TAKAYOSHI Holdings,INC. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥7.98B
• Operating Income: ¥905M
• Net Income: ¥407M
• EPS: ¥72.46

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

Verdict: Solid operating performance with resilient margins and strong cash conversion, but bottom-line was pressured by a high tax burden leading to a notable net income decline. Revenue was 79.82, with gross profit of 73.11 and operating income of 9.05 (down 0.2% YoY), indicating stable core operations despite limited top-line disclosure. Ordinary income was 8.99 (down 0.2% YoY), and profit before tax was 6.97, reflecting minor net non-operating expenses (0.06). Net income declined 24.8% YoY to 4.06, primarily driven by an elevated effective tax rate of 41.7% rather than operational deterioration. Gross margin was very high at 91.6%, consistent with a service-heavy cost structure and low cost of sales (4.51). Operating margin stood at 11.3%, EBIT(DA) margin at 14.7% (EBITDA 11.71), and net margin at 5.1%, demonstrating healthy profitability from operations. ROE calculated via DuPont was 12.5% (Net margin 5.1% × Asset turnover 1.319 × Leverage 1.87x), meeting double-digit return thresholds. ROIC was reported at 21.9%, well above typical cost of capital and management benchmarks, suggesting efficient capital deployment. Cash flow quality was strong: operating cash flow of 7.30 was 1.80x net income, and free cash flow was a positive 4.55 even after 1.65 in capex. Liquidity was adequate with a current ratio of 131.4% and quick ratio of 131.4%, supported by cash and deposits of 16.17 versus short-term loans of 6.00. Balance sheet leverage remained conservative with D/E at 0.87x and interest coverage at 93.18x, indicating low refinancing or interest-rate sensitivity. Financing cash outflow of -17.97 likely reflects debt reduction and/or shareholder returns, though dividend and buyback breakdowns were unreported. Margin expansion/compression in basis points cannot be precisely quantified due to missing revenue YoY and prior-period margin data; however, flat operating income suggests broadly stable operating margin YoY. Earnings quality is favorable given OCF > NI and limited reliance on non-operating gains (non-operating income ratio 0.9%). Forward-looking, maintaining double-digit ROE and high ROIC hinges on sustaining operating margin discipline and normalizing the tax rate; liquidity and FCF provide flexibility for selective investment and shareholder returns.

Profitability Analysis

ROE decomposition: 12.5% = Net Profit Margin (5.1%) × Asset Turnover (1.319x) × Financial Leverage (1.87x). The most material pressure this period came from the net profit margin, given net income declined 24.8% YoY while operating income declined only 0.2% YoY. The business driver for the weaker net margin was a high effective tax rate of 41.7%, coupled with small net non-operating expenses (0.06), rather than a deterioration in the core operating margin (operating margin currently ~11.3%). This looks more like a period-specific effect (tax rate) than a structural erosion in profitability, implying partial mean reversion potential if the tax rate normalizes. Asset turnover at 1.319 indicates reasonable asset efficiency for a service-centric model with modest fixed assets; without YoY data, directionality is uncertain. Financial leverage at 1.87x supports ROE without appearing excessive relative to D/E of 0.87x and very strong interest coverage (93x). SG&A of 66.27 implies a high SG&A-to-revenue ratio typical of labor-intensive services; with operating income essentially flat YoY and revenue YoY unreported, we cannot verify whether SG&A growth exceeded revenue growth this period. Overall, ROE quality is primarily driven by operating profitability and asset efficiency, with leverage playing a moderate supporting role.

Growth Assessment

Top-line sustainability cannot be assessed YoY due to missing revenue growth data, but stable operating income (-0.2% YoY) suggests resilient underlying demand and/or cost control. Gross margin at 91.6% points to a service model with low direct costs; margin durability hinges on managing labor and facility costs within SG&A. Net income contracted 24.8% YoY, largely due to a higher tax burden (effective tax rate 41.7%), which may not recur at this level. Non-operating income was limited (0.04), indicating low dependence on one-off gains. EBITDA margin at 14.7% offers some buffer for investment while sustaining returns. ROIC at 21.9% signals strong value creation and supports reinvestment-led growth if attractive opportunities exist. Outlook depends on labor cost inflation, pricing power, and tax normalization; absent exogenous shocks, maintaining low-double-digit ROE appears feasible. Financing cash outflow suggests balance sheet optimization and/or shareholder returns, but precise capital allocation trends are unclear due to unreported dividend and buyback data.

