ENSHU TRUCK CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥24.72B
• Operating Income: ¥1.43B
• Net Income: ¥972M
• EPS: ¥130.19

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

FY2026 Q2 (cumulative) results for Enshu Truck (9057) were solid on profitability and liquidity, but capital efficiency remains weak with sub-target ROIC. Revenue reached 247.22 (100M JPY), with operating income of 14.27 (-3.6% YoY) and net income of 9.72 (-7.4% YoY). Operating margin stands at about 5.8% (14.27/247.22), while net margin is 3.9%, indicating modest profitability for a logistics operator. Ordinary income was 14.30 (-3.2% YoY), underscoring small but manageable non-operating items (non-op income 0.38 vs non-op expenses 0.36). EBITDA was 20.34, implying an EBITDA margin of 8.2% and healthy interest coverage of 40.8x, pointing to strong debt service capacity. Cash generation quality is acceptable with OCF of 10.25 roughly matching net income (OCF/NI = 1.05x). Liquidity is robust: current ratio at 153% and working capital at 40.38, backed by cash and deposits of 59.43. Leverage is moderate with total liabilities to equity at 0.66x and loans totaling 87.37 (short 17.67, long 69.70). However, ROIC at 3.6% is below the 5% warning threshold, flagging capital efficiency as the key weakness. DuPont shows low financial leverage (1.66x) and middling asset turnover (0.626), constraining ROE (4.1%) despite a reasonable net margin for the sector. Margin trend in basis points cannot be precisely quantified due to missing revenue YoY, but the decline in operating and net profit suggests mild compression. Earnings quality looks clean with limited reliance on non-operating gains and a pragmatic tax rate of 32.4%. Investment CF detail is unreported, but disclosed capex of 8.16 implies FCF of roughly 2.09 (OCF – capex), positive but thin relative to implied dividends if the 74.5% payout ratio is annualized. Dividend sustainability hinges on maintaining OCF above capex and the level of annual shareholder returns; coverage clarity is limited by unreported dividend cash flow. Looking forward, improving ROIC via asset turnover gains (utilization, mix) and disciplined capex will be critical to lift shareholder returns while sustaining a relatively high payout policy.

Profitability Analysis

ROE (4.1%) = Net Profit Margin (3.9%) × Asset Turnover (0.626) × Financial Leverage (1.66x). The binding constraint on ROE is capital efficiency: both asset turnover and financial leverage are modest, while net margin is adequate for a logistics business. The most impactful lever to improve ROE is asset turnover; balance sheet is sizable (assets 394.71) relative to revenue (247.22). Business drivers likely include network utilization and depot/fleet productivity; depreciation (6.07) signals an asset-heavy model that needs higher throughput to lift returns. The current margin profile (operating ~5.8%, EBITDA 8.2%) appears supported by operating discipline and low non-operating dependence (net non-op ~+0.02), suggesting recurring quality. Sustainability: margins should be defensible if cost pass-through (fuel, labor) continues; however, any volume softness or wage/fuel pressure would squeeze operating margin given limited operating leverage. Without YoY revenue or gross profit, we cannot confirm margin expansion/compression in bps; profit declines imply mild margin pressure or mix headwinds. Watch for SG&A discipline: SG&A is 6.51 (2.6% of revenue), but YoY growth vs revenue is not available; a rising SG&A ratio without growth would be a concern.

Growth Assessment

Top-line trajectory is unclear due to missing YoY revenue; profit declines (-3.6% operating, -7.4% net) point to softer growth or lower margin mix. Profit quality looks recurring: ordinary income tracks operating income closely and non-operating items are minor. EBITDA growth is not disclosed, but the 8.2% margin suggests stable underlying operations. Revenue sustainability will hinge on freight demand, utilization, and pricing; regulatory changes around driver hours (the 2024 logistics reforms) may constrain capacity and raise costs but can support pricing if pass-through is effective. With ROIC at 3.6%, incremental growth must be returns-accretive; expansion without utilization uplift risks further diluting capital efficiency. Near-term outlook: stable-to-cautious, supported by liquidity and balance sheet strength, but with pressure to improve asset productivity.

