KISOJI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥24.39B
• Operating Income: ¥-93M
• Net Income: ¥-886M
• EPS: ¥-2.19

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

Kisoji Co., Ltd. (8160) reported FY2026 Q2 consolidated results under JGAAP with modest top-line growth but continued losses at the operating and net levels. Revenue was ¥24.392bn, up 2.2% YoY, indicating steady demand in core restaurant operations. Gross profit was ¥16.125bn, implying a gross margin of 66.1%, consistent with a food-service model where food costs are the main cost of sales and labor/rent sit in SG&A. Operating income remained negative at -¥93m, though the loss narrowed by roughly 10.8% YoY, signaling slight operating leverage. Ordinary income was -¥79m, and net income was -¥61m; the net loss widened by 35.6% YoY despite the improved operating loss, suggesting non-operating and tax effects. Depreciation and amortization totaled ¥734m, supporting an EBITDA of ¥641m (2.6% margin), which indicates cash earnings capacity before non-cash and interest items remains positive. Interest expense was modest at ¥15m, and balance sheet leverage is low with total liabilities of ¥16.44bn versus equity of ¥29.584bn (D/E ~0.56x). Total assets were ¥45.788bn, implying an equity ratio of approximately 64.6% by calculation, even though the reported equity ratio field is unreported. Operating cash flow was materially negative at -¥1.919bn, far larger in magnitude than the net loss, pointing to significant working capital outflows and/or tax/bonus seasonality. Investing cash flow was unreported and shown as zero; financing cash flow was -¥522m, likely reflecting debt/lease repayments or other financing outflows. Liquidity appears comfortable with current assets of ¥19.503bn and current liabilities of ¥13.212bn, yielding a current ratio of about 1.48x and working capital of ¥6.291bn. DuPont analysis shows a net margin of -0.25%, asset turnover of 0.533x, and financial leverage of 1.55x, resulting in a calculated ROE of -0.21%. The negative ROE is modest in absolute terms, cushioned by low leverage and reasonable asset turnover. Dividend per share is shown as ¥0.00 and payout as 0%, indicating no dividend in the period, though the DPS field may be timing-related and not necessarily a full-year signal. Several data points are unreported (e.g., cash and equivalents, investing cash flows, equity ratio, share count), so interpretations rely on available non-zero items and calculated metrics from the balance sheet and income statement. Overall, Kisoji remains close to break-even at the operating level, with modest top-line growth and adequate balance sheet strength, but cash conversion in the half was weak and warrants close monitoring into the seasonally stronger second half.

Profitability Analysis

ROE decomposition shows margin pressure as the primary drag: net margin -0.25% × asset turnover 0.533 × financial leverage 1.55 = ROE -0.21%. Gross margin of 66.1% is structurally high for restaurants under JGAAP because labor and occupancy typically reside in SG&A; the negative operating income indicates SG&A intensity remains heavy relative to sales. EBITDA margin at 2.6% suggests limited buffer to absorb fixed costs, though the improvement in operating loss (+10.8% YoY) hints at incremental operating leverage. The small operating loss (-¥93m) relative to revenue (0.4% of sales) implies Kisoji is near break-even, where slight changes in sales mix, pricing, or cost control can swing profitability. Ordinary loss of -¥79m suggests limited non-operating drag; interest expense is low at ¥15m, and the interest burden is not a principal profitability constraint. Effective tax reporting shows ¥115m tax expense despite a pre-tax loss, likely reflecting timing/deferred tax effects; this depressed net profit relative to operating trends. Asset turnover of 0.533x suggests moderate utilization of a store-heavy asset base; without major asset write-downs, ROA will track small margins closely. Operating leverage is present but not yet translating to sustained operating profit; further same-store sales growth or SG&A efficiency is needed to convert positive EBITDA into a positive operating margin. Overall profitability quality is mixed: healthy gross margin and low interest burden versus thin EBITDA margin and tax drag in a loss-making half.

Growth Assessment

Revenue growth of 2.2% YoY to ¥24.392bn indicates stable to mildly improving demand. Given the small scale of the operating loss vs. sales, incremental growth should carry attractive flow-through if SG&A remains contained. The YoY improvement in operating loss (+10.8%) suggests some cost discipline or pricing/mix improvements, albeit offset at the net level by tax and other below-the-line items. Sustainability hinges on consumer traffic, average ticket, and the ability to pass through food and utilities inflation. The small ordinary loss (-¥79m) indicates limited exposure to volatile non-operating items; core operating trends will drive trajectory. D&A of ¥734m implies ongoing maintenance and past investments; absent disclosure of investing CF, future growth capex appetite is unclear from cash flows alone. With asset turnover at 0.533x, additional revenue growth could augment returns if not matched by proportional asset growth. Near-term outlook: modest revenue growth likely continues, with potential for break-even to slight profitability if H2 seasonality (e.g., year-end dining demand) materializes and cost pressures ease. Profit quality will improve if the tax burden normalizes when returning to pre-tax profitability. Key caveat: OCF weakness in the half could constrain growth initiatives unless it reverses with seasonal inflows.

