| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥19847.4B | ¥18423.6B | +7.7% |
| Operating Income / Operating Profit | ¥1352.6B | ¥1188.8B | +13.8% |
| Ordinary Income | ¥1391.7B | ¥1294.5B | +7.5% |
| Net Income / Net Profit | ¥866.6B | ¥999.1B | -13.3% |
| ROE | 17.5% | 21.4% | - |
For the fiscal year ended March 2026, Revenue was ¥19847.4B (YoY +¥1423.9B, +7.7%), Operating Income was ¥1352.6B (YoY +¥163.8B, +13.8%), Ordinary Income was ¥1391.7B (YoY +¥97.1B, +7.5%), and Net Income attributable to owners of the parent was ¥866.6B (YoY -¥132.5B, -13.3%). Operating margin improved to 6.8% from 6.5% a year earlier (+0.3pt), and gross margin rose to 17.5% (from 17.1%, +0.4pt), indicating improved profitability. Net Income decreased YoY due to corporate taxes of ¥395.5B, and on a parent-attributable Net Income basis adjusted for non-controlling interest loss of ¥0.4B, the effective tax rate rose to 28.5% from 27.9% a year earlier. The company achieved its third consecutive year of revenue and operating income growth. By segment, strong expansion in the Real Estate Development Business (Revenue +186.4%, Operating Income +259.8%) drove company-wide profitability, while the core Real Estate Rental Business maintained stable growth (Revenue +3.6%, Operating Income +6.5%).
[Revenue] Revenue totaled ¥19847.4B (YoY +7.7%), marking the third consecutive year of revenue growth. By segment, the Real Estate Development Business expanded significantly to ¥1473.0B (from ¥514.3B, +186.4%), driven mainly by growth in income-producing real estate receipts of ¥733.9B (from ¥234.4B) and investment condominium business receipts of ¥340.5B (from ¥226.7B). The core Real Estate Rental Business continued stable growth at ¥12137.8B (+3.6%), with a composite revenue model of leasing, guarantees, and brokerage functioning around lump-sum leasing receipts of ¥1065.4B. The Construction Business edged up to ¥5735.8B (+2.6%), with completed contract value at ¥5442.8B (prior ¥5409.8B) remaining in a flat range. Other Businesses amounted to ¥802.2B (+8.2%), contributed by the Energy Business ¥447.9B and the Nursing/Care & Childcare Business ¥182.7B. Revenue composition was Rental 61.2%, Construction 28.9%, Development 7.4%, and the rising share of Development contributed to mix improvement.
[Profitability] Operating Income rose to ¥1352.6B (YoY +13.8%), outpacing revenue growth and demonstrating operating leverage. Gross profit was ¥3470.5B (gross margin 17.5%), improving 0.4pt from ¥3158.6B (gross margin 17.1%) in the prior year. SG&A was ¥2117.9B (SG&A ratio 10.7%), up in absolute terms from ¥1969.8B (10.7%) but stable as a percentage of revenue, reflecting effective cost control. By segment, Real Estate Development Operating Income was ¥185.4B (from ¥51.5B, +259.8%) with a high margin of 12.6%, lifting corporate margins. Conversely, Construction Operating Income declined to ¥451.5B (from ¥471.4B, -4.2%), with margin at 7.9% (from 8.4%, -0.5pt), suggesting material and labor cost increases and delayed cost pass-through. Real Estate Rental Operating Income was ¥855.5B (+6.5%) with a margin of 7.0%, securing stable profitability. Non-operating income was ¥93.2B (including interest income ¥15.3B and foreign exchange gains ¥14.0B), and non-operating expenses were ¥54.1B (interest expense ¥32.7B), so financial items contributed positively overall. Ordinary Income expanded to ¥1391.7B (+7.5%), but after extraordinary losses of ¥12.4B (impairment losses ¥5.0B, valuation losses on securities ¥5.3B) and corporate taxes ¥395.5B, Net Income attributable to owners of the parent was ¥866.6B (-13.3%). In conclusion, revenue and operating income growth were maintained, but higher tax burden and Construction segment profit decline constrained growth at the Net Income level.
The Real Estate Rental Business, the core segment, recorded Operating Income of ¥855.5B (prior ¥803.2B, +6.5%) with a margin of 7.0%, accounting for 63.2% of consolidated Operating Income. Lump-sum leasing receipts of ¥1065.4B, guarantee business ¥217.7B, and brokerage ¥214.0B supported stable revenue. The Construction Business recorded Operating Income of ¥451.5B (prior ¥471.4B, -4.2%) with a margin of 7.9% (down from 8.4%), where cost increases eroded profits despite slight revenue growth. The Real Estate Development Business posted Operating Income of ¥185.4B (prior ¥51.5B, +259.8%) with a high margin of 12.6%, driven by concentrated recording of buy-renovate-resell income-producing real estate and investment condominium development projects. Other Businesses recorded Operating Income of ¥131.3B (prior ¥132.0B, -0.5%) with a margin of 16.4%, where Energy and Nursing/Care contributed stably. Financial Business Operating Income was ¥63.9B (prior ¥66.8B, -4.5%) with a margin of 20.2%, high but limited in scale. While Development’s high growth lifted company-wide profitability, improving Construction margins remains a future challenge.
