| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥212.4B | ¥171.9B | +23.5% |
| Operating Income | ¥26.4B | ¥15.5B | +70.6% |
| Ordinary Income | ¥26.4B | ¥15.4B | +70.7% |
| Net Income | ¥17.7B | ¥10.3B | +71.4% |
| ROE | 14.6% | 9.9% | - |
For the cumulative Q2 of FY2026 (H1), Revenue was ¥212.4B (vs. prior year +¥40.4B, +23.5%), Operating Income was ¥26.4B (vs. prior year +¥10.9B, +70.6%), Ordinary Income was ¥26.4B (vs. prior year +¥10.9B, +70.7%), and Net Income was ¥17.7B (vs. prior year +¥7.4B, +71.4%), resulting in top-line growth and substantial profit expansion. Revenue expansion, improvement in gross margin (67.9%, +1.5pt YoY) and tightening of SG&A ratio (55.5%, -1.2pt YoY) lifted Operating Income margin to 12.4% (+3.4pt YoY), indicating a marked improvement in operating profitability. Non-operating and extraordinary items were immaterial; the bulk of the profit increase is attributable to operating-level improvements.
[Revenue] Revenue of ¥212.4B (+23.5% YoY) was driven by network expansion and improvements at existing stores. The company operates a single restaurant segment and does not disclose breakdowns by region or format, but accelerated openings and improved store productivity are inferred as primary drivers of revenue growth. Revenue increased by ¥40.4B from ¥171.9B in the prior year period, maintaining a high growth pace.
[Profitability] Cost of sales was ¥68.2B (cost ratio 32.1%, prior year 33.5%), improving by 1.4pt and expanding gross profit to ¥144.2B (gross margin 67.9%, +1.5pt YoY). Price optimization, menu mix improvement, and procurement efficiency appear to have contributed to gross margin expansion. SG&A was ¥117.8B, up ¥30.0B YoY; SG&A increased +34.3% versus revenue growth of +23.5%, reflecting operating leverage and reducing SG&A ratio to 55.5% (prior 56.7%, -1.2pt). As a result, Operating Income rose to ¥26.4B (Operating Income margin 12.4%, prior 9.0%, +3.4pt). Non-operating income was ¥0.3B (interest and dividends received, etc.), non-operating expense was ¥0.3B (interest expense ¥0.3B), leaving non-operating items roughly neutral and Ordinary Income at ¥26.4B (Ordinary Income margin 12.4%), in line with Operating Income. Extraordinary gain was ¥0.5B (gain on sale of fixed assets) and extraordinary loss was ¥0.1B (loss on retirement of fixed assets, etc.), netting +¥0.4B and remaining minor. Pre-tax income was ¥26.2B; after deducting corporate taxes of ¥8.5B (effective tax rate 32.5%), Net Income landed at ¥17.7B (Net Income margin 8.3%, prior 6.0%, +2.3pt). Non-controlling interests attributable profit was ¥0.1B and immaterial. In conclusion, improvements in gross margin and control of SG&A structurally enhanced operating profitability, delivering revenue growth with substantial profit expansion.
[Profitability] Operating Income margin 12.4% (prior 9.0%, +3.4pt) and Net Income margin 8.3% (prior 6.0%, +2.3pt) improved materially, driven by gross margin expansion to 67.9% (prior 66.4%, +1.5pt) and tighter SG&A ratio at 55.5% (prior 56.7%, -1.2pt). ROE 14.6% (up significantly from an estimated ~10.0% prior year) was mainly driven by Net Income margin improvement, with asset turnover 0.877x and financial leverage 2.00x enhancing capital efficiency. [Cash Quality] Operating Cash Flow (OCF) ¥30.0B (prior ¥12.4B, +141.7%) is 1.70x Net Income ¥17.7B, and OCF/EBITDA is 0.89x (EBITDA = Operating Income ¥26.4B + Depreciation ¥7.4B = ¥33.8B), close to the benchmark 0.9x, indicating good cash realization of pre-depreciation profits. [Investment Efficiency] Capex ¥22.2B is approximately 3.0x depreciation ¥7.4B, indicating aggressive investment for new store development and renovations. Free Cash Flow ¥5.1B (OCF ¥30.0B - Investing CF ¥24.8B) remained positive, preserving cash generation capacity despite investment burden. [Financial Soundness] Equity Ratio 50.0% (prior 47.0%, +3.0pt), interest-bearing debt ¥43.4B (long-term borrowings ¥42.9B + short-term borrowings ¥0.5B) yields Debt/EBITDA 1.28x and Interest Coverage 89x (Operating Income ¥26.4B ÷ interest expense ¥0.3B), indicating robust financial resilience. However, current ratio 82.5% (current assets ¥58.5B ÷ current liabilities ¥71.0B) and quick ratio 72.3% signal short-term liquidity caution, with negative working capital of -¥12.5B requiring maturity mismatch management. Cash and deposits ¥30.5B sufficiently cover current portion of long-term borrowings ¥18.1B and part of accounts payable ¥12.9B; short-term borrowing dependence is minimal at ¥0.5B, providing a certain liquidity buffer.
