Niigata Kotsu Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥10.29B
• Operating Income: ¥1.18B
• Net Income: ¥589M
• EPS: ¥165.35

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

Niigata Kotsu Co., Ltd. (Consolidated, JGAAP) delivered steady top-line and operating profit growth in FY2026 Q2, with revenue up 3.8% year over year to ¥10.29bn and operating income up 8.2% to ¥1.177bn. Profitability improved at the operating level, with an operating margin of roughly 11.4%, supported by a stable gross margin of 31.8%. Net income rose 7.8% to ¥635m, translating to a net margin of 6.17% and EPS of ¥165.35. Ordinary income of ¥958m sits between operating and net income, reflecting interest expense of ¥174.5m and non-operating items. Interest coverage stands at a comfortable 6.7x, indicating manageable near-term financing burden despite elevated leverage. The DuPont bridge suggests ROE of 3.23% driven by a 6.17% net margin, modest asset turnover of 0.183x (mid-year base), and financial leverage of 2.87x. On the balance sheet, total assets are ¥56.29bn and total equity is ¥19.63bn, implying an equity ratio around 34.9% (despite the reported 0.0% placeholder), with total liabilities of ¥37.39bn. Liquidity is tight: current assets of ¥4.91bn against current liabilities of ¥19.11bn yield a current ratio of 0.26x and negative working capital of roughly ¥14.20bn. This profile indicates reliance on short-term funding or unearned revenue structures typical in transportation-related businesses, warranting monitoring of refinancing and seasonality. The reported cash flow statement shows zeros, which indicates non-disclosure rather than true zero; therefore, cash conversion and free cash flow cannot be validated this quarter. Depreciation and EBITDA are also undisclosed, so operating leverage and non-cash expense intensity must be inferred from margins rather than standard EBITDA metrics. The implied effective tax rate is approximately 32–33% based on income tax of ¥308m and net income of ¥635m, even though a 0.0% effective tax rate is displayed in the calculated section. Dividend data show zero DPS and payout, which likely reflects lack of disclosure at this stage rather than a definitive policy; hence dividend capacity must be assessed using earnings and inferred cash generation. Overall, the company demonstrates improved profitability and solid interest coverage, but faces a constrained liquidity position and limited disclosure on cash flows. Asset intensity and modest asset turnover are consistent with transportation infrastructure businesses, and leverage amplifies ROE despite moderate margins. Key watchpoints include cash flow generation, working capital movements, interest costs, and any fare revisions or demand normalization trends in the region. The absence of reported cash flow and depreciation data is the main limitation for a full quality-of-earnings assessment this quarter.

Profitability Analysis

ROE_decomposition: Reported ROE is 3.23%, aligning with DuPont: Net Profit Margin 6.17% × Asset Turnover 0.183 × Financial Leverage 2.87 ≈ 3.23%. The ROE level suggests modest equity returns consistent with a capital-intensive operator; leverage contributes materially given relatively low turnover. margin_quality: - Gross margin: 31.8% (¥3,272m/¥10,290m), stable for a transportation/services mix and suggests reasonable cost control. - Operating margin: ~11.4% (¥1,177m/¥10,290m), expanded YoY alongside 8.2% operating income growth on 3.8% revenue growth, implying positive operating leverage. - Ordinary margin: ~9.3% (¥958m/¥10,290m) after non-operating items, notably interest. - Net margin: 6.17% (¥635m/¥10,290m). Interest expense equals ~1.7% of sales; the implied tax rate is ~32.6% (¥308m/¥943m pre-tax). operating_leverage: Operating income grew faster than revenue (8.2% vs. 3.8%), indicating operating leverage benefits from fixed cost absorption. Lack of D&A disclosure prevents EBITDA-based leverage analysis, but the expansion in operating margin suggests some scale efficiencies or mix improvements.

Growth Assessment

revenue_sustainability: Top-line growth of 3.8% YoY to ¥10.29bn is moderate and consistent with steady demand; for a regional transportation platform, growth likely reflects incremental ridership recovery/pricing and ancillary businesses. profit_quality: Operating income growth outpaced revenue, and ordinary income remained solid despite interest burden. Without OCF data, cash conversion cannot be verified, but the earnings mix appears balanced between core operations (operating income) and manageable non-operating items. outlook: With margins improving and interest coverage healthy, the near-term profit trajectory is constructive. Sustainability hinges on demand trends (ridership, tourism, charter services), cost pressures (fuel, wages), and any regulatory fare adjustments. Given capital intensity, depreciation and maintenance capex trends (undisclosed) will be key to medium-term earnings durability.

