Shobunsha Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥2.84B
• Operating Income: ¥-64M
• Net Income: ¥262M
• 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

Shobunsha Holdings (9475) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥2,844 million, up 3.2% year on year, indicating modest top-line recovery. Gross profit reached ¥1,006 million, implying a gross margin of 35.4%, which is relatively solid for a content/publishing-centric model and suggests stable unit economics on core products. Operating income remained in the red at -¥64 million, though the year-on-year improvement (+5.6%) points to incremental cost discipline and better operating leverage, albeit insufficient to achieve breakeven. Ordinary income was nearly breakeven at -¥3 million, indicating limited non-operating drag relative to operating performance. Net income was -¥52 million, with the disclosed YoY change of -90.8%, highlighting ongoing bottom-line pressure, including a ¥51 million tax expense despite a pre-tax loss, which likely reflects tax adjustments or non-deductible items under JGAAP. Interest expense was modest at ¥5.7 million, and the interest coverage ratio stood at -11.2x due to the operating loss. On the balance sheet, total assets were ¥18,494 million and total liabilities ¥5,396 million, leaving total equity at ¥12,986 million; this implies an equity ratio of roughly 70% (calculated), despite the reported equity ratio field showing 0.0% (undisclosed). Liquidity appears strong with a current ratio of 243% and quick ratio of 216%, supported by ¥10,227 million in current assets versus ¥4,207 million in current liabilities. Working capital of ¥6,020 million provides a substantial buffer for operations and seasonality, important in a publishing cycle with inventory of ¥1,143 million. DuPont metrics show a net margin of -1.83%, asset turnover of 0.154x, and financial leverage of 1.42x, resulting in a calculated ROE of -0.40%; weak profitability, rather than leverage, is the primary constraint on returns. Cash flow statement items were not disclosed in the extract (all zeros treated as unreported), limiting assessment of earnings-to-cash conversion and free cash flow durability. Depreciation and amortization were also not disclosed, constraining EBITDA-level analysis and capex intensity evaluation. The company did not pay a dividend (DPS ¥0), understandable given negative earnings and the focus on stabilizing profitability. Overall, the quarter shows steady revenue with improved but still negative operating profitability, ample liquidity, low leverage, and a balance sheet capable of absorbing short-term losses. The key to improving ROE will be restoring operating margin via cost control, mix improvements, and higher-margin digital/content monetization. Data limitations—particularly around cash flows and D&A—temper confidence in cash conversion analysis, so subsequent disclosures will be important to confirm trends.

Profitability Analysis

ROE decomposition (DuPont): net profit margin -1.83%, asset turnover 0.154x (¥2,844m revenue / ¥18,494m assets), and financial leverage 1.42x (assets/equity), yielding a calculated ROE of approximately -0.40%. The primary drag is the negative net margin, not balance sheet structure. Gross margin is 35.4% (¥1,006m/¥2,844m), indicating acceptable gross-level economics, but SG&A and fixed costs pushed operating margin to -2.25% (¥-64m/¥2,844m). Ordinary margin is near breakeven at -0.11% (¥-3m/¥2,844m), suggesting limited non-operating swings in the period. The interest burden is small (¥5.7m), but losses produce a negative interest coverage ratio of -11.2x. Operating leverage: revenue grew 3.2% YoY while operating loss narrowed 5.6% YoY, implying some fixed-cost absorption; incremental gross profit is not yet sufficient to cover overhead fully. Margin quality: positive gross margin with negative operating margin indicates SG&A intensity remains the bottleneck; attention to mix (e.g., digital/services vs. print) and cost rationalization could shift breakeven. Tax effects: the ¥51m tax expense despite a loss distorts bottom-line margin and ROE; this appears to be a non-cash or adjustment-related factor under JGAAP and is not indicative of normalized tax burden.

Growth Assessment

Revenue of ¥2,844m grew 3.2% YoY, suggesting modest demand recovery or improved sales execution. The growth translates into higher gross profit (¥1,006m) with a stable gross margin profile, indicating pricing/mix has not materially deteriorated. Profit quality is mixed: operating loss narrowed by 5.6% YoY, but the company remains loss-making, and bottom-line performance was weighed down by tax expense. Sustainability: given inventory of ¥1,143m and strong working capital, the company can support sales cycles; however, structural headwinds typical to print-heavy businesses and ongoing digital transition mean sustained growth will likely depend on expanding higher-margin digital/content and B2B services. Outlook near term: ordinary income near breakeven (-¥3m) suggests the path to overall breakeven is plausible with continued cost control and incremental revenue gains. Key dependencies include product mix shifts, seasonality around travel-related content demand, and input costs (paper/printing). Without disclosed cash flow and capex data, it is difficult to judge whether growth is being funded efficiently or requires elevated investment. Overall, top-line momentum is positive but modest, and execution on margin expansion will determine whether growth converts to ROE improvement.

