ASAX CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥2.74B
• Net Income: ¥1.80B
• EPS: ¥54.69

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

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

ASAX Co., Ltd. (TSE:8772) posted solid profitability in FY2026 Q2 (cumulative) under JGAAP on a consolidated basis, highlighted by operating income of ¥2,739m, ordinary income of ¥2,785m, and net income of ¥1,803m (EPS ¥54.69). Several key line items (e.g., revenue, gross profit, cash balance, dividends) show as zero, which indicates non-disclosure or different account naming in XBRL rather than true zeros; analysis therefore relies on disclosed non-zero figures. Despite revenue being unreported, the strong operating and ordinary income suggest resilient net interest income and fee earnings consistent with ASAX’s business model as a collateralized real estate lender. Interest expense was modest at ¥24m, yielding a very high interest coverage ratio of 112.6x, pointing to a low funding-cost burden and ample capacity to absorb rate or credit cost volatility. Net income of ¥1,803m against income tax of ¥984m implies an effective tax rate of roughly 35.3%, consistent with a normalized tax burden despite automated metrics showing 0.0%. Balance sheet strength is evident with total assets of ¥119.63bn, total liabilities of ¥69.41bn, and total equity of ¥50.22bn; this implies an estimated equity ratio of about 42.0% (versus the reported 0.0% placeholder), and financial leverage of 2.38x. Liquidity appears strong with current assets of ¥111.21bn and current liabilities of ¥22.68bn, yielding a current ratio of ~490%, consistent with a loan book dominated by short-term receivables. Operating cash flow (OCF) of ¥888m is below net income, with an OCF/NI ratio of 0.49, likely reflecting working-capital consumption from loan growth and timing effects typical for nonbank lenders. Depreciation and amortization were small at ¥68m, indicating low fixed-asset intensity and supporting a high EBITDA-to-interest buffer. Working capital is substantial at ¥88.52bn, signaling ample short-term coverage but also embedding asset-liability management considerations for a lender. While dividend and cash balances are unreported, the profit profile and moderate leverage suggest fundamental capacity for distributions, subject to capital policy and regulatory considerations. Given missing disclosures for revenue, cash, and dividends in the feed, profitability margins and FCF cannot be precisely benchmarked; estimates are used where appropriate. Annualizing H1 net income (≈¥3.61bn) against period-end equity suggests an indicative ROE of around 7.2%, with the caveat that beginning equity and seasonality are unknown. Overall, ASAX’s Q2 shows robust earnings, strong liquidity metrics, and moderate leverage, offset by softer cash conversion in the period and typical nonbank risks around credit, collateral values, and funding conditions. Outlook hinges on loan growth discipline, credit cost containment, and funding-cost stability amid an evolving interest rate environment in Japan.

Profitability Analysis

ROE decomposition is constrained by unreported revenue. Using an indicative approach: estimated annualized ROE ≈ 7.2% (annualized NI ≈ ¥3,606m divided by period-end equity ¥50,220m; average equity not available). Financial leverage (Assets/Equity) is 2.38x (¥119.63bn/¥50.22bn). Net profit margin and asset turnover cannot be reliably computed due to revenue non-disclosure; DuPont metrics shown as zero are placeholders. Operating income is ¥2,739m and ordinary income ¥2,785m, suggesting minimal non-operating drag and possibly small gains or funding cost benefits. Interest expense of ¥24m versus operating income of ¥2,739m yields interest coverage of 112.6x, underscoring strong buffer from core earnings. Depreciation of ¥68m is low, so EBITDA ≈ ¥2,807m, indicating a relatively asset-light operating base (ex-loan book). Effective tax rate computed at ~35.3% (¥983.7m tax / (¥1,803m + ¥983.7m)), reflecting normalized taxation. Operating leverage appears favorable: small D&A and low interest burden allow a high conversion from operating to pre-tax income; however, margin percentages versus revenue cannot be assessed. Profitability on assets (proxy) is solid: operating income to total assets is ~2.3% for H1 (annualized ~4.6%), but this is a non-standard proxy for lenders and should be interpreted cautiously. Overall, core profitability is resilient with low funding costs and efficient operations, pending clarity on revenue classification.

Growth Assessment

Revenue growth is not assessable due to revenue being unreported in the feed (0 indicates non-disclosure). Earnings growth appears healthy: operating income ¥2,739m and net income ¥1,803m at Q2 suggest a trajectory consistent with prior-year levels or better, but YoY marks shown as +0.0% are non-informative placeholders. Profit quality is supported by minimal interest expense and low depreciation, implying that earnings are driven by net interest and fee spreads rather than accounting items. The OCF/NI ratio of 0.49 indicates weaker cash conversion in H1, commonly associated with loan book expansion and working-capital build; if tied to quality loan growth at prudent LTVs, this can be value-accretive. Ordinary income exceeding operating income slightly suggests a minor positive non-operating contribution or funding cost benefit. Without disclosed revenue, net interest margin and fee income trends cannot be confirmed; outlook thus hinges on loan growth discipline, credit underwriting quality, and funding-cost stability. If H2 maintains H1 run-rate, annualized net income could approximate ¥3.6bn, implying mid- to high-single-digit ROE on current equity, subject to seasonality and credit costs. Key swing factors for growth include origination volumes, collateralized loan pricing, credit cost normalization, and real estate transaction activity.