OCF was ¥30.0B (prior ¥12.4B, +141.7%). From a subtotal before working capital changes of ¥36.6B, corporate tax payments of ¥6.5B were deducted; increases in trade receivables ¥1.4B and inventories ¥1.8B absorbed cash, partially offset by increases in trade payables ¥0.9B and contract liabilities ¥0.4B, resulting in a net cash inflow of ¥30.0B. OCF/EBITDA of 0.89x indicates high-quality cash conversion of pre-depreciation profits. Investing CF was -¥24.8B, primarily due to capex ¥22.2B (new store openings, renovations, production equipment upgrades), acquisition of subsidiary shares ¥1.0B, and loans ¥0.5B. Financing CF was +¥1.3B, reflecting net proceeds of ¥3.0B (new long-term borrowings ¥12.4B less repayments ¥9.4B), dividend payments ¥2.2B, and share buybacks/other items, resulting in a modest net inflow. Free Cash Flow ¥5.1B (OCF ¥30.0B - Investing CF ¥24.8B) remained positive, preserving cash generation capacity despite active growth investment. Adding foreign exchange effects of +¥0.4B, cash and deposits increased from ¥24.3B at the beginning of the period to ¥30.5B at period-end, up ¥6.2B (+25.5%), expanding the liquidity buffer.
Earnings quality is high: vs. Operating Income ¥26.4B, the net impact of extraordinary items was +¥0.4B (extraordinary gain ¥0.5B - extraordinary loss ¥0.1B), about 1.5%, indicating minor one-off effects. Non-operating income ¥0.3B (less than 0.1% of Revenue) was mainly recurring financial income such as interest income ¥0.2B and dividends ¥0.0B, with limited one-off foreign exchange gains or subsidies. OCF exceeds Net Income (OCF ¥30.0B ÷ Net Income ¥17.7B = 1.70x), resulting in an accrual ratio of -5.1%, indicating strong cash backing for profits. The gap between Ordinary Income ¥26.4B and Net Income ¥17.7B is due to corporate taxes ¥8.5B (effective tax rate 32.5%), with no structural distortion observed. Comprehensive Income ¥18.4B comprises Net Income ¥17.7B plus foreign currency translation adjustments ¥0.7B and valuation differences on available-for-sale securities ¥0.1B; the difference between Comprehensive Income and Net Income is +¥0.7B and limited, indicating constrained FX impact. Overall, the profit increase is high-quality and driven by core operations.
Under the full-year company plan (Revenue ¥439.0B, Operating Income ¥48.0B, Ordinary Income ¥47.7B, Net Income ¥28.8B), H1 progress rates are: Revenue 48.4% (¥212.4B ÷ ¥439.0B), Operating Income 55.0% (¥26.4B ÷ ¥48.0B), Ordinary Income 55.2% (¥26.4B ÷ ¥47.7B), Net Income 61.2% (¥17.7B ÷ ¥28.8B). Revenue is close to a standard 50% progress, while Operating Income is ~+5pt ahead and Net Income ~+11pt ahead, indicating profits are front-loaded. Early realization of gross margin improvement, cost efficiency, and store opening effects likely explain the advance progress. For H2, normalization is expected due to new store start-up costs, wage increases, and raw material price volatility, but current results suggest upside potential versus conservative guidance. Full-year forecasts anticipate YoY growth of Revenue +22.4%, Operating Income +42.5%, Ordinary Income +41.3%, and EPS forecast ¥143.66; H1 EPS was ¥87.98 (61.2% of full-year), indicating steady progress.
