| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥838.0B | ¥672.2B | +24.7% |
| Operating Income | ¥58.3B | ¥36.8B | +58.4% |
| Ordinary Income | ¥60.4B | ¥37.6B | +60.3% |
| Net Income attributable to owners of the parent | ¥37.9B | ¥24.5B | +54.6% |
| ROE | 10.0% | 7.1% | - |
For the fiscal year ending March 2026, Revenue was ¥838.0B (YoY +¥165.8B +24.7%), Operating Income was ¥58.3B (YoY +¥21.5B +58.4%), Ordinary Income was ¥60.4B (YoY +¥22.8B +60.3%), and Net Income attributable to owners of the parent was ¥37.9B (YoY +¥13.4B +54.6%), delivering higher revenue and profit. Completed construction revenue was ¥836.0B, reflecting capture of domestic construction demand, and gross margin modestly improved to 18.9% (up +0.2pt from 18.7% a year earlier). Operating margin expanded to 7.0% (up +1.5pt from 5.5%) as SG&A ratio decreased to 12.0% (prior year 13.2%), demonstrating operating leverage. Ending shareholders’ equity was ¥379.6B (prior year ¥345.7B), ROE improved to 10.0% (prior year 7.1%), and the company maintained a solid financial position with an Equity Ratio of 60.8%. Full-year dividend was ¥49 (Payout Ratio 83.2%), and stable dividends were maintained supported by ample cash and deposits of ¥177.3B.
[Revenue] Completed construction revenue was ¥836.0B (YoY +24.7%), a substantial increase. Domestic public investment and private capital expenditure demand were captured and project progress proceeded smoothly. The company operates a single segment (Construction Business), with over 90% of revenue generated from the domestic market. Contract work-in-progress payments decreased to ¥2.5B (from ¥3.5B at prior fiscal year-end, -28.4%), reflecting accelerated progress, while completed construction accounts receivable accumulated to ¥207.7B, indicating a backward shift in collection timing. Advances received for contract work (advances) decreased to ¥8.4B (from ¥12.6B at prior fiscal year-end, -33.2%), as interim progress billings and drawdown of advances proceeded.
[Profitability] Cost of sales was ¥679.5B, and gross margin modestly improved to 18.9% (up +0.2pt from 18.7%). Despite rising material and labor costs, cost control and price pass-through maintained profitability. SG&A was controlled at ¥100.2B (SG&A ratio 12.0%, down -1.2pt from 13.2%), producing Operating Income of ¥58.3B (Operating margin 7.0%, up +1.5pt from 5.5%). Non-operating income was ¥2.5B, with dividend income ¥1.8B contributing stably, and non-operating expenses were limited to ¥0.4B (interest expense ¥0.1B). Extraordinary gains/losses were minor: extraordinary gains ¥0.1B (gain on sales of fixed assets, negative goodwill gain ¥1.1B), extraordinary losses ¥0.8B (impairment losses ¥0.3B, loss on retirement of fixed assets ¥0.5B). As a result, Ordinary Income was ¥60.4B, profit before income taxes ¥59.6B, income taxes ¥17.4B, leading to Net Income attributable to owners of the parent of ¥37.9B (Net margin 4.5%, up +0.9pt from 3.6%). In conclusion: revenue and profit both increased.
[Profitability] Operating margin improved to 7.0% (up +1.5pt from 5.5%), Net margin improved to 4.5% (up +0.9pt from 3.6%), and ROE increased to 10.0% (prior year 7.1%). Modest improvement in gross margin to 18.9% (prior year 18.7%) and suppression of SG&A ratio to 12.0% (prior year 13.2%) unlocked operating leverage. [Cash Quality] Operating Cash Flow/Net Income was 0.92x (OCF ¥34.7B ÷ Net Income ¥37.9B), in a neutral zone. OCF relative to EBITDA (Operating Income ¥58.3B + Depreciation ¥10.7B = ¥69.0B) was 0.50x, which is low; increases in completed construction accounts receivable (-¥41.7B) and decreases in advances received for contract work (-¥4.3B) pressured working capital and weakened cash conversion. [Investment Efficiency] Capital expenditure was ¥12.6B versus depreciation ¥10.7B, an investment/depreciation ratio of 1.18x, indicating a growth investment pace exceeding maintenance replacement. [Financial Soundness] Equity Ratio 60.8%, Current Ratio 221.6% (Current Assets ¥439.8B ÷ Current Liabilities ¥198.5B), Quick Ratio 221.4%—short-term payment capacity is extremely high. Interest-bearing debt consists only of long-term borrowings of ¥3.5B, and with cash and deposits of ¥177.3B the company effectively holds net cash of approximately ¥173.8B, providing very strong interest-rate resilience.
