| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1055.5B | ¥890.3B | +18.6% |
| Operating Income / Operating Profit | ¥65.8B | ¥37.0B | +78.0% |
| Ordinary Income | ¥66.1B | ¥37.1B | +78.1% |
| Net Income / Net Profit | ¥19.2B | ¥36.0B | -46.7% |
| ROE | 7.6% | 15.6% | - |
For the fiscal year ended March 2026, Revenue was ¥1,055.5B (YoY +¥165.2B, +18.6%), Operating Income was ¥65.8B (YoY +¥28.8B, +78.0%), Ordinary Income was ¥66.1B (YoY +¥29.0B, +78.1%), and Net Income was ¥19.2B (YoY -¥16.8B, -46.7%). The sharp revenue increase was primarily driven by Construction Completed Work (Completed Contract Revenue) of ¥1,047.0B (YoY +¥158.9B, +18.0%). Gross profit rose sharply to ¥117.4B (YoY +¥36.4B, +45.0%) as the Completed Work Gross Profit Margin improved to 11.2% (prior year 9.2%) (+2.0pt). At the operating level, SG&A was contained at 5.1% of sales, improving the operating margin to 6.2% (prior year 4.1%) (+2.1pt). At the ordinary level, non-operating items contributed a net positive ¥0.3B, resulting in an Ordinary Income margin of 6.3%. In extraordinary items, although a gain on sale of investment securities of ¥13.1B was recorded, impairment losses of ¥14.1B were incurred, resulting in a net negative impact of -¥1.0B. Profit before tax remained at ¥52.0B (YoY +¥16.5B, +46.5%), and after deducting corporate taxes of ¥14.0B, Net Income was ¥19.2B, down from ¥36.0B in the prior year. The decline in Net Income was mainly due to the increase in extraordinary losses and the reversal from last year’s extraordinary gain of ¥13.1B to this year’s extraordinary loss of ¥14.1B; operating profitability has nevertheless improved substantially.
[Revenue] Completed Work of ¥1,047.0B (YoY +¥158.9B, +18.0%) drove growth, and together with Development Business etc. of ¥8.5B (YoY -¥0.1B, -1.2%), total Revenue reached ¥1,055.5B (YoY +¥165.2B, +18.6%). The company operates a single-segment structure with Construction Business accounting for 99.2% of total sales, so the progress of completed work directly determines revenue growth. Contract assets at fiscal year-end stood at ¥328.8B, a slight decrease of -¥14.7B YoY, and Advances Received for Incomplete Work (advance payments) were ¥26.1B, down -50.2% from ¥52.3B at prior year-end. The decline in advances suggests accelerated revenue recognition as projects progressed, implying mid-term revenue bookings outpaced plan. Completed Work Gross Profit Margin improved to 11.2% (prior year 9.2%) (+2.0pt), reflecting rigorous cost control and selective acceptance of profitable projects. The gross profit margin for Development Business etc. also rose to 24.1% (prior year 19.7%) (+4.4pt), indicating company-wide profitability improvements.
[Profit & Loss] At the operating level, increased SG&A of ¥53.7B (YoY +¥7.9B, +17.3%) was covered by gross profit expansion, delivering Operating Income of ¥65.8B (YoY +¥28.8B, +78.0%). SG&A ratio remained flat at 5.1% (prior year 5.1%), demonstrating scale benefits. Fixed costs, including R&D ¥1.9B, goodwill amortization ¥1.3B, and lease costs ¥4.7B, were kept at an absorbable level. In non-operating items, dividend income ¥0.6B and foreign exchange gains ¥0.6B contributed, which after offsetting interest expense ¥0.6B and commission expenses ¥0.5B resulted in a net positive ¥0.3B, bringing Ordinary Income to ¥66.1B (YoY +¥29.0B, +78.1%). In extraordinary items, although a gain on sale of investment securities of ¥13.1B was recorded, impairment losses of ¥14.1B (centered on intangible fixed assets) occurred, resulting in total extraordinary items of -¥14.1B (net negative). Profit before tax was ¥52.0B (YoY +¥16.5B, +46.5%), and after deducting corporate taxes of ¥14.0B (effective tax rate 26.9%), Net Income was ¥19.2B. The YoY decline in Net Income of -46.7% is mainly due to a temporary extraordinary loss; operating-level profitability has improved markedly. In conclusion, the structure is revenue and operating/ordinary income expansion, but revenue increase paired with Net Income decrease due to one-off losses.
