GAKKYUSHA CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥6.56B
• Operating Income: ¥1.45B
• Net Income: ¥1.04B
• EPS: ¥83.86

Income Statement

Balance Sheet

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

Gakkyusha Co., Ltd. (TSE: 9769) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite a modest top-line decline. Revenue was ¥6,564 million, down 1.6% YoY, while operating income increased 6.1% YoY to ¥1,448 million, indicating effective cost control and operating efficiency. Gross profit was ¥2,446.6 million, yielding a gross margin of 37.3%, and the operating margin expanded to approximately 22.1%. Ordinary income reached ¥1,487 million, implying net non-operating gains of roughly ¥39 million despite interest expense of ¥6.1 million. Net income declined 12.7% YoY to ¥911 million, suggesting headwinds below the operating line—likely higher taxes and/or extraordinary losses. The effective tax rate shown as 0.0% in the data is clearly a placeholder; based on reported tax expense of ¥463.1 million and implied pre-tax income of about ¥1,374 million, the effective tax rate is approximately 33.7%. DuPont metrics indicate solid returns: net margin of 13.88%, asset turnover of 0.524x, and financial leverage of 1.62x, yielding an ROE of 11.75%, consistent with the reported figure. The balance sheet is conservative: total assets ¥12,531 million, liabilities ¥4,818.5 million, and equity ¥7,756 million. Although the reported equity ratio is 0.0%, the implied equity ratio is about 61.9% (equity/assets), indicating a strong capital base. Liquidity appears adequate with a current ratio of 123.7% and working capital of about ¥673 million, though cash detail is not disclosed. Interest coverage is robust at 237.8x, reflecting minimal financial risk from debt service. Cash flow statement items show as zero due to non-disclosure, preventing an assessment of operating cash conversion and free cash flow. Dividend data also show zeros, suggesting non-disclosure rather than an actual absence of dividends; hence payout assessment requires caution. Overall, the company delivered improved operating performance in the face of a slight revenue contraction, but net income softness warrants monitoring of extraordinary items and taxes. The education services business can be seasonal; first-half results may not fully reflect full-year earnings power. Data limitations (cash flows, D&A, shares, and equity ratio disclosure) constrain precision, but available figures support a view of solid profitability, conservative leverage, and manageable liquidity.

Profitability Analysis

ROE_decomposition: ROE 11.75% = Net margin 13.88% × Asset turnover 0.524 × Financial leverage 1.62. Components: Net income ¥911m on revenue ¥6,564m; asset turnover based on assets ¥12,531m; leverage from assets/equity (¥12,531m/¥7,756m ≈ 1.62). margin_quality: Gross margin 37.3% (GP ¥2,446.6m). Operating margin ≈ 22.1% (OI ¥1,448m), up YoY given OI growth despite revenue decline. Ordinary margin ≈ 22.7% (¥1,487m). Net margin 13.88% declined YoY due to higher taxes and/or extraordinary loss (implied ~¥113m difference between ordinary and pre-tax). Effective tax rate approximates 33.7% (¥463.1m/¥1,374m). operating_leverage: Revenue fell 1.6% YoY while operating income rose 6.1% YoY, implying positive operating leverage from SG&A discipline. Estimated SG&A ≈ ¥998.6m (GP − OI), about 15.2% of revenue, indicating tight cost control. Interest expense is negligible (¥6.1m), so operating results primarily drive earnings.

Growth Assessment

revenue_sustainability: Top line declined modestly (−1.6% YoY), consistent with potential enrollment or pricing softness and/or calendar/seasonality. Education services can display seasonal revenue recognition; first-half trends may not extrapolate linearly. profit_quality: Operating profit growth (+6.1% YoY) against declining revenue suggests improved mix, pricing discipline, or fixed-cost leverage. Non-operating items netted a modest gain (~¥39m), while extraordinary/tax effects compressed net income (−12.7% YoY). The operating margin of ~22% is robust for the sector. outlook: If cost discipline persists and seasonally stronger periods materialize, full-year operating profitability could remain solid. Key swing factors include student enrollment, utilization of classrooms, staffing efficiency, and rent. Net income recovery will depend on controlling extraordinary losses and maintaining a normalized effective tax rate.

