| Metric | Current Period | YoY | YoY |
|---|---|---|---|
| Revenue | ¥521.21B | ¥440.34B | +18.4% |
| Operating Income | ¥45.32B | ¥39.29B | +15.3% |
| Ordinary Income | ¥45.86B | ¥41.14B | +11.5% |
| Net Income | ¥31.95B | ¥30.25B | +5.6% |
| ROE | 3.3% | 3.1% | - |
For Q1 of the fiscal year ending March 2027, Taisei Corporation reported higher revenue and higher earnings, primarily due to a sharp improvement in the profitability of its core Construction segment. Revenue was ¥521.21B (¥440.34B in the same period of the previous year, YoY +18.4%), Operating Income was ¥45.32B (¥39.29B, YoY +15.3%), and Ordinary Income was ¥45.86B (¥41.14B, YoY +11.5%). Net Income attributable to owners of the parent was ¥30.91B (¥29.50B, YoY +4.8%), representing slower growth than at the operating level. The slowdown in Net Income growth was primarily attributable to an increase in non-operating expenses due to higher interest expense and an increase in the effective tax rate to 36.3%. While the gross margin improved to 16.4% (15.4% in the previous year), the SG&A ratio increased to 7.7% (6.5%), resulting in a slight decline in the Operating Income margin to 8.7% (8.9%).
【Revenue】All segments recorded higher revenue, with Construction (+21.0%) and Engineering (+19.5%) leading growth. Construction accounted for approximately 58.1% of segment revenue on an aggregate segment basis, highlighting the company’s high dependence on the segment. Development (+6.5%) and Other (+32.2%) also contributed to the increase in revenue.
【Profit and Loss】The gross margin improved by +1.0pt year on year to 16.4%, but the Operating Income margin remained nearly flat at 8.7% (-0.2pt) because the SG&A ratio rose by +1.3pt. Although non-operating income included ¥1.70B in dividend income, interest expense increased to ¥1.47B (¥0.66B in the previous year), compared with ¥1.15B, resulting in Ordinary Income growth of +11.5%, slightly below Operating Income growth (+15.3%). Net Income included ¥4.42B in extraordinary gains, including a ¥4.39B gain on the sale of investment securities. However, the burden of income taxes and other taxes was substantial at ¥18.22B (effective tax rate: 36.3%), causing growth to slow further (+4.8%). In summary, the company achieved higher revenue and earnings, but the Operating Income margin remained at approximately the prior-year level, while Net Income growth slowed due to non-operating and tax-related factors.
Construction recorded revenue of ¥315.58B (+21.0%), Operating Income of ¥25.02B (+199.1%), and a margin of 7.9% (+4.6pt from 3.3% in the previous year), demonstrating a substantial improvement in profitability and serving as the primary driver of company-wide earnings growth. Engineering recorded higher revenue of ¥177.29B (+19.5%), but Operating Income declined to ¥15.33B (-37.9%) and its margin deteriorated to 8.6% (-8.8pt from 17.4% in the previous year), suggesting the impact of project mix and rising costs behind the revenue increase. Development maintained the highest profitability among all segments, with revenue of ¥46.15B (+6.5%), Operating Income of ¥9.34B (+46.2%), and a margin of 20.2% (+4.9pt from 15.3% in the previous year). Other businesses recorded revenue of ¥4.53B (+32.2%), Operating Income of ¥0.71B (+69.9%), and a margin of 15.7% (-1.6pt from 17.3% in the previous year). Overall, the recovery in Construction contrasts with the deterioration in Engineering, and the profitability gap between segments is widening.
【Profitability】The Operating Income margin was 8.7%, down -0.2pt from 8.9% in the previous year, while the Net Income margin, based on income attributable to owners of the parent, declined by -0.8pt to 5.9% from 6.7%. The improvement in the gross margin to 16.4% was offset by the rise in the SG&A ratio.【Cash Quality】Extraordinary gains of ¥4.42B primarily consisted of the ¥4.39B gain on the sale of investment securities and therefore included a significant non-recurring component. Non-operating income of ¥3.15B was only 0.6% of revenue, indicating that the majority of earnings originated from operating activities.【Investment Efficiency】ROE was 3.3% (quarterly basis), and EPS increased to ¥189.62 (¥173.42 in the previous year, YoY +9.3%).【Financial Soundness】The Equity Ratio improved by +1.9pt to 36.8% from 34.9% in the previous year. Cash and deposits declined to ¥207.32B (¥278.34B in the previous year, YoY -25.5%), while total interest-bearing debt decreased by -4.7% to ¥397.78B (¥417.41B in the previous year), indicating progress in reducing both assets and liabilities.
As cash flow statement data is not included in the disclosed information, cash trends are assessed based on changes in the balance sheet. Cash and deposits declined by -25.5% year on year to ¥207.32B, while short-term investment securities also decreased by -46.2% to ¥35.00B (¥65.00B in the previous year). Meanwhile, accounts receivable from completed construction contracts declined by -16.1% to ¥80.71B (¥96.18B in the previous year), suggesting progress in collecting operating receivables. Advances received on construction contracts in progress declined by -15.0% to ¥240.84B (¥283.34B in the previous year), indicating that the funding benefit from customer advances has weakened somewhat. Short-term borrowings also decreased by -14.3% to ¥138.87B (¥161.99B in the previous year), and total interest-bearing debt was reduced by -4.7%. Overall, collections of operating receivables and debt reduction progressed in parallel, while cash and deposits on hand declined from the previous year, indicating a change in capital allocation.
