SAN HOLDINGS,INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥9.37B
• Operating Income: ¥1.55B
• Net Income: ¥943M
• EPS: ¥43.44

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

San Holdings (TSE:9628) posted stable top-line and modest operating growth in FY2026 Q2 on a consolidated JGAAP basis, with revenue flat year on year at ¥9.37bn and operating income up 0.8% to ¥1.55bn. Operating margin expanded slightly to roughly 16.5%, indicating decent cost control and operating discipline. Ordinary income of ¥1.48bn sits modestly below operating income, implying small net non-operating costs (around ¥66m). Net income declined 5.6% YoY to ¥0.89bn, likely driven by a heavier tax burden and minor below-the-line headwinds rather than a deterioration in core operations. EBITDA was ¥2.04bn (21.8% margin), with depreciation and amortization of ¥0.50bn, highlighting a moderate capital intensity for the business model. The DuPont bridge indicates ROE of 2.36% driven by a 9.5% net margin, low asset turnover of 0.157x, and modest financial leverage of 1.58x. Liquidity is solid with a current ratio of 158% and quick ratio of 156%, reflecting a cash-light working capital structure and minimal inventories (¥0.18bn). Balance sheet leverage appears conservative with debt-to-equity at 0.69x and very low interest expense (¥5m), yielding an excellent interest coverage ratio of ~309x. Operating cash flow of ¥1.25bn represents 1.41x net income, suggesting good earnings quality and working capital discipline in the period. Financing cash inflow of ¥9.70bn is sizable; without investing cash flow disclosure, the use of funds is unclear (e.g., potential refinancing, acquisitions, or share-related flows). Reported zeros for several line items (gross profit, equity ratio, investing cash flows, cash balance, DPS) likely reflect non-disclosure under XBRL or different account nomenclature rather than true zeros. The effective tax expense of ¥0.62bn against net income implies a non-trivial tax burden, even though the calculated “effective tax rate” figure provided as 0.0% is not reflective of the actual expense. Profit quality appears resilient given OCF outpaced earnings and interest burden is negligible. With revenue flat but operating profit slightly up, near-term outlook hinges on pricing, mix, and cost control rather than volume expansion. Overall, fundamentals point to a stable, cash-generative profile with conservative leverage, though ROE is restrained by low asset turnover and limited financial leverage. Data gaps (notably gross profit, investing cash flows, cash, and DPS) constrain depth of analysis; conclusions below focus on disclosed non-zero items.

Profitability Analysis

ROE is 2.36%, decomposed into a 9.50% net profit margin, 0.157x asset turnover, and 1.58x financial leverage. Operating margin stands near 16.5% (¥1.546bn/¥9.368bn), and ordinary margin is 15.8% (¥1.480bn/¥9.368bn), indicating modest non-operating drag (¥66m). EBITDA margin is 21.8%, with D&A of ¥498m equating to ~5.3% of revenue and ~32% of operating income, consistent with a moderate capital base. Interest expense is minimal at ¥5m, yielding interest coverage of ~309x, underscoring limited financial friction. Net margin of 9.5% trails operating margin mainly due to tax and small non-operating items; estimated effective tax burden approximates 41% if we infer pre-tax income near ¥1.5bn. Operating leverage appears disciplined: slight operating income growth (+0.8% YoY) on flat revenue suggests some cost efficiencies and/or favorable mix. The margin structure implies stable pricing power with controlled fixed costs, although low asset turnover (0.157x) caps ROE.

Growth Assessment

Revenue was flat YoY at ¥9.368bn, implying limited volume growth; operating income rose 0.8% YoY, reflecting incremental efficiency or mix benefits. Ordinary income of ¥1.480bn and net income of ¥0.890bn (-5.6% YoY) indicate that below-the-line items and taxes weighed on bottom-line growth despite steady operations. EBITDA of ¥2.044bn supports the view of solid operating cash generation potential. With asset turnover at 0.157x, growth appears capacity- or utilization-constrained rather than demand-accelerated in the period. Sustainability of revenue hinges on stable demand and pricing; absent volume growth, continued cost discipline is key to protecting margins. Profit quality is supported by OCF exceeding net income (1.41x), suggesting earnings are largely cash-backed. Outlook near term is for stable to modest improvement contingent on managing personnel and facility costs and maintaining pricing; any new site openings or service line expansion could re-accelerate growth, but investing plans are not disclosed here.

