KNT-CT Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥146.55B
• Operating Income: ¥2.98B
• Net Income: ¥2.52B
• EPS: ¥97.34

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

KNT-CT Holdings (FY2026 Q2, JGAAP, consolidated) delivered solid top-line growth with revenue of ¥146.5bn (+9.0% YoY) and strong operating leverage, lifting operating income to ¥3.0bn (+33.1% YoY). Gross profit reached ¥25.1bn, implying a gross margin of 17.1%, which, combined with controlled SG&A, supported a meaningful uptick in operating margin to roughly 2.0%. Ordinary income of ¥3.5bn exceeded operating income, indicating positive non-operating contributions (e.g., financial income, FX, or equity-method), while interest expense remained de minimis at ¥3m. Net income rose 23.8% YoY to ¥3.1bn, with EPS of ¥97.34, pointing to continued post-pandemic earnings normalization. DuPont decomposition shows a moderate ROE of 5.66%, driven by a thin net margin of 2.13%, reasonable asset turnover of 0.91x, and leverage of 2.92x, a profile typical for an agency model with sizable customer advances. Cash generation was robust: operating cash flow (OCF) was ¥10.7bn, translating to an OCF/Net Income ratio of 3.44x, signaling strong earnings quality and favorable working-capital dynamics this half. Liquidity appears healthy with a current ratio of 148.7% and working capital of ¥40.6bn, suggesting ample buffer for seasonal swings. The debt-to-equity ratio of 1.55x reflects reliance on liabilities (likely largely non-interest-bearing payables and advances); the very high interest coverage of 992.7x indicates low financial risk from debt service. Effective tax expense was unusually low relative to profits, likely reflecting loss carryforwards or timing effects, aiding bottom-line performance. Dividend remains suspended (DPS ¥0), with payout ratio at 0%, consistent with a balance-sheet-first stance and reinvestment focus during recovery. Data limitations exist: several items show as zero due to non-disclosure (e.g., cash & equivalents, investing cash flow, inventories, equity ratio, share count), so interpretations rely on the disclosed non-zero metrics and industry context. Despite these gaps, the trend points to improving profitability and cash conversion on the back of recovering travel demand and better cost discipline. Sustainability of the margin gains will depend on product mix (corporate/MICE vs. leisure), pricing power, and operating efficiency as volumes normalize. Overall, the company exhibits improving earnings power, solid liquidity, and limited interest burden, with room to further lift ROE through margin expansion and asset efficiency while managing working-capital intensity.

Profitability Analysis

ROE_decomposition: Reported ROE is 5.66%, explained by Net Profit Margin 2.13% × Asset Turnover 0.910 × Financial Leverage 2.92. The result (≈5.65%) aligns with the reported figure, indicating consistency across components. margin_quality: Gross margin is 17.1% (gross profit ¥25.1bn on revenue ¥146.5bn). Operating income of ¥3.0bn implies an operating margin of roughly 2.0%, up meaningfully YoY given operating income growth (+33.1%) outpacing revenue (+9.0%). Net margin of 2.13% remains thin but improved; low interest expense (¥3m) and a low effective tax burden supported bottom line. operating_leverage: Operating income growth (+33.1% YoY) significantly exceeded revenue growth (+9.0% YoY), evidencing positive operating leverage via SG&A efficiency and potentially improved mix (higher-yield segments). EBITDA of ¥3.19bn (margin ~2.2%) versus D&A of ¥0.21bn indicates limited fixed-cost drag; incremental margins should remain favorable if volumes hold.

Growth Assessment

revenue_sustainability: Revenue grew 9.0% YoY to ¥146.5bn, consistent with ongoing normalization in travel demand. Sustainability depends on inbound momentum, corporate/MICE recovery, and outbound resilience amid FX and airfare levels. profit_quality: Operating income rose 33.1% YoY to ¥3.0bn, indicating margin expansion. Ordinary income outpaced operating income, implying supportive non-operating contributions; interest cost is negligible. The unusually low tax charge boosted net income and may not be fully recurring. outlook: With demand tailwinds and cost control, margins can continue to normalize; however, competitive pricing from OTAs, supplier capacity/pricing, and FX volatility could temper growth. Mix upgrades (corporate, packaged high-value tours, inbound solutions) and digital efficiency gains are key to sustaining mid-single-digit ROE improvement.