[Profitability] Operating margin of 6.2% improved by +2.1pt from 4.1% a year earlier, supported by a +2.0pt increase in Completed Work Gross Profit Margin to 11.2% and SG&A control. Ordinary Income margin expanded to 6.3% (prior year 4.2%) (+2.1pt), confirming stable contribution from non-operating items. Conversely, Net Income margin fell to 1.8% from 4.0% (-2.2pt), driven by the one-off impairment loss of ¥14.1B. ROE was 7.6%, down from 9.0% the prior year, primarily due to the temporary reduction in Net Income; operating profitability trends remain improving.
[Cash Quality] Operating Cash Flow (OCF) was ¥93.0B (YoY +404.0%), equal to 4.84x Net Income of ¥19.2B, indicating very high-quality cash generation. From OCF subtotal of ¥116.2B, movements in working capital included Accounts Receivable increase ¥12.4B, Accounts Payable increase ¥40.8B, and Advances Received for Incomplete Work decrease -¥26.2B, after which corporate tax payments of ¥23.2B were deducted to arrive at OCF. Free Cash Flow was ¥89.9B (OCF ¥93.0B - Investing CF ¥3.0B); capital expenditures were ¥1.6B and depreciation ¥4.7B, indicating restrained investment.
[Investment Efficiency] Total Asset Turnover was 1.77x (Revenue ¥1,055.5B ÷ average total assets ¥597.2B), maintaining efficient asset utilization. CapEx / Depreciation was 0.34x, indicating conservative investment, though given the capital intensity of construction, additional medium- to long-term investment may be required to maintain competitiveness. ROA was 3.2% (Net Income ¥19.2B ÷ average total assets ¥597.2B), down from 6.5% last year, driven by the temporary decline in Net Income.
[Financial Soundness] Equity Ratio was 42.3% (prior year 41.4%), maintaining a solid capital base. Current Ratio 174.7% and Quick Ratio 174.7% indicate no short-term liquidity issues. Interest-bearing debt totaled ¥24.0B (short-term borrowings ¥1.0B, long-term borrowings ¥23.0B) while Cash and Deposits were ¥107.8B, resulting in net cash of +¥83.8B and effectively debt-free operations. Interest Coverage was 107.8x (Operating Income ¥65.8B ÷ interest expense ¥0.6B), indicating minimal interest burden.
Operating Cash Flow was ¥93.0B (turning positive from -¥30.6B prior year), achieved after OCF subtotal ¥116.2B and working capital movements and tax payments. Accounts Receivable increase ¥12.4B was a natural result of revenue growth, and Accounts Payable increase ¥40.8B reflected expansion of trade payables with project progress. Advances Received for Incomplete Work decreased by -¥26.2B during the period, reversing prior period large increases and reflecting accelerated revenue recognition. Including adjustments of depreciation ¥4.7B, impairment losses ¥14.1B (non-cash), and gain on sale of investment securities ¥13.1B, OCF was 4.84x Net Income, demonstrating high-quality cash generation. Investing CF was -¥3.0B, with capital expenditures ¥1.6B, intangible asset acquisition ¥1.0B, and acquisition of investment securities ¥5.0B offset by sale of securities ¥18.8B and long-term loans receivable collection ¥0.3B, resulting in limited net outflow. Financing CF was -¥26.8B, reflecting dividend payments ¥14.8B, share buybacks ¥7.4B, and debt repayments ¥4.5B (short-term -¥1.0B, long-term -¥3.5B). Free Cash Flow of ¥89.9B comfortably covered total dividends and share buybacks of ¥22.2B, and cash and deposits increased by +¥63.2B to ¥107.8B at year-end. Operating CF / EBITDA was 1.32x (OCF ¥93.0B ÷ EBITDA ¥70.5B), and OCF / Investing CF was -30.8x, highlighting strong cash generation under constrained investment.