[Profitability] Operating margin improved to 6.8% from 6.5% (+0.3pt), gross margin 17.5% (from 17.1%, +0.4pt), and SG&A ratio remained 10.7%, improving overall balance. ROE was 17.5%, down 3.9pt from 21.5% a year earlier, but still high considering the adjustment to an Equity Ratio of 36.3% (prior 38.2%). EBIT was ¥1352.6B, EBITDA was ¥1547.1B (adding depreciation ¥194.5B), yielding an EBITDA margin of 7.8%. [Cash Quality] Operating Cash Flow / Net Income was 0.47x (OCF ¥404.9B ÷ Net Income ¥866.6B), indicating weak cash conversion of Net Income, mainly due to a large increase in inventories for sale (cash absorption of -¥481.98B in the OCF detail). Free Cash Flow was -¥12.1B (OCF ¥404.9B - Investing CF ¥417.0B), meaning internal funds did not fully cover dividends and buybacks this period. [Investment Efficiency] Total Asset Turnover was 1.45x (Revenue ¥19847.4B ÷ Total Assets ¥13675.0B), indicating favorable asset efficiency. Days Sales Outstanding ~45 days; Inventory turnover days about 220 days (including inventories for sale ¥1392.4B + work-in-progress equivalent), with high inventory levels weighing on working capital. [Financial Soundness] Equity Ratio was 36.3% (vs. 38.2% prior, -1.9pt), and net cash exceeded ¥800B with interest-bearing debt (short-term borrowings ¥135B + long-term borrowings ¥1705B + corporate bonds ¥110B) totaling ¥1950B versus cash and deposits ¥2750B. Debt/EBITDA was 1.26x (interest-bearing debt ¥1950B ÷ EBITDA ¥1547.1B), and interest coverage was 41.4x (EBIT ¥1352.6B ÷ interest expense ¥32.7B), both in healthy ranges. Current ratio was 219% (current assets ¥8836B ÷ current liabilities ¥4034B), indicating ample short-term liquidity.
Operating Cash Flow was ¥404.9B (down -52.7% from ¥856.1B prior), a large decline, and conversion relative to Pre-tax Income ¥1385.4B was only 0.29x. Subtotal of OCF was ¥872.2B; after adding non-cash expenses such as depreciation ¥194.5B and impairment loss ¥5.0B, and adjusting for equity-method losses -¥5.7B, interest/dividend receipts -¥21.3B, and interest payments ¥33.2B, the level stood as reported. Working capital changes were pressured primarily by cash absorption of -¥481.98B due to an increase in inventories for sale, followed by an increase in trade receivables -¥124.4B and a decrease in advances received on uncompleted construction +¥27.9B. Corporate tax payments of ¥455.4B were also a cash outflow. Investing Cash Flow was -¥417.0B, mainly driven by purchases of tangible fixed assets -¥236.6B, intangible fixed assets -¥70.7B, and acquisition of investment securities -¥20.4B. Free Cash Flow was slightly negative at -¥12.1B (OCF ¥404.9B - Investing CF ¥417.0B), as growth investments and working capital needs exceeded OCF. Financing Cash Flow was +¥372.2B, balancing proceeds from long-term borrowings ¥1961.3B, long-term borrowing repayments -¥897.8B, dividend payments -¥512.0B, and treasury stock acquisitions -¥269.7B. Cash and cash equivalents at period-end increased to ¥2581.2B (from ¥2235.7B, +¥345.5B), preserving safety, though persistent weak OCF could raise reliance on external funding.
Quality of earnings is generally sound: of Operating Income ¥1352.6B, non-operating income was ¥93.2B (0.5% of revenue), indicating low dependency on non-core items and core operations at the center. Extraordinary items were minor: Extraordinary gains ¥6.1B and extraordinary losses ¥12.4B, net -¥6.3B, so recurring earnings structure is intact. The difference between Ordinary Income ¥1391.7B and Net Income attributable to owners of the parent ¥866.6B (¥1,058.8B) is explained by corporate taxes ¥395.5B and adjustments from pre-tax profit to Net Income, yielding an effective tax rate of 28.5%. Comprehensive income was ¥1033.8B, ¥167.2B above Net Income ¥866.6B, contributed by Other Comprehensive Income ¥43.9B (foreign currency translation adjustment ¥12.9B, adjustments related to retirement benefits ¥30.5B, deferred hedge profit/loss ¥6.5B, valuation difference on securities -¥6.0B). From an accrual quality perspective, the gap where OCF significantly lags Net Income (OCF/Net Income 0.47x) is a concern: inventory buildup and fluctuations in advances have delayed profit cash realization. Most of the ¥467.3B drop from OCF subtotal ¥872.2B to OCF ¥404.9B was due to working capital changes, indicating timing gaps between accounting profit recognition and cash collection. Continuous monitoring is required.
