KATITAS CO.,LTD FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥72.42B
• Operating Income: ¥9.01B
• Net Income: ¥4.54B
• EPS: ¥76.56

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

Katitas Co., Ltd. delivered solid topline and strong earnings momentum in FY2026 Q2 (consolidated, JGAAP). Revenue rose 13.1% year over year to ¥72.4bn, while operating income grew faster at 32.1% to ¥9.0bn, indicating meaningful operating leverage. Gross profit of ¥14.6bn implies a gross margin of 20.2%, and operating margin expanded to 12.4% (operating income/revenue), outpacing revenue growth. Net income increased 32.0% to ¥6.0bn, with net margin at 8.27%, supporting DuPont ROE at 12.06%. Asset turnover of 0.832 and financial leverage of 1.75 combine with the net margin to explain the ROE profile. The company’s balance sheet appears conservative with total assets of ¥87.1bn and total equity of ¥49.6bn, suggesting moderate leverage; the reported debt-to-equity ratio of 0.76x indicates manageable solvency. Liquidity looks ample on reported figures: current assets ¥81.1bn and current liabilities ¥11.0bn imply a current ratio of about 7.35x, providing a substantial short-term cushion. Interest coverage is very robust at 64.8x, reflecting limited interest burden versus operating earnings. Cash conversion lagged earnings this half: operating cash flow (OCF) of ¥2.36bn is 0.39x net income, suggesting working capital build or timing effects typical for inventory-heavy, project-cycle businesses. Free cash flow cannot be reliably concluded as investing cash flows are undisclosed (reported as zero indicates not disclosed), though the reported financing cash outflow of ¥2.08bn implies some capital return or debt repayment. Dividend data show DPS and payout as zero; this likely reflects an absence of disclosure in the period rather than a policy change, so we refrain from drawing conclusions. The calculated effective tax rate shown as 0.0% in the metrics is inconsistent with reported tax expense of ¥2.11bn; using ordinary income as a proxy for pre-tax suggests an effective tax rate near 24%. Data limitations are material: inventories, cash and equivalents, and share count are shown as zero (i.e., not disclosed), constraining precision in liquidity, per-share, and working-capital analyses. Even with these caveats, the quarter evidences improving profitability and solid capital discipline. Key questions for the outlook are the sustainability of margin gains, inventory turnover dynamics, and cash conversion in the second half. Overall, Katitas exhibits strong earnings execution with moderate leverage and high interest coverage, offset by weaker first-half cash conversion and limited disclosure on working capital and capex.

Profitability Analysis

ROE_decomposition: DuPont: Net margin 8.27% × Asset turnover 0.832 × Financial leverage 1.75 ≈ ROE 12.06% (matches reported 12.06%). The improvement in operating income (+32.1% YoY) versus revenue (+13.1% YoY) indicates margin-led ROE support alongside steady asset turns and moderate leverage. margin_quality: Gross margin at 20.2% on ¥14.6bn gross profit reflects pricing/renovation spread resilience. Operating margin ~12.4% (¥9.01bn/¥72.42bn) expanded YoY given the faster operating income growth. Net margin at 8.27% is healthy for the business model. Reported effective tax rate in the metrics (0.0%) is not supported by the statements; computed ETR ≈ 24% (¥2.114bn/¥8.784bn using ordinary income as a proxy for pre-tax). operating_leverage: Operating income grew 2.5x faster than revenue, evidencing positive operating leverage likely from scale benefits and cost control. EBITDA of ¥9.04bn (margin 12.5%) and minimal reported D&A (¥32m) suggest most cost is variable or captured above EBIT; leverage primarily arises from SG&A efficiency rather than depreciation intensity.

Growth Assessment

revenue_sustainability: Revenue +13.1% YoY to ¥72.4bn suggests healthy demand and execution. Sustainability hinges on renovation pipeline, inventory sourcing, and sales cycle times. Without inventory data, it is difficult to assess forward visibility, but the topline trend is favorable. profit_quality: Operating income +32.1% YoY with net margin at 8.27% indicates quality earnings improvement. Interest expense is modest (¥139m), and interest coverage is 64.8x, so below-the-line items are not driving growth. The gap between NI and OCF (0.39x) tempers profit quality in the half due to working-capital timing. outlook: Key drivers for the second half include maintaining gross spread, controlling SG&A, and improving cash conversion as projects complete. If asset turnover holds near 0.83 and net margins remain >8%, ROE should stay around low-teens. Watch for normalization of OCF as inventory turns and settlement timing improve.

