BIKEN TECHNO CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥17.67B
• Operating Income: ¥1.02B
• Net Income: ¥406M
• EPS: ¥89.05

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

Biken Techno Co., Ltd. (9791) delivered solid top-line growth and outsized profit expansion in FY2026 Q2 under JGAAP on a consolidated basis. Revenue rose 5.7% year over year to ¥17.7bn, while operating income surged 81.1% to ¥1.02bn, pointing to strong operating leverage and meaningful cost discipline. Gross profit reached ¥3.61bn, translating to a 20.4% gross margin, and operating margin expanded to approximately 5.8%. Ordinary income of ¥1.04bn modestly exceeded operating income, indicating non-operating items were net positive despite ¥36m in interest expense. Net income increased 65.4% to ¥671m, implying a net margin of 3.80%. The company’s DuPont profile shows ROE of 3.02%, driven by a 3.80% net margin, 0.438x asset turnover, and 1.82x financial leverage. Balance sheet strength is underpinned by total assets of ¥40.4bn and equity of ¥22.2bn, implying an equity ratio of roughly 55% (despite the reported 0.0% field), and a conservative liability-to-equity position of 0.84x. Liquidity remains robust with current assets of ¥20.68bn against current liabilities of ¥10.59bn, yielding a current ratio of about 195% and working capital of ¥10.09bn. Interest coverage is strong at approximately 28x (operating income versus interest expense), reflecting low financial risk. SG&A intensity is inferred at about 14.7% of sales based on gross profit less operating income, signaling improved cost control. Although depreciation/amortization and cash flow statements were not disclosed, the business model appears asset-light with minimal inventories, consistent with building maintenance and services. The reported effective tax rate field is not populated; using net income and income tax, an implied tax rate is approximately 28–29%, within a normal range. The earnings trajectory suggests improved pricing, mix, and/or utilization efficiency rather than one-off gains, given the alignment between operating and ordinary income. Dividend information is not disclosed for the period (DPS and payout shown as zero placeholders), so distribution policy and near-term cash returns cannot be assessed from this dataset. Overall, the company enters the second half with improved profitability, healthy liquidity, and manageable leverage, though the absence of cash flow disclosure limits assessment of earnings-to-cash conversion.

Profitability Analysis

ROE of 3.02% decomposes into a 3.80% net margin, 0.438x asset turnover, and 1.82x leverage, indicating returns are predominantly margin-driven this quarter rather than balance sheet leverage. Operating margin improved to ~5.8% (¥1,022m / ¥17,674m), up from an implied ~3.4% in the prior-year period, evidencing strong operating leverage. Gross margin held at 20.4%, suggesting the margin expansion stemmed primarily from SG&A efficiency; SG&A is inferred at ~¥2,590m (≈14.7% of sales). Ordinary income slightly above operating income (¥1,038m vs. ¥1,022m) implies non-operating contributions were mildly positive even after ¥36m of interest cost. Interest coverage is approximately 28x, indicating ample capacity to service debt. The net margin of 3.80% is healthy for a maintenance/services profile, with an implied effective tax rate around 28–29% based on reported taxes and net income. The combination of stable gross margin and sharply higher operating margin points to cost optimization and potentially better contract pricing. With D&A not disclosed, EBITDA cannot be precisely assessed; however, the gap between gross profit and operating income suggests no heavy non-cash expense drag. Overall, the profitability mix shows improving quality through opex discipline rather than reliance on financial or extraordinary items.

Growth Assessment

Revenue grew 5.7% YoY to ¥17.7bn, a steady pace indicative of resilient demand in core facility management/maintenance lines. Operating income grew 81.1% YoY to ¥1.02bn, implying significant operating leverage and improved cost structure. Back-of-the-envelope prior-year comparisons suggest operating income of ~¥564m on revenue of ~¥16.7bn, placing the prior OPM near ~3.4% versus ~5.8% now. The gross margin at 20.4% indicates stable underlying unit economics; the uplift in operating margin points to SG&A efficiencies and/or improved contract mix. Ordinary income tracked operating income closely, supporting the view that growth is operational rather than financial. Net income advanced 65.4% to ¥671m; net margin reached 3.80%, consistent with normalized tax. With inventories minimal (¥19m), growth appears services-driven rather than inventory-led, and scalability likely hinges on labor productivity and contract pricing. Sustainability will depend on the renewal pipeline, new contract wins, pricing power against wage inflation, and retention rates. Absent cash flow and order/backlog disclosures, visibility into second-half momentum is limited, but the margin trajectory is favorable. Outlook hinges on maintaining SG&A discipline, mitigating labor cost pressures, and sustaining utilization improvements.

