MATSUYA FOODS HOLDINGS (9887) FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 period of FY2026, the Company achieved higher revenue and higher earnings, driven by revenue expansion in existing businesses and the absorption of selling, general and administrative expenses. Revenue was ¥1,366.9B (+20.5% YoY), while operating income was ¥64.0B (+53.0% YoY), with the earnings growth rate substantially exceeding the revenue growth rate. Ordinary income was ¥70.2B (+48.1% YoY), and net income was ¥33.1B (+52.4% YoY). The operating margin improved to 4.7% from 3.7% in the same period of the previous year, while the gross margin declined slightly to 63.3% from 64.3%. The decline in the SG&A ratio to 58.6% from 60.7% absorbed this deterioration and resulted in higher earnings.

Factors Affecting Business Performance

【Revenue】Revenue increased 20.5% YoY to ¥1,366.9B. As the Company operates in a single Food Service Business segment, the expansion of the business scale, including existing stores, is considered the primary factor behind the revenue increase.

【Profit and Loss】Gross profit was ¥865.3B (+18.6% YoY), slightly below the revenue growth rate, and the gross margin declined to 63.3% from 64.3% in the same period of the previous year, a decrease of approximately 1.0pt. Meanwhile, SG&A expenses remained at ¥801.2B (+16.5% YoY), and the SG&A ratio declined to 58.6% from 60.7%, a decrease of approximately 2.0pt. This fixed-cost absorption effect outweighed the decline in the gross margin, resulting in operating income of ¥64.0B (+53.0% YoY). Non-operating income and expenses produced a surplus of ¥6.2B, contributing to the increase in ordinary income, which reached ¥70.2B (+48.1% YoY). After reflecting extraordinary losses of ¥6.5B, including impairment losses of ¥6.2B, and an effective tax rate of 48.1%, net income amounted to ¥33.1B (+52.4% YoY). Overall, the period can be characterized as one of higher revenue and higher earnings.

Segment Analysis

The Group operates in a single Food Service Business segment and does not disclose operating income or loss by segment.

Key Financial Indicators

【Profitability】The operating margin was 4.7%, improving from 3.7% in the same period of the previous year, but it remained below the 5% level. The net profit margin improved to 2.4% from 1.9%. The gross margin declined slightly to 63.3% from 64.3%, indicating that improvement at the operating level through cost absorption was the primary driver of the improvement in profitability.【Cash Flow Quality】Impairment losses accounted for ¥6.2B of the ¥6.5B in extraordinary losses. The effective tax rate was high at 48.1%, constraining the conversion rate from profit before tax to net income.【Investment Efficiency】Annualized ROE was 9.1%, comprising a combination of a 2.4% net profit margin, total asset turnover of 1.453x, and financial leverage of 2.59x. This indicates a structure in which asset efficiency and leverage compensate for the low level of profitability.【Financial Soundness】The equity ratio was 38.6%, down from 43.8% in the same period of the previous year. Current liabilities of ¥492.4B exceeded current assets of ¥474.9B, resulting in a current ratio of 96.4%, below 1x. Cash and deposits increased 68.2% YoY to ¥283.6B, indicating an improvement in short-term funding capacity.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is limited, an examination of funding trends based on changes in the balance sheet shows that cash and deposits increased by ¥114.96B (+68.2% YoY) to ¥283.6B, indicating an increase in available liquidity. Meanwhile, property, plant and equipment increased by ¥67.2B (+13.6%), suggesting that investment in stores and equipment has continued. Long-term borrowings declined from ¥246.6B in the same period of the previous year to ¥197.5B, potentially indicating a shift in the funding structure from long-term borrowings toward short-term funds and internal funds. Current liabilities increased significantly by 89.4% YoY, and the coexistence of higher cash balances and expanding short-term liabilities warrants attention as a change in the funding structure.

Quality of Earnings

The increase in earnings during the period was primarily supported by the fixed-cost absorption effect resulting from a lower SG&A ratio, and the improvement in profitability at the operating level can be assessed as being based on recurring factors. On the other hand, the gross margin declined YoY, indicating that cost pressures from raw materials, labor, and other expenses remain at the cost-of-sales level. Of the ¥6.5B in extraordinary losses, ¥6.2B consisted of impairment losses, which can be distinguished as a temporary factor associated with a review of the profitability of stores and assets. Non-operating income of ¥10.6B was approximately 0.8% of revenue and was not large enough to materially distort overall earnings. Comprehensive income was ¥33.2B, almost equal to net income of ¥33.1B. Valuation differences, including foreign currency translation adjustments, were minimal, and the small divergence between net income and comprehensive income indicates no significant factor undermining earnings quality.

