| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥688.2B | ¥649.7B | +5.9% |
| Operating Income | ¥48.8B | ¥41.9B | +16.3% |
| Ordinary Income | ¥54.4B | ¥46.9B | +15.9% |
| Net Income | ¥37.2B | ¥32.0B | +16.5% |
| ROE | 4.5% | 4.3% | - |
For FY2026 Q3 consolidated results, Meiko Construction delivered Revenue of ¥688.2B (YoY +¥38.5B +5.9%), Operating Income of ¥48.8B (YoY +¥6.9B +16.3%), Ordinary Income of ¥54.4B (YoY +¥7.5B +15.9%), and Net Income attributable to owners of the parent of ¥37.2B (YoY +¥5.2B +16.5%), achieving both top-line and bottom-line growth. Gross profit margin was 13.2%, broadly maintained from the prior year, and a restrained SG&A ratio of 6.1% contributed to operating profit growth. Non-operating income, including ¥5.8B in dividend income, underpinned Ordinary Income, and the effective tax rate was a standard 31.4%. The full-year outlook calls for Revenue of ¥980B (YoY +5.2%), Operating Income of ¥65B (YoY +1.8%), and Net Income of ¥52B, with progress through Q3 at 70.2% for Revenue, 75.0% for Operating Income, and 71.5% for Net Income, broadly in line with plan.
[Profitability] ROE 4.5% (improved from 3.9% in the same period last year but significantly below the industry median of 10.4%), ROA 3.0% (below the industry median of 5.7%), and ROIC 4.4%, indicating room for improvement in capital efficiency. Operating margin 7.1% (improvement of +0.7pt from 6.4% last year, above the industry median of 4.5%), Net margin 5.4% (slightly above the industry median of 4.7%). Decomposing ROE shows Net margin 5.4% × Total asset turnover 0.553 × Financial leverage 1.51x, with declining asset turnover suppressing capital efficiency. [Cash Quality] Cash and deposits of ¥147.2B and short-term liability coverage of 23.2x indicate extremely strong short-term liquidity. Dividend income of ¥5.8B is the main component of non-operating income, and the divergence from cash generation of core operating activities warrants monitoring. [Investment Efficiency] With total assets of ¥1,243.7B (YoY +¥146.5B +13.4% increase) against sales growth of 5.9%, sales growth is not keeping pace with the expansion of invested capital. Fixed assets increased +31.1% YoY, and investment securities increased +40.0%, suggesting the company is in an investment recovery phase. [Financial Soundness] Equity Ratio 65.9% (above the industry median of 52.3%), Current ratio 303.7%, Debt-to-Equity Ratio 0.51x, and interest-bearing debt of ¥82.0B, yielding a net cash position (cash ¥147.2B - interest-bearing debt ¥82.0B = +¥65.2B). Long-term borrowings surged to ¥76.6B, up +434.9% YoY, while short-term borrowings decreased to ¥6.3B, down -73.2%, indicating progression in the lengthening of debt maturities.
Cash and deposits increased by +¥47.7B YoY to ¥147.2B, estimated to be supported by operating profit growth. Working capital was ¥502.1B, reflecting a construction industry-specific working capital structure, including contract assets of ¥50.8B and advances received of ¥6.1B. Property, plant and equipment increased by +¥12.8B YoY to ¥183.9B, and investment securities increased substantially by +¥83.7B to ¥293.2B, indicating sizable capital deployment into capital expenditures and acquisition of securities. In financing activities, long-term borrowings increased by +¥61.5B, while short-term borrowings decreased by -¥17.3B, advancing the lengthening of the debt structure and stabilizing capital procurement. Cash coverage of short-term liabilities of ¥63.4B is 2.3x, ensuring ample liquidity. The Net debt to EBITDA multiple is -0.8x, indicating minimal debt pressure. Dividend income of ¥5.8B is underpinning profits, and it is necessary to confirm the cash generation of core operating activities themselves.
Against Ordinary Income of ¥54.4B and Operating Income of ¥48.8B, the net non-operating gain is approximately ¥5.6B. The breakdown is primarily dividend income of ¥5.8B, which offsets interest expense of ¥0.7B. Non-operating income accounts for 1.0% of Revenue, comprising ¥5.8B in dividend income and ¥0.9B in miscellaneous income, among others. Dependence on non-operating income is limited; however, dividend income is subject to valuation fluctuation risks of investment securities and changes in dividend policies. Other comprehensive income was ¥56.8B, significantly exceeding Net Income attributable to owners of the parent of ¥37.2B, mainly due to an increase of ¥51.4B in valuation differences on investment securities. As a large portion of the ¥93.9B in comprehensive income comprises valuation gains, fluctuations in valuation differences may affect future profit and shareholders’ equity. The tax burden coefficient is 0.684, and the effective tax rate is 31.4%, a standard level, with no abnormal tax adjustments observed. Deferred tax liabilities of ¥53.8B suggest future tax burdens but are not a material concern at this time.
[Position within the industry] (Reference information; in-house research) Compared to the median of six construction companies for Q3 2025, an operating margin of 7.1% exceeds the industry median of 4.5%, placing the company in the upper tier, while a net margin of 5.4% is only slightly above the industry median of 4.7%. ROE at 4.5% falls significantly below the industry median of 10.4%, placing the company in the lower tier, and ROA at 3.0% is also below the industry median of 5.7%, highlighting weaker capital efficiency. In soundness, an Equity Ratio of 65.9% exceeds the industry median of 52.3%, and a current ratio of 303.7% exceeds the industry median of 225%, indicating a stable financial base. A Net debt to EBITDA multiple of -0.8x is lower than the industry median of -0.27x (i.e., a stronger net cash position). In efficiency, sales growth of 5.9% is below the industry median of 8.3%, indicating a growth pace below the industry average. Overall, while the operating margin is in the upper tier of the industry, capital efficiency (ROE/ROA) ranks in the lower tier. Financial soundness is among the best in the industry, while there remains room for improvement in growth and investment efficiency. (Industry: Six construction companies; comparison target: Q3 2025; Source: In-house aggregation)
Key highlights include, first, the timing of contribution to earnings from large-scale investments in investment securities and fixed assets (combined +¥201.1B) and the roadmap to improving ROIC. The current ROIC of 4.4% and ROE of 4.5% suggest monetization of invested capital is not yet sufficient, and future improvements in operating margin and asset turnover will be key to restoring capital efficiency. Second, as a substantial increase of ¥51.4B in valuation differences of other securities is boosting comprehensive income, a reversal of valuation differences due to future market fluctuations could affect net assets and performance assessments. Third, while the sharp increase in long-term borrowings (+¥61.5B) and the lengthening of the borrowing structure aim to stabilize the capital base, the certainty of future interest payments/repayment plans and investment recovery will determine medium- to long-term financial soundness. With a Payout Ratio of 30.6% and a strong cash position, dividend sustainability is high; however, achieving future earnings guidance and realizing investment returns are prerequisites for sustaining shareholder returns.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information aggregated in-house based on publicly available financial results. Investment decisions are your own responsibility; consult a professional as needed before making any decisions.