Takachiho Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥5.67B
• Operating Income: ¥484M
• Net Income: ¥271M
• EPS: ¥522.20

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

For FY2026 Q2 (consolidated, JGAAP), Takachiho delivered solid top-line and profit growth with strengthening returns, while cash flow conversion lagged. Revenue rose 21.3% YoY to ¥5,673m, driven by volume and/or mix gains that also supported a 23.5% gross margin. Operating income increased 36.0% YoY to ¥484m, outpacing sales growth and indicating positive operating leverage. Ordinary income was ¥485m, essentially in line with operating income, suggesting limited non-operating volatility and very low interest burden. Net income was ¥364m, up 34.3% YoY, translating to a 6.42% net margin. DuPont analysis points to an ROE of 13.96%, supported by a 6.42% net margin, an asset turnover of 1.093x, and moderate financial leverage of 1.99x. The balance sheet is conservative: total assets are ¥5,191m with total equity of ¥2,607m and liabilities of ¥2,035m, implying a debt-to-equity ratio of 0.78x and an equity ratio around 50% by calculation (the reported 0.0% equity ratio is an unreported metric, not an actual zero). Liquidity is ample with a current ratio of 216% and quick ratio of 173%, and working capital of ¥1,179m. Interest expense is minimal at ¥4.0m and interest coverage is strong at 121x. Cash flow conversion is the key weak spot this period: operating cash flow was ¥72.7m, only 20% of net income, indicating working capital investment or timing effects; investing cash flow was unreported and cash balance was not disclosed. EBITDA was ¥523.9m (9.2% margin) with low D&A of ¥39.9m, implying a largely asset-light or low-depreciation base relative to earnings. The effective tax rate shown as 0.0% appears inconsistent with the financials (income tax expense of ¥86.0m vs. pre-tax), suggesting reporting limitations in the provided metric rather than an actual zero tax burden. No dividend information is disclosed (DPS and payout ratio reported as zero reflect non-disclosure), so dividend capacity cannot be fully assessed without capex and cash data. Overall, profitability and returns improved alongside strong sales momentum, while cash conversion and disclosure gaps (cash, investing flows, shares) temper confidence in near-term free cash generation assessment. Key watchpoints are inventory and receivables turns, gross margin resilience, and the trajectory of operating cash flow relative to earnings.

Profitability Analysis

ROE of 13.96% decomposes into a 6.42% net profit margin, 1.093x asset turnover, and 1.99x financial leverage, indicating returns are balanced across margin and efficiency with moderate leverage. Gross margin of 23.5% is healthy and provides headroom for operating scale effects; operating margin is approximately 8.5% (operating income ¥484m / revenue ¥5,673m), up YoY given operating income growth outpaced revenue. EBITDA margin of 9.2% and low D&A (¥39.9m) suggest limited depreciation drag and support for cash earnings potential if working capital normalizes. Operating leverage is positive: revenue grew 21.3% YoY while operating income rose 36.0% YoY, implying SG&A efficiency and/or improved product mix. Ordinary income closely tracks operating income, with negligible non-operating gains/losses and minimal interest cost (¥4.0m), contributing to earnings quality from operations. Net margin at 6.42% reflects a reasonable tax burden implied by the P/L (despite the reported 0% effective tax rate metric), and positions profitability above many small-cap distributors/industrial traders. Interest coverage at 121x underscores robust core profitability relative to financing costs.

Growth Assessment

Top-line growth of 21.3% YoY to ¥5,673m is strong and likely volume- and/or mix-driven given concurrent margin support. Operating profit growth of 36.0% YoY outpaced revenue, signaling scalable cost structure and potential mix improvements. Net income growth of 34.3% YoY is consistent with the operating trajectory, indicating controlled non-operating items. Sustainability hinges on maintaining the 23.5% gross margin and leveraging fixed costs without sacrificing service or pricing; ordinary income alignment with operating income suggests growth is operationally grounded. However, OCF at only ¥72.7m (OCF/NI ~0.20x) points to working capital absorption as growth accelerates; this could normalize if inventory and receivables settle, but it remains a near-term watchpoint. Lack of disclosed investing cash flows and capex data limits visibility into growth investment and maintenance needs. With asset turnover at 1.093x, further efficiency gains could support growth without significant balance sheet expansion, provided inventory turns improve. Outlook: if demand remains firm and cost discipline holds, mid- to high-single-digit margin maintenance with continued revenue growth is feasible; cash conversion will be the key determinant of the quality of growth.

