MIRARTH HOLDINGS,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥56.56B
• Operating Income: ¥12M
• Net Income: ¥2.11B
• EPS: ¥-6.46

Income Statement

Balance Sheet

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

MIRARTH Holdings reported FY2026 Q2 consolidated results under JGAAP showing a sharp top-line contraction and a swing into losses at the ordinary and net levels. Revenue was ¥56.561 billion, down 34.5% YoY, indicating a materially softer sales environment or timing effects in its project-driven businesses. Despite the decline, gross profit was ¥18.249 billion and the gross margin held at 32.3%, suggesting underlying project/unit economics remain relatively intact at the gross level. Operating income fell to essentially breakeven at ¥12 million (−99.7% YoY), highlighting high operating leverage and cost absorption issues when volumes fall. Ordinary income deteriorated to a loss of ¥1.598 billion, with interest expense of ¥1.358 billion more than absorbing the negligible operating profit. Net income was a loss of ¥878 million (−2.5% YoY), implying a net margin of −1.55% and EPS of ¥−6.46. DuPont metrics reflect the weak earnings profile: net margin −1.55%, asset turnover 0.141x, and financial leverage 4.66x, resulting in ROE of −1.02%. The current ratio stands at 160.6% with working capital of ¥81.188 billion, indicating short-term liquidity headroom. Total assets were ¥400.472 billion and total liabilities ¥283.401 billion, with total equity of ¥85.987 billion; the implied equity ratio is approximately 21.5% despite a reported 0.0% figure, which appears to be undisclosed rather than zero. Interest coverage is effectively nil given operating income near zero and substantial interest expense, underscoring elevated financial risk in a downturn. Cash flow statements were not disclosed in the dataset, limiting visibility into operating cash conversion and debt service capacity. No dividend was reported (DPS ¥0), consistent with a period loss and a prudent stance while profitability is under pressure. The tax line shows ¥1.235 billion despite a loss, likely reflecting non-cash tax effects or adjustments under JGAAP, which depress reported net results. Overall, results reflect significant cyclical or timing sensitivity, with gross margins resilient but operating profitability and bottom-line performance constrained by fixed costs and a sizable interest burden. Key focus into 2H will be revenue recovery cadence, project delivery timing, gross-to-operating margin drop-through, and interest expense trajectory. Data limitations (notably cash flows, depreciation/amortization, inventories, and share data) temper the precision of cash and per-share analyses, but the available numbers point to a balance sheet that can support near-term liquidity with constrained earnings capacity in the interim.

Profitability Analysis

ROE decomposition per DuPont is consistent with weak profitability: net margin −1.55% × asset turnover 0.141 × financial leverage 4.66 = ROE −1.02% (matches reported). Margin structure shows a solid gross margin of 32.3% (¥18.249b GP on ¥56.561b sales), but operating margin compresses to 0.02% (¥12m OI), indicating heavy SG&A and fixed-cost drag on reduced volumes. Ordinary margin is −2.83% (¥−1.598b on sales), reflecting the weight of interest expense (¥1.358b; ~2.4% of sales). Net margin is −1.55%, aided by non-operating items and burdened by a ¥1.235b tax line despite losses, suggesting tax timing/valuation allowances. Operating leverage is high: a 34.5% revenue decline drove operating income nearly to zero, implying weak cost variability or mix effects; incremental drop-through from gross profit to operating profit was negligible. Efficiency is soft with asset turnover of 0.141x, consistent with a project/asset-heavy model with long conversion cycles. Interest coverage on an operating basis is approximately 0.01x (¥12m OI/¥1,358m interest), indicating profitability is insufficient to service interest without non-operating support or asset recycling in this period. The absence of reported depreciation/amortization and EBITDA limits further margin quality diagnostics, but the large gap between gross and operating profit points to significant overhead intensity.

Growth Assessment

Revenue fell 34.5% YoY to ¥56.561b, signifying either cyclical weakness, delayed project completions, or fewer property closings/energy project CODs within the quarter. Given the project-based nature implied by the balance sheet scale, revenue timing can be lumpy; sustainability hinges on backlog conversion and new bookings, which were not disclosed. Gross margin resilience (32.3%) suggests pricing and cost-of-goods discipline remained intact, but operating expense rigidity limited profit quality. Profit growth is negative across operating, ordinary, and net lines; the −2.5% YoY change in net loss indicates some stabilization versus deeper losses, but underlying earnings power remains constrained by interest costs. Outlook depends on 2H seasonality and project delivery cadence; a recovery in closings could restore operating leverage given the existing gross margin profile. However, with asset turnover at 0.141x and high leverage, growth quality will be judged by cash conversion rather than accounting profits. Key swing factors for the next quarters include sales mix, land and construction cost trends, and financing costs. In the absence of order/backlog data, we treat near-term growth visibility as limited and sensitive to execution timing.

