RINKO CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.86B
• Operating Income: ¥180M
• Net Income: ¥178M
• EPS: ¥150.42

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Rinko Corporation (9355) reported FY2026 Q2 consolidated results under JGAAP showing modest top-line growth with stronger operating leverage. Revenue was 6,863 million yen, up 3.2% YoY, while operating income rose 21.7% YoY to 180 million yen, indicating effective cost control or mix improvement. Gross profit was 794 million yen, translating to a gross margin of 11.6%, consistent with a low-margin, asset-intensive logistics/port services profile. Operating margin improved to 2.6% (180/6,863), highlighting incremental efficiency gains despite a modest revenue increase. Ordinary income reached 252 million yen, and interest expense was 38 million yen, yielding an operating interest coverage of about 4.7x. Net income surged 120.1% YoY to 390 million yen, significantly outpacing operating and ordinary income growth, suggesting material contribution from non-operating or extraordinary items and/or one-off tax effects. The reported tax expense was 49 million yen; using net income and tax expense implies a rough effective tax rate of about 11%, though this is approximate given the absence of a clear pre-tax profit line and the presence of extraordinary items. Balance sheet scale remains substantial, with total assets of 39.5 billion yen and total equity of 18.5 billion yen; the implied equity ratio is about 46.7% (calculated as equity/assets), despite the reported metric showing 0% (undisclosed). Asset turnover stood at 0.174x, consistent with a capital-heavy model, while financial leverage was 2.14x, producing a DuPont-calculated ROE of 2.11%. Liquidity metrics are tight: current ratio is 49.7% and quick ratio 47.1%, with negative working capital of roughly 3.67 billion yen, suggesting reliance on short-term funding or favorable payables terms. Debt-to-equity is a moderate 1.11x (total liabilities to equity), supported by a sizeable equity base. Cash flow statement items were undisclosed this period (zeros indicate unreported), preventing direct assessment of operating cash flow and free cash flow. Dividend data was not disclosed for the period, so payout and coverage cannot be assessed, despite EPS of 150.42 yen being reported. Overall profitability improved at the operating level, but the outsized net income growth appears non-recurring, warranting caution in extrapolating. The company’s solvency profile is sound, but liquidity is a key watchpoint in the absence of reported cash balances and cash flows.

Profitability Analysis

ROE of 2.11% decomposes into a net profit margin of 5.68%, asset turnover of 0.174x, and financial leverage of 2.14x. The ROE is modest primarily due to low margins and slow asset turnover typical of asset-heavy logistics. Gross margin is 11.6% (794/6,863), and operating margin is 2.6% (180/6,863), indicating thin but improving profitability with operating income rising faster than revenue (+21.7% vs +3.2% YoY). The spread between gross and operating margin suggests SG&A discipline and/or better utilization. Ordinary margin is 3.7% (252/6,863), supported by non-operating contributions. Net margin at 5.68% materially exceeds ordinary margin, implying significant extraordinary gains and/or tax effects this quarter. Interest coverage at ~4.7x (operating income/interest expense) is adequate but not ample, indicating sensitivity to interest rate increases or profit volatility. Operating leverage appears positive this period as small revenue growth translated into a larger increase in operating profit. Given depreciation was undisclosed, EBITDA and margin cannot be robustly evaluated, but the step-up in operating profit indicates some efficiency gains independent of D&A.

Growth Assessment

Revenue grew 3.2% YoY to 6,863 million yen, reflecting steady but not rapid expansion, likely volume or tariff improvements in core logistics/port services. Operating income rose 21.7% YoY to 180 million yen, suggesting operating leverage from cost control, pricing discipline, or better mix. Ordinary income of 252 million yen outpaced operating profit, indicating non-operating gains (e.g., financial income, equity-method, subsidies), though details were not disclosed. Net income surged 120.1% YoY to 390 million yen, with net margin far above operating margin, pointing to non-recurring or below-the-line items as key drivers. Given this mix, profit quality at the net level is weaker than at the operating level; for sustainable growth, focus should be on recurring operating profit and ordinary income excluding special factors. Asset turnover of 0.174x underscores structural constraints on rapid growth from the existing asset base without further utilization gains. Outlook hinges on demand resilience, cost pass-through, and capacity utilization; continued mid-single-digit revenue growth with disciplined costs could lift operating margins modestly. However, repeatability of this quarter’s net profit spike is uncertain absent disclosure of the extraordinary drivers.

