Keikyu Corporation FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥18.56B
• Net Income: ¥13.74B
• EPS: ¥56.22

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

Keikyu Corporation (TSE:9006) reported FY2026 Q2 (cumulative) consolidated results under JGAAP with operating income of ¥18.56bn (-2.3% YoY) and net income of ¥15.26bn (+11.7% YoY), indicating modest operating pressure but improved bottom-line performance. Ordinary income stood at ¥16.89bn, below operating income due to non-operating costs such as interest expense of ¥2.02bn, highlighting the drag from financial costs. Depreciation and amortization were ¥13.86bn, yielding EBITDA of ¥32.42bn and an EBIT-based interest coverage of roughly 9.2x, which is solid for a capital-intensive railway and real estate operator. While headline DuPont metrics based on reported revenue show zeros (due to undisclosed revenue), an economic ROE proxy using reported net income and period-end equity implies approximately 4.0% for the half-year (¥15.26bn / ¥383.27bn), which would annualize to the high single digits if H2 is comparable; this is an assumption given seasonality. The balance sheet shows total assets of ¥1,062.09bn, liabilities of ¥667.12bn, and equity of ¥383.27bn, implying financial leverage (assets/equity) of 2.77x. Liquidity is tight with a current ratio of 86.7% and quick ratio of 85.7%, and working capital is negative at -¥29.36bn, a common but still notable feature for Japanese railways with strong advance ticketing and short-term liabilities. Operating cash flow was -¥13.31bn, resulting in an OCF/Net Income ratio of -0.87, signaling weak earnings-to-cash conversion in the first half likely influenced by seasonality and working capital movements. Investing cash flow and cash balance were not disclosed in the provided XBRL, so free cash flow cannot be reliably calculated for this period; reported FCF of 0 should be treated as “not available.” Debt-to-equity of 1.74x suggests a meaningful but manageable leverage profile for the sector. The effective tax rate derived from available data is approximately 17.6% (¥2.98bn tax on roughly ¥16.89bn pre-tax), lower than statutory norms, supporting the YoY increase in net income despite modestly lower operating income. EBITDA of ¥32.42bn versus operating income of ¥18.56bn evidences a significant non-cash depreciation burden consistent with heavy fixed-asset intensity. Segment-level revenue and margins are not available, limiting the assessment of transport, real estate, and leisure contributions. Dividends were not disclosed (DPS reported as 0 in the feed), and payout and FCF coverage cannot be evaluated for this period based on the provided data. Overall, fundamentals point to steady core profitability with good interest coverage but pressured liquidity and negative OCF in the half. Key uncertainties include absent revenue data, undisclosed investing cash flows, and lack of dividend details, which constrain the depth of ratio analysis and cash flow-based conclusions.

Profitability Analysis

ROE decomposition is constrained by absent revenue and average equity data; however, using period-end equity, half-year ROE approximates 4.0% (¥15.26bn / ¥383.27bn), annualizing to around the high-single digits if H2 mirrors H1. Financial leverage is 2.77x (Assets ¥1,062.09bn / Equity ¥383.27bn), a typical level for private railways. Net profit margin and asset turnover are not computable from the feed because revenue is undisclosed; DuPont outputs showing 0% should be read as “not available.” Operating income declined 2.3% YoY while net income rose 11.7% YoY, implying non-operating improvements and/or a lighter tax burden. Interest expense of ¥2.02bn against EBIT of ¥18.56bn yields an interest coverage of ~9.2x, indicating comfortable debt service capacity at current earnings. EBITDA of ¥32.42bn highlights a sizable depreciation load (¥13.86bn), consistent with capital intensity and high fixed costs; this also implies operating leverage to volumes and pricing. Margin quality cannot be fully assessed without revenue and segment disclosure, but the positive YoY in net income with flat-to-slightly lower operating income suggests cost control and/or favorable below-OP items. Ordinary income was ¥16.89bn, ~¥1.67bn below operating income, reflecting the net burden of non-operating items, mainly interest. Tax expense of ¥2.98bn implies an effective rate near ~17.6% (based on ordinary/pre-tax income), supportive to net profit resilience. Overall, profitability is adequate with robust coverage ratios, but precision on margins and efficiency is limited by missing revenue data.

Growth Assessment

Operating income decreased modestly by 2.3% YoY to ¥18.56bn, indicating slight pressure at the core level, possibly from cost inflation or softer non-transport operations, though segment detail is unavailable. Net income rose 11.7% YoY to ¥15.26bn, supported by lower effective tax and stable non-operating burden relative to earnings capacity. Revenue was not disclosed, preventing analysis of volume, pricing, or mix trends across transport, real estate, and leisure segments. Depreciation remained significant (¥13.86bn), indicating continued capex deployment in prior periods that should support longer-term service quality and capacity, albeit with near-term earnings drag. Interest expense of ¥2.02bn is stable relative to EBITDA/EBIT, suggesting financial costs are not escalating materially this period. Given the capital-intensive nature of the business, earnings growth tends to hinge on ridership recovery, fare revisions, real estate leasing/sales cycles, and hotel/leisure demand; these cannot be quantified here due to absent segment data. Outlook-wise, if H2 seasonality (peak travel and event periods) normalizes, full-year net income can plausibly track at or above H1 annualized levels; however, this is an assumption and sensitive to demand and cost trajectories. The positive YoY net income despite lower operating income highlights some resilience, but sustainability will depend on revenue momentum and containment of energy and labor costs. Without disclosed investing cash flows, visibility on growth capex and pipeline remains limited, constraining forward growth assessment.