Financial Health

Liquidity appears adequate near-term: current assets of ¥215.263b and current liabilities of ¥134.075b yield a current ratio of 160.6% and working capital of ¥81.188b. Quick ratio equals the current ratio in the dataset due to undisclosed inventories; true quick liquidity may be lower if inventories/work-in-process are material. Solvency is more constrained: total liabilities of ¥283.401b versus equity of ¥85.987b imply debt-to-equity of ~3.30x and financial leverage (assets/equity) of 4.66x. The implied equity ratio is about 21.5% (equity/asset), despite a reported 0.0% figure likely reflecting non-disclosure. Interest expense of ¥1.358b with negligible operating income results in effectively no interest coverage, highlighting vulnerability if revenue timing does not improve. The tax expense despite losses could further pressure equity if recurring. Overall capital structure is geared, consistent with an asset-heavy developer/IPP-type profile, making refinancing terms and interest rate trends critical.

Cash Flow Quality

Cash flow statements (operating, investing, financing) and cash balances were not disclosed in the dataset, so we cannot assess cash conversion, free cash flow, or liquidity buffers from reported cash. Consequently, the OCF/Net Income ratio and FCF figures shown as zero should be treated as not available rather than true zeros. Earnings quality is mixed: gross margin strength suggests underlying unit economics, but the large gap to operating income implies limited expense flexibility, reducing predictability of cash earnings. Working capital appears positive (¥81.188b), but without detail on receivables, payables, and inventories/work-in-process, the direction and magnitude of cash tied in projects cannot be assessed. High interest expense indicates significant operating cash requirements for debt service. Until OCF is disclosed, reliance on asset sales, drawdowns, or refinancing cannot be ruled out in periods of weak closings.

Dividend Sustainability

No dividend was reported (DPS ¥0) and the payout ratio is 0%. Given a net loss (¥−878m) and no disclosed operating cash inflow, distributions are understandably paused to preserve balance sheet strength. FCF coverage is not assessable due to undisclosed cash flows; the displayed 0.00x should be viewed as not available. Sustainability of future dividends will depend on restoring positive ordinary income and demonstrating consistent OCF after interest. With a geared capital structure and weak interest coverage this period, priority is likely to be debt service and liquidity. Policy outlook is uncertain from the dataset; any resumption would likely require clear evidence of profitability and cash generation in 2H and beyond.

Risk Assessment

Business Risks:

• Project timing risk in property/energy developments leading to lumpy revenue and earnings
• Market demand volatility in real estate and potential slowdown in transactions
• Construction cost inflation and supply chain delays compressing margins
• Regulatory/permitting delays affecting project deliveries and COD timing
• Sales mix shifts and pricing pressure impacting gross margins
• Concentration risk in key projects or geographies

Financial Risks:

• High leverage (D/E ~3.30x; financial leverage 4.66x) amplifying earnings volatility
• Weak interest coverage with ordinary loss and ¥1.358b interest expense
• Refinancing and interest rate risk in a rising or volatile rate environment
• Potential covenant pressure if profitability does not recover
• Working capital and cash conversion uncertainty due to undisclosed cash flows
• Tax expense despite losses reducing equity and cash flexibility

Key Concerns:

• Revenue down 34.5% YoY with operating income near zero (¥12m)
• Ordinary loss of ¥1.598b driven by sizeable interest burden
• Limited visibility on cash flow and cash balances due to non-disclosure
• Asset turnover of 0.141x signaling slow capital rotation
• Dividend suspension amid losses and geared balance sheet

Investment Implications

Key Takeaways:

• Top-line contraction of 34.5% YoY materially eroded operating profitability despite stable gross margins
• Ordinary and net losses underscore sensitivity to financing costs
• Liquidity buffer appears adequate (current ratio 160.6%, WC ¥81.188b), but solvency metrics are stretched
• ROE is negative (−1.02%) driven by margin weakness and low asset turnover
• Data gaps (cash flows, inventories, D&A, cash balance, shares) limit precision of cash and per-share analyses

Metrics to Watch:

• Quarterly revenue run-rate and backlog/contracted sales (if disclosed)
• Gross-to-operating margin drop-through and SG&A run-rate
• Interest expense and effective interest rate on debt
• Asset turnover and progress of project completions
• Cash and operating cash flow, including working capital movements
• Leverage (net debt, D/E) and interest coverage
• Tax expense normalization relative to pretax income

Relative Positioning: Within Japan’s developer/project-heavy cohort, MIRARTH appears more leveraged with weaker current-period profitability and interest coverage versus typical peers that maintain positive ordinary income; recovery hinges on timely project deliveries and cost control.

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