| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥296.2B | ¥349.8B | -15.3% |
| Operating Income / Operating Profit | ¥23.8B | ¥23.4B | +1.9% |
| Ordinary Income | ¥21.5B | ¥20.6B | +4.6% |
| Net Income / Net Profit | ¥15.3B | ¥13.3B | +15.0% |
| ROE | 6.7% | 6.0% | - |
For the fiscal year ended April 2026, Revenue was ¥296.2B (YoY -¥53.6B, -15.3%), Operating Income was ¥23.8B (YoY +¥0.4B, +1.9%), Ordinary Income was ¥21.5B (YoY +¥0.9B, +4.6%), and Net Income attributable to owners of the parent was ¥15.3B (YoY +¥2.0B, +15.0%). The company achieved lower revenue with higher profits, primarily driven by an improvement in completed-contract gross margin (40.8% → 42.2%, +1.4pt) and an absolute reduction in SG&A (¥123.7B → ¥110.5B, -10.6%). The Housing Business recorded Revenue of ¥253.2B (-18.0%) while maintaining a high-return operating margin of 13.2%; the Hotel Business reported Revenue of ¥41.9B (+5.5%) but continued to incur an operating loss of ¥3.7B. Operating margin improved to 8.0% (prior 6.7%, +1.3pt) and net margin improved to 5.2% (prior 3.8%, +1.4pt), indicating improved profit quality. Conversely, Operating Cash Flow was ¥12.5B (YoY -63.7%) and equated to 0.82x of Net Income ¥15.3B; OCF/EBITDA was 0.32x, indicating low cash conversion efficiency. Short-term borrowings surged to ¥43.4B (+75.5%), revealing a structural change in liquidity.
[Revenue] Revenue of ¥296.2B represents a -15.3% YoY decline. The core Housing Business contracted significantly to ¥253.2B (-18.0%), dragging overall sales down. Completed contract billings were ¥223.1B (prior ¥259.3B), affected by delayed acceptance timing of projects and weaker order intake. Contract work-in-progress payments (未成工事支出金) were ¥6.4B (prior ¥5.2B, +22.0%) and contract work-in-progress deposits (未成工事受入金) were ¥18.8B (prior ¥16.5B, +13.9%), indicating divergence in progress and suggesting that increases in advance receipts may have deferred some future revenue recognition. The Hotel Business grew to ¥41.9B (+5.5%) but accounted for only 14.2% of consolidated sales, providing limited diversification. Segment revenue composition was Housing 85.5%, Hotel 14.1%, Other 0.5%, showing only slight diversification from prior (88.3%) and remaining highly dependent on Housing.
[Profitability] Gross margin improved significantly to 45.4% (prior 42.0%, +3.4pt), and completed-contract gross margin rose to 42.2% (prior 40.8%, +1.4pt), reflecting progress in cost control. Gross profit decreased to ¥134.3B (prior ¥147.0B) due to lower sales, but SG&A was reduced to ¥110.5B (prior ¥123.7B, -10.6%), enabling Operating Income of ¥23.8B (+1.9%). SG&A ratio increased to 37.3% (prior 35.4%, +1.9pt), but the improvement in gross margin (+3.4pt) more than offset this, producing positive operating leverage. Major SG&A components were rent ¥9.7B, advertising ¥4.5B, depreciation ¥5.4B; retirement benefit expenses showed a reversal of ¥-7.7B which boosted reported profits due to accounting treatment. Non-operating income was limited at ¥1.5B (primarily dividend income ¥1.1B), while non-operating expenses were ¥3.8B (primarily interest expenses ¥2.0B), resulting in Ordinary Income of ¥21.5B (+4.6%). Extraordinary losses included impairment losses ¥1.7B and loss on retirement of fixed assets ¥0.2B, bringing profit before tax to ¥21.3B (+22.1%). The effective tax rate rose slightly to 36.2% (prior 33.8%), producing tax expense of ¥7.7B. After deducting non-controlling interests ¥0.2B, Net Income attributable to owners of the parent was ¥15.3B (+15.0%). In conclusion, the company achieved higher profits on lower revenue, driven by Housing gross margin improvement and SG&A cuts; excluding one-off items, profitability is showing structural improvement.
The Housing Business recorded Revenue of ¥253.2B (prior ¥308.9B, -18.0%) and Operating Income of ¥33.3B (prior ¥35.1B, -5.1%), maintaining a margin of 13.2%. Profit decline was modest relative to sales contraction, reflecting effective cost control and selection of profitable projects. The Hotel Business reported Revenue of ¥41.9B (prior ¥39.4B, +5.5%) but an Operating Loss of ¥3.7B (prior -¥5.4B); although the loss narrowed, break-even has not been achieved. Its margin remained deeply negative at -8.9%, and improving occupancy and fixed-cost compression remain challenges. Corporate costs were ¥6.8B (prior ¥7.3B). Consolidated Operating Income ¥23.8B continues to rely heavily on the profitability of the Housing Business. Sustainable expansion of consolidated operating margin depends on the Hotel Business reaching break-even.