Operating Income ¥65.8B and Ordinary Income ¥66.1B are nearly aligned, with non-operating items contributing a net positive ¥0.3B, indicating stability. Non-operating income included dividend income ¥0.6B and foreign exchange gains ¥0.6B, while non-operating expenses included interest expense ¥0.6B and commission expenses ¥0.5B, net positive for core profit. Extraordinary items saw gain on sale of investment securities ¥13.1B (one-off income) and impairment losses ¥14.1B (one-off expense) offsetting, with total extraordinary items -¥14.1B reducing profit before tax. Applying an effective tax rate of 26.9% to profit before tax of ¥52.0B yields Net Income of ¥19.2B. The absolute amount of extraordinary items ¥19.4B (sale gain + impairment) is nearly equal to Net Income ¥19.2B, so sustainability of Net Income depends on operating earnings. Comprehensive income of ¥42.2B exceeded Net Income by +¥23.0B, with Other Comprehensive Income items including valuation differences on available-for-sale securities ¥1.5B and adjustments for retirement benefits ¥2.7B; Parent Company Shareholders’ equity component was ¥42.2B. OCF ¥93.0B / Net Income ¥19.2B = 4.84x demonstrates strong cash backing; even excluding non-cash adjustments (depreciation ¥4.7B, impairment ¥14.1B) and working capital effects, earnings quality is high.
Full Year guidance: Revenue ¥984.0B (YoY -6.8%), Operating Income ¥57.5B (YoY -12.6%), Ordinary Income ¥56.5B (YoY -14.5%), Net Income ¥38.1B (YoY +98.8%). Revenue is expected to decrease by ¥71.5B from prior-year actual ¥1,055.5B; Operating Income is forecast down ¥8.3B from prior-year ¥65.8B, and Ordinary Income down ¥9.6B from prior-year ¥66.1B, implying a decline in operating-level profit. Conversely, Net Income is expected to increase by ¥18.9B from prior-year ¥19.2B (+98.8%), presumably reflecting the assumption that last year’s extraordinary loss of ¥14.1B will not recur. Progress rates to date are Revenue 107.3%, Operating Income 114.4%, Ordinary Income 117.0%, Net Income 50.4%, indicating that results already exceed full-year guidance. The company’s plan appears conservative, incorporating order selection and uncertainty in cost environment (materials and labor cost increases); on a realized basis, results have a high probability of exceeding guidance.
Annual dividend comprises an interim dividend of ¥87 and a year-end dividend of ¥96, totaling ¥183, with Payout Ratio 50.1% (EPS365.60円). This is an increase of ¥138.5 from the prior year dividend of ¥44.5 (+311.2%), corresponding to EPS growth from prior year 197.48円 to 365.60円 (+85.1%). Against Free Cash Flow ¥89.9B, total dividend payments ¥14.8B yield FCF coverage of 6.07x, indicating ample dividend funding. In addition, share buybacks of ¥7.4B were executed, and total distributions (dividends + buybacks) amounted to ¥22.2B. Total Return Ratio was 115.6% relative to Net Income ¥19.2B, exceeding profit levels, but relative to Operating CF ¥93.0B the ratio is 23.9%, a sustainable level. Treasury stock at year-end was ¥8.2B (approximately 3.0% of outstanding shares), demonstrating a commitment to improving capital efficiency. Next fiscal year guidance dividend is ¥93 (forecast payout ratio 25.0%, forecast EPS371.40円), indicating a cautious but continuing dividend-increase stance.