The majority of current-period earnings originated from Operating Income of ¥45.32B, while net non-operating income was limited to +¥0.55B (non-operating income of ¥3.15B - non-operating expenses of ¥2.60B). Extraordinary gains of ¥4.42B mainly consisted of the ¥4.39B gain on the sale of investment securities and are classified as a low-repeatability, temporary factor. The gap between Ordinary Income of ¥45.86B and Net Income attributable to owners of the parent of ¥30.91B was primarily attributable to income taxes and other taxes of ¥18.22B (effective tax rate: 36.3%), with no issue identified in accounting consistency. Comprehensive Income was limited to ¥16.36B (including ¥15.03B attributable to owners of the parent), substantially below Net Income of ¥30.91B. This gap was primarily caused by a negative adjustment of -¥14.54B in valuation difference on available-for-sale securities, with changes in the market value of the company’s investment securities weighing on Comprehensive Income.
The Q1 progress rates against the full-year forecasts (Revenue of ¥2,420.00B, Operating Income of ¥188.00B, Ordinary Income of ¥187.00B, and Net Income of ¥151.00B) were 21.5% for Revenue, 24.1% for Operating Income, 24.5% for Ordinary Income, and 20.5% for Net Income. Operating Income and Ordinary Income were broadly in line with the simple progress benchmark of 25%, while Revenue and Net Income were somewhat behind. The slower progress in Net Income appears to have been affected by the rising tax burden and non-operating expenses observed in Q1. The full-year Operating Income forecast is flat YoY (+0.0%), while the Ordinary Income forecast is YoY -4.5%, suggesting that the initial plan may already incorporate a plateau in revenue growth and rising costs toward the second half of the fiscal year. Neither the earnings forecast nor the dividend forecast was revised during the quarter.
The company’s full-year dividend forecast is ¥380 per share, resulting in a Payout Ratio of 41.0% against forecast EPS of ¥926.33. Based on cash and deposits of ¥207.32B and the company’s strong interest coverage (interest expense of ¥1.47B), this Payout Ratio appears to be within the company’s financial capacity. No data on share repurchases has been disclosed.
Deterioration in Engineering segment profitability: Revenue increased by +19.5%, but Operating Income declined by -37.9%, and the margin fell by -8.8pt from 17.4% to 8.6%. Margin deterioration despite higher revenue suggests the impact of changes in project mix and rising costs.
High level of provision for construction contract losses: The provision was ¥68.82B (¥76.40B in the previous year, -9.9%). Although it declined from the previous year, it remains high, leaving a risk of additional provisions if cost overruns arise on large-scale projects.
Decline in the liquidity cushion: Cash and deposits declined by -25.5% year on year to ¥207.32B, while short-term investment securities decreased by -46.2% to ¥35.00B. Although interest-bearing debt declined by -4.7%, changes in liquidity require monitoring.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 8.7% | 4.5% (2.7%–6.6%) | +4.2pt |
| Net Income Margin | 6.1% | 3.8% (-1.1%–4.4%) | +2.4pt |
Both the Operating Income margin and Net Income margin exceed the industry median, placing the company among the more profitable construction companies.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 18.4% | 4.8% (3.4%–10.1%) | +13.6pt |
The Revenue growth rate substantially exceeds the industry median, indicating a high growth rate even within the industry.
※Source: Compiled by the Company
The Construction segment margin improved sharply from 3.3% in the previous year to 7.9%, becoming the primary driver of company-wide earnings growth. The key focus will be whether this improvement is structural or attributable to individual project factors, as well as its trajectory in subsequent periods.
Although the Engineering segment recorded higher revenue, its margin fell substantially from 17.4% to 8.6%. It was the only segment to report lower earnings amid the company-wide trend of higher revenue and earnings, and the decline is believed to reflect changes in costs and project composition.
The Net Income full-year progress rate of 20.5% was below the Operating Income progress rate of 24.1%. Higher tax and non-operating expenses were the contributing factors, and trends in the tax rate and interest burden from the first half onward will influence the full-year Net Income level.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation to take any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear（Bearish） | ¥6,520 |
| base（Base） | ¥7,465 |
| bull（Bullish） | ¥7,660 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥5,981 |
| Adjusted Forecast EPS | ¥1,050.4 |
| Cost of Equity r | 9.27%（10-year Japanese Government Bond 2.77% + Equity Risk Premium 6.00% + Size Premium 0.50%） |
| Residual Income Persistence Coefficient ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 41.0% |
| Forecast EPS Confidence Adjustment | ×1.134（Based on the Company’s historical track record of achieving its guidance） |
| Implied PBR / PER |
Sensitivity: ¥7,256–¥7,684 at Cost of Equity ±1%; ¥7,429–¥7,520 at ω ±0.1.
Notes:
（Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not predict or guarantee the future share price）
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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 responsibility, after consulting professionals as necessary.
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| 1.25x / 7.1x |
These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.