Financial Health

Total assets were 39,548 million yen and total equity 18,467 million yen, implying an equity ratio around 46.7% (calculated), despite the reported metric being undisclosed. Total liabilities were 20,519 million yen, yielding a debt-to-equity of 1.11x, a moderate leverage profile for the sector. Liquidity is tight: current assets 3,635 million yen versus current liabilities 7,310 million yen produce a current ratio of 49.7% and quick ratio of 47.1%. Working capital is negative at approximately -3,675 million yen, indicating reliance on short-term funding or supplier credit, which can be manageable in steady operations but raises rollover risk in downturns. Interest expense was 38 million yen with operating income of 180 million yen, for coverage of ~4.7x—adequate but with limited cushion if earnings soften. Inventory is small at 196 million yen relative to current liabilities, suggesting limited inventory risk but emphasizing the importance of receivables and payables management. Cash and cash equivalents were undisclosed, so the near-term liquidity buffer cannot be assessed. Overall solvency appears sound on the back of a near-47% equity ratio, but short-term liquidity remains a key risk factor.

Cash Flow Quality

Cash flow statements (operating, investing, financing) were undisclosed for the period, so direct assessment of earnings-to-cash conversion is not possible. Consequently, OCF/Net Income and free cash flow figures shown as zero should be treated as unreported, not actual values. Earnings quality at the net level is mixed this quarter: operating profit improved, but net profit was boosted well beyond ordinary income, implying non-recurring items or tax effects. Without depreciation disclosure, we cannot adjust for non-cash charges, and EBITDA cannot be calculated. Working capital appears structurally negative given the current ratio of 49.7% and quick ratio of 47.1%, which can depress reported OCF if payables unwind or support OCF if payables expand; the direction is unknown this period. In absence of cash flow data, we place more weight on operating income trends and interest coverage to infer underlying cash generation, which appears modest but positive.

Dividend Sustainability

Dividend per share data was not disclosed for the period, and the payout ratio/FCF coverage figures shown as zero should be treated as unreported. EPS was 150.42 yen in the quarter, but given the outsized contribution from non-operating or extraordinary items to net income, distributable capacity based solely on this EPS is uncertain. Without operating cash flow and capex information, free cash flow coverage of dividends cannot be assessed. Historically for asset-heavy logistics, stable ordinary income and OCF are better indicators for sustainable dividends than quarterly net income. Policy outlook cannot be inferred from the provided data; monitoring guidance, shareholder return policies, and full-year forecasts is necessary.

Risk Assessment

Business Risks:

• Low-margin, asset-intensive model with sensitivity to volume and pricing
• Exposure to trade flows and macro cycles affecting cargo volumes and utilization
• Cost inflation (labor, energy) potentially outpacing pricing power
• Customer concentration risk common in logistics/port services
• Regulatory and environmental compliance costs for port/warehouse operations
• Execution risk in maintaining utilization and operational efficiency

Financial Risks:

• Tight liquidity with current ratio at 49.7% and negative working capital of ~3.7 billion yen
• Moderate leverage (D/E ~1.11x) with interest coverage ~4.7x leaves limited cushion in downturns
• Unreported cash balances and cash flows raise uncertainty on short-term funding capacity
• Earnings volatility from non-operating/extraordinary items impacting net income
• Potential interest rate increases elevating finance costs

Key Concerns:

• Sustainability of net income given reliance on below-the-line items this quarter
• Short-term liquidity management amid negative working capital
• Lack of cash flow disclosure impeding assessment of earnings quality and FCF

Investment Implications

Key Takeaways:

• Steady revenue growth (+3.2% YoY) with disproportionately stronger operating income growth (+21.7% YoY) signals improving operating efficiency
• Net income growth (+120% YoY) appears non-recurring relative to operating and ordinary profit levels
• Liquidity is the primary financial constraint with sub-50% current ratio and negative working capital
• Solvency is solid with an implied equity ratio around 46.7% and D/E ~1.11x
• Interest coverage (~4.7x) is acceptable but vulnerable if operating income normalizes

Metrics to Watch:

• Ordinary income and operating margin trends (recurring earnings quality)
• Disclosure of cash and cash equivalents, operating cash flow, and capex (FCF visibility)
• Working capital movements (receivables, payables) and current ratio trajectory
• Interest expense and coverage amid rate environment
• Nature and size of extraordinary items and tax effects
• Asset turnover improvements and utilization indicators

Relative Positioning: Within Japan mid-cap logistics/port services peers, Rinko shows typical low margins and low asset turnover, moderate leverage with a comparatively healthy equity ratio, but weaker near-term liquidity; operating efficiency is improving, yet earnings quality at the net level is less robust due to non-recurring contributions.

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
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis