COSMOS INITIA Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥64.88B
• Operating Income: ¥6.59B
• Net Income: ¥3.31B
• EPS: ¥121.40

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

Cosmos Initia Co., Ltd. (TSE: 8844) delivered solid H1 FY2026 (Q2 cumulative) results with steady top-line growth and stronger profitability. Revenue rose 3.6% year over year to ¥64.9bn, while operating income increased 11.2% to ¥6.59bn, indicating margin expansion and improved cost discipline or a favorable sales mix. Net income grew 17.4% to ¥4.11bn, outpacing revenue growth and underscoring positive operating leverage. Gross margin stands at 21.6% and operating margin at approximately 10.2%, both healthy for a real estate developer/renewal-oriented business. DuPont analysis indicates a calculated ROE of 7.7%, supported by a 6.34% net margin, 0.353x asset turnover, and 3.44x financial leverage. Liquidity appears strong with a current ratio of 2.46x and working capital of approximately ¥97.6bn, though inventory disclosures are not available in the provided XBRL fields. The reported equity ratio of 0.0% is a data gap; based on non-zero figures, equity ratio is approximately 29.1% (¥53.4bn equity / ¥183.6bn assets). Interest expense of ¥462m is well-covered (≈14.3x by EBIT/interest), suggesting manageable financial risk in the current rate environment. Operating cash flow of ¥2.68bn is positive but below net income (OCF/NI ≈ 0.65), consistent with working capital absorption typical of development cycles; however, the lack of inventory detail constrains deeper analysis. Investing cash flow and cash balance are unreported in this dataset, limiting visibility on capital expenditures and liquidity buffers. No dividend is indicated for the period (DPS ¥0, payout 0%), which may reflect a conservative stance during investment and inventory build, but the absence of dividend cash flow data prevents coverage analysis. Overall, the company shows improving profitability and a solid balance sheet posture, but cash flow conversion and data gaps around inventories and cash require monitoring. Revenue growth appears sustainable near term, supported by improved margins and controlled interest burden, but is inherently sensitive to project timing, market demand, and financing conditions. We acknowledge several unreported items (inventories, cash, investing CF, equity ratio, share counts), and base our assessment solely on the non-zero data provided.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 6.34%
• asset_turnover: 0.353x
• financial_leverage: 3.44x
• calculated_ROE: 7.70%
• ROA_implied: 2.24% (Net margin x Asset turnover) margin_quality:
• gross_margin: 21.6%
• operating_margin: 10.2% (6,590/64,882)
• ordinary_margin: 9.3% (6,055/64,882)
• net_margin: 6.34%
• commentary: Margin expansion YoY is evident given operating income growth (+11.2%) outpacing revenue (+3.6%). Low D&A (¥159m) implies earnings are driven by project profitability rather than heavy fixed asset amortization. operating_leverage: Positive operating leverage is indicated by faster growth in operating and net income than revenue, suggesting improved sales mix, tighter SG&A control, or better project gross margins. Interest expense remains modest relative to EBIT (≈14.3x coverage), allowing operational improvements to flow through to net profits.

Growth Assessment

revenue_sustainability: Revenue up 3.6% YoY to ¥64.9bn indicates steady but not rapid growth, consistent with a development/project delivery cadence. Sustainability depends on pipeline/backlog and handover timing, which are not disclosed here. profit_quality: Net income growth (+17.4%) reflects margin gains; low D&A and strong EBIT suggest earnings are primarily from realized project margins. However, OCF/NI of 0.65 signals working capital consumption; conversion to cash should be monitored. outlook: With operating margins around 10% and interest well-covered, the company appears positioned to sustain mid-single-digit revenue growth with improved profitability, subject to macro conditions (housing demand, rates) and project schedules. Data gaps on inventories and backlog temper visibility.