Financial Health

Liquidity is solid: current assets ¥19.503bn vs. current liabilities ¥13.212bn yield a current ratio of ~1.48x and working capital of ¥6.291bn. Quick ratio is reported equal to current ratio due to unreported inventory granularity; available data suggests adequate near-term coverage. Solvency is strong: total liabilities ¥16.44bn vs. equity ¥29.584bn implies D/E ~0.56x and an equity ratio around 64.6% (calculated), despite the equity ratio field being unreported. Interest expense is low at ¥15m, consistent with limited financial risk from debt service. Ordinary loss is small, reducing risk of covenant pressure (covenant data not disclosed). Asset base of ¥45.788bn provides cushion; however, persistent negative OCF could erode liquidity if not reversed. No cash & equivalents balance was reported (field shows zero), so the cash buffer cannot be assessed directly; the current asset balance mitigates this uncertainty in the near term. Overall capital structure remains conservative, supporting operational flexibility.

Cash Flow Quality

Operating cash flow of -¥1.919bn is weak relative to a modest net loss of -¥61m, resulting in an OCF/NI ratio of 31.46x in absolute terms, indicating cash outflows far exceed accounting loss. Drivers likely include working capital outflows (e.g., payables timing, seasonal expenses, tax/bonus payments) and potentially prepayments, given the industry’s cash-sales nature; receivables are typically low in restaurants. Depreciation of ¥734m versus EBIT of -¥93m implies positive EBITDA, yet cash conversion was negative—consistent with inventory/other current asset build or payables reduction. Investing cash flow is unreported (shown as zero); thus, free cash flow cannot be reliably computed for the half (the provided FCF of 0 should be treated as undisclosed, not zero). Financing CF was -¥522m, likely reflecting scheduled repayments (including lease liabilities) or other financing uses; with DPS at ¥0.00, dividends were not a use of cash in the period. Earnings quality is mixed: accounting losses are small and improving at the operating line, but the magnitude of OCF outflow reduces confidence in near-term cash generation. Monitoring H2 OCF recovery will be critical to validate that H1 cash outflows are seasonal and reversible rather than structural.

Dividend Sustainability

Annual DPS is shown as ¥0.00 and payout 0.0%, indicating no dividend recognized in the period; however, these fields may be timing-related or unreported for the full year. With negative net income and negative OCF in H1, internal coverage of dividends would be weak if dividends were to be paid. Free cash flow is unreported (the 0 figure should not be taken as actual), so FCF coverage cannot be assessed from the provided data. Balance sheet strength (calculated equity ratio ~64.6%, D/E ~0.56x) provides theoretical capacity, but sustainable dividends require consistent positive OCF. Until operating profits normalize and OCF improves, dividend capacity appears constrained on a fundamentals basis. Policy outlook is unclear from the data; no explicit guidance or historical policy is provided in this dataset.

Risk Assessment

Business Risks:

• Food input cost inflation (beef and other commodities) compressing gross-to-operating margin spread
• Labor cost inflation and staffing constraints raising SG&A
• Energy and utilities cost volatility impacting store-level margins
• Demand sensitivity to consumer confidence and discretionary dining trends
• Seasonality around year-end/holiday banquets affecting intra-year profitability
• Menu pricing execution risk and potential elasticity effects on traffic
• Brand and competitive dynamics within premium hotpot/kaiseki segments

Financial Risks:

• Negative operating cash flow in H1 increasing liquidity draw if not seasonally reversed
• Tax expense despite pre-tax loss, implying potential cash tax or deferred tax timing risk
• Exposure to lease obligations and fixed rent, heightening operating leverage in downturns
• Potential impairment risk if underperforming stores persist (non-cash but affects equity and future D&A)

Key Concerns:

• Magnitude of OCF outflow (-¥1.919bn) versus small accounting loss
• Thin EBITDA margin (2.6%) limiting buffer against cost shocks
• Dependence on H2 seasonality to achieve full-year break-even or profit
• Lack of disclosure on cash balance and investing cash flows restricting visibility on liquidity runway

Investment Implications

Key Takeaways:

• Top line grew 2.2% YoY to ¥24.392bn, but operating income remained slightly negative at -¥93m
• EBITDA was positive at ¥641m (2.6% margin), yet cash conversion was weak with OCF at -¥1.919bn
• Balance sheet is conservative with D/E ~0.56x and a calculated equity ratio of ~64.6%
• Interest burden is low (¥15m), so profitability hinges on operating efficiency and sales
• Tax expense (¥115m) during a pre-tax loss period suppressed net results and should normalize if profits recover

Metrics to Watch:

• Same-store sales growth, traffic and average ticket
• Food and labor cost ratios within SG&A (store-level margin)
• Operating margin progression and EBITDA margin sustainability
• Operating cash flow recovery in H2 and working capital movements
• Capex and new store pipeline once investing CF is disclosed
• Ordinary income vs. non-operating items, and effective tax rate normalization

Relative Positioning: Within Japan’s full-service dining peer set, Kisoji shows lower financial leverage and adequate liquidity but operates with thin EBITDA margins and near break-even operating results; success will depend on achieving operating leverage from steady same-store growth and disciplined SG&A control while navigating input cost inflation.

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