KYORITSU MAINTENANCE CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥119.56B
• Operating Income: ¥11.27B
• Net Income: ¥7.73B
• EPS: ¥109.93

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

Kyoritsu Maintenance (9616) reported solid FY2026 Q2 consolidated results under JGAAP, with revenue of ¥119.6bn (+7.4% YoY) and operating income of ¥11.27bn (+6.1% YoY), indicating continued demand strength in core businesses. Net income rose 13.6% YoY to ¥8.78bn, outpacing operating income growth and suggesting improved non-operating items and/or tax dynamics. Profitability remains healthy: gross margin was 23.1%, operating margin approximately 9.4%, and EBITDA margin 12.5%, highlighting sound cost control and favorable operating leverage. DuPont analysis shows net margin of 7.34%, asset turnover of 0.377, financial leverage of 2.51x, and ROE of 6.95%, reflecting balanced returns driven more by margin and leverage than by asset velocity. Liquidity appears tight with a current ratio of 64.4% and negative working capital of ¥38.5bn, consistent with the group’s business model but a monitoring point if growth capex or expansion continues. Solvency looks manageable: interest coverage is strong at 31.7x and leverage (debt-to-equity at 1.60x on the provided metric) remains within a serviceable range given cash generation potential. Operating cash flow of ¥4.95bn implies an OCF/NI ratio of 0.56, pointing to working capital outflows or timing effects; this is not unusual in the first half for lodging and contract-based businesses but should normalize over the full year. Investing cash flow and cash balances were not disclosed in the dataset (zeros are placeholders), limiting free cash flow analysis; consequently, the reported FCF of 0 should be treated as not available rather than an actual zero. Tax expense of ¥3.34bn suggests a normalized effective tax rate in the high-20% range, despite the “0.0%” effective tax figure shown in the summary metrics, which appears to be an unpopulated field. The balance sheet shows total assets of ¥317.4bn and total equity of ¥126.3bn, underpinning capacity for ongoing development while requiring disciplined capital allocation. Dividend information was not disclosed here (DPS and payout ratio shown as zero placeholders), so dividend sustainability cannot be assessed from this extract alone. Overall, the first-half performance indicates healthy demand and margin resilience, with robust interest coverage offset by tighter near-term liquidity and modest cash conversion. Given the number of undisclosed line items, conclusions should be viewed as provisional pending fuller cash flow and capital allocation details. Outlook hinges on continued occupancy and ADR strength in hotels and stable dormitory contract economics, alongside cost management amid wage and utility inflation.

Profitability Analysis

ROE_decomposition: ROE 6.95% = Net margin 7.34% × Asset turnover 0.377 × Financial leverage 2.51. ROA implied ≈ 2.77% (7.34% × 0.377), indicating returns driven by steady margins with modest asset velocity (note: turnover may be understated because the period is H1). Leverage provides a multiplier effect without stressing interest service capacity. margin_quality: Gross margin 23.1% and operating margin ~9.4% (¥11.27bn/¥119.56bn) indicate sound cost control across lodging and dormitory operations. EBITDA margin at 12.5% reflects healthy operating efficiency. Net margin at 7.34% benefited from relatively low non-operating drag; tax expense of ¥3.34bn implies a normalized effective tax rate around the high-20% range for H1. operating_leverage: Revenue growth (+7.4% YoY) translated into operating income growth (+6.1% YoY), suggesting modest positive operating leverage but with some cost inflation offsetting mix benefits. The outperformance of net income (+13.6% YoY) vs. operating income indicates favorable non-operating factors and/or tax effects.

Growth Assessment

revenue_sustainability: Top-line expanded 7.4% YoY to ¥119.6bn, consistent with continued recovery in hotel demand (occupancy/ADR) and steady dormitory contracts. Sustainability will depend on inbound travel momentum, corporate demand, and dormitory pipeline retention/renewals. profit_quality: Operating income up 6.1% with stable to slightly expanding margins indicates healthy core profitability. Net income growth outpaced revenue, aided by lower non-operating burden and a normalized tax profile. Interest coverage at 31.7x underscores earnings resilience. outlook: Assuming stable demand, full-year growth should be supported by price/mix in hotels and steady dormitory occupancy. Key sensitivities include energy/wage inflation, staffing, and any demand normalization from exceptionally strong travel trends. Project openings and renovation schedules will influence second-half trajectory.