Financial Health

Liquidity is strong: current ratio 216.4% (¥2,191m current assets vs. ¥1,013m current liabilities) and quick ratio 173.3% indicate ample coverage of short-term obligations. Working capital is ¥1,178.8m, affording buffer for seasonal or growth-driven inventory build. Solvency is solid with total liabilities of ¥2,034.7m against equity of ¥2,607.0m, for a debt-to-equity ratio of 0.78x; by calculation, the equity ratio is roughly 50% (despite an unreported figure shown as 0.0%). Interest burden is very low (¥4.0m), and interest coverage is 121x, implying low refinancing risk at current earnings levels. Capital structure appears conservatively levered, with capacity to absorb working capital fluctuations. Cash and equivalents are not disclosed in the provided data, which constrains assessment of immediate liquidity headroom and net debt.

Cash Flow Quality

OCF of ¥72.7m equates to 0.20x of net income (¥364m), indicating weak conversion this period, likely due to working capital investment (inventory and/or receivables) or timing effects. EBITDA of ¥523.9m versus OCF suggests significant cash tied up in operations despite strong earnings, a common pattern during rapid growth. D&A is modest at ¥39.9m, supporting cash earnings potential if working capital normalizes. Investing cash flow is unreported, so free cash flow cannot be reliably computed; the shown FCF of 0 should be treated as not available rather than zero. Without capex detail, it is unclear whether OCF can cover maintenance and growth investments; consequently, FCF coverage of dividends cannot be assessed. Monitoring inventory levels (¥436.5m) and receivables (not disclosed) relative to sales will be critical to judge cash conversion trends over the next quarters.

Dividend Sustainability

Dividend per share and payout ratio are shown as zero due to non-disclosure; no conclusion can be drawn on actual dividends. Earnings capacity appears supportive of potential distributions (net income ¥364m; ROE 13.96%), but lack of capex, cash, and net debt data prevents a robust FCF-based assessment. OCF of ¥72.7m is currently weak relative to earnings, which would constrain dividend headroom if sustained. Policy outlook is uncertain in the absence of stated guidance; sustainability would depend on improving OCF/NI, stable margins, and visibility on investing needs. Until investing cash flows and cash balances are disclosed, FCF coverage and payout ratios should be considered indeterminable from this dataset.

Risk Assessment

Business Risks:

• Working capital intensity during growth phases pressuring cash conversion
• Potential margin compression from input cost inflation or pricing pressure
• Demand cyclicality affecting volumes and utilization of fixed cost base
• Inventory obsolescence or holding risk given inventory build
• Supply chain and procurement risks impacting gross margin
• Customer concentration or credit risk (receivables not disclosed)
• Operational execution risk in sustaining positive operating leverage

Financial Risks:

• Low OCF/NI (0.20x) indicating reliance on continued earnings and/or external funding to support growth
• Disclosure gaps (cash balance, investing CF, share data) complicate liquidity and FCF assessment
• Potential increase in leverage if working capital needs persist and are debt-funded
• Interest rate risk is low currently but could rise if debt increases from current levels

Key Concerns:

• Weak cash conversion despite strong earnings
• Insufficient disclosure of cash, investing cash flows, and share-base metrics
• Sensitivity of margins to input costs and pricing dynamics

Investment Implications

Key Takeaways:

• Strong revenue growth (+21.3% YoY) with operating leverage (+36.0% YoY OI) enhances profitability
• ROE at 13.96% is supported by balanced margin and asset efficiency with moderate leverage
• Liquidity and solvency are robust (current ratio 216%, D/E 0.78x; interest coverage 121x)
• Cash flow conversion is the primary near-term weak point (OCF/NI 0.20x)
• Non-operating items are minimal; earnings quality is largely operational
• Disclosure limitations (cash, capex, dividends, shares) constrain full valuation and FCF analysis

Metrics to Watch:

• OCF/Net income and working capital movements (inventory and receivables turns)
• Gross and operating margin trajectory
• Asset turnover and revenue growth sustainability
• Capex and investing cash flows (once disclosed) to gauge FCF
• Equity ratio and net debt (once cash disclosed)
• Dividend policy announcements and payout guidance

Relative Positioning: Within small to mid-cap Japanese companies with distribution/industrial characteristics, Takachiho combines improving profitability and solid balance sheet strength with below-par cash conversion this quarter; sustained margin resilience and normalization of working capital would strengthen its relative standing.

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