Anicom Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥1.43B
• EPS: ¥19.20

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

FY2026 Q2 was a weaker profitability quarter for Anicom Holdings, with earnings contracting but cash flow quality remaining solid. Ordinary income was 20.98 (100M JPY), down 33.0% YoY, and net income was 14.29 (100M JPY), down 34.4% YoY. Operating income equaled ordinary income at 20.98 (100M JPY), implying minimal net contribution from non-operating items in the reported data. EBITDA was 25.09 (100M JPY), with depreciation and amortization at 4.11 (100M JPY). The effective tax rate was 31.3%, consistent with a normalized range for domestic operations. On the balance sheet, total assets were 746.73 (100M JPY) and total equity 283.11 (100M JPY), implying a calculated equity ratio of roughly 37.9%. Financial leverage (assets/equity) stood at 2.64x, while the reported D/E ratio was 1.64x, a touch above our general caution threshold of 1.5x, though insurers structurally carry sizable policy-related liabilities. Operating cash flow was 20.05 (100M JPY), exceeding net income, with an OCF/NI ratio of 1.40x indicating healthy earnings-to-cash conversion. Core free cash flow before other investing flows (OCF minus capex) was approximately -0.26 (100M JPY), reflecting capex of 20.31 (100M JPY) and highlighting a tight investment phase in the half. Financing cash flow was -16.61 (100M JPY), including share repurchases of -10.16 (100M JPY), signaling continued shareholder returns despite earnings pressure. EPS (basic) was 19.20 JPY, and book value per share (calculated) was 384.46 JPY. ROIC was reported at 5.1%, which is modest and below typical 7–8% target ranges seen in Japan for value-creation benchmarks. Due to unreported revenue and cost details, we cannot quantify gross or operating margin movements in basis points. Nonetheless, the magnitude of YoY declines in ordinary and net income suggests margin compression or adverse claims trends within the insurance underwriting, acquisition cost, or investment income lines. Looking forward, the key question is whether the earnings drag stems from transitory claim seasonality or a structural rise in loss and expense ratios; the cash flow signal is constructive, but reinvestment and buybacks currently exceed internally generated cash. Management’s ability to stabilize loss ratios and sustain premium growth will be critical to re-accelerate ROIC and support dividends and buybacks.

Profitability Analysis

ROE decomposition is constrained by the absence of revenue, but we can outline the drivers. ROE ≈ Net Profit Margin × Asset Turnover × Financial Leverage. Net profit margin and asset turnover are not calculable due to unreported revenue; financial leverage is 2.64x (Assets 746.73 / Equity 283.11). A proxy period ROE using end-period equity is ~5.0% for the half (14.29 / 283.11), or ~10% annualized; note limitations from end-period equity and seasonality. The most pronounced change evident in the data is the deterioration in profitability (ordinary income -33% YoY; net income -34.4% YoY), implying margin compression rather than leverage or turnover shifts. For an insurer, the business reason for this change likely centers on a higher loss ratio and/or rising operating/acquisition costs; investment income could also be softer, but non-operating breakdown is unreported. Sustainability: if claim frequency/severity and pet medical cost inflation drove the decline, pressure may persist without repricing or tighter underwriting; if seasonality or one-off losses were the cause, partial recovery is plausible in H2. Concerning trend flags: earnings down >30% YoY, ROIC modest at 5.1%, and shareholder returns (buybacks) amid shrinking profit could tighten financial flexibility if maintained without an earnings rebound.

Growth Assessment

Top-line revenue and premium growth are unreported, preventing direct assessment of volume-driven growth. Profit growth is negative: ordinary income -33.0% YoY and net income -34.4% YoY, indicating a material earnings contraction. The lack of non-operating contribution (operating ≈ ordinary) suggests the decline is primarily within core operations rather than investment or one-off items, though detail is unavailable. EBITDA of 25.09 (100M JPY) and D&A of 4.11 (100M JPY) imply some operating capacity to invest, but capex exceeded OCF in the half. Outlook hinges on rebalancing underwriting economics: improving loss ratio (claims trend), controlling acquisition and admin costs, and maintaining premium rate adequacy. Any stabilization of pet healthcare cost inflation, successful repricing, or improved reinsurance terms would support recovery. Conversely, continued claims inflation or higher reinsurance costs would keep pressure on profitability. Given ROIC at 5.1%, the bar is to lift returns toward cost of capital via margin repair rather than volume alone.

