CUC Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥26.29B
• Operating Income: ¥1.71B
• Net Income: ¥566M
• EPS: ¥20.89

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

CUC Inc. (91580) delivered solid top-line momentum in FY2026 Q2 with revenue of 262.91 (100M JPY), up 21.7% YoY, but profitability contracted sharply as operating income fell 43.9% YoY to 17.11 and net income declined 69.5% YoY to 6.12. Gross profit was 107.11, translating to a gross margin of 40.7%, but SG&A expenses of 77.37 (29.4% of sales) compressed operating margin to 6.5%. The pronounced drop in operating profit despite strong revenue growth indicates negative operating leverage, likely tied to cost inflation, business mix, and/or investment for growth. Below operating profit, an unusually high effective tax rate of 85.8% (tax expense 11.99 on PBT of 13.97) materially depressed after-tax earnings, suggesting one-off tax items, valuation allowance movements, or non-deductible expenses. DuPont analysis shows ROE at 2.0%, driven by a thin net margin of 2.3%, modest asset turnover of 0.279, and relatively high financial leverage of 3.06x (assets/equity). The balance sheet shows total assets of 941.40 and equity of 307.23, implying an equity ratio of 32.0% and total liabilities/equity of 1.79x, indicating a moderately leveraged capital structure. Interest-bearing debt disclosed totals at least 234.65 (short-term 28.12, long-term 206.53), offset by cash and equivalents of 75.33, implying net debt of roughly 159.32. Accounts receivable of 121.51 are sizable relative to sales; using an annualized revenue run-rate, days sales outstanding (DSO) is approximately mid-80s, signaling meaningful working capital tied up in receivables. Liquidity ratios (current, quick) and operating/financing cash flows were not disclosed, limiting visibility on near-term cash generation and coverage metrics. EPS (basic and diluted) stood at 20.89 JPY, consistent with net income of 6.12 given average shares of 29.315 million. Book value per share is 1,048.02 JPY, underpinned by retained earnings of 134.57 and capital surplus of 78.20. With dividends unreported, capital allocation appears tilted toward balance sheet and growth funding rather than distributions in this period. Overall, the quarter reflects a growth-at-the-expense-of-margin profile with atypically heavy tax burden suppressing bottom-line returns, while leverage and receivables management are key focus areas. Many disclosure line items (non-operating items, cash flow, capex, dividend policy) are unreported, so conclusions on cash flow quality and dividend capacity are constrained. Monitoring whether profitability normalizes as tax effects abate and growth investments scale will be central to assessing sustainability.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 2.3% (Net income 6.12 / Revenue 262.91)
• asset_turnover: 0.279 (provided; consistent with low capital efficiency for the period)
• financial_leverage: 3.06x (Assets 941.40 / Equity 307.23)
• calculated_ROE: 2.0% (matches reported) margin_quality:
• gross_margin: 40.7% (Gross profit 107.11 / Revenue 262.91)
• sg_and_a_ratio: 29.4% (77.37 / 262.91)
• operating_margin: 6.5% (Operating income 17.11 / 262.91)
• commentary: Strong gross margin was largely offset by high SG&A intensity, compressing operating margin. The steep YoY decline in operating income despite double-digit revenue growth indicates either cost pressures (labor, subcontracting), business mix shifts, or deliberate upfront investments. The unusually high effective tax rate (85.8%) materially reduces net margin and ROE, likely not reflective of normalized profitability. operating_leverage: Negative in this period: revenue +21.7% YoY while operating income -43.9% YoY suggests fixed-cost absorption and/or growth investments did not translate into proportional profit growth. Margin recovery will hinge on SG&A discipline and scaling benefits.

Growth Assessment

revenue_sustainability: Revenue growth of +21.7% YoY is robust. Given the company’s healthcare-services profile, growth likely stems from volume expansion, service line additions, and possibly M&A contributions; durability depends on retention, reimbursement environment, and staffing capacity. profit_quality: Operating margin of 6.5% and net margin of 2.3% are subdued. The 85.8% effective tax rate depresses after-tax results, implying profit quality is currently impacted by non-operational items. Excluding the tax spike, underlying operating profit remains pressured by elevated SG&A. outlook: If tax normalizes and cost controls improve, earnings could rebound from a low base. Key to sustaining growth will be improving utilization, pricing/mix, and integrating any acquired operations. Absent visibility on non-operating items and cash flow, near-term outlook prudently neutral with a focus on profitability restoration.

