Japan Airport Terminal Co.,ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥141.54B
• Operating Income: ¥21.45B
• Net Income: ¥16.77B
• EPS: ¥144.41

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: Solid top-line growth with modest operating profit expansion, but slight operating margin compression; net margin improved on a lighter tax rate and controlled non-operating costs. Revenue rose 7.4% YoY to 1,415.44, while operating income increased 1.7% YoY to 214.46, and net income grew 11.8% YoY to 134.01. Operating margin stands at 15.2% (214.46/1,415.44), down roughly 84 bps from an estimated 16.0% in the prior-year period. Net margin improved to 9.5% (134.01/1,415.44), up about 38 bps from an estimated 9.1% last year. Ordinary income was 203.69 (+0.2% YoY), reflecting net non-operating expenses of about 10.77 (17.47 income versus 28.24 expenses), including interest expense of 18.04. The effective tax rate was 17.8% (36.20/203.85), supportive of net margin expansion versus last year. SG&A intensity is high at about 50.0% of sales (707.62/1,415.44), indicating cost pressure despite recovering demand. Balance sheet liquidity is strong with a current ratio of 211.6% and quick ratio of 193.2%, underpinned by cash and deposits of 854.36 exceeding short-term loans of 152.51. Leverage appears manageable with D/E at 1.26x and interest coverage at 11.89x. ROE is 6.3% per DuPont (9.5% net margin × 0.297 asset turnover × 2.26x leverage), below typical pre-pandemic airport operator aspirations but trending upward with recovery. ROIC is estimated at 6.9%, modestly below the 7–8% target band, implying room for improved capital efficiency as traffic and commercial revenues normalize. Earnings quality assessment is constrained by the absence of cash flow disclosure; OCF/NI and FCF are not calculable this quarter. Nevertheless, ample liquidity and comfortable coverage suggest low near-term financial stress. Forward-looking, sustained passenger recovery, inbound-driven retail spend, and stable non-operating items should support earnings, though cost inflation and potential rate normalization could cap margin upside. Overall, the quarter shows steady recovery momentum with improved bottom-line efficiency, tempered by operating margin compression and limited visibility on cash conversion.

Profitability Analysis

ROE decomposition (DuPont): ROE 6.3% = Net Profit Margin 9.5% × Asset Turnover 0.297 × Financial Leverage 2.26x. Component changes: Net margin improved by ~38 bps YoY (to 9.5%), while asset turnover is relatively low at 0.297 (indicative of asset-heavy airport infrastructure), and leverage at 2.26x is stable-to-moderate. The largest driver this quarter is the improvement in net margin, aided by a lower effective tax rate (17.8%) and controlled non-operating losses despite higher interest costs embedded in non-operating expenses. Operating margin declined ~84 bps YoY to 15.2%, reflecting SG&A intensity (~50% of sales) and likely wage/utilities inflation against a constrained ability to fully pass through costs in regulated/contracted areas. Business reason: Stronger traffic and retail recovery lift revenue, but operating costs (staffing, security, facility operations) scale up with volume and inflation, compressing OPM; the lighter tax rate helped EPS and net margin. Sustainability: Net margin gains tied to tax/finance lines may normalize; to sustain ROE improvement, operating leverage from higher passenger volumes and retail/concession yields must offset cost inflation. Flags: SG&A is high at 50% of sales. Without SG&A YoY detail, we cannot confirm, but the divergence between revenue growth (+7.4%) and operating income growth (+1.7%) implies cost growth outpaced revenue, pressuring operating leverage.

Growth Assessment

Revenue grew 7.4% YoY to 1,415.44, signaling continued recovery in air travel and commercial activities at the terminals. Operating income increased only 1.7% YoY to 214.46, indicating weaker operating leverage due to elevated cost run-rate. Net income rose 11.8% YoY to 134.01, benefitting from a favorable tax rate and manageable non-operating balance. Growth sustainability will depend on inbound tourism strength, domestic business travel normalization, and commercial revenue per passenger (retail/food & beverage/concessions). The 84 bps OPM compression suggests cost inflation and scaling costs are still a headwind; improvements in tenant mix, rent re-pricing, and ancillary revenue may be needed to restore pre-shock margins. With ROIC at 6.9%, incremental growth should prioritize higher-return projects (commercial revitalization, digital/operational efficiency) to lift capital productivity. Near-term outlook is cautiously positive with seasonal tailwinds and inbound momentum, but sensitivity to macro/FX and cost pressures remains.

