Bunkeido Co., Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥8.34B
• Operating Income: ¥1.78B
• Net Income: ¥1.27B
• EPS: ¥199.97

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

Verdict: A solid FY2026 Q2 with resilient margins and disciplined cost control, delivering slight profit growth despite flat sales. Revenue was 83.42, down 0.1% YoY, while operating income rose to 17.84 (+1.9% YoY), ordinary income to 18.21 (+1.9% YoY), and net income to 12.69 (+0.6% YoY). Gross profit reached 39.22, translating to a gross margin of 47.0%, indicating strong pricing and/or mix despite subdued top-line dynamics. Operating margin printed at roughly 21.4% (17.84/83.42), with ordinary and net margins at 21.8% and 15.2%, respectively. Using the reported growth rates to infer last year’s base, operating margin appears to have expanded by approximately 40 basis points YoY (indicative, due to limited prior-year margin detail). EBITDA was 18.84 with an EBITDA margin of 22.6%, supporting the view that operating efficiency remains a key earnings driver. Earnings quality is decent but not immaculate: OCF was 11.33, equal to 0.89x of net income, below the >1.0x ideal but above the 0.8x caution threshold. Liquidity and solvency are exceptionally strong, with a current ratio of 470% and D/E of 0.23x, underpinned by 80.66 in cash and minimal interest-bearing debt. Interest coverage is extremely robust at 835x, reflecting low financing burden and ample operating profitability. Asset efficiency remains modest (asset turnover 0.414), a common trait for cash-rich, seasonally skewed education-related businesses. ROE is 7.8% via DuPont decomposition (NPM 15.2% × AT 0.414 × leverage 1.23x), while ROIC at 14.3% signals disciplined invested capital deployment. Effective tax rate of 30.3% is in line with domestic norms and suggests limited one-time tax effects. Dividend capacity appears comfortable with a conservative payout ratio of 24.3%, and an OCF–capex proxy free cash flow of roughly 10.98 (noting other investing cash flows are unreported). Forward-looking, maintaining high-20% EBITDA margins and >20% operating margins amidst flat revenue suggests continued focus on mix, pricing, and SG&A discipline. Key watchpoints include sustaining inventory/receivable cycles that support OCF conversion above net income, and navigating input cost inflation and digital transition in educational content.

Profitability Analysis

ROE decomposition (DuPont): ROE 7.8% = Net Profit Margin 15.2% × Asset Turnover 0.414 × Financial Leverage 1.23x. The largest contributor is margin strength rather than leverage (low leverage) or asset turnover (subdued at 0.414). Operating margin improved modestly YoY (approx. +40 bps on an inferred basis) as operating income grew (+1.9%) while revenue was flat (-0.1%), implying favorable mix/pricing and firm SG&A control. Business drivers likely include stable adoption cycles in educational materials, disciplined discounting, and limited promotional intensity. Sustainability: margins appear underpinned by recurring textbook/education demand and cost discipline; however, seasonality and curriculum revision cycles can create variability around half-year results. Asset turnover remains a drag on ROE due to high cash and moderate working capital intensity (AR 22.87, inventories 21.24). No signs of negative operating leverage this quarter; SG&A absolute level (21.38) looks contained relative to gross profit (39.22). Flags: none acute, but continued revenue stagnation coupled with SG&A growth outpacing sales in future quarters would pressure operating margin.

Growth Assessment

Top-line was essentially flat (-0.1% YoY to 83.42), indicating stable demand but limited volume growth. Operating income grew 1.9% to 17.84, driven by mix/pricing and cost control rather than volume expansion. Ordinary income (+1.9%) and net income (+0.6%) also grew, albeit net growth lagged due to a normalized tax burden (30.3% effective rate). With EBITDA at 18.84 (22.6% margin), profit quality is supported by high cash-generative operations. ROIC at 14.3% suggests growth is being achieved without sacrificing capital efficiency. Sustainability: given the education sector’s predictable cycles, mid-20% EBITDA margins could be sustained if input cost inflation (paper/printing) remains manageable and digital transition costs are controlled. Near-term outlook hinges on curriculum revision timing, school budget cycles, and adoption patterns; absent a catalyst, revenue growth likely remains low-single-digit at best, with margin preservation the main lever. Risks to growth include price sensitivity in public education spending and competitive pressures in digital content.

