AutoServer Co., Ltd. FY2026 Q2 Earnings In-Depth Analysis Report

This report provides a detailed analysis of the FY2026 Q2 cumulative financial results for AutoServer Co., Ltd. (Securities Code: 5589), the operator of the B2B used car distribution platform "ASNET," covering performance, factor analysis, business structure, and growth strategy.

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1. Earnings Highlights: Significant Profit Growth Exceeding Targets

For the first half of the fiscal year ending December 2026, the company achieved results that significantly surpassed both the previous year's performance and the company's internal targets across all revenue and profit lines.

• Net Sales : 3,595 million yen (+9.3% YoY, 105.8% of target)
• Ordinary Profit : 1,419 million yen (+18.4% YoY, 115.4% of target)
• Net Income Attributable to Owners of Parent : 889 million yen (+18.9% YoY, 114.8% of target)
• Ordinary Profit Margin : 39.5% (Maintaining exceptionally high profitability)

Slide Commentary (Page 3: FY2026 Q2 Earnings Digest)

This slide presents key data illustrating the company's overall performance for the first half of FY2026. Despite a challenging market environment characterized by persistently high used car prices, the high-margin "AS Wan-Pla" service acted as a powerful growth driver. Consequently, net sales exceeded the plan by 198 million yen (105.8%) and ordinary profit by 189 million yen (115.4%) . Furthermore, the ordinary profit margin reached 39.5% , confirming that the company is successfully absorbing increases in SG&A expenses while maintaining high profitability.

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2. Analysis of Factors Affecting Ordinary Profit

The breakdown of the +220 million yen (+18.4%) year-on-year increase in ordinary profit is as follows:

1. Increase in Gross Profit from AS Wan-Pla Business (+34.51 million yen) Gross profit expanded significantly due to a substantial increase in the number of AS Wan-Pla transactions.
2. Decline in Auction Agency Business (-48 million yen) High used car prices led domestic operators to refrain from bidding at auction venues, resulting in a decrease in transaction volume and a negative impact on profit.
3. Increase in SG&A Expenses (-93.52 million yen) Growth investments for the future, such as depreciation expenses (-48.28 million yen) and personnel costs (-20.81 million yen) associated with the full-scale operation of the new office (New DC) in Toyohashi, Aichi Prefecture, pushed up fixed costs.

Despite these increases in fixed costs and the sluggishness in the auction agency business, the growth in AS Wan-Pla gross profit far outweighed these factors, leading to a significant overall profit increase.

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3. Strengths and Complementary Structure of the ASNET Business Model

AutoServer's core business, "ASNET," consists of two pillars: the "Auction Agency Service," which links to 146 auto auction venues nationwide (94% coverage), and the "AS Wan-Pla Service," which facilitates fixed-price transactions between members.

Comparison of Revenue Structures

• Auction Agency : Primarily generates revenue from successful bid fees, with a profit of approximately 10,000 yen per vehicle. Characterized by high transaction volume.
• AS Wan-Pla : A system that collects fees from both sellers and buyers, yielding a highly profitable 35,000 yen per vehicle.

Slide Commentary (Page 15: ASNET Business Features & Strengths ① Service Composition)

This slide illustrates the core "risk resilience" and "profitability mechanism" of the company's business model. As the graph shows, the transaction volumes of the "Auction Agency" and "AS Wan-Pla" are inversely correlated (complementary) . When used car prices are trending downward, the auction agency business becomes more active; conversely, when prices remain high or surge, the demand for "AS Wan-Pla," which allows for inventory-free sales at fixed prices, spikes. This mutual complementarity builds an extremely stable earnings foundation that is less susceptible to shifts in the used car distribution market.

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4. Transaction Volume Trends by Service and Business Environment

Transaction volumes by service for the first half of FY2026 were as follows:

• Total ASNET Transactions : 127,890 units (+3.1% YoY)
• Auction Agency : 70,489 units (-7.4% YoY)
• AS Wan-Pla : 57,401 units (+19.6% YoY)

While the overall used car auction market has seen a recovery in the number of vehicles listed since November 2025, prices remain high, particularly for high-demand export models and late-model vehicles. This made it difficult to purchase via auction, leading to a decline in the auction agency business, while AS Wan-Pla surged by capturing the market's procurement needs.

Slide Commentary (Page 22: Transaction Volume by Service)

This slide details the recent monthly transaction volume trends for each service. Focusing on the "AS Wan-Pla" graph on the right, it has achieved 12 consecutive months of year-on-year growth , reaching a record high of 10,028 units in a single month in June 2026. This reflects not only the acquisition of substitute demand due to external factors (difficulty in purchasing at auctions) but also the success of proactive sales initiatives, such as increased service awareness and expanded usage by used car exporters.

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5. Expansion of Member Base and Key Policy Topics

Key initiatives and achievements in the second quarter include:

1. ASNET Membership Surpassed 85,000
   • As of the end of June 2026, the number of active members reached 85,054 (+3.6% YoY). The member base has expanded beyond used car dealers to include maintenance shops, gas stations, new car dealers, and exporters.
2. Renewal of "Market Price Information" Function
   • The interface was revamped to allow intuitive viewing of vast distribution data accumulated within ASNET in a matrix format, strongly supporting members' transaction decisions.
3. Launch of Financial Support Services
   • Through partnerships with新生 Financial Co., Ltd. ("Lake de Business") and Aplus Co., Ltd. ("RiseAPLUSCARD BIZ"), the company is improving the cash flow and settlement convenience for member businesses, further stimulating transactions.

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6. Cost of Capital, Capital Efficiency, and Market Valuation

The company actively discloses management focused on the cost of capital and stock price (PBR/ROE improvement).

• ROE (Return on Equity) : 13.4% (High capital efficiency with a 3-year average of 13.0%)
• ROIC (Return on Invested Capital) : 12.6%
• Cost of Shareholders' Equity : Approx. 8.0% (CAPM basis)
• WACC (Weighted Average Cost of Capital) : 7.0%
• Equity Spread : 5.4% (ROE 13.4% - Cost of Equity 8.0%)

The company is generating profitability that comfortably exceeds the cost of capital (Equity Spread of 5.4%) and maintains a sound financial position with an equity ratio of 59.0% . Moving forward, the company is considering further improvements in asset efficiency and optimal shareholder return policies to enhance capital efficiency.

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7. Mid-to-Long-Term Growth Strategy and Outlook

The company aims for sustainable growth through three steps, based on the goal of "increasing its presence in used car distribution based on the ASNET business":

• Short-to-Medium-Term Strategy : Expansion of "Transaction Volume" × Increase in "Fee Unit Price"
  • Maximize profitability by steadily increasing the number of members while raising the ratio of high-unit-price AS Wan-Pla transactions.
• Mid-to-Long-Term Strategy : Development of New Transaction Services and Ancillary Services
  • Monetize ancillary services through data utilization and new feature development (financial support, vehicle transport, negotiation NET, etc.).
• Non-Linear Growth : Overseas Expansion and M&A Considerations
  • Strengthen the acquisition of overseas buyers and explore M&A in synergistic peripheral areas.

Summary

The FY2026 Q2 financial results were strong, exceeding plans as the company turned changes in the used car market environment into a tailwind through the strengths of "AS Wan-Pla." Armed with a robust customer base of over 85,000 companies and a high-margin business model, the company has clearly demonstrated its commitment to continuing investments aimed at further transaction activation and functional expansion.