Odakyu Electric Railway Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥28.03B
• Net Income: ¥33.07B
• EPS: ¥66.83

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

Odakyu Electric Railway Co., Ltd. (TSE:9007) reported FY2026 Q2 (cumulative) consolidated results under JGAAP with operating income of ¥28.0bn (-3.5% YoY) and net income of ¥23.1bn (-30.1% YoY). Top-line figures were not disclosed in the provided data, limiting margin analysis; however, profitability at the operating level appears relatively resilient compared with the sharp YoY decline in the bottom line. The larger contraction in net income versus operating income implies deterioration in non-operating items and/or taxation, consistent with interest expense of ¥2.24bn and a likely normalization of special gains versus the prior year. Ordinary income was ¥27.5bn, slightly below operating income, indicating minor net non-operating expense in the period. EPS for the half year was ¥66.83. Balance sheet strength remains sound: total assets were ¥1,359.9bn, total liabilities ¥820.7bn, and total equity ¥494.2bn, implying an equity ratio of roughly 36.4% despite the reported line showing 0.0% (undisclosed). Financial leverage (assets/equity) is 2.75x and debt-to-equity is 1.66x (total liabilities/equity), both reasonable for a railway and real-estate integrated operator. Liquidity is tight with a current ratio of 41.0% and quick ratio of 40.2%, a common sector characteristic given advance receipts and interest-bearing liabilities, but nonetheless a monitoring point as rates remain elevated. Working capital is negative at approximately -¥203.2bn. Interest coverage is a comfortable 12.5x (operating income/interest expense), supporting near-term solvency. Cash flow details (OCF/ICF/FCF) were not disclosed, so free cash flow assessment is constrained; depreciation was also undisclosed, limiting EBITDA analysis. Dividend information shows zero due to non-disclosure; Odakyu historically pays dividends, so payout assessment requires caution. Using end-period equity, half-year net income implies an indicative annualized ROE in the high single digits (around 9–10%), driven primarily by moderate leverage rather than confirmed margins or asset turnover (both undisclosed). Overall, the operating trend appears stable to slightly softer YoY, with bottom-line volatility likely tied to non-operating and tax items; the balance sheet provides buffer, but liquidity metrics and the rate environment warrant attention. Data gaps necessitate careful interpretation and follow-up with full disclosures and segment details (railway, bus, retail, real estate, hotels).

Profitability Analysis

ROE_decomposition: DuPont components are partially unavailable. Net profit margin and asset turnover cannot be calculated from the provided data due to undisclosed revenue; financial leverage is 2.75x (assets/equity = ¥1,359.9bn/¥494.2bn). Using period-end equity, half-year ROE proxy ≈ 4.7% (¥23.1bn/¥494.2bn), annualized ~9–10%. The YoY decline in net income vs a modest decline in operating income suggests margin pressure at the non-operating level and/or higher effective taxation, not necessarily a significant deterioration in core operating margin. margin_quality: Operating income declined 3.5% YoY, indicating modest compression at the core level. Ordinary income of ¥27.5bn is slightly below operating income, implying net non-operating expense (e.g., interest, other) offsetting any non-operating gains. The large drop in net income (-30.1% YoY) points to unfavorable below-operating-line items (specials, equity-method swing, or taxes). Absent revenue, operating margin cannot be verified; given the sector, margin mix likely benefits from real estate and non-rail businesses, cushioning railway cost inflation. operating_leverage: Given missing revenue, formal operating leverage cannot be quantified. However, the smaller decline in operating income relative to net income suggests cost controls helped mitigate volume/mix pressures. Interest coverage at 12.5x indicates that financial leverage did not materially amplify operating softness this half.

Growth Assessment

revenue_sustainability: Revenue is undisclosed. Sector context suggests continued recovery/stabilization in passenger traffic, tourism, and retail, with incremental pricing and ancillary revenues; real estate leasing and development likely provide steady base. Confirmation requires segment disclosure. profit_quality: Operating income (-3.5% YoY) indicates resilient core earnings. Ordinary vs operating income gap and the sharp net income decline point to non-operating/tax-driven volatility. EPS of ¥66.83 for H1 is consistent with positive profitability but below the prior-year trajectory. outlook: Assuming stable mobility demand, gradual fare/pricing benefits, and steady real estate contributions, H2 should maintain profitability. Key swing factors: energy costs, wage inflation, tourism and inbound recovery, and interest expenses. Full-year growth visibility depends on the absence of large one-off gains/losses that affected YoY comparability.

