TBS HOLDINGS,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥210.66B
• Operating Income: ¥15.39B
• Net Income: ¥34.91B
• EPS: ¥286.67

Income Statement

Balance Sheet

Cash Flow Statement

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

TBS Holdings (TSE: 9401) delivered solid top-line growth in FY2026 Q2 with revenue of ¥210.7bn, up 6.5% YoY, and strong operating leverage pushing operating income up 20.2% YoY to ¥15.4bn. Gross margin held at a healthy 31.1%, while operating margin reached 7.3%, indicating disciplined cost control and better utilization of content and programming assets. Ordinary income of ¥22.9bn materially exceeded operating income, implying meaningful non-operating gains (e.g., investment securities dividends/valuation gains or equity-method contributions) typical of TBS’s portfolio structure. Net income surged to ¥45.4bn (+35.2% YoY), far outpacing operating income growth and highlighting the presence of sizeable below-operating-line gains, likely non-recurring. The DuPont bridge shows a high net margin of 21.55% lifting ROE to 4.46%; however, the low asset turnover of 0.151 and modest financial leverage of 1.37 cap overall ROE. Liquidity is strong with a current ratio of 184.9% and quick ratio of 176.7%, backed by large balance-sheet resources (total assets ¥1.40tn, equity ¥1.02tn). Leverage is conservative (debt-to-equity 0.34x), and interest coverage is extremely high (1,710x) due to minimal interest expense. Cash conversion is weak this quarter: operating cash flow (¥8.27bn) is only 18% of net income, reflecting low cash earnings quality likely driven by non-cash gains and/or working capital outflows. Free cash flow is not disclosed (investing CF reported as 0, which indicates missing data rather than true zero), limiting visibility on capex and investment pacing. The effective tax rate shown in the summary metrics is 0.0% (likely not populated), but based on reported taxes of ¥17.9bn and implied pre-tax profit of ~¥63.3bn, the effective tax rate is roughly 28%. Dividend fields are not disclosed (DPS and payout shown as 0), so dividend sustainability cannot be directly inferred despite historically shareholder-friendly policies in the sector. Overall profitability optics are strong at the bottom line, but quality of earnings is mixed given the gap between operating profit, ordinary profit, and net profit, and weak OCF conversion. The balance sheet remains a key source of resilience for TBS given sizable equity and low leverage. Looking ahead, sustainability of earnings depends on the durability of core broadcasting/contents profitability, ad market trends, and recurrence of investment/one-off gains. With limited disclosure on investing cash flows and share count (both showing 0), per-share and FCF-based assessments are constrained this quarter. We therefore emphasize monitoring OCF-to-NI normalization, program inventory dynamics, and the split between recurring operations and non-operating gains.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 21.55% (NI ¥45.4bn / Rev ¥210.7bn)
• asset_turnover: 0.151x (Rev ¥210.7bn / Assets ¥1,396.8bn)
• financial_leverage: 1.37x (Assets / Equity; aligns with provided DuPont)
• calculated_ROE: 4.46% (matches reported DuPont) margin_quality: Gross margin at 31.1% and operating margin ~7.3% indicate decent underlying operating efficiency. The large step-up from operating income (¥15.4bn) to ordinary income (¥22.9bn) and then to net income (¥45.4bn) signals substantial non-operating/one-off contributions, elevating net margin. The implied effective tax rate is ~28% (based on taxes ¥17.9bn and pre-tax ~¥63.3bn), not 0%. operating_leverage: Revenue +6.5% YoY versus operating income +20.2% YoY demonstrates positive operating leverage, suggesting better cost absorption and scale benefits in core operations.

Growth Assessment

revenue_sustainability: Top-line growth of 6.5% YoY is healthy for a mature broadcaster/contents group and likely reflects a firmer ad market mix, content monetization, and possibly events/rights timing. Sustainability hinges on advertising demand, content pipeline, and digital/streaming monetization. profit_quality: Operating income growth is solid, but the outsized increase in net income relative to operating income indicates reliance on non-operating gains (e.g., investment income, asset-related gains). OCF/NI at 0.18 underscores weaker cash realization of earnings this quarter. outlook: Near-term growth depends on macro-ad spending trends, sports/event rights, and content sales. Structural initiatives in digital and IP exploitation can support growth, but volatility from investment securities and extraordinary items may keep bottom-line growth uneven.

