TOHO Co.,Ltd. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥189.34B
• Operating Income: ¥5.55B
• Net Income: ¥3.34B
• EPS: ¥328.71

Income Statement

Balance Sheet

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

TOHO Co., Ltd. (8142) delivered steady year-to-date performance for FY2026 Q3 under JGAAP on a consolidated basis, with both top- and bottom-line growth. Revenue rose 4.1% YoY to 1,893.4, supported by resilient demand and/or pricing in its foodservice wholesale operations. Gross profit of 366.96 implies a gross margin of 19.4%, broadly consistent with industry characteristics where scale and procurement are key. SG&A expenses were 313.98, resulting in an operating income of 55.53, up 4.8% YoY, and an operating margin of 2.9%. Ordinary income of 56.14 grew 2.3% YoY, reflecting modest non-operating items; interest income (0.12) and dividend income (0.38) helped offset interest expense (0.94). Net income rose 6.2% YoY to 35.12, yielding a net margin of 1.9%, with an elevated effective tax rate of 40.9% (23.11 tax over 56.53 pretax). DuPont shows ROE at 10.8%, driven by a 1.9% net margin, high asset turnover of 1.96x, and financial leverage of 2.99x. Liquidity is tight but manageable: the current ratio is 108.4% and quick ratio 76.2%, typical for a wholesaler with large trade payables (accounts payable 289.71). Balance sheet shows total assets of 967.61 and equity of 323.98, implying liabilities-to-equity of 1.77x and leverage consistent with ROE decomposition. Interest coverage is strong at 59.1x, indicating low near-term refinancing pressure despite long-term loans of 109.18. Working capital stands at 35.85, constrained by payables but supported by cash (92.26) and inventories (137.55). Comprehensive income (34.83) is close to net income, indicating minimal OCI volatility. Dividend details are unreported, but a calculated payout ratio of 39.2% suggests potential alignment with a balanced shareholder return policy if sustained. Cash flow statements are unreported; therefore, free cash flow and OCF-to-net income cannot be validated, a key limitation in assessing earnings quality. Overall, TOHO’s Q3 YTD results show disciplined cost control and stable profitability amid a low-margin, volume-driven business model. Data gaps in cash flows, detailed SG&A, and AR components limit deeper analysis of cash conversion and operating efficiency.

Profitability Analysis

ROE of 10.8% decomposes into a 1.9% net margin, asset turnover of 1.957x, and financial leverage of 2.99x. Operating margin is 2.93% (55.53/1,893.4), indicating thin but stable profitability typical in foodservice wholesale. Gross margin is 19.4% (366.96/1,893.4), showing that procurement and pricing discipline are intact; the spread between gross and operating margin (approx. 16.5 pts) reflects a heavy SG&A load necessary for distribution and service. Ordinary margin is 2.97% (56.14/1,893.4), close to operating margin, as non-operating items net to a small positive. Net margin is 1.9%, slightly helped by low interest costs but weighed by a high effective tax rate of 40.9%. Interest coverage is robust at 59.07x (operating income/interest expense), indicating ample buffer against rate increases. Margin quality appears decent: gross profit growth implied by revenue growth and stable OPM suggests limited negative mix or cost inflation impact this period. Operating leverage is mildly positive: operating income growth (+4.8% YoY) slightly outpaced revenue (+4.1% YoY), implying SG&A containment and some efficiency gains. Lack of D&A disclosure prevents precise EBITDA margin evaluation and capex burden attribution. Overall profitability is stable with modest upside from scale and process efficiencies, balanced by structurally low margins inherent to the sector.

Growth Assessment

Revenue grew 4.1% YoY to 1,893.4, consistent with resilient foodservice demand and/or pricing pass-through. Operating income grew 4.8% YoY to 55.53, slightly outpacing sales, indicating controlled SG&A and some operating leverage. Ordinary income growth was 2.3% YoY, slightly lagging operating income likely due to smaller non-operating tailwinds versus the prior period. Net income increased 6.2% YoY to 35.12, supported by stable interest costs; however, the high effective tax rate tempered net margin expansion. Gross margin held at 19.4%, suggesting limited erosion from input cost inflation this period or successful procurement and pricing strategies. The lack of segment and regional detail limits the ability to discern sustainability by business line. Absent cash flow data, we cannot confirm whether growth is supported by underlying cash generation or by working capital elongation. Inventory of 137.55 and payables of 289.71 indicate a business model reliant on supplier credit; revenue growth sustainability will depend on maintaining supplier terms and customer collection discipline (AR unreported). With long-term loans at 109.18 and strong interest coverage, funding growth appears manageable. Outlook-wise, moderate revenue growth with incremental margin expansion is plausible if SG&A productivity continues and cost inflation remains contained, but volatility in input costs and demand normalization remain key variables. Data omissions (OCF, capex, AR) constrain the assessment of profit quality and durability.