Financial Health

Liquidity: Current assets ¥111.21bn versus current liabilities ¥22.68bn yields a strong current ratio of ~490%. Quick ratio equals the current ratio given no reported inventories. Cash balance is unreported; however, large current assets likely consist mainly of short-term loans receivable. Solvency: Total assets ¥119.63bn, liabilities ¥69.41bn, equity ¥50.22bn imply an estimated equity ratio of ~42.0% and debt-to-equity of 1.38x. Financial leverage (Assets/Equity) is 2.38x, moderate for a nonbank lender. Interest burden remains light with interest expense of ¥24m in H1, pointing to manageable funding costs and/or secured borrowings at favorable rates. Working capital of ¥88.52bn suggests ample short-term coverage, though asset-liability duration management remains critical for lenders. Overall capital structure appears balanced with sufficient equity to absorb normal credit losses, pending visibility on allowance levels and NPLs (not disclosed here).

Cash Flow Quality

Earnings quality appears reasonable but cash conversion is soft in the period. OCF of ¥888m versus net income of ¥1,803m yields OCF/NI of 0.49, indicating earnings were not fully cash-backed in H1, likely due to loan growth and working-capital deployment. Free cash flow cannot be reliably assessed because investing CF is unreported (shown as 0), and capex details are absent; D&A of ¥68m suggests low maintenance capex needs. Working capital usage is implied by the large current assets position; absent detail, the shortfall in OCF versus NI is consistent with origination activity and receivables growth. Financing CF of -¥405m indicates net outflows (debt repayment and/or shareholder returns), but dividends are unreported, so the split is unclear. For a lender, period-to-period OCF can be volatile with loan growth; sustained multi-period OCF/NI near or above 1.0 would strengthen quality of earnings. Monitoring credit cash recoveries, delinquencies, and provisioning will be key to validating earnings durability.

Dividend Sustainability

Dividend data (annual DPS and payout ratio) are unreported in the feed; thus, we cannot compute actual payout or FCF coverage. Profit capacity exists with H1 net income of ¥1,803m and moderate leverage (equity ¥50.22bn), suggesting room for distributions subject to regulatory, rating, and growth capital needs. OCF of ¥888m in H1 is below NI, so cash coverage of dividends would depend on H2 cash generation and funding flows. With D&A low and capex likely modest, structural FCF potential is supported, but loan book growth may absorb cash. Policy outlook likely balances stable dividends with growth and capital adequacy, typical for Japanese nonbank lenders; confirmation requires management guidance and historical payout trends (not provided here).

Risk Assessment

Business Risks:

• Credit risk from borrower defaults and collateral (real estate) value declines
• Interest rate risk affecting net interest margin and funding costs
• Real estate market cyclicality impacting origination volumes and recoveries
• Regulatory and supervisory changes for nonbank lenders
• Competition from banks and other specialty finance providers compressing spreads
• Concentration risk in collateral types or geographies
• Operational and underwriting risks, including appraisal accuracy and recovery processes

Financial Risks:

• Asset-liability mismatch and refinancing risk as loans and funding roll
• Cash flow volatility due to loan book growth consuming working capital
• Potential rise in credit costs reducing earnings and capital buffers
• Dependence on secured borrowing lines; covenant or liquidity tightening
• Sensitivity to interest expense from policy rate normalization

Key Concerns:

• Revenue and cash balances unreported, limiting margin and liquidity analysis
• Dividend data absent, obscuring payout policy assessment
• Allowance, NPL, and coverage ratios not disclosed here, limiting credit risk evaluation

Investment Implications

Key Takeaways:

• Strong H1 profitability: operating income ¥2,739m, net income ¥1,803m, with very high interest coverage (112.6x)
• Moderate leverage with estimated equity ratio ~42% and D/E 1.38x
• Liquidity ample: current ratio ~490% and working capital ¥88.52bn
• Cash conversion softer (OCF/NI 0.49), likely due to loan growth dynamics
• Effective tax rate ~35%, indicating normalized tax burden
• Indicative annualized ROE around 7%, subject to seasonality and average equity

Metrics to Watch:

• Net interest margin and average funding cost (not disclosed here)
• Loan growth, LTVs, and portfolio mix
• Credit costs: NPL ratio, delinquency, provision/loan coverage
• OCF/NI trend and FCF after interest
• Capital adequacy (equity ratio) and leverage trajectory
• Refinancing profile and liquidity buffers (cash, committed lines)
• Dividend payout guidance and policy consistency

Relative Positioning: Within Japan’s nonbank real estate lenders, ASAX appears adequately capitalized with strong liquidity and low funding costs, supporting stable profitability; key differentiators will be credit discipline, spread management, and funding diversification versus peers.

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