ICHINEN HOLDINGS (9619) FY2026 Q3 Earnings Report

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Executive Summary

Although Ichinen Holdings maintained growth in both revenue and profit, the increase in SG&A expenses exceeded revenue growth, resulting in a slight decline in the operating margin. Revenue was ¥1,213.0B (+4.4% YoY), Operating Income was ¥87.7B (+2.9%), Ordinary Income was ¥90.0B (+2.2%), and Net Income was ¥61.1B (+9.2%). The fact that the Net Income growth rate exceeded those at the Operating Income and Ordinary Income levels was attributable to ¥0.56B in extraordinary income, including a ¥0.55B gain on the sale of investment securities, rather than to an improvement in core operating margins.

Factors Affecting Performance

【Revenue】Revenue increased +4.4% YoY to ¥1,213.0B. The core Automotive Leasing-Related Business (40.0% of revenue) grew +5.3%, while the Agriculture-Related Business expanded +11.1%. In contrast, the Synthetic Resin Business declined -3.0% and the Chemical Business declined slightly by -0.3%.

【Profitability】Operating Income increased +2.9% to ¥87.7B; however, as SG&A expenses rose +4.9%, exceeding the revenue growth rate, the Operating Margin declined by approximately 10bp to 7.2% from 7.3% in the same period of the previous year. The Machinery and Tool Sales Business contributed to company-wide profit growth by turning profitable at ¥0.31B, compared with a loss of ¥0.07B in the same period of the previous year. However, profit from the Synthetic Resin Business fell -90.7% to ¥0.06B, widening the profitability gap among segments. Ordinary Income increased +2.2% to ¥90.0B, while Net Income increased +9.2% to ¥61.1B, with the increase in Net Income largely driven by the one-time gain on the sale of investment securities. In conclusion, the company achieved growth in both revenue and profit, but the quality of profit growth reflects a mix of core operating factors and one-time factors.

Segment Analysis

The Automotive Leasing-Related Business generated revenue of ¥483.8B (+5.3%) and segment profit of ¥51.5B (+0.3%). It is the core business, accounting for 58.7% of company-wide Operating Income, although profit growth has been sluggish relative to revenue growth. The Parking Business generated revenue of ¥61.2B (+3.0%) and profit of ¥10.8B (+11.6%), maintaining the highest profitability among the segments with a margin of 17.7%. The Machinery and Tool Sales Business generated revenue of ¥284.0B (+4.8%) and profit of ¥0.31B, turning profitable from a loss in the previous year. The Agriculture-Related Business achieved high growth in both revenue and profit, with revenue of ¥141.3B (+11.1%) and profit of ¥11.2B (+44.9%). The Chemical Business improved profitability, generating revenue of ¥84.6B (-0.3%) and profit of ¥8.7B (+22.5%). The Synthetic Resin Business generated revenue of ¥139.5B (-3.0%) and profit of ¥0.06B (-90.7%), with its margin declining to 0.4%, making it the least profitable segment in the portfolio.

Key Financial Indicators

【Profitability】The Operating Margin was 7.2%, down approximately 10bp from 7.3% in the same period of the previous year. The Net Profit Margin improved to 5.0% from 4.8%, an improvement of approximately 22bp; however, the improvement in the Net Profit Margin was primarily attributable to a temporary boost from the gain on the sale of investment securities. The Gross Margin was largely unchanged at 22.1%.【Cash Quality】Cash and deposits increased substantially by +59.0% YoY to ¥145.7B, improving on-hand liquidity.【Investment Efficiency】Annualized ROE was 11.6%, comprising the product of the Net Profit Margin, Total Asset Turnover of 0.76x, and Financial Leverage of 3.02x, indicating a structure in which leverage makes a substantial contribution. BPS was ¥2,938.7.【Financial Soundness】The Equity Ratio was 33.1%. In addition to long-term borrowings of ¥522.7B and bonds of ¥187.0B, short-term financial liabilities were substantial, including current maturities of long-term borrowings of ¥198.7B and current maturities of bonds of ¥152.0B. Maturity management is therefore a key focus in assessing financial soundness.

Cash Flow Analysis

Although direct data from the cash flow statement is unavailable, funding trends can be inferred from changes in the balance sheet. Cash and deposits increased by ¥54.0B (+59.0%) from ¥91.6B in the same period of the previous year to ¥145.7B, clearly improving on-hand liquidity. Meanwhile, current liabilities increased by ¥89.9B YoY, while non-current liabilities decreased by -¥74.2B, indicating that the maturity profile of liabilities, including ¥152.0B in bonds due for redemption within one year, is shifting from non-current to current. Investment securities increased by +¥9.2B, while a gain on the sale of investment securities of ¥0.55B was also recorded during the same period, suggesting that the company has been rotating its holdings through purchases and sales. Overall, cash accumulation and the shortening of liability maturities are progressing simultaneously, making future refinancing and liquidity management key points for monitoring funding trends.

