| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥303.5B | ¥239.8B | +26.5% |
| Operating Income | ¥10.6B | ¥11.7B | -10.1% |
| Ordinary Income | ¥11.0B | ¥11.8B | -6.9% |
| Net Income | ¥7.0B | ¥7.6B | -9.2% |
| ROE | 15.7% | 18.8% | - |
Faiz Holdings (9325) FY2026 Q3 results delivered strong top-line growth with Revenue of ¥303.5B (YoY +¥63.7B +26.5%), while Operating Income was ¥10.6B (YoY -¥1.1B -10.1%), Ordinary Income was ¥11.0B (YoY -¥0.8B -6.9%), and Net Income was ¥7.0B (YoY -¥0.6B -9.2%), resulting in lower profits. The increase in revenue but decrease in profit was mainly due to higher SG&A expenses under a low gross margin structure with a Gross Profit Margin of 6.4%, which pushed the Operating Margin down to 3.5%. Total assets expanded to ¥150.5B (YoY +¥48.1B +47.0%), with notable increases in Property, Plant and Equipment (+¥17.5B), goodwill (+¥2.7B), and accounts receivable (+¥16.8B). Net assets were ¥44.5B (YoY +¥4.1B +10.1%), and ROE of 14.9% was supported by financial leverage of 3.38x. Full-year guidance calls for Revenue ¥380.0B (+20.2%), Operating Income ¥18.0B (+22.9%), and Net Income ¥11.2B (+21.7%), implying a turn to profit growth predicated on improvements in gross margin and normalization of accounts receivable collections.
[Profitability] ROE of 14.9% is maintained from the same period last year but is at a level dependent on financial leverage of 3.38x. Net Profit Margin of 2.2%, Operating Margin of 3.5% (down -1.4pt from 4.9% in the same period last year), and Gross Profit Margin of 6.4% are all low, indicating vulnerabilities in pricing power and cost structure. In the DuPont three-factor decomposition, ROE of 14.9% is formed by Net Profit Margin 2.2% × Total Asset Turnover 2.016x × Financial Leverage 3.38x; while the high asset turnover indicates numerous revenue opportunities, low gross margins are compressing profitability. [Cash Quality] Cash and deposits of ¥41.2B account for 27.4% of total assets, and cash coverage of short-term liabilities of ¥6.35B stands at 6.5x, indicating strong short-term liquidity. Accounts receivable increased to ¥53.5B (YoY +45.6%), and Days Sales Outstanding (DSO) lengthened to 64 days, raising concerns about expansion of working capital. [Investment Efficiency] Total Asset Turnover of 2.016x (down from 2.342x in the same period last year) suggests a modest decline in efficiency due to increases in Property, Plant and Equipment and goodwill. [Financial Soundness] Equity Ratio is 29.6% (down -9.9pt from 39.5% in the same period last year), Current Ratio is 145.8%, and Debt-to-Equity ratio is 2.38x (up significantly from 1.53x in the same period last year), showing a marked rise in leverage. Interest Coverage is 43.4x, and interest expense of ¥0.24B is currently a light burden; however, a D/E ratio of 2.38x suggests diminished financial capacity.
Cash and deposits increased by +¥17.8B YoY to ¥41.2B, accounting for 27.4% of total assets. Sales growth and profit recognition are estimated to have contributed to cash accumulation. In working capital trends, accounts receivable increased by +¥16.8B (+45.6%) YoY to ¥53.5B, outpacing sales growth and extending DSO to 64 days, indicating a longer collection period. Meanwhile, accounts payable increased by +¥7.7B (+62.4%) to ¥20.0B, reflecting improved cash management through the utilization of trade payables. Inventories increased slightly by +¥0.08B, indicating stable inventory efficiency. In investing activities, Property, Plant and Equipment increased by +¥17.5B (+112.6%) YoY to ¥32.9B, goodwill by +¥2.7B (+98.1%) to ¥5.4B, and intangible assets by +¥2.5B (+64.6%) to ¥6.4B, indicating ongoing accumulation of assets related to capital expenditures and M&A. In financing activities, short-term borrowings increased by +¥6.2B from ¥0.12B in the same period last year to ¥6.35B, suggesting financing for capital investments and working capital expansion. Cash coverage of short-term liabilities is 6.5x, indicating ample liquidity, and an annual dividend of ¥26 (Payout Ratio 42.3%) is planned; at present, there is sufficient financial capacity to pay dividends.
