Kamigumi Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥146.52B
• Operating Income: ¥19.29B
• Net Income: ¥15.28B
• EPS: ¥150.54

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 profitability with double-digit earnings growth, but capital efficiency and cash conversion softened, warranting caution on quality. Operating income rose 14.3% YoY to 192.92, ordinary income increased 15.0% to 214.89, and net income advanced 12.8% to 152.45. Revenue for the period was 1,465.16, yielding an operating margin of about 13.2% and a net margin of 10.4%. Non-operating income contributed 24.08, with dividend income of 10.29 and interest income of 1.35, supporting ordinary income expansion. Interest expense remained minimal at 0.95, pushing interest coverage to an exceptional 203x, underscoring a highly conservative balance sheet. Liquidity is robust with a current ratio of 269% and cash/deposits of 556.85 against current liabilities of 509.18. Financial leverage is low (D/E 0.26x; leverage factor 1.26x), helping risk but dampening ROE. ROE was 3.9% (DuPont: margin 10.4% × turnover 0.294 × leverage 1.26), indicating underutilized balance sheet and low asset turnover. ROIC at 3.7% is below a 5% warning threshold, reflecting heavy asset base (notably 1,233.14 in investment securities) relative to earnings. Earnings quality is mixed: OCF was 86.36 versus net income of 152.45 (OCF/NI 0.57x), suggesting working capital outflows or accrual build. Reported payout ratio of 90.9% looks high versus typical sustainability benchmarks (<60%), though total dividends paid were not disclosed. Capex and investing cash flows were unreported, limiting FCF assessment; financing cash outflow of -87.34 includes share buybacks of 6.39 and likely dividends. Margin expansion/compression in basis points cannot be quantified YoY due to missing revenue YoY and prior-period margin data. Overall, the quarter demonstrates resilient core profitability and balance sheet strength, but low ROIC and weak cash conversion temper the quality of the earnings ramp and raise questions about the durability of a high payout. Forward-looking, maintaining double-digit profit growth will likely require improving asset turnover and sustaining price/mix, while any normalization of non-operating income (dividends) or working capital could impact cash distributions.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (10.4%) × Asset Turnover (0.294) × Financial Leverage (1.26x) = ROE 3.9%. The weakest contributor is asset turnover at 0.294, indicating a sizable asset base relative to sales, with investment securities (1,233.14) and fixed assets weighing on efficiency. Net margin is solid for a logistics/port operator, supported by low interest costs and non-operating dividend income (10.29). Leverage is intentionally conservative (D/E 0.26x), limiting ROE uplift. The largest constraint on ROE versus potential improvement appears to be asset turnover; improving utilization of logistics assets and pruning low-yield investments would have the biggest impact. Non-operating income (Nonopex ratio 15.8%) buoyed ordinary income; reliance on this source could fluctuate with equity market and affiliate dividend cycles. Sustainability: net margin strength is more sustainable than non-operating boosts, provided cost discipline in SG&A (119.59) holds and pricing remains firm. Watch for negative operating leverage if SG&A growth outpaces revenue, but revenue YoY is unreported, so this cannot be confirmed. Overall, improving capital efficiency (turnover and ROIC) is the key lever to structurally lift ROE.

Growth Assessment

Top-line sustainability cannot be verified due to missing revenue YoY; however, operating income grew 14.3% YoY and net income 12.8%, indicating healthy margin and/or mix. Operating margin is approximately 13.2% (192.92/1,465.16), a strong level for the sector, suggesting disciplined cost control and possibly resilient cargo volumes or value-added logistics. Ordinary income outpaced operating income growth, aided by 24.08 in non-operating income, especially 10.29 in dividends, which may not be consistently repeatable. EBITDA was 256.69, yielding a 17.5% EBITDA margin, underscoring solid operating efficiency. With ROIC at 3.7%, incremental growth should prioritize higher-return projects or asset-light expansion to prevent further dilution of capital efficiency. Near-term outlook depends on trade flows, port utilization, and pricing; a normalization of dividend income or working capital could dampen reported growth conversion to cash.