Financial Health

liquidity: Current assets ¥123.8bn vs current liabilities ¥83.2bn yields a current ratio of 148.7% and working capital of ¥40.6bn, providing a comfortable buffer for seasonality in bookings and settlements. solvency: Total liabilities ¥85.4bn vs equity ¥55.2bn implies a debt-to-equity ratio of 1.55x. Given interest expense of only ¥3m and interest coverage at 992.7x, true interest-bearing debt appears modest; liabilities likely comprise significant non-interest-bearing advances and payables typical of the travel agency model. capital_structure: Financial leverage of 2.92x (DuPont) indicates moderate balance-sheet gearing, primarily from operational liabilities. Equity base of ¥55.2bn supports recovery; limited interest burden reduces refinancing risk. notes_on_disclosures: Equity ratio and cash balances are shown as zero in the dataset but are undisclosed rather than truly zero; conclusions are drawn from available non-zero items.

Cash Flow Quality

earnings_quality: OCF/Net Income is 3.44x (¥10.7bn / ¥3.1bn), indicating strong cash conversion and limited accrual risk this half. Low D&A (¥0.21bn) versus EBITDA (¥3.19bn) suggests cash earnings are close to operating profit plus working-capital inflows. FCF_analysis: Investing cash flow is undisclosed (shown as zero), so Free Cash Flow cannot be reliably computed; the presented FCF of 0 reflects missing data, not actual FCF. Capex requirements are typically modest for an agency model but IT investments can be lumpy. working_capital: Positive OCF likely benefited from timing of customer advances and payables. With no inventories reported (undisclosed), working-capital efficiency hinges on receivables, payables, and deferred revenue; monitoring advances received and settlement cycles is critical.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is currently ¥0 with a payout ratio of 0.0%, consistent with prioritizing balance-sheet resilience and reinvestment during earnings recovery. FCF_coverage: FCF coverage cannot be assessed due to undisclosed investing cash flows; the reported 0.00x coverage reflects missing data, not a funding shortfall. policy_outlook: Resumption of dividends will likely depend on sustained profitability, normalization of the effective tax rate, and visibility on stable OCF after working-capital seasonality. With interest burden minimal, returning cash is feasible once cash position and FCF are confirmed.

Risk Assessment

Business Risks:

• Travel demand volatility due to macro conditions, FX, and airfare levels
• Competitive pressure from OTAs and peer agencies impacting take rates
• Supplier pricing/capacity constraints (airlines, hotels) compressing margins
• Geopolitical events, natural disasters, and pandemics disrupting travel flows
• Execution risk in digital transformation and system reliability
• Staffing and labor cost pressures in a service-intensive model
• Product mix risk between higher-margin corporate/MICE and lower-margin leisure

Financial Risks:

• Working-capital swings from advances received and settlements affecting OCF
• Low but non-zero interest-rate risk if debt usage increases
• Potential normalization of an abnormally low effective tax rate reducing net income
• Limited visibility on cash and investing outflows due to undisclosed items
• Exposure to FX on inbound/outbound transactions and possible translation effects

Key Concerns:

• Sustainability of margin expansion as volumes normalize and competition intensifies
• Reliance on non-operating items to lift ordinary income above operating income
• Data gaps (cash, investing CF, equity ratio) that constrain assessment of FCF and balance-sheet strength

Investment Implications

Key Takeaways:

• Revenue up 9.0% YoY to ¥146.5bn with operating income up 33.1% YoY, demonstrating positive operating leverage
• ROE at 5.66% supported by improved margins and asset turnover but still leaves room for improvement
• OCF strong at ¥10.7bn (OCF/NI 3.44x), indicating solid cash conversion aided by working-capital inflows
• Interest burden negligible (interest expense ¥3m; coverage 992.7x), reducing financial risk
• Dividend remains suspended; capital allocation likely focused on strengthening the balance sheet and operations
• Data limitations (cash, investing CF, equity ratio, share count) prevent full FCF and per-share analysis

Metrics to Watch:

• Booking trends and Gross Transaction Value (GTV) across inbound, outbound, and domestic segments
• Gross margin and SG&A ratio to confirm sustained operating leverage
• Advances received/deferred revenue and payables to track working-capital driven OCF
• Effective tax rate normalization and its impact on net margin
• Interest-bearing debt levels and cash balances when disclosed
• IT/digital investment levels (capex) and their payoff in productivity
• ROE trajectory and asset turnover as scale returns

Relative Positioning: Among Japanese travel agency peers, KNT-CT appears in mid-recovery with improving margins and strong cash conversion, lower financial risk from interest-bearing debt than headline leverage suggests, and profitability still trailing best-in-class levels; sustained mix and efficiency improvements are key to closing the 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
• 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