Financial Health

liquidity: Current assets ¥4.91bn vs. current liabilities ¥19.11bn yields a current ratio of 0.26x and quick ratio ~0.25x, indicating tight liquidity and reliance on short-term financing or deferred revenue structures. Working capital is -¥14.20bn. solvency: Total liabilities ¥37.39bn and equity ¥19.63bn imply debt-to-equity of ~1.90x and equity ratio ~34.9%. Interest coverage at 6.7x suggests the current interest load is serviceable, but refinancing risk should be monitored given the short-term skew in liabilities. capital_structure: Financial leverage (Assets/Equity) is 2.87x, in line with sector norms for asset-heavy transport. The mix between short- and long-term obligations appears tilted toward current liabilities, elevating rollover and liquidity management importance.

Cash Flow Quality

earnings_quality: Cash flow statement items are undisclosed (reported as zero), preventing verification of cash earnings and working capital cash effects. The improved operating margin supports earnings quality, but confirmation via OCF is not available. FCF_analysis: Free cash flow cannot be computed due to missing OCF and capex data (D&A also undisclosed). Given the asset intensity of transportation, sustaining capex could be meaningful; thus FCF may be more constrained than net income implies. working_capital: Negative working capital of ~¥14.20bn indicates reliance on current liabilities. This can be structurally acceptable in certain service models but heightens sensitivity to timing of receipts/payables and short-term funding conditions.

Dividend Sustainability

payout_ratio_assessment: EPS is ¥165.35, but DPS is shown as ¥0.00 (likely undisclosed). Therefore, payout ratio cannot be reliably assessed this quarter. FCF_coverage: Free cash flow data are unavailable; thus FCF coverage of dividends cannot be evaluated. policy_outlook: Given improving profits and manageable interest coverage, capacity exists for dividends in principle, but sustainability will depend on actual OCF, capex needs, and liquidity management. Clarity will improve once cash flow and dividend policy disclosures are provided.

Risk Assessment

Business Risks:

• Demand volatility in regional passenger transportation (ridership levels, tourism flows).
• Cost inflation in fuel and wages affecting margins.
• Labor shortages and overtime regulations impacting service capacity and costs.
• Regulatory constraints on fare revisions and service obligations.
• Maintenance and safety-related capex requirements typical of transport operations.

Financial Risks:

• Tight liquidity with a current ratio of ~0.26x and negative working capital.
• Refinancing/rollover risk due to high current liabilities.
• Interest rate risk affecting interest expense and coverage.
• Cash flow visibility risk due to lack of disclosed OCF and capex data.
• Leverage sensitivity: D/E ~1.90x and Assets/Equity 2.87x amplify earnings volatility.

Key Concerns:

• Absence of cash flow disclosure prevents validation of earnings-to-cash conversion.
• Short-term liability concentration amid negative working capital.
• Unreported depreciation and capex hinder assessment of maintenance needs and FCF.

Investment Implications

Key Takeaways:

• Steady revenue growth (+3.8% YoY) with stronger operating profit growth (+8.2%).
• Margins improved: operating margin ~11.4%, net margin 6.17%.
• Interest coverage solid at 6.7x despite leverage.
• Liquidity tight: current ratio ~0.26x; working capital -¥14.20bn.
• ROE 3.23% driven by moderate margins, low turnover, and leverage.
• Cash flow and depreciation not disclosed, limiting FCF assessment.
• Equity ratio inferred at ~34.9% despite reported placeholder of 0.0%.

Metrics to Watch:

• Operating cash flow and capex once disclosed (FCF trajectory).
• Working capital movements and short-term debt rollovers.
• Ridership/volume trends and fare adjustments.
• Fuel and labor cost indices and their pass-through.
• Interest expense run-rate and coverage.
• Depreciation trend vs. maintenance capex (asset sustainability).

Relative Positioning: Within regional transportation peers, Niigata Kotsu exhibits improving operating profitability and adequate interest coverage but weaker liquidity and limited disclosure on cash flows this quarter; leverage and asset intensity are in line with sector characteristics, while cash generation and capex discipline remain the main unknowns.

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
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