Financial Health

Liquidity: current ratio 243.1% and quick ratio 215.9% indicate ample short-term coverage; current assets of ¥10,227m exceed current liabilities of ¥4,207m by ¥6,020m. Inventories are ¥1,143m, manageable relative to COGS (¥1,750m) but should be monitored for obsolescence given content lifecycles. Solvency: total liabilities of ¥5,396m against equity of ¥12,986m imply a low debt load; debt-to-equity is 0.42x (based on total liabilities), and the implied equity ratio is about 70% (equity/assets), despite the reported field being undisclosed. Interest expense is modest (¥5.7m), supporting low financial risk. Capital structure is conservative, providing resilience to operating volatility. The negative profitability is the main risk factor, not balance sheet leverage.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed in the extract (zeros indicate unreported). As a result, OCF/Net income and FCF metrics in the provided summary are not meaningful for assessment. Earnings quality cannot be triangulated to cash without OCF; similarly, lack of D&A disclosure prevents EBITDA reconstruction and capex estimation. Working capital appears robust (¥6,020m), and inventories of ¥1,143m versus COGS of ¥1,750m suggest an inventory-to-COGS ratio indicative of normal seasonality, but turnover cannot be verified without prior period balances. Key focus areas once data are available: OCF conversion versus operating profit, capex requirements for digital platforms/content, and any changes in receivables/payables driving cash volatility.

Dividend Sustainability

DPS is ¥0.00 for the period and payout ratio is 0.0%, consistent with a net loss (EPS -¥2.87). With FCF unreported, cash-based coverage cannot be assessed from this extract. Given negative earnings and a focus on returning to operating breakeven, a conservative dividend posture appears aligned with preserving balance sheet strength. The robust equity base and liquidity would support dividends in the long run once sustainable profitability and positive OCF are established, but near-term distributions are constrained by losses.

Risk Assessment

Business Risks:

• Structural shift from print to digital affecting legacy product demand and pricing
• Seasonality and macro sensitivity of travel- and location-based content demand
• Input cost volatility (paper, printing, distribution) pressuring gross margin
• Execution risk in digital transformation and monetization of content/assets
• Inventory obsolescence risk given content refresh cycles

Financial Risks:

• Sustained operating losses could erode equity if not reversed
• Negative interest coverage due to operating loss, though absolute interest burden is small
• Potential cash flow volatility from working capital swings (receivables/inventory)
• Tax expense despite losses may recur due to adjustments/non-deductible items, weighing on net income

Key Concerns:

• Operating margin remains negative at -2.25% despite 3.2% revenue growth
• Lack of disclosed cash flows and D&A limits visibility on earnings quality and investment needs
• Net loss (-¥52m) exacerbated by ¥51m tax expense, delaying bottom-line breakeven
• Asset turnover is low at 0.154x, capping ROE even with low leverage

Investment Implications

Key Takeaways:

• Top line grew 3.2% YoY to ¥2,844m; gross margin stable at 35.4%
• Operating loss narrowed 5.6% YoY to -¥64m, ordinary income near breakeven at -¥3m
• Balance sheet is strong with implied equity ratio ~70% and current ratio 243%
• Interest burden is low (¥5.7m), financial risk limited; profitability is the main constraint
• Data gaps (OCF, capex, D&A) limit assessment of cash conversion and investment intensity

Metrics to Watch:

• Operating margin and SG&A ratio trajectory toward breakeven
• Gross margin resilience amid input cost fluctuations
• OCF and FCF once disclosed, including working capital movements
• Inventory turnover and obsolescence metrics
• Revenue mix shift toward digital/higher-margin services
• Asset turnover improvement and utilization of balance sheet assets
• Tax expense behavior relative to pre-tax profit

Relative Positioning: Within Japanese small-cap content/publishing peers, Shobunsha exhibits stronger-than-average balance sheet strength and liquidity but lags on profitability and asset turnover; sustained margin improvement and progress in digital monetization are needed to close the ROE gap.

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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