Financial Health

liquidity: Current ratio 184.9% and quick ratio 176.7% reflect ample short-term liquidity. Working capital stands at ¥93.2bn, providing buffer for content and programming cycles. solvency: Debt-to-equity of 0.34x and interest coverage of 1,710x indicate very low financial risk from leverage. Based on totals, equity represents roughly 72.9% of assets (equity ¥1,017.7bn / assets ¥1,396.8bn), though the reported equity ratio field is not populated. capital_structure: Conservative leverage with significant equity base affords flexibility for content investments, real estate/project development, and potential shareholder returns. Ordinary income exceeding operating income suggests meaningful financial asset exposure within the capital structure.

Cash Flow Quality

earnings_quality: OCF of ¥8.27bn versus NI of ¥45.4bn (OCF/NI 0.18) indicates low cash conversion, likely due to non-cash gains and/or working capital build. The large spread between operating, ordinary, and net income further suggests non-operating drivers behind earnings. FCF_analysis: Investing CF is shown as 0 (not disclosed), so FCF cannot be reliably computed this quarter. Historically, content spend and capex can be lumpy; absent investing cash flows, FCF coverage and sustainability assessments are limited. working_capital: Working capital is positive at ¥93.2bn. Inventory (program/content) stands at ¥8.94bn; changes in receivables/payables tied to seasonal programming and events likely influenced OCF. Monitoring receivables days and content capitalization/amortization is key.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are shown as 0, indicating non-disclosure this period rather than true zero. With NI at ¥45.4bn and robust equity, capacity exists, but payout evaluation requires actual DPS and policy guidance. FCF_coverage: Not assessable this quarter due to missing investing CF/FCF data. OCF alone is modest relative to NI, which would argue for prudence until cash conversion normalizes. policy_outlook: Sector peers typically maintain stable dividends complemented by buybacks opportunistically. Sustainability for TBS will hinge on recurring OCF, content capex needs, and the extent of one-off investment gains.

Risk Assessment

Business Risks:

• Advertising market cyclicality impacting core broadcasting revenue
• Content cost inflation and hit-dependence for programming/IP
• Event/sports rights timing and profitability variability
• Shift to digital/OTT disrupting legacy TV audience and CPMs
• Regulatory changes in broadcasting and spectrum usage
• Competition from domestic and global streaming platforms

Financial Risks:

• Earnings volatility from investment securities and non-operating items
• Weak cash conversion this quarter (OCF/NI 0.18)
• Potential working capital swings tied to content cycles
• Concentration in domestic market demand
• Asset valuation risks (real estate/investment portfolio)

Key Concerns:

• Sustainability of net income given large non-operating contributions
• Low OCF relative to NI and limited FCF visibility (investing CF not disclosed)
• Dependence on ad market conditions for core growth

Investment Implications

Key Takeaways:

• Solid operational performance with positive operating leverage (OP +20.2% vs Rev +6.5%)
• Bottom-line significantly aided by non-operating/one-off gains
• Strong balance sheet and liquidity; low leverage and high interest coverage
• Cash earnings quality soft this quarter; OCF/NI at 0.18
• Limited visibility on FCF and shareholder returns due to missing DPS and investing CF disclosure

Metrics to Watch:

• OCF/Net Income and working capital trends (receivables, content inventory)
• Split of operating vs non-operating profit (ordinary income drivers)
• Capex/content spend and Investing CF for FCF assessment
• Advertising revenue trajectory and CPM trends
• Content amortization vs capitalization and program rights pipeline
• Equity-method/Investment securities gains or losses
• Dividend/buyback announcements and capital allocation updates

Relative Positioning: Within Japanese media/broadcast peers, TBS shows conservative leverage and strong liquidity, with earnings partly driven by financial assets and one-offs. Operational momentum is improving, but cash conversion lags and visibility on FCF and shareholder returns is currently constrained by disclosure gaps.

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
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