Financial Health

liquidity:

• current_assets: ¥164.6bn
• current_liabilities: ¥67.0bn
• current_ratio: 2.46x
• quick_ratio: 2.46x (inventory unreported; actual quick likely lower)
• working_capital: ¥97.6bn
• note: Cash and equivalents are unreported; true liquidity buffer cannot be assessed from provided data. solvency_capital_structure:
• total_assets: ¥183.6bn
• total_liabilities: ¥126.5bn
• total_equity: ¥53.4bn
• equity_ratio: ≈29.1% (computed; reported 0.0% is an unreported placeholder)
• debt_to_equity: 2.37x (total liabilities/equity)
• interest_coverage: ≈14.3x (EBIT/interest)
• assessment: Moderate leverage with solid equity base and strong coverage. Balance sheet appears resilient for a developer, though refinancing risks remain inherent to the sector.

Cash Flow Quality

earnings_quality: OCF/Net income ≈ 0.65 (¥2.68bn/¥4.11bn), suggesting earnings are not fully converting to cash in H1 due to working capital needs typical of development businesses. FCF_analysis: Investing cash flow and capex are unreported; reported FCF of 0 should be treated as unavailable. Without capex data, true FCF cannot be determined. working_capital: Large working capital base (¥97.6bn) implies that shifts in receivables, deposits, or project-related inventories can materially impact OCF. Inventories are unreported in this dataset, limiting granularity.

Dividend Sustainability

payout_ratio_assessment: DPS is reported as ¥0 with a 0% payout ratio for the period. With EPS at ¥121.40 and positive earnings, capacity exists, but policy cannot be inferred from this dataset. FCF_coverage: FCF coverage ratio is reported as 0.00x due to unreported investing cash flows; not meaningful as a coverage metric here. policy_outlook: Given development-cycle cash needs and OCF/NI below 1.0, a conservative payout stance is plausible near term. Any dividend decision would depend on cash balances, pipeline visibility, and leverage targets, which are not disclosed in the provided data.

Risk Assessment

Business Risks:

• Project timing and handover risk affecting revenue recognition and margins.
• Housing market demand fluctuations and price elasticity in target regions.
• Construction cost inflation and subcontractor availability impacting project profitability.
• Land acquisition and pipeline replenishment risks.
• Regulatory and zoning changes affecting development feasibility.
• Competition in condominium renewal and development segments.

Financial Risks:

• Working capital intensity and OCF volatility across periods.
• Refinancing and interest rate risk given sector exposure, despite current strong coverage.
• Potential concentration risk in a limited number of large projects.
• Limited visibility on cash balances and investing cash flows due to unreported items.

Key Concerns:

• OCF/NI at 0.65 indicates lower cash conversion in H1; need to confirm whether this reverses in H2.
• Inventories and cash balances are unreported, constraining assessment of liquidity buffers and sales pipeline.
• Reported equity ratio of 0.0% is clearly a data gap; relying on computed ~29%.

Investment Implications

Key Takeaways:

• Solid H1: revenue +3.6% YoY; operating income +11.2%; net income +17.4%.
• Healthy profitability: operating margin ~10.2%, net margin 6.34%, ROE 7.7%.
• Strong liquidity metrics (current ratio 2.46x), moderate leverage (D/E 2.37x), and robust interest coverage (~14.3x).
• Cash conversion below earnings (OCF/NI 0.65) points to working capital absorption.
• Several key disclosures (inventories, cash, investing CF) are unreported; caution in interpreting quick ratio and FCF.

Metrics to Watch:

• Backlog/contracted sales and handover schedule.
• Inventory and land bank levels and turnover (once disclosed).
• OCF/Net income trend and working capital movements in H2.
• Equity ratio (computed ~29%) and net debt trajectory.
• Interest coverage and effective tax rate (computed ~33% vs reported 0.0% metric).

Relative Positioning: Within Japan’s mid-cap real estate/development peers, Cosmos Initia exhibits improving margins, adequate equity capitalization (~29% computed equity ratio), and solid coverage. Profit growth outpaces revenue, but cash flow conversion and disclosure gaps remain areas to monitor.

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