| Metric | Current Period | Prior-year period | YoY |
|---|---|---|---|
| Revenue | ¥310.1B | ¥271.8B | +14.1% |
| Operating Income | ¥18.9B | ¥16.6B | +13.9% |
| Ordinary Income | ¥19.8B | ¥17.1B | +15.7% |
| Net Income | ¥13.3B | ¥12.3B | +5.9% |
| ROE | 5.9% | 5.6% | - |
FY2026 Q3 results maintained an increasing revenue and profit trend with Revenue of ¥310.1B (YoY +¥38.3B +14.1%), Operating Income of ¥18.9B (YoY +¥2.3B +13.9%), Ordinary Income of ¥19.8B (YoY +¥2.7B +15.7%), and Net Income of ¥13.3B (YoY +¥1.0B +8.1%). Completed Construction Revenue of ¥243.4B and Contract Assets of ¥65.1B supported the revenue base, showing steady progress toward the full-year forecast (Revenue ¥420.0B, Operating Income ¥31.0B, Net Income ¥20.5B). The Operating Margin was 6.1%, nearly unchanged from the prior year’s 6.1%, but absolute profit expanded on higher sales. Net Income growth of +8.1% was more muted than Operating Income growth of +13.9%, partly due to a 33.1% effective tax rate.
[Profitability] ROE 5.7% (nearly flat from 5.8% in the prior year), Operating Margin 6.1% (unchanged from 6.1% in the prior year), Net Margin 4.3% (slightly down from 4.5% in the prior year), Gross Margin 18.9%, ROA 3.8%. In the DuPont decomposition, ROE 5.7% is formed by Net Margin 4.2% × Total Asset Turnover 0.901 × Financial Leverage 1.52x, indicating a structure in which sales growth underpins profit. [Cash Quality] Cash and cash equivalents ¥9.1B and cash coverage of short-term liabilities at 1.8x indicate secured liquidity. As Operating Cash Flow information is not disclosed, confirmation of profit cash conversion is required. [Investment Efficiency] Total Asset Turnover 0.901x; asset efficiency remains high with sales growth of +14.1%. Investment Securities increased to ¥19.6B, up +36.2%, confirming an expansion of the investment portfolio. [Financial Soundness] Equity Ratio 65.9% (65.6% in the prior year), Current Ratio 241.0%, and Quick Ratio 236.5% are at favorable levels. Interest-Bearing Debt is low at ¥5.0B, but a short-term debt ratio of 100% raises a quality alert, necessitating attention to the short-term funding structure. Debt-to-Equity Ratio is 0.52x, maintaining a conservative capital structure.
Cash and deposits declined slightly from ¥9.4B in the prior year to ¥9.1B, but remained broadly flat, with stable funding. Contract Assets of ¥65.1B and Electronically Recorded Monetary Claims of ¥97.0B, accumulated along with construction progress, constitute the main components of working capital of ¥153.4B, making management of the collection cycle critical. Investment Securities increased by +¥5.6B from ¥14.4B in the prior year to ¥19.6B, suggesting expanded securities management of surplus funds or strategic investments. Short-term borrowings are ¥5.0B and small, keeping funding costs limited; however, with a short-term debt ratio of 100%, transparency in refinancing plans is required. With current assets of ¥262.2B versus current liabilities of ¥108.8B, short-term debt coverage is 2.4x, indicating ample short-term repayment capacity. Operating profit growth and accumulation of Contract Assets are proceeding in parallel, and progress in collections on a progress-billing basis will influence future funding trends.
Against Ordinary Income of ¥19.8B, Operating Income was ¥18.9B, with a net increase of approximately ¥0.9B in non-operating items. The breakdown is mainly Dividend Income of ¥0.5B and Interest Income of ¥0.3B, with non-operating income limited to about 0.4% of Revenue. Operating Income is the core of the earnings structure, and the earnings power of the core business underpins Ordinary Income. With Net Income of ¥13.3B and Profit Before Tax of ¥19.9B, there is a tax burden with an effective tax rate of 33.1%, making tax control key to net profit growth. As Operating Cash Flow information is not disclosed, the divergence between Operating Cash Flow and Net Income cannot be assessed; however, based on the balance of Contract Assets and Completed Construction Revenue, there may be a certain level of accruals (uncollected revenue). Liquidity is sufficient and Interest-Bearing Debt is small, so there are no major concerns about the short-term quality of earnings, but future disclosure of Operating Cash Flow will be important to confirm the degree of profit cash conversion.
Risk of margin pressure from construction delays, material prices, and rising labor costs. Given the size of Completed Construction Revenue at ¥243.4B and Contract Assets at ¥65.1B, delays in progress or collection on large projects could affect revenue and cash flow. Refinancing risk from a short-term debt ratio of 100%. Interest-Bearing Debt of ¥5.0B consists of short-term borrowings, and at refinancing timing, rising interest rates or a deterioration in credit conditions could increase funding costs or impose liquidity constraints. Valuation and liquidity risks associated with a +36.2% increase in Investment Securities. The breakdown and fair value measurement of ¥19.6B in Investment Securities are unclear, raising concerns that market fluctuations or deteriorating performance at investees could generate valuation losses and pressure Net Income.
[Positioning within the Industry] (Reference information; our research) Profitability: ROE 5.7% exceeds the industry median of 3.7% by +2.0pt, ranking high within the industry. Operating Margin 6.1% exceeds the industry median of 4.1% by +2.0pt, indicating an efficient profit generation structure. Net Margin 4.3% exceeds the industry median of 2.8% by +1.5pt. Growth: Revenue growth rate of +14.1% significantly exceeds the industry median of -3.5%, achieving high growth within the industry. Soundness: Equity Ratio 65.9% exceeds the industry median of 60.5% by +5.4pt, indicating a solid financial base. Current Ratio 241.0% exceeds the industry median of 207.0% by +34.0pt, indicating good liquidity. Efficiency: ROA 3.8% exceeds the industry median of 2.2% by +1.6pt, maintaining high asset efficiency. *Industry: Construction (n=4 companies), Comparison: 2025 Q3 results, Source: our compilation While relative superiority within the industry is clear, the short-term debt structure and growth in Investment Securities warrant attention even compared with industry averages.
Sustained revenue growth and industry outperformance. Revenue growth of +14.1% is outstanding within the construction industry, and Contract Assets of ¥65.1B provide a backlog that will support future revenue. The Operating Margin of 6.1% exceeds the industry median of 4.1%, confirming a structural advantage in profitability. Progress toward achieving the full-year forecast is steady, and the short- to medium-term growth trend appears sustainable. Need to monitor short-term funding structure. A short-term debt ratio of 100% is a quality alert, and Interest-Bearing Debt of ¥5.0B consists solely of short-term borrowings. While liquidity is ample, confirmation of refinancing plans and Operating Cash Flow generation capability is important, and upcoming results should be watched for disclosure of the cash flow statement and trends in short-term borrowings. Transparency of the investment portfolio. Investment Securities surged to ¥19.6B, up +36.2% YoY, presumed to be part of surplus fund management or strategic investments. Disclosure of the investment breakdown, valuation gains/losses, and monetization plans will be important information for investors.
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 compiled by our company based on publicly available financial results data. Investment decisions are your own responsibility; consult a professional as needed before making any investment decisions.