Deterioration of project profitability: Although Completed Work Gross Profit Margin improved to 11.2% (prior year 9.2%) (+2.0pt), rising material and labor costs could make cost control more difficult. Provision for project losses is ¥0.2B (prior year ¥0.5B), but if profitability deteriorates on large projects, margins could be significantly squeezed. Uncompleted work expenditure is ¥6.6B (prior year ¥9.5B, -31.2%) and contract balances under the percentage-of-completion method have decreased, but profitability management across contract assets totaling ¥328.8B remains critical.
Working capital fluctuation risk: The sharp decrease in Advances Received for Incomplete Work to ¥26.1B (prior year-end ¥52.3B, -50.2%) indicates accelerated revenue recognition during the period, but reduced advance receipts in subsequent periods could cause volatility in OCF. The balance between contract assets and advances depends on project progress and order timing and can be a driver of period-to-period cash flow variability. The diversification of settlement methods (electronically recorded receivables ¥13.6B, electronically recorded payables ¥90.2B) also increases the complexity of cash management.
Volatility of extraordinary items: Impairment losses ¥14.1B (mainly intangible assets) and gain on sale of investment securities ¥13.1B offset each other; the absolute amount of extraordinary items ¥19.4B is nearly equal to Net Income ¥19.2B. Intangible fixed assets decreased substantially to ¥5.1B (prior year ¥20.0B, -74.3%), and continued goodwill amortization ¥1.3B and recurring impairments could reduce predictability of Net Income. Investment securities balance increased to ¥16.2B (prior year ¥9.0B, +80.7%), and market fluctuations could lead to valuation gain/loss volatility.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.2% | 5.5% (3.5%–7.2%) | +0.7pt |
| Net Margin | 1.8% | 3.5% (2.5%–4.4%) | -1.7pt |
Operating margin exceeds the industry median by +0.7pt, indicating relative progress in profitability improvement. Net margin trails the median by -1.7pt, mainly due to the one-off extraordinary loss.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 18.6% | 9.8% (-2.1%–15.1%) | +8.8pt |
Revenue growth of +18.6% substantially exceeds the industry median +9.8%, with order expansion and accelerated project progress standing out within the sector.
※ Source: Company compilation
Improvement in operating profitability and high-quality cash generation: Operating margin improved to 6.2% (prior year 4.1%) (+2.1pt), and Completed Work Gross Profit Margin rose to 11.2% (prior year 9.2%) (+2.0pt), reflecting cost control and selective project acceptance. OCF of ¥93.0B is 4.84x Net Income ¥19.2B, and OCF/EBITDA is 1.32x, demonstrating very strong cash generation. Free Cash Flow ¥89.9B sufficiently covers dividends and share buybacks totaling ¥22.2B, and net cash of +¥83.8B (Cash and Deposits ¥107.8B less interest-bearing debt ¥24.0B) indicates effectively debt-free operations.
One-off factors depressed Net Income, but operating base is strengthening: The decrease in Net Income to ¥19.2B (YoY -46.7%) was mainly driven by one-off impairment losses ¥14.1B, while Operating Income ¥65.8B (YoY +78.0%) and Ordinary Income ¥66.1B (YoY +78.1%) show strong improvement in core earnings. The absolute amount of extraordinary items ¥19.4B (impairment ¥14.1B + sale gain ¥13.1B) is nearly equal to Net Income, so assessing EPS sustainability requires focusing on operating-level profits. Next fiscal year guidance assumes Revenue -6.8% and Operating Income -12.6%, a cautious plan, but current progress rate already shows Operating Income at 114.4%, indicating upside risk if order selection and cost control are maintained.
This report is an AI-generated earnings analysis document created by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statement data. Investment decisions are your responsibility; consult a professional advisor as necessary before making investment decisions.