Financial Health

liquidity: Current assets ¥3,517.8m vs current liabilities ¥2,844.8m; current ratio 123.7% and quick ratio equivalent due to undisclosed inventories. Working capital ≈ ¥673.0m provides a buffer, though cash composition within current assets is undisclosed. solvency: Total liabilities ¥4,818.5m vs equity ¥7,756m; debt-to-equity 0.62x. Implied equity ratio ≈ 61.9% (vs reported 0.0% placeholder), indicating conservative solvency and ample equity cushion. capital_structure: Financial leverage 1.62x (assets/equity) and very high interest coverage (237.8x) reflect low debt service burden. Balance sheet flexibility appears sound for a service operator with fixed facility commitments.

Cash Flow Quality

earnings_quality: OCF is undisclosed (reported as 0 due to data limitations), preventing direct OCF/NI analysis. Given strong operating margins, cash conversion is likely solid absent unusual working capital swings, but this cannot be confirmed without OCF data. FCF_analysis: Investing and financing cash flows are undisclosed; Free Cash Flow cannot be derived. Capex intensity for education services is typically moderate (leases and fit-outs), but confirmation requires actual cash flow and capex disclosure. working_capital: Positive working capital (~¥673m) supports near-term obligations. Key drivers to watch include receivables collections (tuition timing), deferred revenue, and payables cycle; no inventories are disclosed in the dataset.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are shown as 0.0%, which likely reflects non-disclosure rather than true zeros. With EPS at ¥83.86 for the half-year, indicative capacity exists, but a sustainable payout assessment cannot be made without actual dividend policy and cash flow data. FCF_coverage: FCF is undisclosed; thus, dividend coverage by FCF cannot be evaluated. Earnings-based coverage would be speculative in the absence of cash conversion and capex data. policy_outlook: No explicit policy information provided. Given ROE of 11.75% and conservative leverage, the balance sheet could support distributions, but visibility is limited pending full-year and cash flow disclosures.

Risk Assessment

Business Risks:

• Enrollment and utilization volatility due to demographic decline in school-age population
• Competitive pressure from other cram schools and online learning platforms
• Seasonality around entrance exam cycles affecting quarterly comparability
• Regulatory or curriculum changes impacting demand for supplemental education
• Brand/reputation risk affecting student acquisition and retention
• Staffing and instructor availability affecting service quality

Financial Risks:

• Limited disclosed cash flow data impedes assessment of cash conversion and FCF
• Fixed-cost base (rents, personnel) magnifies downside operating leverage if revenue softens
• Potential extraordinary losses (implied ~¥113m) introducing earnings volatility
• Lease obligations for classrooms and facilities (not detailed here) representing quasi-debt
• Tax rate variability (effective rate ~33.7% estimated) affecting net margins

Key Concerns:

• Net income declined 12.7% YoY despite stronger operating income
• Cash, OCF, capex, and FCF are undisclosed, limiting visibility on cash generation
• Equity ratio reported as 0.0% in the dataset contradicts balance sheet; reliance on inferred metrics
• First-half seasonality may not reflect full-year run-rate earnings

Investment Implications

Key Takeaways:

• Strong operating margin (~22%) and YoY operating profit growth despite a 1.6% revenue decline indicate effective cost control
• ROE of 11.75% supported by healthy net margin (13.88%) and moderate leverage (1.62x)
• Balance sheet is conservative with an implied equity ratio of ~61.9% and interest coverage of ~238x
• Net income contraction reflects tax/extraordinary headwinds; monitoring below-the-line items is important
• Data gaps (cash flows, D&A, dividend details) limit granularity of cash and payout analysis

Metrics to Watch:

• Enrollment trends and same-school revenue growth
• Operating margin trajectory and SG&A ratio
• Effective tax rate and magnitude of extraordinary gains/losses
• Operating cash flow and capex to assess FCF sustainability
• Facility footprint (openings/closures) and occupancy costs
• Interest-bearing debt and lease liabilities detail

Relative Positioning: Within Japanese education services, the company exhibits above-average operating margins and solid ROE with conservative leverage, though revenue softness and limited disclosure on cash flows and dividends temper visibility versus peers with fuller reporting.

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