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

Financial Highlights

• Operating Income: ¥2.80B
• Net Income: ¥1.59B
• EPS: ¥123.47

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

Sanyo Electric Railway Co., Ltd. (consolidated, JGAAP) reported solid profitability for FY2026 Q2, highlighted by operating income of ¥2.801bn (+27.7% YoY) and net income of ¥2.743bn (+72.0% YoY). Despite the absence of disclosed revenue and cash flow figures in this dataset, the sizable YoY uplift at the operating level indicates improved core earnings momentum, likely driven by transportation demand normalization and cost discipline. Ordinary income of ¥2.864bn suggests positive non-operating results, even after ¥150m in interest expense, implying other non-operating gains (e.g., dividends/equity-method income, miscellaneous income). Using reported income tax expense of ¥702m, implied profit before taxes is approximately ¥3.445bn, pointing to net extraordinary gains of about ¥0.58bn in the half (difference between implied PBT and ordinary income). The implied effective tax rate is roughly 20.4% (¥702m/¥3.445bn), notably healthier than the placeholder “0.0%” shown in the provided calculated metrics. EPS was ¥123.47 for the half. On the balance sheet, total assets were ¥122.09bn with total liabilities of ¥65.12bn and total equity of ¥60.05bn, indicating a leverage ratio (assets/equity) of about 2.03x. Liquidity metrics are tight but manageable, with a current ratio of 95.2% and quick ratio of 90.4%, and working capital of approximately -¥0.96bn. Solvency appears sound, evidenced by a debt-to-equity ratio of 1.08x and strong interest coverage of 18.7x, consistent with the stable cash-flow characteristics of rail operations. The improvement in net income outpaced operating income growth, underpinned by non-operating and extraordinary items, which may not be recurring. Given real estate and ancillary segments typical to private railways, contributions beyond core rail can amplify earnings but also introduce variability. Equity totaled ¥60.05bn, supporting an annualized ROE in the high single digits based on H1 run-rate assumptions (acknowledging data limitations). The asset-liability-equity totals show a modest mismatch in this extract, which may reflect rounding, reporting timing, or presentation differences in the interim statement. Cash flow data and revenue were not disclosed in this dataset, limiting margin and cash conversion analysis; conclusions therefore focus on the reported profit and balance sheet items. Overall, core profitability is trending positively with supportive leverage and coverage metrics, but sustainability depends on the persistence of traffic recovery, cost control, and the one-off nature of extraordinary gains.

Profitability Analysis

ROE_decomposition: With revenue undisclosed, a full DuPont decomposition is constrained. Using H1 net income of ¥2.743bn and period-end equity of ¥60.05bn, half-year ROE is ~4.6%; annualized run-rate ROE approximates ~9–9.5% if H2 is similar. Financial leverage is about 2.03x (assets/equity). Net margin and asset turnover cannot be computed from the provided data. margin_quality: Operating income grew 27.7% YoY to ¥2.801bn, indicating improved underlying margins or mix even without disclosed revenue. Ordinary income of ¥2.864bn exceeds operating income by ~¥63m net, despite ¥150m interest expense, implying non-operating income (roughly ¥210m) offsetting financing costs. The implied effective tax rate is ~20.4% based on ¥702m tax against ~¥3.445bn PBT. operating_leverage: The sharp YoY growth in operating income suggests positive operating leverage, likely from passenger volume recovery and cost normalization. However, the 72% YoY increase in net income also reflects approximately ¥0.58bn of extraordinary gains, which inflate bottom-line growth beyond core leverage effects.

Growth Assessment

revenue_sustainability: Revenue is not disclosed in this dataset; however, the operating income trajectory (+27.7% YoY) implies improving topline and/or margin dynamics. For a commuter-rail centric operator, ridership recovery, fare revisions, and ancillary businesses (real estate/retail) typically underpin sustainability. profit_quality: Net income growth (+72% YoY) outpaced operating income growth due to non-operating and extraordinary gains. Estimated extraordinary gains of ~¥0.58bn in H1 elevated PBT above ordinary income, suggesting a portion of bottom-line growth may be non-recurring. outlook: Assuming stable ridership momentum, controlled electricity and personnel costs, and steady real estate contributions, H2 should remain solid. Key swing factors include energy prices, timetable/fare adjustments, leisure/inbound demand, and one-off gains or losses.