Financial Health

Total assets are ¥59.513bn and total liabilities ¥25.881bn, with total equity at ¥37.763bn; the implied leverage (assets/equity) is 1.58x. The current ratio is 158% and quick ratio 156%, supported by low inventories (¥176m) and sizeable current assets (¥15.267bn) versus current liabilities (¥9.664bn). Working capital is ¥5.603bn, providing a buffer for operations. Debt-to-equity is 0.69x, consistent with a moderately levered but conservative balance sheet profile given strong coverage and low interest costs. Interest expense is only ¥5m, indicating either low average debt or low-cost funding. The reported equity ratio of 0.0% appears to be an unreported figure rather than a true metric. Overall solvency appears sound, though a reconciliation between assets, liabilities, and equity would benefit from more granular disclosure to address minor presentation discrepancies.

Cash Flow Quality

Operating cash flow of ¥1.252bn is 1.41x net income (¥0.890bn), indicating healthy earnings-to-cash conversion and disciplined working capital. Free cash flow cannot be determined as investing cash flows are undisclosed (reported as 0, likely unreported), and capex is not separately provided. Depreciation and amortization of ¥498m suggests ongoing maintenance capital needs; without capex, we cannot quantify FCF but EBITDA and OCF support an expectation of positive underlying FCF generation. Financing cash inflow of ¥9.696bn is large relative to OCF and earnings, implying noteworthy balance sheet activity (e.g., debt issuance, refinancing, or equity-related flows); without cash balance disclosure, net liquidity impact is unclear. Working capital appears well managed given low inventories and strong quick ratio. Overall, cash realization from profits is strong, but investment and capital allocation visibility is limited due to missing investing CF data.

Dividend Sustainability

Dividends per share are reported as ¥0.00 and payout ratio 0.0%, which likely reflects non-disclosure for the interim period rather than an explicit zero distribution. On capacity, net income of ¥0.89bn and OCF of ¥1.25bn suggest room to fund ordinary dividends if policy supports it, with minimal interest burden. FCF coverage cannot be assessed without capex/investing CF data; therefore, dividend coverage analysis is inconclusive. Balance sheet strength (current ratio 158%, low interest cost, moderate D/E of 0.69x) supports potential sustainability were dividends declared. Policy outlook cannot be inferred from the provided data; prior-year or guidance data would be required.

Risk Assessment

Business Risks:

• Flat revenue highlights demand and volume sensitivity; limited growth could pressure margins if costs rise.
• Pricing and mix risks in service lines; inability to pass through cost inflation would compress margins.
• Operational leverage from fixed facility and personnel costs can amplify downturn impacts.
• Geographic concentration and demographic trends may create uneven demand patterns.
• Competition in ceremonies/funeral services could pressure utilization and pricing.

Financial Risks:

• Large financing cash inflow (¥9.70bn) without disclosure of use introduces uncertainty around leverage trajectory.
• Low asset turnover (0.157x) constrains ROE and could signal underutilized assets.
• Potential capex requirements for facility upkeep or expansion not disclosed; FCF uncertainty.
• Tax burden appears material (~¥615m), creating downside to net income if profitability stalls.

Key Concerns:

• Data gaps: unreported gross profit, investing cash flows, cash balance, equity ratio, and dividend details limit full assessment.
• Net income decline (-5.6% YoY) despite stable operations suggests persistent below-the-line headwinds.
• Sustained low asset turnover weighing on ROE (2.36%).

Investment Implications

Key Takeaways:

• Core operations stable: operating income +0.8% YoY on flat revenue; operating margin ~16.5%.
• Earnings quality solid: OCF/NI at 1.41x and interest coverage ~309x.
• ROE subdued at 2.36% due to low asset turnover and modest leverage.
• Liquidity strong (current ratio 158%, quick ratio 156%); balance sheet conservatively funded.
• Use of substantial financing inflow (¥9.70bn) is unclear given missing investing and cash data.

Metrics to Watch:

• Revenue growth drivers: same-site utilization, pricing, and mix.
• Operating margin trajectory and cost inflation in personnel/facilities.
• Asset turnover improvement and capital efficiency.
• Capex and investing cash flows to gauge sustainable FCF.
• Net debt and interest expense trend post large financing inflow.
• OCF/NI ratio and working capital movements.

Relative Positioning: Within domestic service peers, the company exhibits healthy operating margins, strong liquidity, and negligible interest burden, but lower ROE driven by subdued asset turnover; capital discipline appears solid, while growth remains measured.

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