Full-year guidance is Revenue ¥20500B (current results ¥19847.4B, progress 96.8%), Operating Income ¥1420B (current ¥1352.6B, progress 95.3%), Ordinary Income ¥1400B (current ¥1391.7B, progress 99.4%), and Net Income attributable to owners of the parent ¥1080B (current ¥866.6B, progress 80.2%). Operating Income is approximately ¥67B short of the full-year forecast, and Net Income attributable to owners of the parent is about ¥213B short, impacted by lower Construction margins and higher tax burden. Ordinary Income is at 99.4% of guidance and effectively within the achievement range, supported by non-operating financial income. Reported EPS versus forecast: Actual EPS ¥299.01 versus forecast EPS ¥326.00, shortfall ~8.3%. Dividend guidance is annual ¥81 (midterm ¥342 + year-end ¥82 converted post-share-split basis), and the year-end ¥82 aligns with guidance. To achieve next fiscal year targets, sustaining the pace of project recognition in the Real Estate Development Business, improving Construction margins, and maintaining stable operations in the Rental Business are key.
Dividends are planned at midterm ¥342 and year-end ¥82; on a pre-share-split basis (1 share → 5 shares, executed October 2025) the annual dividend equates to ¥752 (including an equivalent midterm of ¥410). The company-stated payout ratio is 50.0%, reflecting a stable dividend policy. On a basic EPS basis, the payout ratio is approximately 96% (dividend ¥287 ÷ EPS ¥299.01), and on a post-split basis total dividends imply ¥51.42B (year-end ¥82 × issued shares equivalent to 320 million shares). Share buybacks totaled ¥269.7B (per financing CF detail), and total shareholder returns amounted to ¥781.7B (dividends ¥512.0B + buybacks ¥269.7B). The Total Return Ratio is 90.2% (total returns ¥781.7B ÷ Net Income attributable to owners of the parent ¥866.6B), a high level; however, since Free Cash Flow was -¥12.1B, return funding relied on internal reserves and borrowings. Given cash and deposits ¥2750B and OCF ¥404.9B, short-term sustainability is maintained, but medium-to-long-term sustainability depends on OCF improvement and normalization of inventory turnover.
Weak Operating Cash Flow generation: OCF ¥404.9B is 0.47x Net Income ¥866.6B, and Free Cash Flow is negative at -¥12.1B. The primary cause is an increase in inventories for sale of -¥481.98B, delaying cash realization of profits. If inventory turnover improvement lags, dependence on external funding may rise, increasing financial costs in a rising interest rate environment and threatening the sustainability of shareholder returns.
Declining Construction segment margins: Construction Operating Income declined YoY by -4.2%, with margin deterioration to 7.9% (from 8.4%, -0.5pt). Material and labor cost increases and delayed cost pass-through are factors; absent price renegotiation or process efficiency improvements, profitability deterioration in this core segment could compress consolidated profits.
Concentration risk in Real Estate Development projects: While Real Estate Development recorded Operating Income ¥185.4B (+259.8%), revenue of ¥1473.0B was concentrated in income-producing real estate ¥733.9B and investment condominium business ¥340.5B. Performance is sensitive to timing of project recognition; if large projects cycle through or market conditions shift in future periods, the growth trend could reverse.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.8% | 10.7% (6.8%–17.9%) | -3.8pt |
| Net Margin | 4.4% | 5.8% (2.5%–11.9%) | -1.4pt |
The company’s Operating Margin of 6.8% is 3.8pt below the industry median of 10.7%, and Net Margin 4.4% is 1.4pt below the median 5.8%, reflecting structural margin limitations of the Construction–Rental hybrid model and positioning the company in the middle-to-lower range within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.7% | 12.8% (4.2%–29.2%) | -5.1pt |
Revenue growth of 7.7% lags the industry median of 12.8% by 5.1pt, placing the company at a mid-range growth pace. Although high growth in Development contributed, limited expansion in core Rental and Construction segments kept overall growth below the industry average.
※ Source: Company compilation
Significant expansion and profitability improvement in the Real Estate Development Business drove consolidated operating margin higher, and Operating Income grew 13.8% YoY, outpacing revenue growth. Conversely, Construction margin declined to 7.9% (from 8.4%), revealing delayed cost pass-through. Continued project recognition in Development and correction of Construction margins are key to sustaining profit growth next year.
Operating Cash Flow was ¥404.9B, representing a conversion of 0.47x to Net Income, and Free Cash Flow was -¥12.1B due to inventory buildup for sale absorbing cash. Total shareholder returns of ¥781.7B (Total Return Ratio 90.2%) were funded by internal reserves and borrowings; improvement in inventory turnover and cash generation is essential for sustainable shareholder returns.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statement data. Investment decisions are your own responsibility; consult a professional advisor as appropriate before acting.