Financial Health

liquidity: Current ratio 64.4% and quick ratio 64.4% indicate tight short-term liquidity; working capital is negative at ¥-38.5bn, which can be structurally consistent with the model but raises sensitivity to timing of receipts and seasonality. solvency: Interest coverage of 31.7x (EBIT/interest) is strong. Debt-to-equity of 1.60x (as provided) suggests moderate leverage that is serviceable given earnings power. Total assets ¥317.4bn vs. equity ¥126.3bn indicates prudent but meaningful use of liabilities. capital_structure: Financial leverage in DuPont at 2.51x aligns with a balance of equity and liabilities to fund asset base. Continued balance between growth investment and liquidity buffers is important given negative working capital.

Cash Flow Quality

earnings_quality: OCF/Net income at 0.56 suggests modest cash conversion in H1, likely due to working capital outflows or seasonal effects. Given the business mix, cash conversion typically improves over the full year. FCF_analysis: Investing cash flow not disclosed in this dataset; reported FCF of 0 should be treated as not available. Without capex data, underlying FCF cannot be robustly assessed. working_capital: Negative working capital (¥-38.5bn) and a current ratio below 1.0 indicate reliance on operating cash inflows and/or short-term funding. Monitoring receivables, advances, and payables turnover is key to assessing normalization in H2.

Dividend Sustainability

payout_ratio_assessment: Payout ratio and DPS were not disclosed here (zeros are placeholders). Based on available data, we cannot compute an accurate payout against H1 earnings. FCF_coverage: FCF not available due to undisclosed investing cash flows, so coverage cannot be determined. OCF in H1 (¥4.95bn) provides a partial view but is insufficient for dividend coverage analysis. policy_outlook: No dividend policy details were provided in this extract. Historically, payout decisions depend on full-year earnings, cash generation, and investment needs; assessment should be revisited when full cash flow and policy disclosures are available.

Risk Assessment

Business Risks:

• Demand volatility in hotel segment (occupancy and ADR sensitivity to inbound tourism and macro conditions)
• Contract renewal risk and occupancy in dormitory/contracted accommodations
• Wage and utility cost inflation pressuring margins
• Execution risk on new openings, renovations, and pipeline ramp-up
• Operational disruptions from natural disasters or pandemics impacting travel and occupancy
• Brand and service quality consistency across expanding portfolio

Financial Risks:

• Tight liquidity (current ratio 0.64x) and negative working capital requiring disciplined cash management
• Interest rate risk affecting financing costs and project IRRs
• Capex intensity and potential mismatch between investment timing and cash generation
• Refinancing and covenant risks if earnings soften
• Working capital timing leading to cash flow volatility within the year

Key Concerns:

• OCF/NI of 0.56 in H1 indicates weaker cash conversion pending H2 normalization
• Liquidity metrics below 1.0x warrant monitoring of short-term funding and collection cycles
• Limited visibility on capex and FCF due to undisclosed investing cash flows

Investment Implications

Key Takeaways:

• Solid H1 topline and profit growth with healthy margins; ROE at 6.95% supported by margin strength and moderate leverage
• Strong interest coverage (31.7x) offsets tighter liquidity (current ratio 0.64x)
• Cash conversion soft in H1 (OCF/NI 0.56); FCF not assessable without capex disclosure
• Outlook linked to sustained travel demand and stable dormitory contracts amid cost inflation

Metrics to Watch:

• Occupancy and ADR/RevPAR trends vs. prior year and seasonality
• OCF/NI and working capital movements in H2 (receivables, payables, advances)
• Capex and project pipeline (openings, refurbishments) and resultant investing CF
• Net debt/EBITDA and interest coverage as rates evolve
• Operating margin trajectory amid wage and utility cost pressures
• Contract retention/renewal rates in dormitory and corporate housing

Relative Positioning: Within Japan’s lodging/contracted accommodation space, Kyoritsu demonstrates resilient margins and robust interest coverage, with returns supported by moderate leverage. Near-term liquidity is tighter than some peers, making cash conversion and working capital discipline key differentiators over the second half.

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
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