NISSHIN GROUP HOLDINGS Company,Limited FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥35.98B
• Operating Income: ¥3.08B
• Net Income: ¥122M
• EPS: ¥44.30

Income Statement

Balance Sheet

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

Nisshin Group Holdings (8881) reported strong topline growth for FY2026 Q2 (cumulative), with revenue of ¥35.985bn, up 33.6% YoY, indicating robust handover momentum and/or improved project mix. Profitability rebounded sharply: operating income rose to ¥3.081bn (+547.6% YoY), driving an operating margin of 8.6%, a notable step-up for a developer-centric model. Ordinary income reached ¥2.814bn and net income ¥2.069bn (+50.7% YoY), translating to a net margin of 5.75% and EPS of ¥44.30. DuPont metrics point to an ROE of 2.94% for the reported period, built on a 5.75% net margin, 0.259x asset turnover, and 1.97x financial leverage. On an annualized view (caution: simple linearization), ROE would be around the mid-5% range, still modest relative to typical cost-of-equity benchmarks. Liquidity appears strong with current assets of ¥116.4bn versus current liabilities of ¥34.2bn, giving a current ratio of 3.40x and working capital of approximately ¥82.2bn. Balance sheet strength also looks adequate, with total equity of ¥70.37bn; the equity ratio, recalculated from provided balance sheet figures, is about 50.7%. Interest coverage is healthy at 13.0x, supported by materially improved operating earnings versus interest expense of ¥237m. Gross profit is stated at ¥3.830bn (gross margin 10.6%), implying tight but positive spread amid cost pressures in construction and land procurement. The uptick in operating income suggests operating leverage from higher deliveries and disciplined SG&A. Cash flow statements and several line items (e.g., depreciation, inventories, cash and equivalents) are not disclosed in the feed; these zeroes should be interpreted as unreported rather than actual zeros. As such, OCF/NI shown as 0.00 and FCF as 0 reflect disclosure gaps, not cash flow weakness per se. Dividend data indicate DPS 0.00 and payout 0.0%; based solely on the dataset, distribution policy and potential resumption are unclear. Overall, the company exhibits improved profitability and solid liquidity with moderate leverage, but ROE remains only mid-single digits on an annualized basis. Key uncertainties include the absence of cash flow and inventory disclosures and the inherent handover timing risks in real estate development.

Profitability Analysis

ROE_decomposition: Reported DuPont: Net margin 5.75% × Asset turnover 0.259 × Financial leverage 1.97 = ROE 2.94% (FY2026 Q2 cumulative). Simple annualization would suggest ~5.9%, assuming no second-half skew (real estate typically skews to H2; caution warranted). margin_quality: Gross margin is 10.6% (gross profit ¥3.830bn on revenue ¥35.985bn), indicating a modest spread consistent with condominium and housing development under cost inflation. Operating margin improved to 8.6% (¥3.081bn/¥35.985bn), reflecting SG&A discipline and scale benefits from higher handovers. Ordinary margin at 7.8% and net margin at 5.75% point to manageable non-operating drag (interest and other items). operating_leverage: YoY operating income growth (+547.6%) far outpaced revenue growth (+33.6%), evidencing strong operating leverage from volume and mix. The step-up suggests better absorption of fixed costs and potentially improved project-level margins; sustainability will hinge on maintaining handover cadence and cost control.

Growth Assessment

revenue_sustainability: Revenue increased 33.6% YoY to ¥35.985bn, likely driven by higher unit handovers. In a project-driven model, visibility depends on contracted backlog and scheduled completions; sustaining this momentum requires a solid pipeline of pre-sold projects. profit_quality: Operating margin at 8.6% and ordinary margin at 7.8% indicate improved profitability beyond one-off gains. Interest expense of ¥237m is well covered (13.0x), supporting the view that the profit recovery is primarily operational. The net margin of 5.75% aligns with healthier mix and cost control. outlook: If H2 maintains or exceeds H1 handovers—a common seasonal pattern—full-year profitability could exceed a simple first-half run rate. However, limited disclosure on backlog, pre-sales ratio, and inventories tempers visibility. Cost pressures (construction and land) and financing conditions remain key external variables.