The interim dividend is ¥13 per share; the payout ratio based on H1 Net Income ¥17.7B is 14.8% (¥13 × 20,028 thousand shares ÷ ¥17.7B), a conservative level. Full-year dividend forecast is maintained at ¥13, implying a full-year payout ratio of 9.0% on the full-year Net Income forecast of ¥28.8B. FCF coverage is 1.97x (total dividends ¥2.6B ÷ FCF ¥5.1B), indicating sufficient cash backing for dividends. Considering cash and deposits ¥30.5B and OCF ¥30.0B, there remains room for total shareholder returns, but the company appears to prioritize capex ¥22.2B and growth investments. Both payout ratio and Total Return Ratio are low; given Debt/EBITDA 1.28x and Interest Coverage 89x, financial capacity is ample, so near-term capital allocation favoring store openings and renovations over dividend hikes is a rational approach. No share buyback disclosure has been made; shareholder returns are concentrated in dividends.
Short-term liquidity risk: Current ratio 82.5% and quick ratio 72.3% place short-term liquidity at a cautionary level, with working capital -¥12.5B and current liabilities ¥71.0B exceeding current assets ¥58.5B, indicating maturity mismatch. Cash ¥30.5B sufficiently covers current portion of long-term borrowings ¥18.1B and part of accounts payable ¥12.9B, and short-term borrowing dependence is minimal at ¥0.5B, providing a liquidity buffer; however, accelerated openings or inventory buildup could widen the negative working capital and create short-term funding pressure. Heavy reliance on accounts payable and contract liabilities means changes in supplier terms or reductions in advance receipts could deteriorate liquidity.
Cost inflation pressure risk: Rising labor cost ratios (minimum wage hikes, labor shortages), raw material price volatility (pork bone broth, wheat, edible oils, etc.), and higher utilities (energy prices) could pressure the current gross margin 67.9% and SG&A ratio 55.5% in H2. Although gross margin improved +1.5pt in H1, a raw material price upcycle could reverse the cost ratio; delays in passing through price increases or competitive pressures could cast doubt on the sustainability of Operating Income margin 12.4%. One-off labor and depreciation burdens from new store openings may also weigh on H2 margins.
Capex recovery risk: Capex ¥22.2B is approximately 3.0x depreciation ¥7.4B, indicating continued high-level investment in openings and renovations. Asset retirement obligations ¥7.1B (5.9% of liabilities) represent future cash outflows associated with network expansion; careful distribution management of lease renewals and vacancies is crucial. If new store ROI lengthens or renovation effects underperform expectations, maintaining FCF ¥5.1B could become difficult. Increased competition or shifts in consumer preferences eroding existing store sales could simultaneously lengthen payback periods and degrade profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 12.4% | – | – |
| Net Income Margin | 8.3% | – | – |
Operating Income margin 12.4% and Net Income margin 8.3% are inferred to be in the upper range within the restaurant sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 23.5% | – | – |
Revenue growth 23.5% is high and driven by accelerated openings and improvements at existing stores.
※Source: Company compilation
Structural improvement in Operating Income margin: Operating Income margin rose to 12.4% (prior 9.0%, +3.4pt), with simultaneous gross margin improvement of +1.5pt and SG&A ratio tightening of -1.2pt. Price optimization, menu mix improvement, and scale benefits have lifted profitability. Although wage and raw material cost pressures remain for H2, operating leverage is beginning to work positively. Full-year progress shows Operating Income at 55.0% in H1, indicating potential upside to plan.
Strengthened cash generation: OCF ¥30.0B (prior ¥12.4B, +141.7%) is 1.70x Net Income and OCF/EBITDA 0.89x, achieving high-quality cash generation. Despite capex ¥22.2B, FCF ¥5.1B remained positive, enabling internal funding of growth investments. Debt/EBITDA 1.28x and Interest Coverage 89x indicate strong financial resilience and high likelihood of sustaining store opening and renovation investments. Short-term liquidity (current ratio 82.5%) and asset retirement obligations ¥7.1B (5.9% of liabilities) are management points, but cash ¥30.5B and robust OCF provide a buffer.
Balance between growth investment and shareholder returns: Payout ratio 14.8% is conservative and FCF coverage 1.97x supports dividend sustainability. Full-year dividend forecast ¥13 is maintained, reflecting a clear capital allocation priority toward growth investment. While there is near-term scope for dividend increases, given the 3.0x capex-to-depreciation investment posture and improving Operating Income trend, accelerating openings and renovations to drive profit growth appears the primary route to enhance shareholder value. Key H2 monitoring points include existing-store sales trends, labor and raw material cost trajectories, and new store ROI.
This report was auto-generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from publicly disclosed financial statements. Investment decisions are your responsibility; consult professionals as needed before acting.
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