Shinki Bus Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥26.36B
• Operating Income: ¥1.26B
• Net Income: ¥420M
• EPS: ¥74.15

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

Shinki Bus Co., Ltd. (TSE:9083) reported solid FY2026 Q2 consolidated results under JGAAP, showing clear operating recovery and strong cost control. Revenue reached ¥26.36bn, up 8.2% YoY, indicating improving demand and pricing in core transportation and ancillary businesses. Operating income surged 108.7% YoY to ¥1.26bn, reflecting strong operating leverage from higher utilization and disciplined expense management. Gross profit margin was 18.4%, and operating margin improved to roughly 4.8%, both consistent with an ongoing post-pandemic normalization in route bus and related services. Net income rose 112.7% YoY to ¥0.89bn, lifting net margin to 3.39% for the half year. DuPont analysis shows a calculated ROE of 1.76% for the half-year period; on a simple annualized basis this would approximate mid-3% (assumes stable H2), supported by modest leverage (assets/equity about 1.35x) and improved asset turnover relative to the half-year base. Operating cash flow was a strong ¥2.99bn, equating to 3.35x net income, indicating high earnings quality and supportive working capital dynamics. The balance sheet is conservative: total liabilities are ¥17.61bn versus equity of ¥50.78bn (implied equity ratio ~74% based on reported totals), underpinning excellent solvency. Interest expense was only ¥2m, yielding an interest coverage ratio of 629.5x on EBIT, reflecting minimal financial risk. Liquidity looks adequate with a current ratio of 120.5% and quick ratio of 114.9%, supported by positive working capital of ¥2.44bn. EBITDA was ¥2.23bn and the EBITDA margin 8.5%, providing additional cushion for maintenance and renewal capex typical of bus fleet operations. While the provided metrics show an effective tax rate of 0.0%, the presence of income tax expense of ¥229m suggests a normalized tax burden; calculated tax rate is likely in the high teens to low 20% range depending on non-operating/extraordinary items. Several items are unreported in the XBRL extract (e.g., cash and equivalents, investing cash flows, dividends, share data), so free cash flow and capital return capacity cannot be fully assessed; however, the strong OCF and low leverage are favorable signals. Overall, the company exhibits improving profitability, robust cash generation quality, and a highly resilient balance sheet, with key watchpoints being capex needs for fleet renewal, fuel and labor cost trends, and sustainability of demand recovery.

Profitability Analysis

ROE decomposition (DuPont): Net margin 3.39% × asset turnover 0.386 × financial leverage 1.35 = ROE 1.76% for the half year (simple annualized ROE ~3.5%, assuming similar H2). Gross margin is 18.4% and operating margin about 4.8%, indicating meaningful operating improvement versus prior-year levels given operating income rose +108.7% on +8.2% revenue. Margin quality: EBITDA margin 8.5% provides buffer for depreciation (¥973m), which is material for a transport operator—suggesting a capital-intensive but improving business. Ordinary income (¥1.316bn) exceeds operating income, implying minor net non-operating gains or subsidies offsetting low interest costs, supportive of bottom-line expansion. Effective tax rate appears understated in the provided metric; based on income tax expense of ¥229m and net income of ¥894m, a normalized tax rate likely sits around high teens to low 20%, subject to extraordinary items. Operating leverage is high: the >100% YoY surge in operating income on single-digit revenue growth indicates strong fixed-cost absorption and cost discipline; further revenue gains should continue to translate into outsized profit growth, albeit with sensitivity to fuel and labor costs.

Growth Assessment

Revenue growth of +8.2% YoY to ¥26.36bn suggests steady recovery in passenger demand and/or pricing. The breadth of profit expansion (operating income +108.7% YoY) indicates that growth is not solely volume-driven but also reflects structural cost adjustments and possibly better route mix or ancillary revenues. Profit quality appears high given OCF/NI of 3.35x; cash conversion is robust even amid depreciation-heavy operations. Sustainability: bus demand recovery in regional markets tends to be gradual and sticky, but macro conditions, tourism flows, and fare revisions will influence the trajectory. Outlook considerations: normalized seasonality in H2, wage negotiations amid labor tightness, and fuel price trends could moderate incremental margin gains; however, low financial leverage and improved scale offer cushion. With ordinary income above operating income, recurring non-operating items (e.g., subsidies, equity method gains, or financial income) may provide incremental support, though these are less controllable. Overall, revenue growth looks sustainable near term with continued margin tailwinds, but medium-term growth will require disciplined capex for fleet renewal and potential service optimization.