Operating Cash Flow was ¥34.7B (YoY -23.1%). The ratio to Net Income was 0.92x, indicating neutral cash collection, but there was a significant drop from pre-working-capital subtotal OCF of ¥48.5B. The main driver was an increase in completed construction accounts receivable and trade receivables of -¥41.7B; billing and collection timing delayed with project progress, straining liquidity. An increase in accounts payable of +¥13.9B partially offset this, but a decrease in advances received for contract work of -¥4.3B was also a cash outflow factor. After income taxes paid of -¥15.5B, OCF was ¥34.7B. Investing CF was -¥17.7B, mainly capital expenditure -¥12.6B (acquisition of tangible fixed assets), acquisition of investment securities -¥2.6B (sales +¥0.2B, net -¥2.4B), and acquisition of subsidiary shares affecting consolidation scope -¥1.8B. Free Cash Flow was ¥17.1B (OCF ¥34.7B + Investing CF -¥17.7B). Financing CF included dividend payments -¥20.0B and long-term borrowings repayment -¥1.8B, totaling Financing CF -¥21.9B. Cash and deposits decreased slightly to ¥177.3B at period-end (from ¥181.5B at prior year-end, -¥4.2B); including foreign exchange effect +¥0.4B, the net cash decline was -¥4.5B, and liquidity remains ample. FCF coverage (FCF ¥17.1B ÷ Dividends ¥20.0B = 0.85x) is somewhat insufficient, but short-term dividend sustainability is high due to ample cash on hand.
Ordinary Income of ¥60.4B versus Operating Income ¥58.3B indicates stable non-operating contributions of ¥2.5B (dividend income ¥1.8B, foreign exchange gains ¥0.2B), while non-operating expenses ¥0.4B (interest expense ¥0.1B, foreign exchange losses ¥0.5B) are minor; core operations drive ordinary earnings. Extraordinary items were net -¥0.7B (extraordinary gains ¥0.1B, extraordinary losses ¥0.8B) and limited; impairment losses ¥0.3B and loss on retirement of fixed assets ¥0.5B were temporary factors. Comprehensive income was ¥53.8B, ¥15.9B higher than Net Income ¥37.9B. Composition of other comprehensive income: foreign currency translation adjustments +¥0.2B, valuation difference on available-for-sale securities +¥9.9B, actuarial differences on retirement benefits +¥1.4B. Expansion in valuation difference on available-for-sale securities (investment securities ¥59.8B, up +39.4% from ¥42.9B) reflects mark-to-market gains but is sensitive to market volatility. OCF was ¥34.7B, 0.60x of Operating Income, somewhat low; the accrual–cash divergence was mainly driven by increased trade receivables -¥41.7B and increased accounts payable +¥13.9B, a timing difference in collections rather than early revenue recognition. Allowance for construction loss was minor at ¥0.3B (prior year ¥0.2B), indicating limited risk from unprofitable projects. Overall, recurring earnings quality is high, extraordinary and comprehensive income one-offs are limited, but weak cash conversion suggests room to improve working capital management.
