. While cash and equivalents are unreported, there is no immediate stress sign given OCF strength and coverage metrics. Key caveat: absence of detailed debt maturity profile and net debt figures constrains a full solvency appraisal.

Cash Flow Quality

Operating cash flow of ¥8.06bn versus net income of ¥4.73bn (OCF/NI 1.70x) indicates solid earnings quality, likely benefiting from working capital inflows and non-cash charges (¥2.53bn D&A). EBITDA of ¥8.07bn aligns closely with OCF, supporting the view that earnings translate to cash. Investing cash flows are unreported, so free cash flow cannot be reliably calculated; the displayed FCF of 0 should be treated as undisclosed rather than zero. Without capex detail, we cannot assess maintenance vs growth investment needs, which is important for evaluating long-run cash generation. Financing cash flow of -¥4.35bn suggests net outflows (debt repayment, dividends, or share repurchases), but the components are not disclosed. Working capital appears well-managed given liquidity ratios and the small inventory position, but receivables/payables dynamics were not provided, limiting granularity on cash conversion cycle. Overall, cash flow quality is good at the operating level, with uncertainty concentrated in reinvestment requirements.

Dividend Sustainability

Dividend per share and payout ratio are unreported this period; thus, distribution capacity cannot be confirmed from the provided dataset. On fundamentals, earnings and OCF are positive, and leverage and coverage metrics indicate capacity to fund distributions alongside operations, subject to capex needs. Because investing cash flows are undisclosed, free cash flow coverage of dividends cannot be assessed with confidence; the listed 0.00x should be treated as a placeholder. Policy outlook is therefore indeterminate based solely on these figures. If the company maintains a stable dividend policy historically, current financials would be broadly supportive; however, reinvestment priorities (e.g., energy infrastructure, renewables) could influence payout decisions.

Risk Assessment

Business Risks:

• Commodity price volatility affecting procurement costs and gross margin spread
• Regulatory changes in electricity and gas markets impacting pricing and customer contracts
• Weather-driven demand variability and seasonality
• Competitive pressure in energy retail leading to churn and margin compression
• Dependence on non-operating income to bridge earnings, which may be less predictable
• Supply chain and hedging effectiveness risks in energy procurement
• Potential increases in environmental compliance and decarbonization investment needs

Financial Risks:

• Partial disclosure of cash and investing flows limits visibility on capex and net debt
• Refinancing and interest rate risk despite currently strong coverage
• Working capital swings tied to commodity prices and seasonality
• Tax rate variability given low effective rate in the period
• Potential asset impairment risk if energy market conditions deteriorate

Key Concerns:

• Sustainability of non-operating income supporting ordinary profit above operating profit
• Lack of disclosed investing cash flows and capex, constraining FCF assessment
• Unreported dividend and share information hindering per-share and payout analysis

Investment Implications

Key Takeaways:

• Top-line growth of 4.6% YoY coupled with significant operating margin expansion drove earnings recovery
• OCF/NI of 1.70x signals good earnings-to-cash conversion
• Ordinary income outpaced operating income, indicating non-operating contributions that may be less repeatable
• Balance sheet appears strong with computed equity ratio ~55% and interest coverage ~30x
• DuPont ROE at 4.66% leaves room for improvement via margin and asset turnover gains
• Data gaps on investing CF and dividends constrain visibility on capital allocation and FCF

Metrics to Watch:

• Gross and operating margin trends versus energy procurement costs
• Ordinary-to-operating income gap (quality and persistence of non-operating gains)
• OCF/NI ratio and detailed working capital movements
• Capex and investing cash flows (maintenance vs growth) and resulting FCF
• Net debt and debt maturity profile; net debt/EBITDA
• Customer churn/ARPU in energy retail and hedging effectiveness
• Effective tax rate normalization

Relative Positioning: Within Japan’s energy distribution and related services peers, Mitsuuroko exhibits conservative leverage, strong liquidity, and mid–single-digit ROE with improving margins. Margin levels remain modest relative to asset-light peers, but cash conversion is solid. Visibility on reinvestment and dividends is weaker than some peers due to current disclosure gaps.

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