Financial Health

Liquidity: Current ratio 131.4% and quick ratio 131.4% indicate acceptable short-term solvency (above 1.0, albeit below a 1.5 comfort threshold). No explicit warning triggers (Current Ratio is not <1.0). Cash and deposits (16.17) plus accounts receivable (10.82) comfortably cover current liabilities (22.02) and short-term loans (6.00), limiting maturity mismatch risk. Solvency: D/E at 0.87x is conservative; interest coverage is very strong at 93.18x. Total assets 60.51 vs total equity 32.41 yields financial leverage ~1.87x, aligned with DuPont input. Short-term vs long-term debt: Short-term loans (6.00) exceed long-term loans (1.83), but liquidity resources mitigate rollover risk. Off-balance sheet obligations: Not disclosed; no assessment possible. Overall, the capital structure is sound with ample headroom for investment or distributions.

Cash Flow Quality

OCF/Net Income of 1.80x indicates high-quality earnings with cash backing. Working capital management appears supportive (cash and receivables strong relative to payables), though detailed inventory/payables dynamics are not fully reported. Free cash flow of 4.55 after 1.65 capex is positive, indicating internal funding capacity for moderate growth or distributions. Financing cash outflow of -17.97 suggests debt repayments and/or shareholder returns; exact composition is unreported. No clear signs of working capital manipulation are evident from the limited data, and interest paid (0.10) is well-covered by EBITDA and OCF. Overall cash generation supports ongoing operations and capital allocation flexibility.

Dividend Sustainability

Dividend metrics are largely unreported (annual DPS, total dividend, payout ratio unreported; reported DOE 0.1% appears de minimis). With net income at 4.06 and FCF at 4.55, the company generated sufficient internal cash to support a modest dividend policy if desired. Coverage of dividends from FCF cannot be calculated due to missing dividend amounts. Balance sheet flexibility (cash 16.17; D/E 0.87x) and strong interest coverage provide additional cushion. Policy outlook cannot be inferred from disclosures this quarter; however, the combination of positive FCF and high ROIC would generally support stable to gradually rising distributions, subject to reinvestment needs and tax normalization.

Risk Assessment

Business Risks:

• Margin pressure from labor cost inflation given high SG&A intensity
• Potential constraints on pricing power in a service-heavy model
• Operational execution risk in scaling while maintaining service quality

Financial Risks:

• Tax rate volatility (effective tax rate 41.7%) depressing net profitability
• Refinancing risk on short-term loans (6.00) albeit mitigated by cash on hand
• Limited disclosure on dividends/buybacks may obscure capital allocation risk

Key Concerns:

• Net income down 24.8% YoY despite stable operating income, driven by elevated taxes
• Dependence on SG&A discipline to sustain ~11% operating margin
• Data gaps (dividend amounts, revenue YoY, SG&A breakdown) reduce visibility into trend drivers

Investment Implications

Key Takeaways:

• Core operations are stable: operating income -0.2% YoY with ~11.3% operating margin
• Cash conversion is strong: OCF/NI 1.80x and positive FCF of 4.55
• ROE 12.5% and ROIC 21.9% indicate attractive returns on capital
• Bottom-line weakness is tax-driven rather than operational
• Balance sheet is sound with D/E 0.87x and interest coverage 93x

Metrics to Watch:

• Effective tax rate trajectory and drivers
• SG&A growth vs revenue growth to gauge operating leverage
• Working capital turns (AR days; inventory if disclosed) affecting OCF
• Capex intensity vs EBITDA to sustain FCF
• Dividend and buyback disclosures to clarify capital allocation
• Short-term debt rollovers and cash balance trends

Relative Positioning: Within small-cap service-oriented peers, the company exhibits above-average return metrics (ROE/ROIC) and strong cash conversion with conservative leverage, though visibility is tempered by disclosure gaps and a temporarily high tax rate impacting net margins.

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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