KU HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥81.92B
• Operating Income: ¥3.98B
• Net Income: ¥3.33B
• EPS: ¥84.58

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

Keiyu Holdings (9856) reported FY2026 Q2 consolidated results under JGAAP showing modest top-line growth but pressured profitability. Revenue increased 3.7% YoY to ¥81.9bn, highlighting stable unit sales and/or ASP/mix resilience in its auto retail operations. Gross profit reached ¥13.74bn, implying a gross margin of 16.8%, broadly consistent with an inventory-heavy dealership model. Operating income declined 17.4% YoY to ¥3.98bn, compressing the operating margin to roughly 4.9%, suggesting elevated SG&A, tighter spreads on vehicle sales, or negative operating leverage. Ordinary income of ¥4.11bn benefited slightly from minimal interest expense (¥17m), underlining a conservative balance sheet. Net income fell 16.3% YoY to ¥2.78bn, with a net margin of 3.4%, indicating some absorption of cost inflation and competitive pricing dynamics. DuPont analysis yields ROE of 3.98%, driven by a modest net margin, asset turnover of 0.838, and low financial leverage of 1.40x. Liquidity is solid with a current ratio of 228% and a quick ratio of 107%, backed by sizable working capital of ¥24.5bn, though inventory represents more than half of current assets and remains a key execution lever. The capital structure is conservative with total liabilities at ¥24.8bn versus equity of ¥69.9bn (D/E ~0.35x), providing ample solvency headroom. Operating cash flow was ¥1.85bn, below net income (OCF/NI 0.66), indicating weaker cash conversion in the half, likely reflecting inventory and receivables dynamics characteristic of the sector. EBITDA was ¥5.59bn (6.8% margin), and interest coverage is exceptionally strong at 234x, implying minimal refinancing risk under current leverage. Reported “effective tax rate: 0.0%” in the metrics appears inconsistent with disclosed income tax of ¥1.61bn; a simple recalculation suggests an effective tax rate around the mid-30% range for the period. Cash and equivalents, investing cash flow, and several per-share metrics were not disclosed in the dataset (zeros indicate unreported), limiting full FCF and per-share diagnostics. Dividend information also appears unreported (DPS shown as zero), so payout sustainability cannot be concluded from this snapshot alone. Overall, the company shows durable revenue and strong balance sheet quality but faces margin pressure and subpar cash conversion in H1, warranting close monitoring of inventory discipline, SG&A control, and pricing spreads into H2.

Profitability Analysis

roe_decomposition: ROE 3.98% = Net margin 3.40% x Asset turnover 0.838x x Financial leverage 1.40x. The primary drag is margin compression at the operating level, with limited help from leverage given a conservative balance sheet. margin_quality: Gross margin of 16.8% is consistent with dealership economics; operating margin of ~4.9% declined YoY alongside a 17.4% drop in operating income despite revenue growth, pointing to SG&A inflation, weaker per-unit gross, or mix. Net margin at 3.4% aligns with thin downstream auto retail spreads. operating_leverage: Revenue grew 3.7% YoY while operating income fell 17.4% YoY, indicating negative operating leverage in the half. Fixed cost absorption likely deteriorated, and pricing/mix effects may have narrowed contribution per unit.

Growth Assessment

revenue_sustainability: Top-line growth of 3.7% YoY suggests stable market demand and/or effective inventory availability. Sustainability hinges on used-vehicle price normalization, new-vehicle supply recovery, and regional demand trends. profit_quality: EBITDA margin of 6.8% and operating margin of ~4.9% are sound for the model but down YoY. Ordinary income tracked operating trends with minimal financial income/expense effects. Tax expense of ~¥1.61bn implies a normalized tax burden, supporting quality of earnings from an accounting standpoint. outlook: Near-term performance depends on inventory turnover, gross per unit, and SG&A discipline. If vehicle price volatility eases and new-car supply normalizes, spreads could stabilize in H2. However, continued cost inflation and competitive discounting could cap margin recovery.