Financial Health

Liquidity cannot be assessed precisely because current assets and current liabilities are unreported; no current ratio warning can be issued. Solvency appears moderate: equity is 283.11 (100M JPY) versus assets of 746.73 (100M JPY), implying a calculated equity ratio of ~37.9%. Reported D/E is 1.64x, slightly above the 1.5x conservative benchmark; for insurers, this partly reflects policy-related liabilities rather than financial debt. Interest-bearing debt and maturity buckets are unreported, so maturity mismatch risk between short-term obligations and liquid assets cannot be evaluated. There are no disclosed off-balance sheet obligations in the provided data. Overall capitalization looks adequate for an insurance model, but insurer-specific solvency indicators (e.g., solvency margin ratio, economic capital) are not provided.

Cash Flow Quality

Earnings quality is solid: OCF/Net Income is 1.40x (>1.0), indicating that accounting earnings are backed by cash generation. Working capital details are unreported, limiting granular assessment of any timing effects; nonetheless, cash conversion looks healthy on the aggregate. Free cash flow before other investing flows (OCF minus capex) is approximately -0.26 (100M JPY), reflecting capex of 20.31 (100M JPY) slightly exceeding OCF of 20.05 (100M JPY). Financing CF is -16.61 (100M JPY), including -10.16 (100M JPY) of share repurchases, indicating shareholder returns exceeded internally generated free cash in the half. Sustainability: continued negative core FCF alongside buybacks would require reliance on cash reserves, investment proceeds, or incremental liabilities; this is manageable in the short term but not ideal if earnings remain weak. Withholding detailed working capital breakdown, we do not observe signs of manipulation; however, the absence of revenue and premium/claim settlement data limits a deeper quality review.

Dividend Sustainability

The calculated payout ratio is 44.6%, which is comfortably below the 60% sustainability benchmark. DPS is unreported, and total dividends paid are not disclosed, limiting precise cash coverage analysis. Based on core FCF (OCF minus capex) of approximately -0.26 (100M JPY) in the half, dividends plus buybacks are not covered by internally generated cash over this period. That said, OCF breadth (1.40x NI) supports the underlying capacity to fund dividends if capex normalizes and/or H2 cash flow improves. Policy outlook: absent guidance, we assume management aims to maintain stable dividends; continuation of buybacks at the current pace would be contingent on earnings recovery or balance sheet capacity. Key swing factors are H2 underwriting results and investment income.

Risk Assessment

Business Risks:

• Underwriting risk: higher loss ratio from rising pet medical costs and claim frequency/severity could depress margins
• Pricing risk: lag in premium repricing relative to cost inflation
• Customer acquisition cost pressure and retention risk in a competitive pet insurance market
• Operational risk: scaling systems and claims management amid growth and product changes
• Regulatory risk specific to insurance products and reserves

Financial Risks:

• Leverage: D/E of 1.64x is slightly above conservative benchmark (recognizing insurer liability structure)
• Investment income volatility from market movements affecting securities portfolios
• Free cash flow shortfall in the half with concurrent buybacks
• Limited visibility on liquidity and maturity profile due to unreported current items

Key Concerns:

• Earnings contraction: ordinary income -33% YoY and net income -34.4% YoY
• ROIC at 5.1% is below value-creation targets, indicating return pressure
• Core FCF slightly negative while capital returns continue
• Data gaps (revenue, claims, expense breakdown) hinder assessment of margin drivers

Investment Implications

Key Takeaways:

• Significant earnings decline YoY with ordinary income at 20.98 and NI at 14.29 (100M JPY)
• Cash conversion strong (OCF/NI 1.40x), offset by capex leading to marginal negative core FCF
• Leverage moderate but above conservative threshold; equity ratio ~38%
• Buybacks continued despite weaker earnings, tightening near-term cash coverage
• ROIC at 5.1% underscores need for margin repair to enhance returns

Metrics to Watch:

• Loss ratio, expense ratio, and combined ratio trends (not disclosed here)
• Premium growth and policyholder retention
• Investment yield and securities valuation gains/losses
• Solvency margin ratio and capital adequacy
• OCF versus NI trajectory and capex intensity in H2
• Payout actions (DPS and buybacks) relative to FCF

Relative Positioning: Within Japan’s niche insurance space (pet insurance), Anicom remains a scale player with recurring premium characteristics, but current period profitability is under pressure; returns (ROIC 5.1%) lag typical value-creation thresholds, and sustaining both dividends and buybacks will likely require underwriting improvement or stronger investment income in H2.

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