Earnings Forecast and Guidance

The cumulative Q3 progress rates against the full-year Company forecasts were 74.9% for revenue, 98.5% for operating income, 94.8% for ordinary income, and 112.1% for net income. Revenue progress was close to the standard level of approximately 75% after nine months, while profit progress was substantially ahead of schedule. Against full-year forecasts of ¥65.0B in operating income, ¥74.0B in ordinary income, and ¥29.5B in net income, the Company had already nearly achieved its targets by the cumulative Q3 period, while net income had exceeded the full-year forecast. Expenses incurred in Q4, additional extraordinary income or losses, and trends in the tax burden will determine the final full-year results.

Shareholder Returns

The Q2 dividend was ¥12.00 per share, and the full-year Company forecast is an annual dividend of ¥24.00 per share. Based on the annual dividend total of approximately ¥4.6B calculated from the full-year net income forecast of ¥2.95B, the payout ratio is approximately 155%. However, this figure is based on the full-year forecast net income; using cumulative Q3 net income of ¥3.31B as the basis would result in a lower payout ratio. Since earnings progress is exceeding the full-year plan, the actual payout ratio should be assessed after the Company finalizes its full-year results. No share repurchase has been disclosed, and shareholder returns are limited to dividends.

Risk Factors

1. Raw Material and Labor Cost Pressures: The gross margin declined by approximately 1.0pt to 63.3% from 64.3% in the same period of the previous year, as rising costs for food ingredients, packaging materials, labor, and other items pressured the cost-of-sales level. Stabilizing the gross margin through price pass-through and improvements in product mix will be a key focus going forward.

2. Short-Term Liquidity Headroom: The current ratio was 96.4%, below 1x, with current liabilities of ¥492.4B exceeding current assets of ¥474.9B. Although cash and deposits increased 68.2% YoY, the Company has a relatively high degree of dependence on short-term liabilities, requiring monitoring of liquidity management.

3. Profitability of Stores and Assets: Impairment losses accounted for ¥6.2B of the ¥6.5B in extraordinary losses, indicating that the review of underperforming stores and assets is ongoing. Asset retirement obligations of ¥50.2B have also been recorded, creating a structure in which future cash outflows associated with the maintenance and withdrawal of the store network will continue.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (retail)

Profitability and Return

The Company’s operating margin and net profit margin both exceeded the industry median, placing its profitability in a relatively favorable position within the industry.

Growth and Capital Efficiency

The revenue growth rate substantially exceeded the industry median, placing the Company among the industry’s high-growth businesses.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The high earnings growth rate of +53.0% in operating income compared with revenue growth of +20.5% was primarily attributable to the fixed-cost absorption effect from the approximately 2.0pt decline in the SG&A ratio, indicating that operating leverage from business expansion was achieved.

2. The gross margin declined by approximately 1.0pt YoY, and the improvement in the operating margin to 4.7% was largely attributable to SG&A management. If cost pressures at the gross profit level continue, the sustainability of earnings improvement will depend on the continued effectiveness of SG&A control.

3. Profit progress against the full-year plan—98.5% for operating income and 112.1% for net income—substantially exceeded revenue progress of 74.9%. Trends in extraordinary income or losses and the tax burden in Q4 will be key factors affecting the full-year results.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,257–¥2,390 at ±1% for the cost of equity, and ¥2,314–¥2,327 at ±0.1 for ω.

Notes:

• Since net income progress against the full-year forecast (112%) exceeds the standard level (75%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies whose progress is ahead of schedule tend to outperform their forecasts. The adjustment may be excessive for businesses with strong seasonality).
• Net income is substantially compressed relative to operating income due to the tax burden, acquisition-related expenses, and non-controlling interests, among other factors (net income ÷ operating income: 45%). This value reflects that compression at face value; if these factors are temporary, underlying earnings power may be higher.
• Since forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used, resulting in a timing mismatch with the full-year forecast.
• Since net assets include non-controlling interests, the theoretical value may be calculated at a somewhat elevated level.

(Model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest Rate Reference Month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional where necessary.

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