Financial Health

Liquidity: current ratio 120.5% and quick ratio 114.9% indicate adequate near-term coverage of obligations; working capital stands at ¥2.44bn. Solvency: total liabilities ¥17.61bn vs equity ¥50.78bn implies low leverage; debt-to-equity is 0.35x. Implied equity ratio by balance sheet totals is approximately 74% (equity/assets ≈ ¥50.78bn/¥68.31bn), despite the 0.0% equity ratio reported metric being uninformative. Interest coverage is exceptionally strong at 629.5x EBIT/interest (¥1.259bn/¥2m), reflecting minimal interest burden. Capital structure is conservative with ample equity buffer; this supports resilience against operating shocks and provides capacity to fund capex cycles.

Cash Flow Quality

Earnings quality is strong: OCF of ¥2.99bn equals 3.35x net income, signaling favorable working-capital dynamics and non-cash expense add-backs (notably ¥973m depreciation). Free cash flow cannot be calculated precisely as investing cash flow and capex are unreported in the extract; however, given the sector’s capital intensity, maintenance capex is likely substantial and a key variable for true FCF. Working capital appears well-managed given positive OCF alongside revenue growth, suggesting no material inventory or receivables drag (inventories are modest at ¥671m). The large spread between EBITDA (¥2.23bn) and OCF (¥2.99bn) hints at working-capital release or other cash inflows in the period; sustainability of this boost should be monitored.

Dividend Sustainability

Dividend data (DPS, payout, FCF coverage) are unreported in the provided extract; therefore, we cannot infer the current dividend level or payout policy from this dataset alone. From a capacity standpoint, the combination of strong OCF (¥2.99bn) and low leverage suggests potential flexibility for distributions once maintenance and renewal capex are accounted for. However, absent investing cash flow and capex details, FCF coverage of any dividend cannot be assessed. Historically for bus operators, dividend policies balance stable payouts with fleet renewal needs; sustainability will hinge on normalized FCF after capex and volatility in fuel and labor costs.

Risk Assessment

Business Risks:

• Demand volatility due to macro conditions, tourism flows, and demographic trends in service areas
• Fuel price fluctuations impacting operating costs and margins
• Driver labor shortages and wage inflation affecting service levels and cost base
• Regulatory constraints on fares and route operations
• Capital intensity and timing of fleet renewal, including potential transition to low/zero-emission vehicles
• Operational disruptions from weather events and natural disasters
• Safety and compliance risks inherent in passenger transportation

Financial Risks:

• Potential increase in capex requirements reducing free cash flow
• Exposure to subsidy or non-operating income variability
• Interest rate risk is limited currently but could rise if leverage increases for fleet investments
• Working-capital normalization could reduce OCF vs. current period

Key Concerns:

• Lack of disclosed investing cash flows and capex, limiting visibility on free cash flow
• Unknown cash and equivalents balance in the extract, making liquidity buffers opaque
• Effective tax rate uncertainty due to classification of non-operating and extraordinary items

Investment Implications

Key Takeaways:

• Strong top-line growth (+8.2% YoY) with outsized operating profit growth (+108.7%) indicates high operating leverage
• Improving margins (GPM 18.4%, OPM ~4.8%, EBITDA margin 8.5%) support ongoing earnings recovery
• High-quality cash generation (OCF/NI 3.35x) underscores earnings durability
• Conservative balance sheet (implied equity ratio ~74%, D/E 0.35x) and minimal interest burden (629.5x coverage)
• Visibility on FCF and capital returns constrained by unreported investing CF and DPS data

Metrics to Watch:

• Passenger volumes, load factors, and fare/yield trends
• Operating margin progression and OCF/NI ratio sustainability
• Capex and fleet renewal schedule; net debt/EBITDA once cash is disclosed
• Fuel cost trajectory and hedging, wage inflation and staffing levels
• Ordinary income composition (non-operating items, subsidies) and effective tax rate normalization
• Equity ratio and liquidity (cash and equivalents) once disclosed
• Dividend policy updates and payout guidance

Relative Positioning: Within Japan’s regional bus operators, Shinki Bus appears conservatively financed with improving profitability and strong cash conversion in the period; its low leverage and implied high equity ratio position it favorably for capex cycles, though medium-term competitiveness will depend on managing fuel and labor costs and executing fleet renewal.

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