Financial Health

liquidity: Current assets ¥81.05bn vs current liabilities ¥11.03bn yields a current ratio ~7.35x. Quick ratio is shown at 7.35x because inventories were undisclosed (0); actual quick ratio may be lower if inventory is material. Liquidity appears ample on reported figures. solvency: Total liabilities ¥37.61bn vs equity ¥49.62bn; debt-to-equity reported at 0.76x indicates moderate leverage. Interest coverage 64.8x underscores low near-term financial stress. capital_structure: Assets ¥87.09bn funded 57% by equity (implied from liabilities/equity), with financial leverage at 1.75x (Assets/Equity). The structure supports ROE without excessive risk, though clarity on debt composition and maturities is not available from the provided data.

Cash Flow Quality

earnings_quality: Net income ¥5.99bn vs OCF ¥2.36bn (OCF/NI 0.39) indicates earnings not yet fully backed by cash in H1, consistent with inventory build or receivable timing in a purchase-renovate-sell cycle. FCF_analysis: Investing cash flow is undisclosed (reported 0), preventing a precise FCF calculation. Using available data, an indicative FCF cannot be derived; therefore, cash coverage of shareholder returns or debt reduction cannot be robustly assessed. working_capital: Working capital is ¥70.02bn (Current assets ¥81.05bn − Current liabilities ¥11.03bn), large relative to revenue, reflecting the business model. However, inventories and cash balances are undisclosed, limiting insight into turnover and liquidity granularity.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are reported as 0.00, which likely reflects lack of disclosure rather than an actual zero dividend. With EPS ¥76.56, a normalized payout assessment is not possible from the provided data. FCF_coverage: FCF is not computable due to undisclosed investing cash flows; reported FCF coverage of 0.00x is not decision-useful. OCF alone (¥2.36bn) would cover a modest interim dividend, but this is hypothetical absent policy disclosure. policy_outlook: Given solid profitability, moderate leverage, and strong interest coverage, dividend capacity appears supported in principle, but confirmation requires actual DPS guidance and capex/working-capital plans. We refrain from conclusions without disclosed dividend policy for the period.

Risk Assessment

Business Risks:

• Inventory sourcing and refurbishment pipeline sufficiency to sustain revenue growth
• Housing market conditions, pricing power, and demand elasticity for renovated properties
• Execution risk in renovation costs and cycle times affecting gross spreads
• Regional concentration and exposure to local economic conditions
• Regulatory or tax changes impacting housing transactions

Financial Risks:

• Working-capital intensity leading to volatile OCF versus earnings intra-year
• Potential increase in borrowing costs from interest rate changes (though current coverage is strong)
• Concentration of assets in inventory (undisclosed), affecting liquidity under stress
• Limited visibility on capex/investing needs due to undisclosed investing cash flows

Key Concerns:

• OCF/NI at 0.39 indicates weak cash conversion in H1
• Lack of disclosure on inventories and cash balances constrains liquidity and turnover analysis
• Effective tax rate discrepancy in provided metrics requires relying on computed ~24% rate

Investment Implications

Key Takeaways:

• Strong earnings momentum: revenue +13.1% YoY, operating income +32.1% YoY
• Healthy profitability: gross margin 20.2%, operating margin ~12.4%, net margin 8.27%
• ROE 12.06% driven by solid margin, 0.832x asset turns, and moderate 1.75x leverage
• Robust interest coverage at 64.8x; balance sheet appears conservatively geared
• Cash conversion lags earnings (OCF/NI 0.39) due to working-capital dynamics
• Material data gaps (inventories, cash, investing CF, share count) limit precision on liquidity and FCF

Metrics to Watch:

• Inventory levels and turnover days (once disclosed)
• OCF/NI and working-capital movements in H2
• Gross spread per unit and SG&A ratio trends
• Debt levels, interest expense trajectory, and any refinancing
• Actual DPS/payout guidance and cash returns policy
• Asset turnover and ROE sustainability

Relative Positioning: Within Japan’s existing-home renovation/resale space, the company exhibits above-average operating leverage and strong interest coverage with moderate balance-sheet leverage; however, its cash conversion in the half is weaker than ideal, and disclosure gaps reduce visibility relative to best-in-class 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