Keifuku Electric Railroad Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.65B
• Operating Income: ¥1.53B
• Net Income: ¥1.00B
• EPS: ¥482.22

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

Keifuku Electric Railroad (TSE: 90490) delivered solid FY2026 Q2 consolidated results under JGAAP, with revenue of ¥7.651bn, up 4.8% YoY, indicating steady recovery and/or resilience in core transport and related businesses. Operating income rose 6.0% YoY to ¥1.528bn, outpacing topline growth and implying some operating leverage and/or mix improvement. Ordinary income of ¥1.533bn was slightly above operating income, suggesting a small net positive contribution from non-operating items despite ¥24m in interest expense. Net income increased 7.9% YoY to ¥958m, translating to an EPS of ¥482.22. The implied operating margin is approximately 20.0% (¥1.528bn/¥7.651bn), while the provided net margin is 12.52%, both healthy for a regional railway and associated businesses. DuPont metrics indicate ROE of 6.50% driven by a net margin of 12.52%, asset turnover of 0.307x, and financial leverage of 1.69x. Balance sheet strength appears solid with total assets at ¥24.948bn, liabilities at ¥11.597bn, and equity at ¥14.728bn, implying an equity ratio of roughly 59.1% (calculated), notwithstanding the reported equity ratio field shows 0.0% (undisclosed). Liquidity is tight in the near term with a current ratio of 95.9% and negative working capital of ¥237m, though manageable given the company’s scale and stable cash-generation profile typical of rail operations. Interest coverage is strong at 63.7x, reflecting low financing burden relative to earnings. Effective tax expense is reported at ¥481m; using ordinary income as a proxy for pre-tax profit implies an effective tax rate around the low 30% range, which is consistent with Japan’s statutory levels. All cash flow figures, DPS, and share count are shown as zero and should be treated as undisclosed, not actual zero values; this limits assessment of free cash flow and dividend capacity. Given the absence of cash flow data, we infer cash earnings quality from accrual metrics and stability in margins, but acknowledge higher uncertainty. The company’s asset turnover of 0.307x is typical for capital-intensive transportation and indicates stable utilization. Leverage is moderate with a debt-to-equity ratio of 0.79x, consistent with sector norms for regional rails. Overall, profitability improved on both operating and net levels, balance sheet solvency appears sound, but near-term liquidity is slightly below 1.0x and cash flow visibility is limited due to nondisclosure.

Profitability Analysis

ROE of 6.50% decomposes into: Net Profit Margin 12.52% × Asset Turnover 0.307 × Financial Leverage 1.69. The operating margin is about 20.0% (¥1,528m/¥7,651m), suggesting solid cost control and/or favorable mix. Ordinary income (¥1,533m) slightly exceeds operating income, implying minor positive non-operating balance despite ¥24m interest expense. The spread between operating and net income is consistent with normal tax and non-controlling/extraordinary items; implied effective tax rate is roughly 31% (¥481m/¥1,533m), though exact pre-tax income was not disclosed. EBITDA and gross profit are undisclosed (shown as zero), so margin quality is assessed via operating margin and net margin; both indicate healthy underlying profitability for a regional transport operator. Operating leverage appears modestly positive as operating income growth (+6.0% YoY) outpaced revenue growth (+4.8% YoY), suggesting incremental margins were favorable in 1H.

Growth Assessment

Revenue grew 4.8% YoY to ¥7.651bn, reflecting steady demand recovery and/or pricing in core rail and related segments. Operating income rose 6.0% YoY to ¥1.528bn, implying improved efficiency or favorable mix. Net income growth of 7.9% demonstrates good flow-through from operations to bottom line. The small positive gap between ordinary and operating income suggests limited earnings volatility from non-operating items. With asset turnover at 0.307x, expansion is constrained by capital intensity but stable utilization is evident. Sustainability of revenue growth likely hinges on passenger volumes (tourism, commuting), fare revisions, and ancillary businesses. Profit quality appears decent given the margins and strong interest coverage; however, lack of cash flow disclosure limits confirmation of cash conversion. Outlook near term remains cautiously constructive assuming stable ridership and energy cost normalization; risks include energy price spikes and adverse weather/natural disasters that can impact services.