Financial Health

Total assets are ¥40.36bn and total equity is ¥22.18bn, implying an equity ratio of roughly 55% and financial leverage of ~1.82x. Total liabilities of ¥18.70bn translate to a debt-to-equity of ~0.84x, indicating a conservative capital structure overall. Current assets of ¥20.68bn and current liabilities of ¥10.59bn yield a current ratio of ~195% and working capital of ~¥10.09bn, underscoring solid liquidity. The quick ratio is effectively the same as the current ratio (≈195%) due to negligible inventories (¥19m), reflecting an asset-light profile. Interest expense is modest at ¥36m, and interest coverage is strong at ~28x using operating income, suggesting low refinancing risk in the near term. The balance sheet appears resilient to short-term shocks, with ample current assets and moderate leverage. No detailed debt maturity or covenant data were provided; however, given coverage and liquidity, solvency risk is low based on available figures.

Cash Flow Quality

Operating, investing, and financing cash flows were not disclosed in this dataset, so OCF/NI and FCF figures shown as zero are placeholders rather than economic values. Earnings quality cannot be directly validated via cash conversion without OCF. The minimal inventory balance suggests working capital risk is concentrated in receivables and payables rather than inventory management. Given the strong margin expansion, monitoring whether receivables growth outpaces sales (indicative of elongated collection cycles) is important once cash flow data become available. Capex intensity cannot be assessed without investing CF or D&A; the business likely remains asset-light, but confirmation is pending. Free cash flow coverage of dividends is not assessable in this release due to undisclosed OCF and capex. Overall, earnings quality appears improved from a P&L perspective, but cash corroboration is a key missing piece.

Dividend Sustainability

Dividend data for the period are not disclosed (DPS and payout fields display zero placeholders). With EPS at ¥89.05 for the half-year (period basis as reported), payout ratio and FCF coverage cannot be determined from the provided information. Balance sheet liquidity and interest coverage suggest capacity for distributions exists, but sustainability depends on cash generation and capital needs. The company’s historical payout policy and full-year guidance are not provided; therefore, no inference on policy trajectory can be made. Upon disclosure of operating cash flow and capex, FCF-based payout coverage should be reassessed. In the absence of reported dividends, the near-term dividend outlook remains unspecified.

Risk Assessment

Business Risks:

• Contract renewal and pricing risk in building maintenance and facility management
• Labor cost inflation and staffing shortages affecting margins and service quality
• Customer concentration or large-account churn impacting revenue stability
• Execution risk on multi-site contracts and SLA compliance
• Competitive pressure from regional and national service providers
• Regulatory and hygiene/cleaning standards changes increasing compliance costs
• Exposure to cyclical end-markets (e.g., commercial real estate utilization)

Financial Risks:

• Receivables collection and working capital swings due to service billing cycles
• Interest rate volatility modestly affecting financing costs despite strong coverage
• Potential off-balance commitments or lease liabilities not detailed here
• Tax rate variability versus implied ~28–29% depending on credits/adjustments

Key Concerns:

• Lack of disclosed cash flow statements limits assessment of earnings-to-cash conversion
• No visibility on capex, making FCF durability uncertain
• Dividend policy and payout not disclosed, reducing clarity on shareholder returns
• Sustainability of recent margin gains amid wage inflation and competitive bidding

Investment Implications

Key Takeaways:

• Robust operating leverage: operating income up 81% on 6% revenue growth; OPM expanded to ~5.8%
• Healthy balance sheet: equity ratio roughly 55%, current ratio ~195%, and interest coverage ~28x
• Quality of margin improvement appears driven by SG&A efficiency rather than non-operating gains
• Service-model balance sheet with negligible inventories supports capital-light profile
• Absence of cash flow disclosure is the main analytical gap; cash conversion needs confirmation

Metrics to Watch:

• Operating cash flow and free cash flow in H2
• Receivables days and collection trends
• SG&A ratio and labor cost inflation versus pricing
• Order intake/renewals and contract win-loss metrics
• Ordinary-to-operating income gap (non-operating gains/losses)
• Interest coverage and any changes in borrowing costs
• Tax rate versus implied ~28–29%

Relative Positioning: Within Japanese building maintenance and facility services peers, the company exhibits solid liquidity, moderate leverage, and improving operating margins; confirmation of cash conversion will be key to benchmarking durability of the margin gains and potential for capital returns.

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