Financial Health

Liquidity is strong: current ratio 153.2%, quick ratio 153.2%, and working capital 40.38 indicate ample short-term coverage. No warning on current ratio (<1.0) or excessive leverage (D/E >2.0); D/E (total liabilities/equity) is 0.66x. Cash and deposits (59.43) comfortably exceed short-term loans (17.67), limiting maturity mismatch risk; current assets (116.33) exceed current liabilities (75.95). Long-term loans of 69.70 are manageable given EBITDA of 20.34 and very strong interest coverage of 40.77x. Equity is solid at 238.26 with retained earnings of 213.35, indicating accumulated profitability. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

OCF/Net Income is 1.05x, clearing the 0.8x quality threshold; earnings are broadly cash-backed. Using disclosed capex (8.16), implied FCF is approximately 2.09 for the period, positive but thin relative to potential dividend and debt service outflows. Financing CF is -10.36, suggesting net repayments/dividends; exact dividend cash amount was not disclosed. Working capital detail is limited (AR/AP unreported), but the OCF > NI and absence of outsized non-operating gains reduce concerns about earnings management. Key watchpoint: if capex remains elevated without revenue/turnover uplift, FCF headroom could narrow.

Dividend Sustainability

The calculated payout ratio is 74.5%, above the <60% comfort benchmark, implying a relatively aggressive return stance. With implied FCF of ~2.09 for the period, coverage of any annualized dividend is unclear; data limitations prevent precise FCF coverage calculation. Balance sheet strength and low interest burden provide some cushion, but sustaining a ~75% payout would require stable OCF and disciplined capex. Policy outlook: if ROIC remains at 3.6%, management may need to balance shareholder returns with reinvestment to avoid further capital efficiency dilution. Absent disclosure of DPS/total dividends, we treat dividend sustainability as medium risk pending full-year cash generation.

Risk Assessment

Business Risks:

• Freight demand volatility impacting utilization and pricing
• Driver labor constraints and wage inflation (Japan 2024 logistics work-hour reforms)
• Fuel cost volatility affecting margins if pass-through weakens
• Asset-heavy model requires high utilization to sustain margins and ROIC
• Customer mix/contract repricing risk

Financial Risks:

• Low ROIC (3.6%) relative to typical cost of capital, risking value dilution
• Potential FCF tightness if capex remains elevated and payout stays high
• Refinancing/interest-rate exposure on 87.37 of loans (though coverage is currently strong)
• Working capital swings (AR/AP not disclosed) could impact OCF

Key Concerns:

• Capital efficiency: ROIC below 5% warning threshold
• Earnings softness: operating income -3.6% YoY, net income -7.4% YoY
• Dividend coverage visibility limited due to unreported dividend cash flows and investing CF details

Investment Implications

Key Takeaways:

• Core profitability remains acceptable with operating margin ~5.8% and strong interest coverage
• Liquidity and solvency are healthy (current ratio 153%, D/E 0.66x, ample cash)
• ROIC at 3.6% is the primary weakness and needs improvement via higher asset turnover or portfolio optimization
• Cash conversion is adequate (OCF/NI 1.05x) but FCF is thin after capex
• Dividend policy appears on the high side (payout ~75%); sustainability hinges on stable OCF and controlled capex

Metrics to Watch:

• ROIC progression versus 5–8% benchmarks
• Asset turnover (Revenue/Assets) and depot/fleet utilization indicators
• Operating margin and cost pass-through to offset fuel/labor pressure
• OCF and FCF versus capex plans
• Debt trajectory and interest coverage amid rate environment
• Any disclosed DPS/total dividend and payout policy updates

Relative Positioning: Within Japanese mid-cap logistics, Enshu Truck shows solid balance sheet resilience and earnings quality, but lags peers focused on asset-light or higher-utilization models on capital efficiency (ROIC/ROE).

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