Financial Health

liquidity: Current ratio 41.0% (¥141.1bn/¥344.3bn) and quick ratio 40.2% reflect tight liquidity typical for railways; negative working capital of -¥203.2bn underscores reliance on short-term funding and advance receipts. Monitoring cash buffers and committed lines is important given missing cash disclosures. solvency: Debt-to-equity is 1.66x (total liabilities/equity). Implied equity ratio is ~36.4% (¥494.2bn/¥1,359.9bn), providing a solid capital cushion. Interest coverage of 12.5x suggests comfortable serviceability under current earnings. capital_structure: Assets ¥1,359.9bn funded by ¥820.7bn liabilities and ¥494.2bn equity; leverage (A/E) 2.75x aligns with sector norms. With rates elevated, incremental refinancing costs could pressure ordinary income, though current coverage is ample.

Cash Flow Quality

earnings_quality: OCF is undisclosed, preventing OCF-to-net income analysis; calculated OCF/NI ratio appears as 0.00 due to non-disclosure, not underlying weakness. Depreciation is also undisclosed, limiting accruals and EBITDA assessment. FCF_analysis: Investing and financing cash flows are undisclosed; FCF cannot be derived. Given capex intensity in rail and property, H1 FCF may be seasonally negative even when earnings are solid. Verification requires capex and OCF details. working_capital: Negative working capital (-¥203.2bn) is typical for the business model (advance tickets, deposits, short-term borrowings). Inventory is small at ¥2.5bn, consistent with services orientation; WC swings can materially affect quarterly OCF.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are undisclosed here (zeros reflect non-reporting). Historically, Odakyu pays dividends, and H1 EPS is ¥66.83. A normalized payout assessment requires full-year EPS guidance and policy disclosure. FCF_coverage: FCF data are unavailable. Coverage cannot be assessed without OCF and capex. Given capital intensity, sustainable dividends typically rely on stable OCF from core rail/real estate; confirmation pending full cash flow statements. policy_outlook: Assuming continued profitability and stable leverage, the company is positioned to maintain a policy-aligned dividend, subject to investment needs (infrastructure, safety, rolling stock) and interest rate trends.

Risk Assessment

Business Risks:

• Passenger demand elasticity to macro slowdown and remote-work normalization
• Energy and utility cost inflation impacting rail operations
• Tourism and inbound recovery sensitivity to currency and geopolitical conditions
• Real estate market cyclicality affecting leasing and development profits
• Labor cost pressures amid tight labor markets
• Regulatory and safety compliance costs in rail operations

Financial Risks:

• Tight liquidity (current ratio 41%) and reliance on short-term funding
• Interest rate risk impacting interest expense and refinancing costs
• Potential volatility from non-operating items and special gains/losses
• Capex intensity driving periodic negative FCF
• Covenant or rating considerations if earnings soften

Key Concerns:

• Net income down 30.1% YoY despite modest operating income decline
• Cash flow data (OCF/ICF/FCF) undisclosed, constraining FCF and payout visibility
• Short-term liquidity is tight; monitoring cash and committed facilities is essential
• Equity ratio reported as 0.0% in summary but implied ~36.4%; ensure consistency in disclosures

Investment Implications

Key Takeaways:

• Core operating performance is relatively resilient (OI -3.5% YoY) versus a sharp net income decline
• Balance sheet leverage is moderate with implied equity ratio ~36%
• Interest coverage is solid at 12.5x, mitigating near-term rate pressure
• Liquidity is structurally tight (current ratio 41%), a key monitoring area
• Data gaps (revenue, cash flows, depreciation, dividend) limit margin and FCF assessments
• Half-year ROE proxy annualizes to high single digits, driven by moderate leverage

Metrics to Watch:

• Revenue and segment breakdown (Railway, Bus, Real Estate, Retail, Hotels) once disclosed
• OCF and capex to gauge FCF trajectory and dividend capacity
• Non-operating items and tax rate normalization impacting net income
• Interest expense trend and refinancing schedule
• Passenger volumes, fare yields, and inbound/tourism indicators
• Energy costs and wage inflation pass-through

Relative Positioning: Within the Japanese private railway peer set, Odakyu’s leverage and equity buffer appear in line with norms, operating earnings are resilient, and interest coverage is healthy; liquidity tightness is typical for the sector but warrants monitoring, while bottom-line volatility underscores sensitivity to non-operating items.

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