Financial Health

Total assets: ¥1,062.09bn; equity: ¥383.27bn; liabilities: ¥667.12bn. Financial leverage (A/E) is 2.77x and debt-to-equity is cited at 1.74x, indicating meaningful leverage typical for the sector. Liquidity is tight with current assets of ¥191.54bn versus current liabilities of ¥220.90bn, yielding a current ratio of 86.7% and quick ratio of 85.7%. Working capital is negative at -¥29.36bn, which can be structurally manageable for rail operators with steady cash inflows but reduces flexibility in stress scenarios. Interest coverage (~9.2x on EBIT) supports short-term solvency, while the large tangible asset base underpins borrowing capacity. Equity ratio reported in the feed as 0% reflects non-disclosure; economically, equity/assets are roughly 36.1% using provided balances. No cash and equivalents were disclosed, limiting assessment of immediate liquidity buffers. Overall solvency appears stable, but near-term liquidity is constrained and reliant on ongoing cash generation and access to committed lines or capital markets.

Cash Flow Quality

Operating cash flow was -¥13.31bn versus net income of ¥15.26bn, producing an OCF/Net Income ratio of -0.87, which indicates weak cash conversion in H1. Adding back depreciation (¥13.86bn) to net income suggests that sizable negative working capital movements and/or other cash adjustments drove the OCF deficit, consistent with seasonal patterns (bonus payments, tax payments, inventory/ticketing dynamics) in Japan. Investing cash flow was not disclosed (reported as 0), preventing calculation of free cash flow; the FCF figure shown as 0 should be read as “not available.” Financing cash flow was -¥16.33bn, implying net repayments and/or dividends, but dividends were not provided in the dataset so the split cannot be confirmed. With negative OCF, the period’s cash funding would have been supported by opening cash balances and/or financing; however, cash balances were not disclosed. Earnings quality is mixed: accounting profits are positive with strong coverage ratios, but cash realization is poor this half, likely timing-related. Sustained negative OCF beyond seasonality would be a concern given tight liquidity. Monitoring working capital drivers (receivables, payables, advances, and tax timing) is key.

Dividend Sustainability

Dividend data (DPS) and payout ratio are not disclosed in the provided feed for FY2026 Q2 (DPS and payout show as 0 due to non-reporting). EPS for the period is ¥56.22, but without dividend information and investing cash flows, we cannot assess payout ratio, FCF coverage, or adherence to any stated policy. Financing cash outflow of -¥16.33bn may include dividend payments, but this cannot be confirmed. In general, sustainability depends on stable OCF and manageable capex, both of which cannot be evaluated fully here due to missing investing cash flows and cash balance details. Until DPS is disclosed, dividend capacity should be considered indeterminate based on the provided data.

Risk Assessment

Business Risks:

• Demand variability in passenger transport (ridership, tourism, commuting patterns)
• Energy and utility cost inflation affecting operating margins
• Labor cost pressures and periodic bonus payments impacting seasonality
• Real estate market cyclicality affecting leasing and property sales
• Leisure/hotel segment sensitivity to macro and travel trends
• Regulatory and fare revision risks in transport operations
• Operational risks including safety incidents and service disruptions
• Project execution risk on large capex (rolling stock, stations, infrastructure)

Financial Risks:

• Tight liquidity (current ratio 86.7%, negative working capital of -¥29.36bn)
• High capital intensity requiring ongoing investment despite limited disclosed FCF
• Interest rate and refinancing risks given leverage (D/E 1.74x)
• Cash flow volatility from working capital timing (OCF/NI = -0.87 in H1)
• Potential constraints if investing cash flows are elevated (not disclosed this period)

Key Concerns:

• Negative operating cash flow in the half and absent investing cash flow disclosure
• Undisclosed revenue obscures margin and efficiency analysis
• Liquidity headroom appears limited without visibility on cash balances and facilities

Investment Implications

Key Takeaways:

• Core earnings are stable with operating income at ¥18.56bn (-2.3% YoY) and solid interest coverage (~9.2x).
• Net income grew 11.7% YoY to ¥15.26bn, aided by a relatively low effective tax rate (~17.6%).
• Liquidity is tight (current ratio 86.7%, negative working capital), increasing reliance on steady cash inflows and funding access.
• Cash conversion is weak this half (OCF/NI = -0.87), likely due to seasonal working capital but warrants monitoring.
• Leverage is meaningful but in line with capital-intensive peers (A/E 2.77x; D/E 1.74x).
• Lack of disclosed revenue and investing cash flow limits assessment of margin trends and FCF.

Metrics to Watch:

• Disclosure of revenue and segment breakdown (transport, real estate, leisure) to evaluate margins and mix
• OCF trends and working capital movements (receivables/payables, tax timing)
• Capex and investing cash flows to derive FCF and assess funding needs
• Net debt and net debt/EBITDA, interest coverage trajectory amidst rate environment
• Ridership volumes, fare revisions, and energy cost trends
• Current ratio and available liquidity buffers (cash, committed lines)

Relative Positioning: Within the private railway cohort, Keikyu exhibits typical capital intensity and leverage with solid interest coverage, but tighter near-term liquidity and missing revenue/FCF disclosures this period constrain visibility relative to peers that provide fuller interim breakdowns.

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