| Metric | Current Period | Prior-year Period | YoY |
|---|---|---|---|
| Revenue | ¥124.0B | ¥130.8B | -5.2% |
| Operating Income | ¥10.6B | ¥7.6B | +40.3% |
| Ordinary Income | ¥10.5B | ¥7.6B | +39.0% |
| Net Income | ¥7.4B | ¥5.8B | +27.3% |
| ROE | 16.5% | 13.8% | - |
Interlife Holdings’ 2026 FY Q3 results showed lower revenue at ¥124.0B (YoY -¥6.8B -5.2%), while achieving significant profit growth with Operating Income of ¥10.6B (YoY +¥3.0B +40.3%), Ordinary Income of ¥10.5B (YoY +¥2.9B +39.0%), and Net Income of ¥7.4B (YoY +¥1.6B +27.3%). By maintaining a gross profit margin of 22.6% and restraining SG&A expenses versus the prior-year period, the company delivered an operating margin of 8.6% (improved by +2.8pt from 5.8% in the prior year), enhancing profitability through margin improvement despite lower sales.
[Profitability] ROE 16.4% (improved YoY; DuPont three factors comprise Net Profit Margin 6.0% × Total Asset Turnover 1.315 × Financial Leverage 2.09x), Operating Margin 8.6% (+2.8pt from 5.8% in the prior year), Gross Profit Margin 22.6% (flat YoY), Effective Tax Rate 34.0%. [Cash Quality] Cash and Deposits ¥25.3B (YoY +¥15.1B, Short-term Liability Coverage 5.7x), Working Capital ¥32.1B (on a construction contract basis including Contract Liabilities ¥5.2B and Costs on Uncompleted Construction ¥9.9B). [Investment Efficiency] Total Asset Turnover 1.315x, Investment Securities ¥7.5B (YoY +¥2.2B +40.4%). [Financial Soundness] Equity Ratio 47.8%, Current Ratio 188.1%, Quick Ratio 187.7%, Debt-to-Capital Ratio 22.4%, Interest Coverage 50.8x, Interest-bearing Debt ¥13.0B (including Short-term Borrowings ¥4.5B, down ¥2.0B YoY).
Cash and Deposits increased substantially by +¥15.1B YoY to ¥25.3B, presumably supported by higher operating profits. In working capital efficiency, Contract Liabilities of ¥5.2B and Costs on Uncompleted Construction of ¥9.9B are recognized in line with construction progress, forming a funding cycle characteristic of a made-to-order business model. Short-term Borrowings decreased by ¥2.0B from ¥6.5B to ¥4.5B, strengthening self-funded operations. Investment Securities increased by +¥2.2B to ¥7.5B, indicating reinvestment into financial assets as part of capital allocation. Cash coverage of short-term liabilities stands at 5.7x, ensuring ample liquidity, while shareholder returns are being executed—including a dividend of ¥20.0 (FY) and an increase in treasury stock (treasury stock book value -¥1.3B increase)—yet cash on hand remains robust. Retained Earnings rose by +¥2.6B YoY to ¥11.4B, progressing in parallel with the accumulation of internal reserves and capital enhancement.
With Ordinary Income at ¥10.5B and Operating Income at ¥10.6B, non-operating items are broadly neutral (Non-operating Income ¥0.2B, Non-operating Expenses ¥0.3B). Non-operating income mainly comprises Dividend Income of ¥0.2B and Interest Income of ¥0.03B; financial income accounts for roughly 0.2% of revenue and has limited contribution to Ordinary Income. With Interest Expense at ¥0.2B and a low interest burden, Operating Income largely flows through to Ordinary Income, making core operations the primary source of profits. The tax burden coefficient (Net Income/Ordinary Income) is 0.66, and the Effective Tax Rate is 34.0%, somewhat elevated, yet Net Income increased by +27.3% YoY to ¥7.4B. While the increase in Cash and Deposits and the build-up of Retained Earnings support an assessment of good earnings quality, note that Operating Cash Flow is not disclosed, limiting direct verification of earnings cash conversion.
Risk of continued revenue decline (YoY -5.2%, full-year forecast also -2.6%): If demand conditions and order trends soften, the company may be unable to maintain the profit growth trend. Contract-based revenue recognition risk: With Costs on Uncompleted Construction of ¥9.9B and Contract Liabilities of ¥5.2B, delays in construction progress or contract modifications may affect the timing of profit recognition. Persistently high tax burden (Effective Tax Rate 34.0%): Tax law changes or reversal of deferred tax assets could pressure after-tax profit. Market value fluctuation risk of Investment Securities (holding balance ¥7.5B): Changes in market conditions could trigger valuation losses and potential recognition of extraordinary losses. Non-disclosure of Operating Cash Flow: In the absence of a cash flow statement, details of working capital movements and capital management are opaque, constraining the assessment of dividend sustainability.
[Position within the Industry] (Reference information; in-house research) Compared with the 2025 Q3 industry benchmark (median, N=4 companies, compiled by us) in construction, the Equity Ratio of 47.8% is below the industry median of 60.5%, placing the company relatively lower within the industry, while the Current Ratio of 188.1% (1.88x) is somewhat below the industry median of 2.07x but secures sufficient liquidity. The Operating Margin of 8.6% significantly exceeds the industry median of 4.1%, and the Net Profit Margin of 6.0% also exceeds the industry median of 2.8% by 2.2pt, representing a high level. ROE of 16.4% is more than four times the industry median of 3.7%, indicating superior profitability within the industry. The Revenue growth rate of -5.2% is below the industry median of -3.5%, indicating a somewhat larger pace of decline in sales; however, margin improvement keeps ROA above the industry median of 2.2%. The Net Debt/EBITDA multiple is negative net debt because Cash and Deposits far exceed Interest-bearing Debt, below the industry median of 2.31 (lower leverage). In the company’s own historical trend, the Operating Margin of 8.6% shows an improving trajectory toward FY2026 and is at a high level compared with the past five periods. While profitability metrics significantly exceed the industry average, revenue growth and the Equity Ratio are somewhat below the industry average.
[Earnings Highlights] Margin improvement amid declining sales: SG&A restraint improved the Operating Margin by +2.8pt from 5.8% to 8.6%, demonstrating cost management that lifted Operating Income by +40.3% despite lower revenue. Whether this efficiency gain is a temporary factor or a structural improvement requires verification in future trends. Low financial leverage and cash build-up: With Interest-bearing Debt of ¥13.0B versus Cash and Deposits of ¥25.3B, the company is in a net cash position, reducing Short-term Borrowings while increasing cash by 67.4%. Investment Securities also increased by +40.4%, and the direction of capital allocation (additional investments, M&A, enhanced shareholder returns, etc.) warrants attention. Full-year performance progress: Cumulative Q3 results versus the full-year forecast (Revenue ¥165.0B, Operating Income ¥11.0B, Net Income ¥7.5B) show progress of Revenue 75.2%, Operating Income 96.4%, and Net Income 98.7%, with Operating Income and Net Income nearly achieving the full-year plan. Barring major volatility in Q4, achievement of the full-year forecast is highly likely, while detailed information such as Operating Cash Flow will be important for assessing upside potential or downside risks.
This report is an automatically generated earnings analysis created by AI based on XBRL earnings summary data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by us based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any decisions.