Daiwa Motor Transportation Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.89B
• Operating Income: ¥228M
• Net Income: ¥-146M
• EPS: ¥5.61

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

Daiwa Motor Transportation (9082) reported FY2026 Q2 consolidated results under JGAAP showing modest top-line growth with limited profit expansion, reflecting cost pressures and a still-fragile recovery profile. Revenue rose 5.8% YoY to ¥9.889bn, while operating income was flat YoY at ¥228m, indicating that incremental sales did not translate into stronger operating leverage this quarter. Gross profit was ¥681m, equating to a low gross margin of 6.9%, underscoring the structurally thin margins typical of taxi/transport services amid elevated labor and maintenance costs. EBITDA was ¥645m (6.5% margin), and depreciation and amortization of ¥417m remain a substantial drag on EBIT, consistent with a fleet-intensive model. Ordinary income stood at ¥214m, and net income was ¥24m (flat YoY), implying meaningful non-operating burdens, including interest expense of ¥91m and potential below-the-line items. The DuPont decomposition points to a slim net profit margin of 0.24%, asset turnover of 0.33x, and financial leverage of 3.21x, delivering a low calculated ROE of 0.26%. While ROE is low, the company is using leverage to compensate for low margins; however, this leaves limited buffer if operating conditions weaken. Liquidity indicators are tight: the current ratio is 68.4% and working capital is negative ¥4.04bn, reinforcing refinancing and cash management as key focus areas. Interest coverage is modest at 2.5x, adequate but not strong for a cyclical, capital-intensive service business. Operating cash flow of ¥246m exceeded net income by more than 10x, aided by non-cash charges and likely working capital effects; however, investing cash flow and cash balances are unreported in XBRL, constraining free cash flow assessment. Financing cash flow was a ¥445m outflow, suggesting net repayments amid ongoing balance sheet normalization. The company paid no dividend (DPS ¥0), consistent with the need to preserve liquidity and reduce leverage. Using the reported totals, equity is ¥9.333bn against total assets of ¥29.953bn, implying an equity ratio of roughly 31% (despite the equity ratio field showing 0.0%, which we treat as unreported), and a liabilities-to-equity measure of 2.23x. Overall, revenue growth is encouraging, but cost normalization and capital intensity kept profit expansion muted, and the balance sheet requires continued prudence. Outlook hinges on sustained demand recovery, fare optimization, driver supply, and cost control, with close monitoring of liquidity and leverage. Data limitations include unreported investing cash flows, cash balances, share count, and equity ratio, which temper the precision of cash and per-share analyses.

Profitability Analysis

roe_decomposition: ROE 0.26% = Net Profit Margin 0.24% × Asset Turnover 0.330 × Financial Leverage 3.21. The very low NPM is the primary bottleneck, with leverage partially offsetting weak profitability while asset turnover is modest for a service fleet operator. margin_quality: Gross margin 6.9% and EBITDA margin 6.5% indicate minimal overhead absorption beyond COGS and highlight wage, fuel, and maintenance pressures. EBIT margin (~2.3%) is thin, and interest expense (¥91m) further compresses bottom-line returns. operating_leverage: Revenue +5.8% YoY versus flat operating income suggests limited operating leverage this quarter; incremental volume/pricing gains were largely absorbed by cost inflation and D&A. Sustained leverage improvement would require higher utilization and pricing or structural cost efficiencies.

Growth Assessment

revenue_sustainability: Top-line growth of 5.8% appears consistent with a gradual recovery in mobility demand, supported by tourism normalization and possible fare adjustments. Sustainability depends on driver availability, dispatch efficiency, and demand elasticity post-fare revisions. profit_quality: Flat YoY operating income despite higher revenue signals cost headwinds in wages and vehicle upkeep. Net income at ¥24m remains highly sensitive to interest and extraordinary items, underscoring fragile profit quality. outlook: Near-term growth hinges on utilization gains (ride volumes per vehicle), continued tourism recovery, and operational efficiency. Medium-term levers include digital dispatch optimization, fleet mix improvement (including safety/eco features), and disciplined cost control to convert revenue into EBIT.