Financial Health

liquidity: Current ratio 227.9%, quick ratio 106.6%, working capital ¥24.5bn. Inventories of ¥23.25bn comprise over half of current assets, making inventory turnover critical to liquidity quality. solvency: Total liabilities ¥24.77bn vs equity ¥69.86bn (D/E ~0.35x). Interest expense is minimal (¥17m) with interest coverage ~234x, indicating low financial risk. capital_structure: Assets ¥97.71bn funded primarily by equity (financial leverage 1.40x). The low leverage limits ROE amplification but provides resilience against macro and rate shocks.

Cash Flow Quality

earnings_quality: OCF of ¥1.85bn vs net income ¥2.78bn gives OCF/NI of 0.66, signaling weaker cash conversion likely tied to working capital build (inventories/receivables). D&A of ¥1.61bn supports EBITDA-to-cash bridge but was offset by WC movements. fcf_analysis: Free cash flow cannot be determined because investing cash flow was unreported (shown as zero). As a result, FCF and FCF margin are not assessable from the provided data. working_capital: Inventories at ¥23.25bn are the pivotal lever. The quick ratio of 107% indicates adequate coverage excluding inventories, but sustained margin pressure alongside slower turns could constrain OCF.

Dividend Sustainability

payout_ratio_assessment: Payout ratio is shown as 0.0% due to unreported DPS; EPS is ¥84.58 but share count and DPS were not disclosed. Thus, a true payout ratio cannot be assessed. fcf_coverage: FCF coverage is unassessable because investing cash flows were not disclosed; the reported 0.00x is not meaningful. policy_outlook: Given the conservative balance sheet and positive earnings, the company has capacity for distributions in principle, but without DPS/FCF disclosure and given H1 cash conversion softness, visibility on policy continuity is limited.

Risk Assessment

Business Risks:

• Used-vehicle price volatility impacting gross per unit and inventory valuation.
• New-vehicle supply normalization altering mix and pricing dynamics.
• Competition in regional auto retail compressing margins.
• SG&A inflation (labor, logistics, utilities) pressuring operating margin.
• Residual value and appraisal risk on trade-ins.
• Regulatory changes in auto emissions/inspection potentially affecting demand mix.

Financial Risks:

• Inventory concentration exposes liquidity to turnover slowdowns.
• Working capital swings driving OCF volatility.
• Potential floorplan or short-term funding needs if inventory rises (despite low leverage today).
• Tax rate variability; effective tax appears mid-30% despite a reported 0.0% metric.

Key Concerns:

• Negative operating leverage in H1 despite revenue growth.
• OCF/NI at 0.66 indicating weaker cash conversion.
• High inventory levels relative to current assets, requiring disciplined turnover.

Investment Implications

Key Takeaways:

• Revenue grew 3.7% YoY to ¥81.9bn, but operating income fell 17.4% YoY.
• Margins compressed: operating margin ~4.9%, net margin 3.4%.
• ROE of 3.98% reflects modest margins and low leverage.
• Liquidity is strong (current ratio 228%), but inventory reliance is high.
• OCF of ¥1.85bn trails net income (OCF/NI 0.66), pointing to WC drag.
• Interest burden is negligible; coverage ~234x.
• Effective tax rate recalculates to ~36–37%, not 0%.
• FCF and dividend details are not assessable due to unreported investing CF and DPS.

Metrics to Watch:

• Inventory turnover days and used-vehicle pricing indices.
• SG&A to sales ratio and operating margin trajectory in H2.
• OCF/NI conversion and working capital movements (inventory and receivables).
• Unit sales and ASP/mix between new and used vehicles.
• Ordinary income vs operating income gap (non-operating items).
• Tax rate normalization and any extraordinary items.

Relative Positioning: Within Japanese auto retail peers, Keiyu exhibits a conservative balance sheet and strong liquidity, but current-period profitability and cash conversion are under pressure; sustained advantage will hinge on inventory discipline and margin recovery relative to peers experiencing similar price normalization.

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