AIFUL CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥16.70B
• Net Income: ¥6.88B
• EPS: ¥26.44

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

Aiful Co., Ltd. (TSE: 8515) reported FY2026 Q2 (cumulative) consolidated results under JGAAP showing strong profit growth despite limited top-line disclosure in the XBRL. Operating income reached ¥16.705bn, up 84.9% YoY, and net income rose 76.1% YoY to ¥12.661bn, underscoring solid operating momentum and improved credit cost/expense discipline. Ordinary income was ¥16.489bn, broadly consistent with operating income, suggesting stable non-operating items. EBITDA was ¥18.780bn, implying modest D&A of ¥2.075bn and limited capital intensity. Although “Revenue” is shown as zero in the data extract, this reflects non-disclosure/account labeling rather than actual zero revenue; therefore, margin metrics tied to revenue cannot be computed from the provided dataset. The balance sheet shows total assets of ¥1,520.9bn and equity of ¥233.0bn, implying an equity ratio of roughly 15.3% (despite the reported 0.0% field), and total liabilities of ¥1,227.1bn (D/E ≈ 5.27x), which is typical for a consumer finance company operating a leveraged funding model. Liquidity looks adequate with a current ratio of 169.3% (current assets ¥1,336.9bn vs. current liabilities ¥789.5bn) and sizable working capital of ¥547.5bn. Operating cash flow was negative at -¥51.5bn, which is consistent with loan book expansion in this sector, and was largely funded by positive financing cash flow of ¥54.4bn, indicating continued access to funding. Tax expense of ¥1.261bn appears modest relative to ordinary income, though a precise effective tax rate cannot be inferred given missing pre-tax profit details under JGAAP classification. ROE cannot be reliably derived from the supplied DuPont fields because revenue and average equity are not disclosed, but a simple point-in-time calculation suggests NI/ending equity of ~5.4% for the half-year (roughly ~10–11% annualized, assumption-based). Dividend payments were not disclosed in this dataset (DPS shows as 0.00), implying either no dividend or non-disclosure; the payout ratio is shown as 0.0% and should not be treated as a confirmed zero. Overall, results indicate stronger profitability, manageable leverage for a non-bank lender, and growth-funded cash outflows, with the main swing factors being credit costs, funding conditions, and regulatory environment. Data limitations (notably revenue, cash, share count, and some DuPont components) constrain precision in several ratios; the analysis focuses on reliably reported non-zero items. The outlook hinges on sustaining asset growth while controlling credit costs and funding spreads. Monitoring working capital dynamics, provisioning trends, and funding mix will be critical in the coming quarters. Given the company’s model, negative OCF during expansion is not necessarily a sign of weak earnings quality, but requires continued funding access and prudent risk management.

Profitability Analysis

ROE decomposition is limited by missing revenue and average equity. Using period-end figures, NI/Equity ≈ ¥12.661bn / ¥233.043bn = ~5.4% for H1, roughly 10–11% annualized (assumption). Net profit growth was strong (+76.1% YoY), supported by operating income growth (+84.9% YoY), indicating improved operating leverage (expense and/or credit cost discipline) versus the prior year. Ordinary income (¥16.489bn) is close to operating income (¥16.705bn), suggesting non-operating items (interest, investment gains/losses) were not a major drag this period. EBITDA of ¥18.780bn vs. operating income of ¥16.705bn indicates low D&A intensity (¥2.075bn), consistent with a predominantly financial asset-driven model rather than heavy fixed assets. Margin quality relative to revenue cannot be computed from disclosed data; however, the delta between EBITDA and operating income is small, pointing to margins that are largely driven by interest spread/credit costs and operating efficiency rather than depreciation. Effective tax burden appears modest (income tax ¥1.261bn) relative to ordinary income, but a precise rate cannot be determined without pre-tax profit per JGAAP line. Overall, profitability improvement appears to stem from better operating leverage and likely benign credit costs, though the latter is not separately disclosed here.

Growth Assessment

Operating income up 84.9% YoY and net income up 76.1% YoY signal robust profit growth in H1 FY2026. The negative operating cash flow (¥-51.5bn) alongside positive financing inflow (¥+54.4bn) is consistent with growth in receivables/loan book, supporting a view of revenue growth momentum despite the revenue field being undisclosed. Sustainability depends on maintaining loan growth while preserving underwriting standards; absent explicit NPL/provision data, we infer credit costs remained contained. Profit quality appears sound given EBITDA expansion and limited non-operating distortions (ordinary ≈ operating income). Outlook hinges on credit quality normalization, funding cost trends, and competitive pricing; if spreads compress or credit costs revert upward, growth in operating income could moderate. Near-term growth should track receivables expansion as long as funding access remains strong and delinquency metrics remain stable.