Financial Health

Liquidity is strong: current ratio 211.6% and quick ratio 193.2%, with cash and deposits of 854.36 comfortably covering current liabilities (632.15) and short-term loans (152.51). No warning triggers: Current Ratio well above 1.0; D/E at 1.26x below the 2.0 threshold. Solvency: total liabilities 2,657.33 against equity 2,111.95; interest-bearing loans total roughly 1,305.52 (ST 152.51 + LT 1,153.01). Interest coverage is robust at 11.89x, indicating ample buffer. Maturity mismatch risk is low given strong cash and current assets (1,337.94) relative to short-term obligations. Off-balance sheet obligations are not disclosed in the provided data; airport operators typically have concession/lease and maintenance commitments, but we cannot quantify them here.

Cash Flow Quality

OCF, Capex, and FCF are unreported, so OCF/Net Income and FCF coverage cannot be assessed this quarter. Earnings quality flags: Not assessable on a cash basis; however, strong liquidity and interest coverage mitigate near-term concerns. Working capital: Accounts receivable 269.94 and inventories 116.39 appear manageable relative to sales, but without period changes, we cannot infer working capital releases/uses or potential manipulation. Dividend and capex sustainability against FCF cannot be evaluated due to missing cash flow data.

Dividend Sustainability

Payout ratio is calculated at 62.6%, slightly above the <60% benchmark, suggesting a moderately stretched payout relative to earnings. DPS and total dividends paid are unreported, and FCF coverage is not calculable this quarter. Balance sheet liquidity (cash 854.36) and solid interest coverage provide flexibility, but longer-term sustainability should align with normalized FCF after maintenance capex for terminal operations. Policy outlook cannot be inferred from disclosures; monitor guidance, payout targets, and capex plans.

Risk Assessment

Business Risks:

• Passenger traffic volatility affecting commercial and facility revenues (exposure to inbound tourism and business travel cycles).
• Cost inflation (labor, utilities, maintenance) pressuring operating margins.
• Concession/tenant performance risk impacting retail and F&B sales and rent income.
• Regulatory and airport fee framework changes affecting revenues and capex requirements.

Financial Risks:

• Interest rate risk on sizable long-term borrowings (1,153.01) potentially raising interest expense.
• Payout ratio slightly above benchmark may constrain balance sheet flexibility if FCF softens.
• Potential capex needs for terminal upgrades and safety/security could increase leverage if funded by debt.

Key Concerns:

• Operating margin compression (~84 bps YoY) despite revenue growth indicates cost pressure.
• Limited visibility on cash generation due to unreported OCF/FCF.
• Net non-operating expense (≈10.77) remains a drag; any rate increases could widen this.

Investment Implications

Key Takeaways:

• Revenue +7.4% YoY with operating income +1.7% YoY; topline recovery intact but weaker operating leverage.
• Operating margin at 15.2% (down ~84 bps); net margin at 9.5% (up ~38 bps) aided by lower tax burden.
• Liquidity is strong (current ratio 211.6%, cash 854.36) and leverage manageable (D/E 1.26x, interest coverage 11.89x).
• ROE 6.3% and ROIC 6.9% suggest improving but not yet optimal capital efficiency.
• Dividend payout ratio at 62.6% is slightly above the typical comfort zone without FCF visibility.

Metrics to Watch:

• Passenger volumes and inbound tourism metrics (traffic mix and spending per passenger).
• Operating margin trajectory and SG&A efficiency versus revenue growth.
• OCF/Net income and FCF after capex once disclosed.
• Interest expense trend and debt maturity profile amid rate environment.
• Commercial revenue KPIs (tenant sales, rent re-pricing, concession yields).

Relative Positioning: Within Japanese airport/terminal operators, the company shows healthy liquidity and coverage, modest leverage, and ongoing revenue recovery; however, operating margin pressure and sub-target ROIC leave room for improvement versus best-in-class peers focused on high-margin commercial monetization and disciplined cost control.

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