Nishi-Nippon Railroad Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥13.06B
• Net Income: ¥9.64B
• EPS: ¥216.25

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

For FY2026 Q2 (cumulative), Nishi-Nippon Railroad (Nishitetsu) delivered solid profit growth at the operating line and a sharp acceleration at the bottom line despite limited disclosures on revenue. Operating income was ¥13.06bn, up 3.0% YoY, indicating steady core earnings progress. Ordinary income reached ¥14.38bn, exceeding operating income and implying net financial/associate contributions were positive. Net income surged 78.6% YoY to ¥16.53bn, substantially outpacing operating income growth and pointing to sizable non-operating and/or extraordinary gains. Based on net income (¥16.53bn) and income tax expense (¥4.62bn), we infer pre-tax income of approximately ¥21.15bn and an effective tax rate near 21.9%, versus the provided 0.0% metric that reflects data gaps rather than true tax economics. The gap between ordinary income (¥14.38bn) and inferred pre-tax income (~¥21.15bn) suggests roughly ¥6.8bn in extraordinary gains, which likely drove the outsized YoY net income increase. EBITDA is estimated at ¥22.33bn (operating income plus D&A), underscoring strong cash earnings potential, though cash conversion was weak this half with operating cash flow (OCF) of -¥5.08bn. Liquidity remains adequate with a current ratio of 138.6% and quick ratio of 135.9%, supported by modest inventories (¥4.26bn). The capital structure looks balanced for the sector: total assets of ¥777.48bn, total equity of ¥264.26bn, and financial leverage (assets/equity) of 2.94x; liabilities-to-equity is 1.99x. Interest coverage is healthy at roughly 10.4x (operating income/interest expense), indicating comfortable debt service capacity. Working capital stands at ¥60.58bn, providing a cushion against near-term cash flow volatility. Dividend information is not disclosed for the period (DPS reported as 0.00 and payout ratio 0.0% reflect non-disclosure), so we cannot assess distributions or coverage. Key data constraints include unreported revenue and several calculated metrics defaulting to zero; analysis is therefore anchored on the disclosed profitability, balance sheet, and partial cash flow items. Overall, core profit growth appears steady, bottom-line strength is likely boosted by one-off factors, liquidity is sound, leverage is manageable, and near-term cash conversion is a watch-point.

Profitability Analysis

ROE_decomposition: Using available data, simple half-year ROE proxy ≈ net income / period-end equity = ¥16.53bn / ¥264.26bn ≈ 6.3% for the half; annualized 12–13% if trends persist. DuPont margins and asset turnover cannot be computed due to undisclosed revenue, but financial leverage is 2.94x (assets/equity). Ordinary-to-operating income uplift indicates supportive non-operating items; the step-up from ordinary to pre-tax (¥14.38bn to ~¥21.15bn) implies extraordinary gains that inflate ROE in this period. margin_quality: Operating income grew 3.0% YoY without revenue disclosure, suggesting modest margin and/or volume improvement in core operations. Net income growth (+78.6% YoY) far exceeds operating growth, indicating non-recurring or non-core gains materially aided bottom-line margins. Effective tax rate inferred at ~21.9%, consistent with normalizing tax burden despite the data table showing 0.0% due to missing inputs. operating_leverage: EBITDA of ¥22.33bn versus operating income of ¥13.06bn shows meaningful D&A (¥9.27bn), consistent with a capital-intensive rail/real estate model. Operating leverage appears controlled: modest operating profit growth suggests either disciplined cost management or stable demand, but the absence of revenue data prevents a precise read on fixed-cost absorption dynamics.

Growth Assessment

revenue_sustainability: Revenue is undisclosed this period; thus, top-line trajectory cannot be assessed directly. Given operating income grew 3.0% YoY, underlying demand and/or pricing likely remained stable to slightly positive across core transport and related segments. profit_quality: Profit quality is mixed: operating income growth is steady, but the large gap between ordinary income and inferred pre-tax points to extraordinary items (~¥6.8bn) driving net profit outperformance. Interest coverage at ~10.4x supports the view that core earnings are resilient, yet cash conversion (OCF/NI ≈ -0.31x) weakens quality in the half. outlook: Assuming normalization of one-off gains, net income growth should converge closer to operating trends in subsequent periods. Key determinants include ridership recovery, real estate leasing/hotel performance, fare and cost pass-through, and energy costs. With adequate liquidity and manageable leverage, the company appears positioned to sustain incremental operating improvement, contingent on macro demand and cost discipline.

