EURASIA TRAVEL (9376) FY2026 Q1 Earnings Report

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Executive Summary

While operating income turned positive due to revenue growth and control of SG&A expenses, the Company continued to post a net loss due to foreign exchange losses and the tax burden. Revenue was ¥1.14B (¥0.97B in the previous year, YoY +16.8%), and operating income turned positive at ¥0.004B (¥-0.03B in the previous year). Ordinary income was ¥0.0B (YoY -20.8%), while the net loss attributable to owners of the parent was ¥0.005B, narrowing from the previous year's ¥-0.02B loss. Revenue growth and the decline in the SG&A ratio were the primary factors behind the improvement in operating income; however, the foreign exchange loss of ¥0.005B exceeded operating income, preventing a return to profitability at the ordinary income and net income levels.

Factors Affecting Performance

【Revenue】Revenue increased 16.8% year on year to ¥1.14B. Gross profit was ¥0.20B (¥0.16B in the previous year), and its growth rate of +24.2% exceeded revenue growth, with the gross margin improving by approximately 110bp from 16.8% to 17.8%.

【Profit and Loss】SG&A expenses were ¥0.20B, increasing only +1.5% year on year and significantly below the revenue growth rate. As a result, the SG&A ratio declined by approximately 260bp from 20.0% to 17.4%. This operating leverage improved operating income from ¥-0.03B in the previous-year period to ¥0.004B, resulting in a return to profitability. However, a foreign exchange loss of ¥0.005B was recorded, exceeding operating income, resulting in ordinary income declining YoY by -20.8% and a net loss attributable to owners of the parent of ¥0.005B. In conclusion, although the Company achieved higher revenue and operating income, the improvement in final earnings was limited, with the net loss continuing due to non-operating factors.

Key Financial Indicators

【Profitability】The operating margin was 0.4%, improving from the negative level recorded in the previous-year period; however, together with the gross margin of 17.8%, it remains low. The net profit margin was -0.4% on an annualized basis.【Cash Flow Quality】A foreign exchange loss of ¥0.005B was recorded against operating income of ¥0.004B, creating a structure in which non-operating factors weigh on final earnings; earnings quality is therefore vulnerable to non-operating fluctuations.【Investment Efficiency】Annualized ROE was -1.3%. Although the Company has asset turnover efficiency, its low profitability is constraining the recovery of capital efficiency.【Financial Soundness】The equity ratio was 56.6%, while cash and deposits of ¥1.89B accounted for approximately 61% of total assets, indicating ample liquidity and a conservative financial foundation.

Cash Flow Analysis

Although a standalone cash flow statement was not disclosed, balance sheet trends indicate that cash and deposits declined to ¥1.89B from ¥1.99B in the previous-year period, while remaining above current liabilities of ¥1.19B. At the earnings level, the Company recorded operating income of ¥0.004B against a net loss attributable to owners of the parent of ¥0.005B, with foreign exchange losses and income taxes weighing on cash-generation capacity. The cash ratio to total assets was high at approximately 61%, providing resilience against earnings fluctuations during the period; going forward, the key focus will be whether expansion in operating income translates into stable or increasing cash balances.

Earnings Quality

The earnings structure for the period comprised recurring improvement through a return to profitability at the operating level alongside a non-operating, temporary fluctuation attributable to foreign exchange losses. The principal non-operating expense was a foreign exchange loss of ¥0.005B, which exceeded operating income of ¥0.004B and was the primary factor depressing ordinary income and net income. In addition, income taxes of ¥0.1B were recorded while pretax income remained minimal, creating a structure in which the effective tax rate is nominally extremely high; the impact of deferred tax expenses reduces the predictability of final earnings. Accordingly, while the improvement in operating income represents a high-quality improvement in business operations, final earnings remain significantly influenced by non-operating and tax factors, requiring attention to earnings stability.

Earnings Forecast and Guidance

The full-year company plan calls for revenue of ¥5.15B, operating income of ¥0.14B (YoY +22.5%), and ordinary income of ¥0.14B (YoY +13.8%). Q1 revenue progress was 22.1%, slightly below the standard 25%, while operating income progress was 2.8%, significantly below the standard level. Achieving the full-year plan will require improvement in the gross margin from Q2 onward, maintenance of SG&A efficiency, and control of foreign exchange losses; the pace of profit generation in the second half will be the key focus.

Shareholder Returns

The Company's forecast annual dividend is ¥50 per share, representing a substantial increase from ¥7 in the previous year. Based on the average number of shares outstanding during the period of 368.9974 ten thousand shares, the total annual dividend is approximately ¥0.184B, resulting in an expected payout ratio of approximately 160% against forecast full-year net income attributable to owners of the parent of ¥0.115B. This is a payout ratio based solely on dividends and is not a total return ratio including share repurchases. As of Q1, the Company had a net loss attributable to owners of the parent of ¥0.005B; consequently, the source of dividends depends not on current-period earnings but on retained earnings of ¥1.25B and cash and deposits of ¥1.89B. Dividend sustainability should therefore be monitored together with full-year earnings progress.

Risk Factors

1. Foreign Exchange Sensitivity Risk: The foreign exchange loss of ¥0.005B during the period exceeded operating income of ¥0.004B. Given the nature of the travel business, which involves purchases and settlements denominated in foreign currencies, foreign exchange fluctuations have a significant impact on earnings.

2. Low Profitability and Thin Earnings Buffer: Both the gross margin of 17.8% and operating margin of 0.4% are low, creating a structure in which even minor fluctuations in costs or demand could result in a return to an operating loss.

3. Delayed Progress Toward the Full-Year Plan: Against the full-year operating income plan of ¥0.14B, Q1 progress was only 2.8%. Even after taking seasonality into account, an acceleration in the pace of profit generation in the second half is necessary.

Industry Benchmark (For Reference; Company Research)

Industry Benchmark (healthcare)

Profitability and Returns

Comparative industry data for both operating margin and net profit margin is limited, and the absolute levels are low.

※Source: Company research

Key Takeaways from the Earnings Results

1. Revenue increased +16.8% and the SG&A ratio declined by approximately 260bp, resulting in operating income turning positive from a loss in the previous-year period. This operating leverage effect indicates an improvement in business operations.

2. As the foreign exchange loss of ¥0.005B exceeded operating income, the Company posted a net loss attributable to owners of the parent of ¥0.005B. This confirms a structure in which improvement at the operating level is offset by non-operating factors.

3. Q1 operating income progress against the full-year company plan was low at 2.8%, while the expected payout ratio was planned at approximately 160%, above the earnings level. The strong financial foundation, including cash and deposits of ¥1.89B and an equity ratio of 56.6%, supports the feasibility of these plans.

Theoretical Share Price (Reference Value)

Sensitivity: ¥417–¥439 at ±1% for the cost of equity, and ¥427–¥429 at ±0.1 for ω.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value will be below book value per share.
• Net assets as of the quarter-end are used (there is a timing gap relative to 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; this is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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 advisor as necessary.

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