FJ NEXT HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥63.40B
• Operating Income: ¥5.42B
• Net Income: ¥2.80B
• EPS: ¥112.53

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

FJ Next Holdings reported solid topline and earnings growth for FY2026 Q2 (cumulative), with revenue of ¥63.4bn (+18.3% YoY) and operating income of ¥5.42bn (+31.7% YoY), indicating meaningful operating leverage. Net income rose 31.7% YoY to ¥3.68bn, and EPS was ¥112.53, reflecting disciplined cost control and scale benefits. Gross margin was 15.0%, consistent with a condominium developer profile where construction and land costs dominate COGS. Operating margin improved to roughly 8.5% (¥5.42bn/¥63.40bn), outpacing revenue growth and suggesting SG&A efficiency and mix effects. Ordinary income was ¥5.39bn, and with interest expense at only ¥27m, interest burden is minimal, as evidenced by a very high interest coverage ratio of about 201x. The DuPont decomposition points to a calculated ROE of 4.87%, driven by a 5.81% net margin, 0.583x asset turnover, and modest financial leverage of 1.44x. On a cumulative half-year basis, this level of ROE is consistent with moderate profitability and conservative leverage for the sector; annualized ROE could differ due to seasonality in project deliveries. Total assets were ¥108.7bn and total equity ¥75.7bn, implying an equity ratio around 69.6% (implied from available data), and liabilities of ¥32.6bn (debt-to-equity ~0.43x) indicate a strong balance sheet. Current assets of ¥92.78bn against current liabilities of ¥15.84bn yield a very high current ratio of ~5.86x, pointing to ample short-term liquidity, although details such as inventories and cash were not disclosed in XBRL. Operating cash flow was negative ¥4.05bn despite positive earnings, a common pattern in development businesses likely driven by project-related working capital needs (e.g., land acquisition and construction progress), while financing cash inflow was ¥2.33bn, signaling reliance on external funding to bridge timing. Depreciation and amortization were modest at ¥173m, so EBITDA was ¥5.59bn and EBITDA margin 8.8%, broadly aligned with operating margin, indicating limited non-cash add-backs. The implied effective tax rate, inferred from income tax of ¥1.31bn relative to pre-tax earnings, appears around the mid-20% range. Dividend data were not disclosed for the period; hence payout and FCF coverage metrics are not assessable from the provided dataset. Overall, the company is executing well operationally with healthy margin progression and strong balance sheet flexibility, while cash conversion is temporarily weak due to working capital dynamics intrinsic to the development cycle. Key watchpoints include the trajectory of operating cash flow into H2, the pace of unit deliveries, and maintenance of gross margin amid construction cost pressures. Data gaps (e.g., inventories, cash balance, detailed investing cash flows) limit full visibility, but the available figures portray a company with improving profitability and conservative leverage. The outlook hinges on the conversion of pipeline into recognized revenue and the normalization of working capital as projects complete. In sum, the quarter reflects strong fundamentals with typical real estate development seasonality in cash flows and a solid financial foundation to support ongoing growth.

Profitability Analysis

ROE_decomposition: ROE 4.87% = Net margin 5.81% × Asset turnover 0.583 × Financial leverage 1.44. The principal driver is a mid-single-digit net margin with moderate asset utilization and low leverage. margin_quality: - Gross margin: 15.0% (¥9.50bn/¥63.40bn), consistent with condo development economics. - Operating margin: ~8.5% (¥5.42bn/¥63.40bn), improved YoY given operating income growth (+31.7%) outpacing revenue (+18.3%). - Ordinary margin ~8.5% and net margin 5.81% indicate limited non-operating drag and a normalized tax burden. D&A is small (¥173m), so EBITDA margin (8.8%) is close to operating margin, implying earnings are predominantly cash-operational before working capital. operating_leverage: Revenue +18.3% vs operating income +31.7% indicates solid operating leverage, likely from SG&A efficiency and scale. Interest expense is minimal (¥27m), so leverage benefits are operational rather than financial. Sustaining current leverage into H2 depends on delivery mix and construction cost containment.

Growth Assessment

revenue_sustainability: Topline growth of +18.3% YoY suggests robust demand and/or a favorable delivery schedule. Sustainability will hinge on contracted backlog conversion, land bank quality, and market demand in core metropolitan areas. profit_quality: Operating income outpaced sales, indicating mix/efficiency gains. The small D&A base suggests limited accounting noise in earnings. However, negative OCF vs positive earnings highlights working capital intensity typical to the business model rather than accrual-based profit inflation. outlook: With strong H1 growth and margin improvement, H2 performance will depend on completion schedules, pricing resilience amid construction cost inflation, and cancellation rates. A mid-20% implied tax rate provides a stable baseline for after-tax profitability if pre-tax trends continue.