Full-year guidance projects Revenue ¥805.0B (YoY -3.9%), Operating Income ¥55.0B (YoY -5.6%), Ordinary Income ¥55.0B (YoY -8.9%), and Net Income attributable to owners of the parent ¥34.0B (YoY -10.3%), a conservative plan anticipating lower revenue and profit. Actual results were Revenue ¥838.0B, Operating Income ¥58.3B, Ordinary Income ¥60.4B, Net Income ¥37.9B, outperforming plan by Revenue +4.1%, Operating Income +6.0%, Ordinary Income +9.8%, Net Income +11.5%. Progress rates were Revenue 104.1%, Operating Income 106.0%, Ordinary Income 109.8%, Net Income 111.5%, exceeding the full-year plan across all items, aided by orders and project progress exceeding initial expectations. Dividend forecast of ¥22 was far exceeded by actual ¥49 (interim ¥22 + year-end ¥27); Payout Ratio was high at 83.2% (on Net Income basis). Next fiscal year plans to revert to dividend ¥22 (Payout Ratio approx. 24.8% on projected EPS ¥88.58). The next fiscal year plan is conservative, incorporating rising material and labor costs and order environment uncertainty, but outperformance is possible if current cost control and SG&A suppression continue.
Year-end dividend ¥27 and interim dividend ¥22 for full-year dividend ¥49 (prior year ¥22, +122.7%) were paid. Payout Ratio was high at 83.2% (based on Net Income ¥37.9B). Total dividends were ¥20.0B versus FCF ¥17.1B, FCF coverage was 0.85x (somewhat short), but short-term dividend continuity is strongly supported by cash and deposits of ¥177.3B. Share buybacks were negligible (¥0.01B), so shareholder returns were dividend-centric. Next fiscal year dividend guidance is ¥22, targeting a Payout Ratio of approx. 24.8% (based on projected EPS ¥88.58), indicating a return to a more normal level; this year’s ¥49 is positioned as a one-off high dividend reflecting rapid profit growth. Medium-term policy is to maintain stable dividends (low-¥20s) while considering increases if profit growth and working capital cash conversion progress; if cash conversion improvement lags, dividend growth may be restrained.
Working capital burden from accumulation of completed construction accounts receivable: Trade receivables increased by ¥41.7B, OCF/EBITDA ratio is low at 0.50x, and mismatches between project progress and billing/collection timing are pressuring liquidity. Prolonged receivables increase raises credit loss risk and undermines sustainable FCF generation.
Profitability deterioration risk from rising material and labor costs: Gross margin at 18.9% is below 20%; delays in price pass-through or additional costs could compress margins. In an environment of sustained high labor and material costs across the construction industry, fixed-price contracts may see margin deterioration.
Impact on comprehensive income and net assets from market value fluctuations of investment securities: Investment securities ¥59.8B (YoY +39.4%) are highly sensitive to market conditions. This fiscal year, valuation gains on securities of +¥9.9B boosted comprehensive income, but market reversals could erode net assets and comprehensive income.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.0% | 5.5% (3.5%–7.2%) | +1.4pt |
| Net Margin | 4.5% | 3.5% (2.5%–4.4%) | +1.0pt |
Profitability ranks in the upper range within the industry; both Operating Margin and Net Margin exceed the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 24.7% | 9.8% (-2.1%–15.1%) | +14.8pt |
Revenue growth is outstanding within the industry, reflecting strong order intake and project progress.
※ Source: Company aggregation
Stepwise improvement in revenue, profit, and margins: Revenue +24.7%, Operating Margin 7.0% (up +1.5pt from 5.5%), ROE 10.0% (prior year 7.1%) demonstrating improved profitability. Modest gross margin improvement to 18.9% and suppression of SG&A ratio to 12.0% have unlocked operating leverage, securing top-tier profitability within the industry. Next fiscal year plan is conservative, but upside exists if cost control and SG&A discipline continue.
Monetization of working capital is the top operational priority: OCF/EBITDA 0.50x and OCF/Net Income 0.92x indicate weak cash collection; increases in completed construction accounts receivable -¥41.7B and decreases in advances received -¥4.3B are pressuring liquidity. FCF coverage 0.85x slightly underpins dividends, but short-term dividend continuity is supported by cash and deposits ¥177.3B. Achieving both shareholder returns and growth investment over the medium term requires improvement in working capital efficiency via shortened collection cycles and strengthening use of advances received.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by the company based on public financial statements. Investment decisions should be made at your own responsibility and, if necessary, after consulting with a professional advisor.