Financial Health

liquidity: Current ratio 68.4% and quick ratio 67.8% indicate tight short-term liquidity with negative working capital of ¥4.04bn. This necessitates careful cash management and likely reliance on revolving facilities or rolling short-term liabilities. solvency: Total liabilities ¥20.769bn vs equity ¥9.333bn implies D/E 2.23x and leverage of 3.21x. Interest coverage is 2.5x, adequate but leaves limited cushion under stress. capital_structure: Implied equity ratio is about 31% (using totals; reported 0.0% is unreported). Financing CF of -¥445m suggests net debt reduction or lease repayments, which is constructive for solvency if sustained.

Cash Flow Quality

earnings_quality: OCF of ¥246m versus NI of ¥24m (OCF/NI 10.25x) reflects strong non-cash add-backs (notably ¥417m D&A) and likely working capital dynamics; this supports the quality of earnings despite thin margins. fcf_analysis: Investing CF is unreported (0 in XBRL), so FCF cannot be reliably computed. Given the fleet-intensive model, recurring capex is likely material; true FCF may be meaningfully below OCF. working_capital: Negative working capital and a current ratio below 1 indicate dependence on short-term funding and efficient receivables/collections. Any elongation in receivable days or parts procurement could pressure OCF.

Dividend Sustainability

payout_ratio_assessment: DPS is ¥0 with a payout ratio of 0.0%, consistent with prioritizing balance sheet resilience and liquidity under tight profitability. fcf_coverage: FCF coverage is not assessable due to unreported investing CF; assuming ongoing capex needs, coverage of any future dividends would depend on sustained EBITDA growth and reduced financing outflows. policy_outlook: Given leverage (D/E 2.23x), modest interest coverage (2.5x), and negative working capital, a conservative dividend stance is likely until earnings and cash generation strengthen and net debt is reduced.

Risk Assessment

Business Risks:

• Demand volatility tied to tourism, corporate travel, and macro conditions
• Driver recruitment and retention constraints increasing wage costs
• Fuel and maintenance cost inflation compressing margins
• Competitive intensity from ride-hailing/dispatch platforms and alternative mobility
• Regulatory changes on fares, safety, and labor rules affecting cost structure
• Operational disruptions (weather, events) impacting utilization

Financial Risks:

• Tight liquidity with current ratio at 68.4% and negative working capital
• Leverage sensitivity with D/E 2.23x and interest coverage of 2.5x
• Refinancing risk amid higher interest rates or tighter credit conditions
• Capex intensity for fleet renewal (including safety/eco/EV investments) pressuring FCF
• Potential volatility in non-operating items affecting bottom-line earnings

Key Concerns:

• Thin net margins (0.24%) and low ROE (0.26%) despite leverage
• Limited operating leverage evidenced by flat YoY operating income on higher revenue
• Unreported investing CF and cash balances impede clear view on FCF and liquidity buffers

Investment Implications

Key Takeaways:

• Revenue growth resumed (+5.8% YoY), but margin expansion is not yet evident
• Earnings remain sensitive to interest and cost inflation; interest coverage is modest at 2.5x
• OCF is solid relative to NI due to D&A, but true FCF likely constrained by capex
• Balance sheet leverage is meaningful (D/E 2.23x) with tight liquidity (current ratio 68.4%)
• Dividend remains suspended, consistent with balance sheet preservation

Metrics to Watch:

• Utilization (rides per vehicle/day) and fare yield per km
• Personnel costs per revenue and driver headcount trends
• Fuel/energy and maintenance cost per vehicle
• EBITDA and EBIT margins, interest coverage
• Net debt/EBITDA and refinancing schedule
• Capex and fleet age profile; disclosure of investing CF
• Working capital turns and receivable days
• Tourism indicators and corporate travel demand

Relative Positioning: Within Japan’s taxi/transport peers, the company exhibits typical thin margins and relatively high capital intensity. Leverage and liquidity appear tighter than ideal, placing emphasis on operational efficiency and disciplined capex to improve resilience as demand normalizes.

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