Shobunsha Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.84B
• Operating Income: ¥-64M
• Net Income: ¥-52M
• EPS: ¥-2.87

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

Verdict: FY2026 Q2 was mixed—top-line grew modestly but the company remained loss-making at the operating and net levels, cushioned by sizable non-operating income. Revenue rose 3.2% YoY to 28.44, while cost discipline did not offset SG&A, resulting in an operating loss of -0.64. Gross profit was 10.20, implying a gross margin of 35.9%. The operating margin was -2.25%, and based on prior-period estimates, it compressed by roughly 5 bps YoY. Ordinary income was nearly breakeven at -0.03, but deteriorated 26.3% YoY. Net income widened to -0.52 (EPS -2.87 JPY), down 90.8% YoY, indicating a weaker bottom line despite higher revenue. Non-operating income of 0.66 (dividends 0.44; interest income 0.10) was material relative to the operating loss and helped limit ordinary loss. Interest expense was 0.06, driving a negative interest coverage ratio of -10.64x, underscoring the lack of operating earnings to service debt from operations. Tax expense was 0.37 despite a pretax loss (-0.15), yielding a highly negative effective tax rate (-242.8%), likely due to non-deductible items or tax on investment income. Total comprehensive income was positive at 0.56, implying OCI gains (likely from investment securities) offset the net loss. The balance sheet remains conservative with ample liquidity: cash and deposits of 69.56 cover short-term loans (6.40) multiple times; current ratio is 236.6% and quick ratio 214.4%. Equity of 129.86 against assets of 184.94 implies an equity ratio around 70% (computed), and D/E is a modest 0.42x. Cash flow data were not disclosed; hence earnings quality via OCF cannot be assessed this quarter. Forward-looking, the key will be improving core operating profitability (SG&A vs gross profit) and reducing reliance on dividend/valuation gains to sustain earnings. Focus areas include monetization of digital content/services, SG&A efficiency, and inventory discipline amid structural print headwinds.

Profitability Analysis

ROE = Net Profit Margin × Asset Turnover × Financial Leverage = (-1.8%) × 0.154 × 1.42 ≈ -0.4% (matches reported). The biggest drag is the negative net margin; asset turnover is low and leverage is moderate. Operating margin is -2.25% (OI -0.64 on sales 28.44), and appears to have compressed by ~5 bps YoY (prior OM ~-2.20% using prior revenue ~27.56 and prior OI ~-0.61). Gross margin stands at 35.9%, but SG&A of 10.84 exceeded gross profit of 10.20, preventing operating breakeven. The deterioration at the ordinary and net levels despite non-operating tailwinds suggests limited operating leverage this quarter. Business drivers: modest sales growth was insufficient to cover fixed SG&A; non-operating dividends (0.44) and interest income (0.10) provided meaningful buffer. Sustainability: reliance on market-dependent non-operating items is inherently volatile; without SG&A reduction or higher-margin growth, ROE will likely remain subdued. Concerning trend: SG&A growth vs revenue growth cannot be precisely measured due to lack of YoY SG&A disclosure, but the absolute SG&A > gross profit gap is a core concern reducing margin quality.

Growth Assessment

Top-line growth of 3.2% YoY to 28.44 is modest and likely driven by recovery in certain segments (e.g., travel/content), but insufficient to achieve operating breakeven. Profit quality is weak: operating loss persisted, and ordinary income depended on dividends/interest. Net loss widened (-0.52, -90.8% YoY), indicating deleverage at the bottom line. Without disclosed segment data, durability of growth is uncertain; structurally, print media faces secular decline while digital monetization remains key to sustainable growth. Near-term outlook hinges on: (1) SG&A efficiencies to narrow the gross profit–SG&A gap, (2) product mix shifts toward higher-margin digital/services, and (3) stability of dividend income from investment securities to cushion earnings while core operations improve.

Financial Health

Liquidity is strong: current ratio 236.6% and quick ratio 214.4%, with cash and deposits of 69.56 comfortably covering current liabilities (42.63) and short-term loans (6.40). Solvency appears conservative: total liabilities 55.08 vs equity 129.86 (D/E 0.42x). Computed equity ratio is ~70% (129.86 / 184.94), although the metric was not reported in XBRL. No explicit warning thresholds breached (Current Ratio > 1.0; D/E < 2.0). Maturity mismatch risk is low given cash levels vs short-term borrowings. Off-balance sheet obligations are not disclosed; none can be inferred from the provided data.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed, so OCF/Net Income and FCF cannot be assessed this quarter. Earnings quality flags: (1) Ordinary and net results were heavily influenced by non-operating income (dividends/interest), and (2) positive total comprehensive income was driven by OCI gains despite a net loss, implying market-sensitive valuation effects. Without OCF disclosure, sustainability of dividends/capex coverage cannot be evaluated; watch for working capital swings given inventories (9.47) and receivables (16.63) relative to quarterly sales.

Dividend Sustainability

Dividend data were not disclosed; the calculated payout ratio (-174.8%) is not decision-useful due to negative earnings and absent cash flow data. With net losses and unknown FCF, dividend sustainability depends on cash reserves (cash 69.56) and retained earnings (5.80). While the balance sheet is liquid and lowly levered, sustained payouts in the face of operating losses would gradually erode retained earnings unless OCF is positive. Policy outlook cannot be inferred; monitor FY guidance, OCF, and any announced dividend policy revisions.

Risk Assessment

Business Risks:

• Structural decline in print/map publishing and shift to digital reducing legacy revenue pools
• Input cost inflation (e.g., paper, printing) pressuring gross margins
• Execution risk in monetizing digital content/services to offset print declines
• Customer concentration or seasonal demand in travel-related products (if applicable)

Financial Risks:

• Negative operating income leading to negative interest coverage (-10.64x)
• Earnings reliance on non-operating income (dividends 0.44; interest income 0.10) and OCI gains
• Volatility in valuation of investment securities (30.23) affecting comprehensive income and equity
• Tax expense despite pretax loss (effective tax rate -242.8%) increasing bottom-line volatility

Key Concerns:

• SG&A (10.84) exceeding gross profit (10.20), preventing operating breakeven
• Ordinary income deterioration (-26.3% YoY) despite non-operating tailwinds
• Absence of cash flow disclosure, limiting assessment of earnings quality and dividend capacity
• Low ROIC (-1.0%) and negative ROE (-0.4%) indicating poor capital efficiency

Investment Implications

Key Takeaways:

• Revenue growth (+3.2% YoY) did not translate to operating profitability; operating margin at -2.25%
• Non-operating income (0.66) is material and masks weak core earnings
• Liquidity is ample (cash 69.56; current ratio 236.6%), leverage conservative (D/E 0.42x)
• Interest coverage is negative, highlighting the need to restore operating profits
• Comprehensive income positive (0.56) due to OCI gains, but this is market-driven and volatile

Metrics to Watch:

• OCF and FCF (once disclosed) vs net income
• SG&A-to-sales ratio and progress on cost reductions
• Gross margin trajectory amid input cost trends
• Non-operating income stability (dividends from investment securities) and OCI sensitivity
• Inventory and receivables turnover
• Tax rate normalization and drivers of tax expense in loss-making periods

Relative Positioning: Within domestic publishing/content peers, the company exhibits stronger liquidity and low leverage, but weaker profitability and capital efficiency, with elevated dependence on market-based non-operating items to offset core losses.

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