Financial Health

Balance sheet scale is large with total assets of ¥1,520.9bn and liabilities of ¥1,227.1bn, resulting in equity of ¥233.0bn (~15.3% equity-to-asset ratio by calculation; the reported 0.0% equity ratio is a non-disclosure artifact). Leverage (liabilities/equity) stands at ~5.27x, typical for a consumer finance lender. Liquidity appears solid: current assets ¥1,336.9bn vs. current liabilities ¥789.5bn yields a current ratio of 169.3% and working capital of ¥547.5bn. Inventory is not applicable to the business model (0 reported is non-applicable/undisclosed). Interest expense is shown as 0 in the dataset (undisclosed), so interest coverage cannot be reliably calculated; nonetheless, ordinary income proximity to operating income suggests financing costs were manageable. Solvency looks adequate given the equity buffer and funding access, but remains sensitive to credit losses and funding market conditions typical of the sector.

Cash Flow Quality

Operating CF was ¥-51.469bn while net income was ¥12.661bn, producing an OCF/NI ratio of -4.07. For a lending business, negative OCF often reflects loan book growth (increase in operating assets) rather than weak earnings quality per se. Free cash flow is shown as 0 in the dataset (undisclosed); given OCF negative and investing CF undisclosed (0), true FCF is likely negative in growth mode. D&A of ¥2.075bn is modest, and EBITDA conversion to operating income is tight, suggesting limited accounting noise from non-cash charges. Working capital likely expanded via higher loans/receivables (not itemized here), driving the OCF outflow; this is consistent with the simultaneous increase in financing CF (+¥54.391bn) to support asset growth. In sum, earnings quality appears acceptable for a financial lender, but cash flow is growth-consuming and reliant on continued funding access.

Dividend Sustainability

DPS is shown as 0.00 and payout ratio 0.0% in the dataset; treat these as non-disclosed rather than confirmed zero. With H1 net income of ¥12.661bn and growth investments absorbing cash (OCF negative, FCF likely negative), internal reinvestment is a priority. Coverage of any prospective dividend by free cash flow cannot be assessed from the provided data. Capital policy for consumer finance firms typically balances growth, regulatory capital considerations, and shareholder returns; given leverage of ~5.27x and expansionary cash needs, retaining earnings would support balance sheet resilience. Future dividend capacity will depend on full-year profitability, credit cost trends, and funding conditions; absent explicit guidance, sustainability cannot be concluded from this dataset.

Risk Assessment

Business Risks:

• Credit risk: potential increase in delinquencies and net charge-offs impacting provisions and profitability
• Pricing pressure and spread compression amid competition in unsecured lending
• Regulatory and legal risks specific to consumer finance (interest rate caps, collection practices, compliance)
• Macroeconomic sensitivity: employment/income shocks affecting borrowers’ repayment capacity
• Operational risks including collections effectiveness and underwriting model calibration

Financial Risks:

• Funding risk: dependence on wholesale funding and market access to support loan growth
• Interest rate risk: rising funding costs could outpace asset yields
• Leverage sensitivity: D/E ~5.27x magnifies shocks to equity through credit losses
• Liquidity management: negative operating CF during growth requires ongoing refinancing
• Concentration risk if portfolio mix skews to higher-risk segments (not disclosed)

Key Concerns:

• Negative operating CF (-¥51.5bn) necessitating continued funding inflows
• Limited disclosure on revenue, interest expense, and credit cost metrics in this dataset
• Potential normalization of credit costs from currently benign levels could curb profit growth

Investment Implications

Key Takeaways:

• Strong H1 profit momentum with operating income +84.9% YoY and net income +76.1% YoY
• Leverage and liquidity are within expected ranges for a non-bank lender (D/E ~5.27x; current ratio 169%)
• OCF negative due to asset growth, funded by financing inflows, consistent with expansion
• Margins and ROE cannot be precisely decomposed due to revenue and average equity non-disclosure
• Outlook sensitive to credit quality and funding spreads; sustained growth requires stable delinquency and market access

Metrics to Watch:

• Loan book growth and yield on receivables (top-line driver)
• Credit quality: NPL ratio, delinquency buckets, net charge-offs, and provision coverage
• Funding mix and cost of funds; maturity ladder and liquidity buffers
• Operating efficiency: opex-to-income ratio
• Capital adequacy/leverage (equity-to-asset ratio, D/E) and potential rating changes
• OCF trends vs. loan growth to gauge funding needs

Relative Positioning: Within Japan’s consumer finance space, Aiful’s leverage and liquidity appear broadly in line with peers, and the sharp improvement in operating and net income suggests competitive execution; however, limited disclosure in this dataset on revenue, credit costs, and funding costs prevents a full comparative margin/ROE assessment.

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