Financial Health

liquidity: Current ratio 95.2% and quick ratio 90.4% indicate tight near-term liquidity but not distress; working capital is about -¥0.96bn (current assets ¥19.14bn vs. current liabilities ¥20.10bn). Inventory is modest at ¥0.96bn, consistent with the rail profile. solvency: Debt-to-equity at 1.08x and financial leverage ~2.03x point to a moderate leverage structure. Interest coverage of 18.7x (EBIT/interest using ¥2.801bn OI and ¥150m interest expense) is strong for the half. capital_structure: Total assets ¥122.09bn vs. equity ¥60.05bn and liabilities ¥65.12bn suggest a conventional rail operator balance sheet. Minor discrepancies between the sum of liabilities and equity versus assets in this extract likely reflect rounding/presentation differences.

Cash Flow Quality

earnings_quality: Cash flow figures (OCF/ICF/FCF) are not disclosed here; thus, cash conversion cannot be assessed. The reliance on extraordinary gains (~¥0.58bn estimated) lowers the quality of earnings relative to pure operating profitability. FCF_analysis: Free cash flow is undisclosed. Given the capital intensity of rail (maintenance capex, rolling stock, safety investments), FCF can be volatile across halves; absent data, no definitive assessment can be made. working_capital: Working capital is slightly negative at ~-¥0.96bn. With stable ticketing inflows and predictable payables, modest negative working capital is not unusual for rail operators, but monitoring payables days and accrued expenses is prudent.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratios are not disclosed in this dataset. Using EPS of ¥123.47 (H1), any interim or annual dividend coverage cannot be computed from the provided data. FCF_coverage: FCF data is not available; dividend coverage by FCF cannot be assessed. policy_outlook: Private railways in Japan often target stable or progressively increasing dividends aligned with earnings stability; sustainability at Sanyo Electric Railway will hinge on recurring operating profit, capex cadence, and leverage targets.

Risk Assessment

Business Risks:

• Passenger demand sensitivity to macro conditions, demographics, and telework trends
• Energy and electricity cost volatility affecting rail operating expenses
• Exposure to real estate and retail segments, which can introduce cyclical earnings variability
• Regulatory and fare revision constraints impacting pricing power
• Weather, disasters, and operational incidents disrupting service
• Competition/substitution from other transport modes

Financial Risks:

• Tight liquidity indicated by sub-1.0 current ratio and negative working capital
• Interest rate risk on refinancing despite currently strong coverage
• Capex intensity for maintenance and safety potentially pressuring FCF
• Earnings sensitivity to non-operating/extraordinary items

Key Concerns:

• Sustainability of H1 extraordinary gains (~¥0.58bn) that boosted net income
• Absence of disclosed cash flow data limits assessment of earnings-to-cash conversion
• Potential cost pressures from energy and wage inflation

Investment Implications

Key Takeaways:

• Core profitability improved: operating income ¥2.801bn (+27.7% YoY) with strong interest coverage (18.7x).
• Bottom-line growth (+72% YoY) benefited from an estimated ~¥0.58bn in extraordinary gains.
• Leverage moderate (D/E 1.08x; assets/equity ~2.03x); liquidity tight (current ratio 95.2%).
• Data gaps (revenue, cash flows, DPS) constrain margin and cash conversion analysis.

Metrics to Watch:

• Ridership trends and fare mix in H2
• Energy/electricity costs and cost pass-through
• Ordinary vs. extraordinary items to gauge recurring earnings
• Capex plans and disclosed OCF/FCF to assess dividend capacity
• Interest coverage and refinancing profile
• Progress in real estate/ancillary segments

Relative Positioning: Within the Japanese private railway peer set, Sanyo Electric Railway exhibits improving core profitability and robust coverage typical of the sector, with somewhat tighter short-term liquidity and higher reliance on non-operating/extraordinary gains this half compared to larger peers that often display more diversified earnings and stronger disclosed cash flow profiles.

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
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