Financial Health

Total assets are 967.61 and total equity 323.98, implying liabilities/equity of 1.77x and assets/equity of 2.99x. Current assets are 463.83 versus current liabilities of 427.98, yielding a current ratio of 108.4%, adequate but not generous for a wholesaler. Quick ratio at 76.2% signals reliance on inventory and payables management; AR is unreported, which limits precision. Cash and deposits total 92.26, providing some liquidity buffer against near-term obligations. Accounts payable is sizable at 289.71, consistent with sector working capital dynamics; this leverage is efficient if collections are timely. Noncurrent liabilities are 144.04, including long-term loans of 109.18; with strong interest coverage, solvency risk appears contained. Equity stands at 323.98, with retained earnings of 163.03 indicating accumulated profitability and capacity for reinvestment or distributions. Investment securities of 23.69 add a modest financial asset cushion. Goodwill (17.63) and intangible assets (32.45) represent manageable portions of equity, suggesting limited impairment risk concentration. Overall, the capital structure is moderately leveraged but supported by stable earnings and low interest burden; key sensitivities are to working capital swings and input cost volatility.

Cash Flow Quality

Cash flow statements (OCF, investing CF, financing CF) and capex are unreported, preventing direct evaluation of earnings-to-cash conversion and free cash flow generation. The OCF/Net Income ratio is not calculable; consequently, we cannot validate accrual quality or working capital drag/benefit this period. Inventory (137.55) and large payables (289.71) indicate typical wholesale working capital structure, but AR is unreported, limiting assessment of collection efficiency and potential credit risk. Strong interest coverage (59.07x) suggests cash interest burden is low versus operating earnings, but without OCF and capex we cannot assess maintenance FCF after reinvestment needs. Comprehensive income is close to net income (34.83 vs 35.12), indicating minimal non-cash OCI volatility. In the absence of cash flow data, our base view is that earnings quality appears reasonable given stable margins and limited reliance on non-operating items, but confirmation requires OCF and capex disclosure.

Dividend Sustainability

Dividend per share and total dividends paid are unreported; however, the calculated payout ratio is 39.2%, implying a moderate distribution level relative to earnings if accurate. EPS (basic) is 328.71 JPY and BVPS is 3,048 JPY, suggesting retained earnings support for ongoing distributions without over-levering. FCF coverage is not calculable due to missing OCF and capex; thus, sustainability from a cash perspective cannot be confirmed. Equity (323.98) and retained earnings (163.03) indicate capacity, but working capital intensity and potential capex could constrain free cash flow in certain periods. Policy outlook cannot be inferred from DOE or DPS due to non-disclosure; historically, food wholesalers often target stable dividends with opportunistic increases tied to profit and cash flow stability. Until OCF and capex are disclosed, dividend safety assessment remains provisional despite the moderate earnings payout ratio.

Risk Assessment

Business Risks:

• Input cost inflation (food, energy, logistics) compressing gross margins
• Demand volatility in restaurant and hospitality end-markets
• Labor shortages and wage inflation elevating SG&A
• Competitive pricing pressure in a low-margin wholesale sector
• Supply chain disruptions affecting availability and delivery performance
• Customer credit risk and potential bad debts (AR details unreported)
• Perishability and inventory management risks

Financial Risks:

• Tight liquidity metrics (current ratio 108.4%, quick ratio 76.2%)
• Dependence on trade payables (AP 289.71) for working capital funding
• Exposure to interest rate increases despite current strong coverage
• Refinancing risk on long-term loans (109.18) over the medium term
• Elevated effective tax rate (40.9%) reducing net cash generation
• Limited visibility due to unreported OCF, capex, and AR

Key Concerns:

• Absence of cash flow disclosure hampers verification of earnings quality and dividend coverage
• High tax burden constraining net margin expansion
• Liquidity buffer reliant on maintaining supplier terms and timely collections

Investment Implications

Key Takeaways:

• Steady YoY growth: revenue +4.1%, operating income +4.8%, net income +6.2%
• Thin but stable operating margin at 2.9% with disciplined SG&A
• ROE of 10.8% supported by high asset turnover (1.96x) and moderate leverage (2.99x assets/equity)
• Strong interest coverage (59.1x) mitigates near-term financing risk
• Liquidity is adequate but tight; working capital management remains critical
• Dividend payout ratio appears moderate at 39.2%, but cash coverage unverified
• Data gaps (OCF, capex, AR, DPS) limit deeper cash flow and efficiency analysis

Metrics to Watch:

• Gross margin and operating margin trends versus input cost inflation
• SG&A ratio to sales and productivity initiatives
• OCF/Net income and free cash flow once disclosed
• Working capital days (AR, inventory, AP) and cash conversion cycle
• Interest-bearing debt levels and maturity profile
• Effective tax rate normalization
• Dividend policy disclosures (DPS, DOE) and payout discipline

Relative Positioning: Within Japan’s foodservice wholesale peer set, TOHO exhibits sector-typical low margins but solid asset turnover and disciplined cost control, delivering ROE around the sector norm (circa high single to low double digits). Leverage is moderate with strong interest coverage, placing it in a stable middle-of-the-pack position contingent on ongoing working capital efficiency.

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