Against Ordinary Income of ¥11.0B, Operating Income was ¥10.6B, indicating net non-operating income of approximately ¥0.4B. Non-operating profit and loss, after deducting interest expense of ¥0.24B, etc., from non-operating income of ¥0.74B, is small relative to Operating Income, and the earnings structure is centered on core operating profit. Non-operating income accounts for 0.2% of Revenue, and its composition is limited, indicating low dependence on non-core income. Given the low levels of Operating Margin at 3.5% and EBIT margin at 3.5%, the profitability of the core business itself is weak, which is a challenge. With Profit Before Tax of ¥11.0B and Net Income of ¥7.0B, the effective tax rate is 36.6%, an average level of tax burden. As the growth rate of accounts receivable exceeds sales growth and DSO is lengthening, the time lag between revenue recognition and cash collection is widening, requiring attention to the quality of accruals. As Operating Cash Flow data are not disclosed, the ratio of Operating Cash Flow to Net Income cannot be calculated; however, due to the increase in accounts receivable, cash generation may be weak relative to profit.
Vulnerability of profit margins due to a low-gross-margin structure. Gross Profit Margin of 6.4% and Operating Margin of 3.5% are low, indicating weak resilience to increases in SG&A or cost of sales. There is a risk that profit margins will deteriorate rapidly in an environment of intensifying price competition or rising procurement costs. Delayed collection of accounts receivable and pressure on working capital. Accounts receivable increased by +45.6% YoY to ¥53.5B, and DSO lengthened to 64 days. The expansion of working capital may strain cash management, increasing the risk of deterioration in Operating Cash Flow and the need for additional borrowings. Higher leverage and reduced financial flexibility. With a Debt-to-Equity ratio of 2.38x (1.53x in the same period last year) and an Equity Ratio of 29.6% (39.5% in the same period last year), financial leverage has increased, lowering financial flexibility amid interest rate hikes or economic downturns. There are also concerns about impairment risk and increased depreciation burden associated with increases in Property, Plant and Equipment (+¥17.5B) and goodwill (+¥2.7B).
[Position within the Industry] (Reference information - Our research) The company is a holding company operating multiple business segments (Information Systems Services, International Logistics Services, and EC Solutions Services), and due to industry characteristics, direct comparison with a single industry is limited. Over the past five fiscal periods, the Operating Margin of 3.5% (FY2026 Q3) is roughly in line with past levels, and the Net Profit Margin of 2.3% is also stable, while the sales growth rate of 26.5% (FY2026 Q3) shows strong growth compared to past years. In profitability metrics, ROE of 14.9% is maintained at past levels; however, the rise in financial leverage to 3.38x has contributed to this, and there has been no improvement in Net Profit Margin or EBIT margin. In soundness, the Equity Ratio of 29.6% has declined from 39.5% in the same period last year, and the Debt-to-Equity ratio of 2.38x indicates reduced financial capacity. In efficiency, Total Asset Turnover of 2.016x remains high, efficiently converting assets into sales; however, the lengthening of the collection period for accounts receivable presents challenges for working capital efficiency. Compared to industry norms, wholesale and logistics industries are often low-margin, high-volume businesses with Operating Margins around 1–5%. The company’s Operating Margin of 3.5% is estimated to be around the industry average, but the Gross Profit Margin of 6.4% is considered low even within wholesale/logistics. (Industry: Diversified Services / Wholesale / Logistics; comparison benchmark: company’s own results over the past five fiscal periods; source: our aggregation)
Key takeaways from the results are as follows. Divergence between sales growth and margin deterioration. Revenue grew a strong +26.5% YoY, but Operating Income declined -10.1%, highlighting a structure of higher sales but lower profits. Low levels of Gross Profit Margin at 6.4% and Operating Margin at 3.5% indicate structural issues, and achieving the full-year guidance of +22.9% growth in Operating Income presupposes the execution of margin enhancement measures such as price pass-through and cost reduction. It is necessary to monitor consistency between progress through Q3 and the full-year guidance. Increase in accounts receivable and working capital management. Accounts receivable increased by +¥16.8B (+45.6%) YoY and DSO lengthened to 64 days. The increase in receivables outpacing sales suggests relaxed collection terms or changes in customer mix, heightening the risk of cash flow deterioration. In the full-year results, where Operating Cash Flow data will be disclosed, it will be important to confirm the ratio of Operating Cash Flow to Net Income and the details of working capital fluctuations to assess the sustainability of cash management. Rising financial leverage and returns on investment. Increases of +¥17.5B in Property, Plant and Equipment, +¥2.7B in goodwill, and +¥6.2B in short-term borrowings indicate active investment and financing. The rise in the Debt-to-Equity ratio to 2.38x reduces financial capacity, and the degree of ROIC realization from these investments will affect future financial soundness and profitability. It will be necessary to verify in upcoming quarterly results whether capital expenditures and M&A outcomes are translating into improvements in Operating Margin and Total Asset Turnover.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our company based on publicly available financial results data. Investment decisions are your own responsibility; please consult a professional as necessary before making any investment.