Financial Health

Liquidity is very strong: current assets 140.71 vs current liabilities 29.92 yield a current ratio of 470.3% and quick ratio of 399.3%. No warning triggers (Current Ratio well >1.0; D/E 0.23x well <2.0). Cash and deposits of 80.66 cover all short-term loans (2.90) and long-term loans (1.00) many times over, minimizing refinancing risk. Working capital is ample at 110.79, and accounts payable (3.51) is modest relative to inventories (21.24) and receivables (22.87), implying limited supplier financing reliance. Maturity mismatch risk is low: sizeable liquid assets against small current liabilities. Interest coverage at 835x confirms negligible solvency risk. No off-balance sheet obligations are reported in the provided data; absence of disclosure means we cannot fully rule out leases/guarantees, but leverage headroom is significant.

Cash Flow Quality

OCF was 11.33 versus net income of 12.69, giving OCF/NI of 0.89x. This is below the >1.0x ideal but above the 0.8x caution threshold, suggesting acceptable but monitor-worthy conversion (seasonality and working capital timing likely factors). Capex was modest at 0.35, implying an OCF–capex proxy FCF of approximately 10.98; however, total investing cash flow is unreported, so this is a proxy rather than full FCF. Financing CF was -3.20, indicating net outflows (likely dividends/debt service) comfortably covered by operating cash generation. No clear signs of working capital manipulation from the snapshot; nonetheless, the inventory (21.24) and receivables (22.87) levels warrant monitoring for turns and collection cycles given the sub-1.0 OCF/NI. Dividend and capex commitments appear sustainable under current cash generation.

Dividend Sustainability

The calculated payout ratio is 24.3%, which is conservative and consistent with sustained distributions. While DPS and total dividends paid are unreported, cash reserves (80.66) and modest leverage provide significant coverage. Using an FCF proxy (OCF – capex) of ~10.98, coverage of a low-20% payout appears ample, though we note other investing flows are unreported and could reduce true FCF. With ROIC at 14.3% and stable profitability, the company has room to maintain or moderately grow dividends, subject to investment needs in digital content and working capital. Policy outlook: likely stable, given conservative balance sheet and mid-teens ROIC.

Risk Assessment

Business Risks:

• Revenue stagnation risk amid mature domestic educational publishing market (-0.1% YoY sales).
• Curriculum revision/adoption cycle risk affecting timing and magnitude of textbook orders.
• Input cost inflation (paper, printing) potentially pressuring gross margin (currently 47.0%).
• Digital transition risk requiring investment and potential cannibalization of print.
• Seasonality affecting working capital and cash conversion (OCF/NI 0.89x this quarter).

Financial Risks:

• Asset turnover low at 0.414, depressing ROE despite strong margins.
• Inventory and receivable concentration risk if school budgets or payment terms shift.
• Interest rate risk on large cash balances affecting financial income.
• Limited disclosure on leases/other off-balance commitments (data constraint).

Key Concerns:

• Flat top-line growth with dependence on margin management for earnings.
• OCF below net income this period; sustained sub-1.0 conversion would be a concern.
• Exposure to domestic education budgets and policy changes.
• Need to manage digital content investments without eroding margins.

Investment Implications

Key Takeaways:

• Margins resilient: operating margin ~21.4% and EBITDA margin 22.6% despite flat sales.
• ROE of 7.8% is margin-driven; low leverage and asset turnover cap upside.
• Balance sheet strength (current ratio 470%, D/E 0.23x, cash 80.66) reduces downside risk.
• Cash conversion acceptable but below ideal (OCF/NI 0.89x); monitor WC cycles.
• ROIC strong at 14.3%, supporting disciplined capital allocation and dividend capacity.

Metrics to Watch:

• Operating margin and gross margin trajectory (bps moves vs input cost trends).
• OCF/Net Income and working capital turns (receivable days, inventory turnover).
• Top-line growth catalysts around curriculum revisions/adoption cycles.
• Digital product revenue mix and related capex/opex.
• Dividend disclosures (DPS, total payout) and any change in payout policy.

Relative Positioning: Within domestic educational content/publishing peers, the company stands out for high margins, very conservative leverage, and strong ROIC, but lags on growth velocity and asset efficiency. Its cash-rich profile affords resilience and optionality for investment in digital and shareholder returns.

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