[Profitability] Operating margin improved to 8.0% (prior 6.7%, +1.3pt); net margin improved to 5.2% (prior 3.8%, +1.4pt), reflecting gross margin expansion and SG&A control. ROE 6.7% exceeds prior-year 5.3%, indicating recovery in capital efficiency. Improvement in completed-contract gross margin to 42.2% (prior 40.8%) evidences progress in cost management.
[Cash Quality] Operating Cash Flow / Net Income was 0.82x (prior 2.59x), showing substantial deterioration in cash conversion; OCF/EBITDA 0.32x (prior 0.88x) remains low, indicating stress from working capital movements and receivables management. Interest coverage was 12.1x on operating income basis and 19.9x on an EBITDA basis, preserving interest-paying capacity.
[Investment Efficiency] Total asset turnover was 0.67x (prior 0.83x), declining with lower sales. Tangible fixed asset turnover slowed to 1.18x (prior 1.34x). CapEx/Depreciation was 0.33x, indicating restrained investment that supports short-term FCF but may limit medium-to-long-term growth.
[Financial Soundness] Equity Ratio was 51.8% (prior 52.0%) and stable; D/E was 0.40x, and interest-bearing debt / total assets was 20.8%, on the conservative side. Current Ratio 111.4% and Quick Ratio 110.5% preserve a minimum safety buffer, but short-term borrowings increased to ¥43.4B (prior ¥24.7B, +75.5%), raising short-term debt dependence and refinancing sensitivity. Cash / short-term debt was 1.62x, providing some cushion.
Operating Cash Flow was ¥12.5B, down -63.7% from prior ¥34.5B, with cash conversion to Net Income at 0.82x. Operating subtotal (before working capital changes) was ¥18.9B; main working capital variances were increase in trade receivables -¥2.8B, increase in trade payables +¥2.0B, and corporate tax payments -¥5.7B. Increased consumption tax outflow (reversal from a prior inflow of +¥2.9B to an outflow of -¥4.1B) and movement in retirement benefit liability -¥14.7B pressured OCF. Contract work-in-progress deposits increased by +¥2.3B, temporarily boosting cash from advance receipts but representing future cash outflows as projects progress. Investing Cash Flow was -¥9.1B, mainly acquisitions of tangible fixed assets -¥5.1B; with Depreciation of ¥15.2B, CapEx/Depreciation was 0.33x. Financing Cash Flow was +¥5.8B, driven by net increase in short-term borrowings +¥18.7B and new long-term borrowings +¥5.6B, offset by bond redemptions -¥16.4B, long-term debt repayments -¥4.0B, and dividend payments -¥4.4B. Free Cash Flow was ¥3.4B, below dividend cash outflow of ¥4.4B, so shareholder returns were covered by increased borrowing. Interest and dividend income received totaled ¥1.2B, interest paid -¥1.9B, so interest burden equaled ~12.4% of Net Income. OCF/EBITDA 0.32x points to delays from accruals to cash realization, highlighting the need for working capital and receivables collection improvements.
Of Net Income ¥15.3B, Ordinary Income was ¥21.5B; the gap between Ordinary and Operating income is due to non-operating expenses (mainly interest expense) and thus reflects financing rather than core business structure. Extraordinary losses totaled ¥2.2B (impairment losses ¥1.7B and loss on retirement of fixed assets ¥0.2B), representing 14.4% of Net Income. Non-operating income of ¥1.5B (dividend income ¥1.1B) was limited; most profit improvement stems from core operations (Housing gross margin improvement). Operating Cash Flow / Net Income 0.82x was mainly driven by working capital movements and tax payment timing; there is no structural defect in earnings quality, but increased contract work-in-progress deposits have temporarily boosted cash and pose a future outflow risk as projects progress. Comprehensive income totaled ¥15.7B versus Net Income ¥15.3B, with other comprehensive income composed of deferred hedge gains +¥2.1B, valuation gains on securities +¥0.2B, and retirement benefit adjustment -¥0.2B, supporting stable earnings quality on a comprehensive basis. Overall, excluding one-off losses, profit increase is based on recurring earnings, though cash realization delays persist.
For FY ending April 2027, company guidance is Revenue ¥349.4B (YoY +18.0%), Operating Income ¥26.4B (YoY +10.9%), Ordinary Income ¥23.3B (YoY +8.3%), Net Income ¥13.6B (YoY -11.2%), EPS ¥34.25. Revenue is expected to rebound from this year's decline, but the operating margin is projected at 7.6%, slightly more conservative than this year's 8.0%, reflecting planned SG&A increases (personnel and advertising). The projected decline in Net Income assumes a reversal of one-off gains and normalization of tax burden. Progress rates are Revenue 84.8% (¥296.2B/¥349.4B) and Operating Income 90.2% (¥23.8B/¥26.4B); achieving the full-year target requires an additional ¥53.2B in Revenue and ¥2.6B in Operating Income. Key assumptions include recovery in Housing orders and acceleration of project progress, Hotel Business reaching break-even, maintenance of completed-contract gross margin in the low-42% range, and pass-through of cost inflation. Dividend guidance is ¥6 (including interim ¥5 already paid), halving this year’s dividend of ¥12 (interim ¥5 + year-end ¥7); implied payout ratio is 17.5%, a conservative level prioritizing investment capacity and financial flexibility.