Financial Health

liquidity: Current assets ¥92.78bn vs current liabilities ¥15.84bn yields a current ratio of ~586%, indicating ample short-term headroom. Quick ratio appears similar given undisclosed inventories, but actual liquidity depends on the composition of current assets (cash, receivables, real estate for sale). solvency: Total equity ¥75.65bn vs total liabilities ¥32.56bn implies an equity ratio of ~69.6% (implied) and debt-to-equity of 0.43x, reflecting a conservative capital structure. capital_structure: Low interest expense (¥27m) and very high interest coverage (~201x) indicate low financial risk from debt service. The company has capacity to add working capital funding if needed, subject to market conditions.

Cash Flow Quality

earnings_quality: Net income ¥3.68bn with EBITDA ¥5.59bn and minimal D&A suggests earnings are largely reflective of operating performance. The implied tax expense (~¥1.31bn) aligns with ordinary income, supporting quality of earnings. FCF_analysis: Operating CF was -¥4.05bn. Investing CF was not disclosed, so FCF cannot be reliably calculated from the dataset. Negative OCF likely reflects inventory/land build and project progress payments typical for developers. working_capital: The OCF/NI ratio of -1.10 indicates significant cash absorption by working capital in H1. As projects are delivered, working capital should release and OCF should improve; the timing and magnitude are key to watch.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio were not disclosed in the provided data. With EPS of ¥112.53 and conservative leverage, capacity exists in principle, but actual payout policy cannot be assessed from this dataset alone. FCF_coverage: Free cash flow was not determinable due to undisclosed investing cash flows; OCF was negative in H1, implying near-term cash coverage from operations is constrained until deliveries convert. policy_outlook: Given strong balance sheet metrics (low leverage, high implied equity ratio), the company appears positioned to sustain a dividend under normal conditions; however, without disclosed DPS and with H1 negative OCF, visibility on policy execution is limited.

Risk Assessment

Business Risks:

• Condominium market cyclicality and demand sensitivity in key metropolitan areas
• Construction cost inflation and subcontractor availability impacting gross margin
• Land acquisition competition affecting pipeline quality and project IRRs
• Project timing risk leading to earnings and cash flow volatility across quarters
• Regulatory changes in real estate sales, financing, or housing policies
• Macroeconomic shifts (interest rates, employment) affecting buyer affordability
• Cancellation risk and slower sell-through of completed inventory

Financial Risks:

• Negative operating cash flow in H1 necessitating reliance on external financing
• Potential refinancing risk if credit conditions tighten
• Working capital concentration in real estate assets (if large share of current assets are properties for sale)
• Margin compression risk if sales incentives increase to clear inventory
• Tax rate variability relative to pre-tax income mix

Key Concerns:

• H1 OCF of -¥4.05bn versus positive earnings requires monitoring of cash conversion
• Limited disclosure of inventories, cash, and investing cash flows reduces visibility
• Sustaining 15% gross margin amid cost pressures is critical to maintaining ROE

Investment Implications

Key Takeaways:

• Revenue +18.3% YoY and operating income +31.7% demonstrate healthy operating leverage
• Net margin 5.81% and implied tax rate around mid-20% support earnings quality
• Balance sheet is strong with implied equity ratio ~69.6% and debt-to-equity 0.43x
• Interest coverage ~201x indicates low financing risk
• OCF negative in H1; cash conversion depends on delivery timing and working capital release
• EBITDA margin 8.8% and modest D&A point to clean operating performance
• ROE 4.87% on H1 cumulative basis reflects moderate profitability with low leverage

Metrics to Watch:

• Contracted backlog and delivery schedule into H2
• Gross margin per project and construction cost trends
• Operating cash flow trajectory and working capital movements
• Completed-but-unsold inventory and sell-through
• Leverage (net debt/equity) and interest coverage
• SG&A ratio and operating margin sustainability
• Cancellation rates and pricing resilience

Relative Positioning: Within Japanese condo developers, FJ Next appears conservatively capitalized with mid-teens gross margin and strong interest coverage, positioning it to navigate market cycles, though cash flow volatility from development timing remains a core characteristic.

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