Financial Health

liquidity: Current assets ¥116.41bn vs current liabilities ¥34.23bn imply a current ratio of 3.40x and working capital of ~¥82.17bn. Quick ratio is shown as 3.40x, but with inventories unreported, this likely overstates true quick liquidity for a developer. solvency: Total liabilities ¥63.92bn vs equity ¥70.37bn; recalculated equity ratio ≈ 50.7% (equity/total assets), indicating a balanced capital structure for the sector. Interest coverage at 13.0x suggests comfortable debt service capacity. capital_structure: Reported debt-to-equity of 0.91x appears to reflect total liabilities/equity (¥63.92bn/¥70.37bn). Absent a split of interest-bearing debt vs. non-interest liabilities, leverage should be viewed as moderate based on available data.

Cash Flow Quality

earnings_quality: EBIT-based interest coverage (13.0x) supports the credibility of operating earnings. The gap between ordinary income (¥2.814bn) and net income (¥2.069bn) reflects taxes and other below-the-line items; the stated income tax of ¥168m implies a modest tax burden, with the remainder likely from non-controlling interests or extraordinary items. FCF_analysis: Operating, investing, and financing cash flows are undisclosed in the dataset (zeros denote not reported). Consequently, FCF cannot be assessed from this feed. working_capital: Working capital is sizable at ~¥82.17bn, consistent with a development model that carries substantial current assets. With inventories unreported, cash conversion and inventory turns cannot be quantified here.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is shown as 0.00 with a payout ratio of 0.0%; based on available data, no payout is assumed for the period. Given EPS of ¥44.30 in H1, coverage capacity would be ample for a modest dividend, but policy details are not disclosed. FCF_coverage: FCF not disclosed; coverage cannot be evaluated from this dataset. policy_outlook: Without guidance or historical payout information in the feed, the outlook for dividends remains unclear. Resumption or initiation would depend on confirmed cash generation, backlog visibility, and leverage targets.

Risk Assessment

Business Risks:

• Handover timing and concentration risk inherent to condominium/housing projects
• Housing demand cyclicality and macro sensitivity in Japan
• Construction cost inflation and contractor availability
• Land acquisition competition and pricing risk
• Regulatory and inspection changes impacting project timelines
• Cancellation risk and sales pace variability
• Geographic/project concentration exposure

Financial Risks:

• Refinancing and interest rate risk amid changing domestic rate dynamics
• Inventory (WIP and completed units) carry risk impacting liquidity
• Potential margin compression from cost overruns
• Sensitivity of ROE to leverage and asset turnover in a low-turnover model
• Limited cash flow disclosure impeding assessment of cash conversion

Key Concerns:

• ROE at 2.94% for H1 (mid-5% annualized) remains modest despite profit rebound
• Absence of disclosed operating, investing, and financing cash flows
• Inventories not disclosed, constraining analysis of liquidity quality and risk
• Dividend policy not evident from data; DPS currently shown as zero

Investment Implications

Key Takeaways:

• Strong revenue growth (+33.6% YoY) and a pronounced rebound in operating income (+547.6% YoY)
• Operating margin expanded to 8.6%, with ordinary margin 7.8% and net margin 5.75%
• Interest coverage robust at 13.0x, indicating manageable financial burden
• Balance sheet appears solid with recalculated equity ratio around 50.7% and moderate leverage
• ROE still mid-single-digit on an annualized view, highlighting room for capital efficiency improvements
• Disclosure gaps on cash flows and inventories limit assessment of cash conversion and liquidity quality
• DPS shown as zero; dividend policy and trajectory not inferable from provided data

Metrics to Watch:

• Contracted backlog and pre-sales ratio for upcoming handovers
• Gross margin by project and aggregate gross margin trend
• SG&A ratio and fixed-cost absorption as volumes scale
• Inventory levels (land bank, WIP, completed but unsold) and turnover
• Operating cash flow and free cash flow, including cash conversion cycle
• Interest-bearing debt levels, average borrowing rate, and maturity ladder
• Cancellation rates and pricing trends in key markets

Relative Positioning: Versus domestic mid-cap real estate developers, the company currently shows solid liquidity and manageable leverage with improved profitability; however, ROE remains modest and transparency on cash flow and inventory metrics lags, which could place it mid-pack on quality and efficiency pending fuller disclosures.

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