Annual dividend ¥12 (interim ¥5, year-end ¥7), total dividends ¥4.39B. Payout ratio relative to Net Income attributable to owners of the parent ¥15.3B is 28.7%, a sustainable level. However, Free Cash Flow ¥3.4B relative to dividend payments ¥4.4B yields FCF coverage of 0.78x, with the shortfall covered by increased borrowing. Dividend yield depends on share price assumptions; with BPS ¥569.62, dividend ¥12 equates to Dividend/BPS 2.1%. Forecast dividend for FY2027 ¥6 halves this year’s level, lowering payout to 17.5% (on Net Income ¥13.6B), reflecting prioritization of growth investment and balance sheet strengthening over short-term shareholder returns. No share buybacks are planned; total return ratio equals the payout ratio.
Concentration risk in the Housing Business: Housing accounts for 85.5% of Revenue, making results sensitive to housing market conditions, interest rates, and construction material price volatility. Completed contract billings ¥223.1B (YoY -13.9%) reflect order weakness and acceptance delays. Increase in contract work-in-progress deposits ¥18.8B (+13.9%) may indicate order-front loading, but maintaining progress control and cost control is prerequisite for sustaining gross margins.
Low cash conversion efficiency and refinancing risk: Operating Cash Flow / Net Income 0.82x and OCF/EBITDA 0.32x indicate materially weakened cash conversion, partly due to expansion in working capital (trade receivables ¥14.9B, contract work-in-progress payments ¥6.4B). Short-term borrowings ¥43.4B (+75.5%) have risen sharply, increasing refinancing sensitivity in a rising-rate environment and raising the risk of higher interest payments (current interest expense ¥2.0B).
Continued losses in the Hotel Business and inefficient resource allocation: The Hotel Business posted an operating loss of ¥3.7B; while losses narrowed, break-even remains unmet and margin -8.9% depresses consolidated profitability. Despite Revenue growth to ¥41.9B (+5.5%), fixed-cost burden remains heavy; delayed occupancy / RevPAR improvements extend payback. The current structure, where Housing profits (Operating Income ¥33.3B) cover Hotel losses, continues and optimization of resource allocation is required.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.0% | 5.5% (3.5%–7.2%) | +2.5pt |
| Net Margin | 5.2% | 3.5% (2.5%–4.4%) | +1.7pt |
Both operating margin and net margin exceed industry medians, placing profitability at an upper-tier level.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -15.3% | 9.8% (-2.1%–15.1%) | -25.1pt |
Revenue growth lags the industry median by -25.1pt, indicating pronounced revenue contraction and weak growth.
※ Source: Company compilation
Margin improvement and structural shift amid revenue decline: Despite a 15.3% drop in Revenue, Operating Income increased by 1.9% and Net Income by 15.0%, driven by gross margin improvement of +3.4pt and SG&A reduction of -10.6%. Completed-contract gross margin of 42.2% reflects progress in cost management, and profit-focused project selection contributed to structural margin improvement. ROE 6.7% (prior 5.3%) shows recovery in capital efficiency and suggests potential for expanded operating leverage when top-line recovers.
Vulnerability in cash generation and emerging financial instability: Operating Cash Flow ¥12.5B (YoY -63.7%) and OCF/EBITDA 0.32x indicate sharply deteriorated cash conversion. Short-term borrowings ¥43.4B (+75.5%) have elevated short-term debt dependence and revealed refinancing risk. Free Cash Flow ¥3.4B is insufficient to cover dividends ¥4.4B, with shareholder returns funded by debt increases. Improving next-year OCF and lengthening maturities of short-term debt are key to restoring financial stability.
FY2027 revenue recovery scenario and achievement conditions: Company plan targets Revenue +18.0% (¥349.4B), which is optimistic; operating margin guidance 7.6% is slightly conservative relative to this year’s 8.0%, incorporating planned SG&A increases. Achievement requires Housing order recovery (consumption of contract work-in-progress deposits ¥18.8B), Hotel break-even, and maintenance of completed-contract gross margin in the low-42% range. Dividend cut to ¥6 (payout 17.5%) signals a shift to prioritize growth investment and balance sheet strengthening, which may warrant re-evaluation by long-term investors. Near-term monitoring should focus on improvements in cash generation and Hotel business turnaround.
This report is an AI-generated financial analysis based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the firm from public financial data as reference. Investment decisions are your responsibility; consult a professional advisor as needed.
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