Quality of Earnings

Non-operating income and expenses resulted in a surplus of +¥0.23B relative to Operating Income of ¥87.7B. Non-operating income of ¥0.56B, including dividend income of ¥0.14B and foreign exchange gains of ¥0.02B, amounted to only 0.5% of revenue, indicating a stable recurring earnings structure. Most of the ¥0.56B in extraordinary income consisted of the ¥0.55B gain on the sale of investment securities, which did not arise from recurring operating activities and should be distinguished as a one-time factor. The ¥0.18B in extraordinary losses consisted of losses on the sale and disposal of property, plant and equipment. Net Income of ¥61.1B was 32.2% lower than Ordinary Income of ¥90.0B, with the effective tax rate of 34.9% being the primary cause of the difference. Net Income increased +9.2% YoY, exceeding the +2.9% increase in Operating Income, but much of the difference was attributable to the temporary boost from the gain on the sale of investment securities and should be evaluated separately from an improvement in the company’s underlying earnings power.

Earnings Forecast and Guidance

The Q3 cumulative progress rates against the Full-Year forecast were 74.9% for Revenue, 84.3% for Operating Income, 89.7% for Ordinary Income, and 98.5% for Net Income. Revenue was broadly in line with the standard progress rate of 75%, indicating that performance is tracking the plan. Operating Income exceeded the standard by 9.3 points but did not reach the deviation criterion of ±10 points, while the progress rates for Ordinary Income and Net Income were significantly above the standard. In particular, the upside in Net Income progress was primarily attributable to improved extraordinary income and expenses, centered on the ¥0.55B gain on the sale of investment securities. Accordingly, when evaluating the Full Year, greater emphasis should be placed on progress at the Operating Income and Ordinary Income levels excluding one-time gains.

Shareholder Returns

The Q2 dividend was ¥38.00 per share, while the Full-Year forecast dividend is ¥80.00, implying a planned year-end dividend of ¥42.00 based on a simple calculation. The forecast Payout Ratio against forecast Net Income of ¥62.0B is approximately 30.5% (total dividends of approximately ¥1.89B ÷ Net Income of ¥62.0B), well below the 60% level often regarded as an indication of sustainability. Retained earnings were substantial at ¥625.8B, and the burden of shareholder returns measured solely by dividends remains low.

Risk Factors

1. Deteriorating profitability in the Synthetic Resin Business: Segment profit declined -90.7% YoY to ¥0.06B, with the profit margin falling to 0.4%. Deteriorating profitability due to fluctuations in raw material and selling prices and supply and demand is weighing on company-wide profit.

2. Financial leverage and maturity concentration: Although the D/E ratio of 2.02x supports ROE of 11.6%, short-term financial liabilities are substantial, including current maturities of long-term borrowings of ¥198.7B and current maturities of bonds of ¥152.0B. Refinancing and maturity management are therefore important monitoring points.

3. Concentration of earnings in the core business: As the Automotive Leasing-Related Business accounts for 58.7% of company-wide Operating Income, vehicle procurement prices, used-vehicle residual values, and interest-rate trends have a significant impact on overall performance.

Industry Benchmark (For Reference; Company Research)

Profitability and Returns

The company’s profitability is below the industry median on both measures, positioning it in the lower half of the industry.

Growth and Capital Efficiency

The revenue growth rate is significantly below the industry median, indicating an inferior level of growth relative to industry peers.

※Source: Company research

Key Points from the Earnings Results

1. The company maintained growth in both revenue and profit, with Revenue up +4.4% and Operating Income up +2.9%. However, the increase in SG&A expenses (+4.9%) exceeded revenue growth, causing the Operating Margin to decline by approximately 10bp YoY. Trends in cost discipline will determine future profitability.

2. The Net Income progress rate of 98.5% was supported by extraordinary income and expenses, including the ¥0.55B gain on the sale of investment securities. The gap from progress at the Operating Income and Ordinary Income levels excluding one-time factors (84.3% and 89.7%) is a key consideration in evaluating the quality of the earnings results.

3. The profitability gap among segments is widening. The return to profitability in the Machinery and Tool Sales Business and the strong growth of the Agriculture-Related Business are positive developments. Meanwhile, the decline in the Synthetic Resin Business’s profit margin to 0.4% requires monitoring as a portfolio issue.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,863–¥3,031 at ±1% for the Cost of Equity, and ¥2,945–¥2,946 at ±0.1 for ω.

Notes:

• Because Net Income progress against the Full-Year forecast (98%) exceeds the standard rate (75%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with progress ahead of plan tend to outperform forecasts. In businesses with strong seasonality, the adjustment may be excessive).
• Net assets as of the quarter-end are used (there is a time lag relative to the Full-Year forecast).

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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