Financial Health

Liquidity is strong: current ratio 269.1% and quick ratio 267.0%, with cash/deposits of 556.85 exceeding short-term loans (6.10) and comfortably covering current liabilities (509.18). No warning triggers: Current Ratio well >1.0 and D/E 0.26x well <2.0. Solvency is conservative with long-term loans of 300.00 and ample equity of 3,950.54; interest coverage is 203x. Maturity mismatch risk appears low: current assets of 1,370.34 vs current liabilities 509.18; near-term obligations can be met from cash and operations. Off-balance sheet obligations are not disclosed in the provided data; no assessment possible. The large investment securities balance (1,233.14) provides financial flexibility but introduces market valuation and dividend-income variability.

Cash Flow Quality

OCF/Net Income is 0.57x, below the 0.8 threshold, flagging potential quality issues from working capital outflows or accruals. OCF of 86.36 is well below net income of 152.45 despite robust profitability, suggesting receivables buildup or other WC uses; detailed components are unreported. Free cash flow cannot be calculated because investing CF and capex are unreported. Financing CF was -87.34, including share repurchases of 6.39 and likely dividends (amount not disclosed), implying outflows largely funded by internal cash and cash on hand. With liquidity strong, short-term coverage is not a problem, but sustaining distributions requires improving cash conversion. No signs of aggressive working capital manipulation can be confirmed due to lack of AR/AP detail; nonetheless, the low conversion warrants monitoring.

Dividend Sustainability

The calculated payout ratio is 90.9%, above the <60% benchmark for comfort. Total dividends paid were not disclosed, and FCF is unreported, so true coverage cannot be confirmed. Given OCF (86.36) below net income (152.45) and financing outflows (-87.34) including buybacks (6.39), the combination of dividends plus repurchases may be stretching organic cash generation this period. Balance sheet capacity (net cash and low leverage) can support near-term shareholder returns, but medium-term sustainability hinges on improving OCF conversion and ROIC. Policy outlook: if management targets stable or rising DPS, they may need to align capex and portfolio returns to lift cash yield on assets or consider moderating repurchases when cash conversion is weak.

Risk Assessment

Business Risks:

• Trade volume cyclicality affecting port and logistics throughput
• Customer mix and pricing pressure in contract logistics
• Cost inflation (labor, energy) potentially compressing margins
• Project timing risk for infrastructure/logistics hub investments

Financial Risks:

• Low cash conversion (OCF/NI 0.57x) risking funding of dividends and capex
• ROIC at 3.7% below 5% threshold, indicating capital efficiency risk
• Earnings sensitivity to non-operating dividend income (10.29) and market-linked returns on investment securities (1,233.14)
• Potential equity valuation volatility flowing through comprehensive income

Key Concerns:

• Sustained high payout ratio (90.9%) despite weak OCF
• Asset turnover of 0.294 and leverage of 1.26x constrain ROE at 3.9%
• Dependence on non-operating income (15.8% contribution) to support ordinary income
• Data gaps (revenue YoY, cost of sales, capex) obscure margin drivers and FCF

Investment Implications

Key Takeaways:

• Core profitability is solid with double-digit OP and NI growth
• Balance sheet is very strong (current ratio 269%, D/E 0.26x, interest coverage 203x)
• ROE 3.9% and ROIC 3.7% highlight capital efficiency headroom
• OCF/NI of 0.57x flags earnings quality and cash conversion concerns
• Non-operating dividend income materially supported ordinary income

Metrics to Watch:

• OCF/Net Income and working capital movements (AR, AP, inventories)
• ROIC progression and asset turnover (monetization of investment securities; asset-light growth)
• Composition of ordinary income (recurring operating vs non-operating dividends/interest)
• Capex and investing cash flows to assess FCF coverage of dividends
• Payout policy versus cash generation; buyback cadence

Relative Positioning: Within domestic logistics/port operators, Kamigumi exhibits above-average margins and exceptionally conservative leverage, but lags on capital efficiency (ROIC/ROE) and near-term cash conversion, suggesting a quality-mix of resilient earnings with underutilized balance sheet and improvement potential if asset efficiency is addressed.

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