PHYZ Holdings (9325) FY2026 Q3 Earnings Report

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Executive Summary

The most important point for the current period is that the Company achieved higher revenue but lower profit as profitability deteriorated despite significant revenue growth. Revenue increased substantially to ¥303.5B (前年比+26.5%), while Operating Income declined to ¥10.6B (同-10.1%), Ordinary Income to ¥11.0B (同-6.9%), and Net Income to ¥7.0B (前年¥7.6B). The primary factor was a decline in the gross profit margin, as the rate of increase in cost of sales (+29.3%) exceeded the revenue growth rate, while the increase in SG&A expenses (+5.6%) remained restrained.

Factors Affecting Performance

【Revenue】Revenue was ¥303.5B, maintaining high growth of +26.5% year on year. By segment, the EC Solution Services segment, which accounts for 93% of the revenue mix, led overall growth with revenue of ¥281.9B (92.9% of the composition), while Information Systems Services generated ¥15.5B (5.1%) and International Logistics Services generated ¥6.0B (2.0%). Business scale continues to expand, partly due to the impact of one newly consolidated subsidiary.

【Profit and Loss】Operating Income was ¥10.6B (前年比-10.1%), and the Operating Income margin deteriorated to 3.5% from 4.9% in the previous year. Segment profit margins were 3.5% for EC Solution Services, 5.8% for Information Systems Services, and 0.5% for International Logistics Services, with the profitability of the core business weighing down overall results. Ordinary Income was ¥11.0B (同-6.9%), representing a smaller decline than Operating Income, supported by non-operating income and expenses (income of ¥0.7B and expenses of ¥0.3B). Net Income declined to ¥7.0B from ¥7.6B in the previous year, resulting in higher revenue but lower profit.

Segment Analysis

EC Solution Services is the core business that dominates the Company in both scale and profit, with revenue of ¥281.9B (92.9% of the composition), Operating Income of ¥9.8B, and a profit margin of 3.5%. Information Systems Services is relatively profitable, with revenue of ¥15.5B, Operating Income of ¥0.9B, and a profit margin of 5.8%, but its scale is small. International Logistics Services remained almost at break-even, with revenue of ¥6.0B, Operating Income of ¥0.05B, and a profit margin of 0.5%. The Company-wide Operating Income margin of 3.5% is strongly determined by the level of the core EC Solution Services business, making improvement in that business’s gross profit a key to restoring overall profitability.

Key Financial Indicators

【Profitability】The Operating Income margin was 3.5%, down from 4.9% in the previous year, while the Net Income margin also deteriorated from 3.1% to approximately 2.2%. The primary cause of the decline in the gross profit margin was that the increase in cost of sales (+29.3%) exceeded the increase in revenue (+26.5%).【Cash Quality】Cash and deposits were ¥41.2B, increasing year on year and ensuring liquidity on hand. Meanwhile, accounts receivable increased by +45.6% to ¥53.5B, exceeding the rate of revenue growth and becoming a factor behind the increase in working capital.【Investment Efficiency】ROE (annualized) was high at 20.9%, but the Company’s structure compensates for its low Net Income margin through high total asset turnover and financial leverage; therefore, assessment based solely on the profit margin requires caution. The Equity Ratio was 29.6%, down from 38.4% in the previous year.【Financial Soundness】Total assets were ¥150.5B and net assets were ¥44.5B. Liabilities have expanded against the backdrop of increases in property, plant and equipment (+112.6% year on year) and goodwill (+98.1%), indicating an upward trend in financial leverage.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is unavailable, changes in the balance sheet indicate that cash and deposits increased to ¥41.2B from the previous year, demonstrating that liquidity on hand has been maintained even during a period of expansionary investment. Meanwhile, accounts receivable increased to ¥53.5B at a rate exceeding revenue growth, creating pressure for an increase in working capital. Accounts payable also increased substantially to ¥20.0B, potentially providing some relief to cash management through the expansion of purchasing and subcontracting transactions. Property, plant and equipment increased substantially to ¥33.0B, suggesting progress in investments in locations and equipment, and implying that a considerable cash outflow from investing activities occurred. As short-term borrowings increased significantly from the previous year, part of the investment funding may have been procured through short-term borrowings.