Financial Health

Total assets ¥24.948bn, total liabilities ¥11.597bn, and total equity ¥14.728bn imply an equity ratio near 59.1% (calculated), signaling strong solvency despite the reported 0.0% (undisclosed) equity ratio field. Debt-to-equity is 0.79x, indicating moderate leverage consistent with the sector. Interest coverage is robust at 63.7x (operating income/interest expense), implying low refinancing risk under current earnings. Liquidity is tight with current assets of ¥5.566bn vs current liabilities of ¥5.803bn (current ratio 95.9%), and minimal inventories (¥9m), resulting in a quick ratio of 95.8%. Working capital is negative at ¥237m; while not alarming for a stable cash-generative rail, it warrants monitoring for seasonal swings. No cash and cash equivalents figure is disclosed (shown as zero), limiting direct assessment of immediate liquidity buffers.

Cash Flow Quality

Operating, investing, and financing cash flows are undisclosed (shown as zero), preventing direct analysis of cash conversion or FCF. OCF/Net Income and FCF metrics shown as 0.00 should be treated as not available rather than actual values. Earnings quality must therefore be inferred from accrual metrics: stable operating margin (~20%) and strong interest coverage suggest underlying cash generation is likely adequate for operations. Working capital is slightly negative (¥237m), which can support cash generation if payables exceed receivables, but may also introduce rollover risk if suppliers tighten terms. Capex requirements for rolling stock and infrastructure are typically sizable and lumpy; absent investing CF data, we cannot judge maintenance vs growth capex or FCF sustainability. Overall, cash flow assessment remains constrained by disclosure limits; future filings with CF statements are needed to validate earnings-to-cash conversion.

Dividend Sustainability

Annual DPS and payout ratio are shown as 0.00, indicating non-disclosure rather than actual zero payout. Without OCF and FCF, coverage of dividends cannot be assessed quantitatively. From earnings alone, net income of ¥958m could theoretically support a modest payout, but capex intensity in rail businesses often necessitates retaining cash. Balance sheet strength (calculated equity ratio ~59%) supports long-term capacity, yet near-term liquidity (current ratio 95.9%) suggests prudence. Dividend policy outlook thus remains indeterminate pending disclosure of cash flows, capex plans, and board policy updates.

Risk Assessment

Business Risks:

• Ridership volatility due to tourism cycles, demographics, and macro conditions
• Energy and electricity cost fluctuations impacting operating expenses
• Natural disasters and weather disruptions affecting operations and assets
• Regulatory and fare revision constraints
• Capital intensity and long asset lives requiring ongoing maintenance capex
• Labor cost inflation and skilled labor availability
• Safety, accident, and reputational risks inherent to rail operations

Financial Risks:

• Tight near-term liquidity with current ratio below 1.0x
• Refinancing and interest rate risk on outstanding debt despite strong coverage
• Potential working capital rollover risk given negative working capital
• Cash flow visibility is low due to undisclosed OCF/FCF
• Capex funding requirements could pressure free cash flow and leverage

Key Concerns:

• Lack of cash flow disclosure impedes assessment of earnings quality and FCF
• Equity ratio field shows 0.0% despite strong calculated equity; reliance on calculated solvency metrics
• Dividend capacity cannot be evaluated without DPS and OCF/FCF information

Investment Implications

Key Takeaways:

• Topline grew 4.8% YoY with operating income up 6.0%, indicating improving operating leverage
• Healthy profitability with ~20% operating margin and 12.5% net margin
• ROE of 6.5% reflects solid margin, modest asset turnover, and moderate leverage
• Balance sheet solvency is strong (calculated equity ratio ~59%), though liquidity is slightly tight
• Interest burden is low with 63.7x coverage
• Cash flow and dividend metrics are undisclosed, constraining FCF and payout analysis

Metrics to Watch:

• Passenger volumes, load factors, and fare revisions
• Energy and electricity costs vs revenue pass-through
• Operating margin trajectory and cost discipline
• OCF/Net income and FCF once cash flow statements are disclosed
• Capex commitments for rolling stock/infrastructure and funding mix
• Debt maturity profile and interest rate sensitivity
• Working capital trends and current ratio recovery above 1.0x

Relative Positioning: Within Japan’s regional railway peers, Keifuku exhibits respectable margins and a solid solvency profile with moderate leverage; however, current liquidity is tighter than ideal and disclosure gaps on cash flows and dividends limit comparability on FCF-based metrics.

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