Financial Health

liquidity: Current assets are 205.20, but current liabilities are unreported; thus current and quick ratios cannot be calculated. Cash and equivalents are 75.33. Working capital was listed as 205.20, which likely reflects current assets rather than a true current assets minus current liabilities measure due to lack of disclosure. solvency: Total liabilities 548.81 vs equity 307.23 implies liabilities/equity of 1.79x and equity ratio 32.0%. Interest-bearing debt disclosed totals at least 234.65 (short-term 28.12, long-term 206.53). With cash of 75.33, net debt is roughly 159.32, indicating moderate leverage for a services business. capital_structure: Assets/equity of 3.06x aligns with DuPont leverage. The mix includes material long-term borrowings, suggesting reliance on debt to fund expansion. Absent interest expense and coverage data, debt service capacity cannot be quantitatively assessed this period.

Cash Flow Quality

earnings_quality: Not fully assessable due to unreported operating cash flow. The very high effective tax rate suppresses reported net income and may mask underlying operating performance. Non-operating components (income/expense) are unreported, limiting reconciliation. free_cash_flow_analysis: FCF not calculable (OCF and capex unreported). With sizeable receivables (121.51), working capital could be a cash consumer during growth phases. working_capital_dynamics: Accounts receivable are significant relative to sales; using annualized revenue, DSO is approximately mid-80s days. Inventories are minimal (1.60), consistent with a service-heavy model. Payables of 43.14 provide some spontaneous financing, but overall cash conversion cannot be determined without OCF detail.

Dividend Sustainability

payout_ratio_assessment: Dividend and payout information are unreported; payout ratio cannot be calculated. Given low net income (6.12) and investment-driven profile inferred from leverage, near-term payout capacity may be constrained, but this is not confirmed. fcf_coverage: Not assessable due to lack of OCF and capex disclosure. policy_outlook: No dividend data disclosed. With equity ratio at 32% and emphasis on growth, the company may prioritize reinvestment and balance sheet management; formal policy and medium-term targets would clarify.

Risk Assessment

Business Risks:

• Healthcare reimbursement and regulatory changes affecting pricing and service economics
• Labor availability and wage inflation in healthcare services impacting margins
• Integration risk if growth includes M&A; potential for execution slippage
• Customer concentration and receivables collection risk from medical institutions or payors
• Service quality/compliance risks leading to penalties or contract loss

Financial Risks:

• Moderate leverage with material long-term debt; refinancing and interest rate exposure
• Cash flow visibility is limited; potential working capital consumption from receivables growth
• Unusually high effective tax rate creating volatility in after-tax earnings
• Potential for goodwill/intangible impairments in a roll-up model (intangible details unreported)

Key Concerns:

• Operating deleverage despite strong revenue growth (operating income -43.9% YoY)
• High effective tax rate at 85.8% significantly depressing net profit
• Limited disclosure on cash flows, capex, and dividends constrains assessment of sustainability

Investment Implications

Key Takeaways:

• Strong top-line growth (+21.7% YoY) but sharp earnings contraction indicates negative operating leverage
• Operating margin compressed to 6.5% despite a healthy 40.7% gross margin due to high SG&A
• ROE at 2.0% is weighed down by a 2.3% net margin and high leverage (3.06x assets/equity)
• Equity ratio of 32.0% and total liabilities/equity of 1.79x reflect a moderately leveraged balance sheet
• Receivables are sizable (121.51), implying working capital discipline is crucial
• Tax normalization is a key potential lever for net income recovery

Metrics to Watch:

• Operating margin and SG&A ratio trajectory
• Effective tax rate and explanations for non-recurring tax effects
• Receivables days and cash conversion (OCF/NI when disclosed)
• Net debt level and any changes in borrowing costs/tenor
• Any disclosure on capex, M&A spend, and integration costs
• Dividend policy updates and capital allocation priorities

Relative Positioning: Within Japan’s healthcare services cohort, CUC shows above-peer revenue growth but below-peer profitability and returns this period, with higher leverage and an exceptional tax drag; improved operating efficiency and tax normalization would be needed to close the profitability gap.

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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