Financial Health

liquidity: Current assets ¥217.68bn, current liabilities ¥157.11bn; current ratio 1.39x and quick ratio 1.36x indicate comfortable near-term liquidity. Working capital is ¥60.58bn, providing buffer against seasonal cash swings. solvency: Total liabilities ¥526.09bn versus equity ¥264.26bn yields liabilities/equity of 1.99x and financial leverage (assets/equity) of 2.94x. Interest expense is ¥1.25bn with operating income of ¥13.06bn, giving ~10.4x coverage—solid for the sector. capital_structure: Asset base ¥777.48bn funded by ~34% equity and ~66% liabilities (based on period-end balances). The mix is consistent with a capex- and asset-heavy model. Financing cash flow of +¥10.36bn suggests net borrowing or lower net repayments in the half, aligning with ongoing investment and refinancing needs.

Cash Flow Quality

earnings_quality: OCF/Net income is approximately -0.31x, indicating poor cash conversion in the half, likely driven by working capital outflows and seasonality. EBITDA of ¥22.33bn underscores strong pre-working-capital earnings capacity. FCF_analysis: Investing cash flow is undisclosed (reported as 0), so free cash flow cannot be reliably measured. Given D&A of ¥9.27bn, maintenance and strategic capex are likely material; absent investing data, we cannot assess FCF sustainability. working_capital: Current asset/liability structure and negative OCF imply a working capital drag this period. Inventories are minimal (¥4.26bn), so drivers likely include receivables/payables timing and advances/deposits typical of transport and real estate segments.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are not disclosed; the 0.00 entries reflect non-disclosure, not true zeros. With EPS of ¥216.25, any actual interim or full-year DPS cannot be evaluated against earnings. FCF_coverage: Unavailable due to undisclosed investing cash flow; OCF was negative in the half, which—if persistent—would pressure cash-based coverage, but seasonality may normalize in the second half. policy_outlook: No explicit guidance provided here. Without DPS history or policy disclosure in this dataset, we cannot infer payout stability or trajectory.

Risk Assessment

Business Risks:

• Demand variability in passenger transportation and tourism affecting core volumes
• Energy and utility cost inflation impacting operating margins
• Regulatory/fare-setting constraints and public policy changes
• Real estate market cyclicality influencing leasing and development profits
• Execution risk on large capex projects and project timing
• Labor cost pressures and staffing constraints

Financial Risks:

• Cash flow volatility (OCF negative this half) and working capital swings
• Refinancing and interest rate risk given sizable liabilities
• Potential normalization of extraordinary gains reducing bottom-line support
• Capex intensity potentially outpacing internally generated cash
• Pension/retirement benefit obligations typical of legacy operators

Key Concerns:

• Net income heavily boosted by likely one-off gains in H1
• Negative operating cash flow despite higher earnings
• Limited disclosure on revenue and investing cash flows obscures trend analysis

Investment Implications

Key Takeaways:

• Operating income up 3.0% YoY to ¥13.06bn indicates steady core performance
• Net income up 78.6% YoY to ¥16.53bn, likely aided by ~¥6.8bn in extraordinary gains
• Interest coverage robust at ~10.4x; leverage moderate with liabilities/equity at ~1.99x
• Liquidity solid (current ratio 1.39x; quick ratio 1.36x), working capital ¥60.58bn
• Cash conversion weak (OCF/NI ≈ -0.31x); watch for H2 normalization
• EBITDA ¥22.33bn underscores earnings capacity despite OCF weakness
• Dividend metrics not disclosed; payout sustainability cannot be assessed from this dataset

Metrics to Watch:

• OCF/Net income and working capital movements in H2
• Net debt and net debt/EBITDA once cash and investing data are disclosed
• Recurring operating profit growth excluding extraordinary items
• Ridership, fare mix, and yield indicators in transport
• Real estate NOI, occupancy, and development profit recognition
• Energy costs and cost pass-through effectiveness
• Capex outlays versus D&A and funding mix

Relative Positioning: Within the context of integrated private rail/operators in Japan, leverage and coverage appear within a typical range, core operating growth is modestly positive, and profitability this half is flattered by non-recurring gains; sustained assessment requires fuller disclosure of revenue and cash flow details.

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