Earnings Quality

The difference between Ordinary Income and Operating Income was approximately ¥0.4B, with small non-operating items—non-operating income of ¥0.7B and non-operating expenses of ¥0.3B—being the primary factors. No significant temporary factors corresponding to extraordinary gains or losses have been identified. The difference between Net Income and Ordinary Income resulted from the tax burden (corporate income taxes and other taxes of ¥4.0B, with an effective tax rate of approximately 37%) and Net Income attributable to non-controlling interests of ¥0.3B; no unusual accounting adjustments are apparent. Comprehensive income was ¥7.2B, close to Net Income of ¥7.0B, and there was no significant divergence apart from valuation difference on securities of ¥0.2B. Accordingly, the impact of other comprehensive income factors on earnings quality is limited. However, the fact that accounts receivable increased at a rate exceeding revenue growth warrants attention from an accrual perspective, and changes in the speed of revenue monetization may affect future earnings quality.

Earnings Forecasts and Guidance

The full-year forecast is revenue of ¥380.0B (前年比+20.2%), Operating Income of ¥18.0B (同+22.9%), and Ordinary Income of ¥18.0B (同+21.7%). While revenue progress was approximately 79.9%, exceeding the standard progress level of 75%, Operating Income progress was approximately 58.6% and Ordinary Income progress was approximately 61.1%, both significantly below the standard level. Achieving the full-year plan requires a meaningful improvement in profitability in Q4 alone, resulting in a gap between the pace of revenue growth and the degree of progress toward the profit plan.

Shareholder Returns

The Q2 dividend was ¥15.00 per share, and the full-year forecast dividend is ¥30.00 per share. Assuming an interim dividend of ¥15.00, the planned year-end dividend is also ¥15.00. Based on forecast full-year Net Income of ¥11.2B, the forecast Payout Ratio is approximately 29%, remaining below the general benchmark of 60%. Retained earnings have accumulated to ¥37.5B, indicating continued retention of earnings.

Risk Factors

1. Deterioration in gross profit margin: Cost of sales increased by +29.3% year on year, exceeding the +26.5% increase in revenue, and the gross profit margin declined by approximately 2 percentage points from the previous year. If cost increases continue, higher revenue may continue to have difficulty translating into profit growth.

2. Gap versus the full-year profit plan: Progress toward the Operating Income and Ordinary Income targets remained at approximately 58–61%, creating a significant gap from revenue progress of approximately 80%. A meaningful improvement in profitability in Q4 is assumed in the plan.

3. Increase in financial leverage: Property, plant and equipment increased by +112.6% year on year and goodwill increased by +98.1%, accompanied by an expansion in liabilities. The Equity Ratio declined from 38.4% in the previous year to 29.6%, indicating continued changes in the capital structure.

Industry Benchmark (Reference; Company Research)

Industry Benchmark (transport)

Profitability and Return

The Company’s profitability is below the industry median for both the Operating Income margin and Net Income margin, placing it among the lower-profitability group within the industry.

Growth and Capital Efficiency

The revenue growth rate is substantially above the industry median, placing the Company among the high-growth group within the industry.

※Source: Company research

Key Points from the Earnings Results

1. While revenue growth of +26.5% year on year was high even within the industry, Operating Income declined by -10.1%, making the divergence between the directions of growth and profitability a defining feature of the current period.

2. Progress toward the full-year forecast differs between revenue at approximately 80% and Operating Income at approximately 59%, with an improvement in profitability in Q4 being a prerequisite for achieving the plan.

3. The substantial increases in property, plant and equipment and goodwill, together with the decline in the Equity Ratio (38.4%→29.6%), confirm changes in the capital structure during a period of expansionary investment. The monetization of invested assets may affect future financial indicators.

Theoretical Share Price (Reference Value)

Sensitivity: ¥604–¥641 at ±1% for the cost of equity, and ¥617–¥630 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

（Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices）

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

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