GOOD LIFE COMPANY,INC. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥16.98B
• Operating Income: ¥1.90B
• Net Income: ¥806M
• EPS: ¥72.12

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: Strong topline and profit growth in FY2025 Q3 with improved margins and high ROE, albeit supported by leverage and likely one-time/other operating gains. Revenue rose 41.0% YoY to 169.82, while operating income increased 54.6% YoY to 19.02 and ordinary income climbed 57.1% YoY to 18.84. Net income advanced 47.6% YoY to 11.91, translating to a 7.0% net margin. Operating margin is 11.2% (19.02/169.82), exceeding the 10.5% gross margin, implying material other operating income within the operating section of JGAAP. Based on YoY growth rates, we estimate operating margin expanded by roughly 100 bps (from ~10.2% to 11.2%). The net margin appears to have improved by ~30 bps YoY to 7.0% (estimate from growth math). ROE is a robust 22.6%, driven by a 7.0% net margin, 0.891x asset turnover, and 3.63x financial leverage. Interest coverage is very strong at 48.77x, supported by modest interest expense (0.39) relative to operating profit. Liquidity looks sound with a current ratio of 187% and cash of 57.53 against short-term loans of 31.94. However, leverage is high with D/E at 2.63x, warranting caution on refinancing and covenant headroom. The P/L structure suggests extraordinary/other items may be in play (operating income above gross profit, and ordinary vs PBT/NI gap), so the quality of earnings includes non-core contributions within operating income in this period. Cash flow data are not disclosed, so we cannot validate earnings-to-cash conversion this quarter. ROIC is reported at a strong 16.1%, well above the 7–8% benchmark. Forward-looking, backlog visibility and delivery timing will be critical for sustaining growth, while funding discipline is essential given elevated leverage. Overall, momentum is positive, but sustainability hinges on repeatable operating drivers rather than one-off gains and on maintaining balance sheet resilience.

Profitability Analysis

ROE decomposition: ROE 22.6% = Net Profit Margin (7.0%) × Asset Turnover (0.891x) × Financial Leverage (3.63x). The largest contribution to high ROE currently comes from financial leverage (3.63x), followed by adequate asset turnover typical for a development-driven model, and a mid-single digit net margin. Operating margin at 11.2% exceeded gross margin of 10.5%, indicating other operating income boosted profitability; this, rather than core spread, is a notable driver this quarter. Business reason: Q3 likely benefited from development deliveries with favorable mix/timing and recognition of other operating income (e.g., sale of non-core assets, fee income, or remeasurement gains classified as operating under JGAAP). Sustainability: The margin uplift from other operating income is less repeatable than core gross spread improvement; we view the 11.2% operating margin as above normalized if such items are non-recurring. Positive operating leverage is evident: SG&A of 5.57 equates to ~3.3% of revenue, implying fixed-cost dilution as revenue scaled. We do not have YoY SG&A to confirm, but revenue growth (+41%) materially outpaced SG&A as a share of sales, indicating cost discipline. Watchpoints: if SG&A growth in coming quarters exceeds revenue growth or if other operating gains fade, operating margin could compress. Overall, ROE quality is mixed—solid operational delivery plus leverage support but with a non-trivial non-core component this quarter.

Growth Assessment

Revenue grew 41.0% YoY to 169.82, implying strong delivery cadence and/or higher average selling prices. Operating income rose 54.6% to 19.02, outpacing sales growth and indicating operating leverage and other operating contributions. Ordinary income expanded 57.1% to 18.84, with non-operating effects limited (non-operating income 0.10, expenses 0.40), reinforcing that the uplift is mainly within the operating line. Net income increased 47.6% to 11.91, with the net margin reaching 7.0%. Estimated operating margin expansion is ~100 bps YoY, and net margin expansion ~30 bps YoY, based on the provided growth rates. Profit quality: operating profit exceeding gross profit signals material other operating income; hence, some growth appears non-core/less repeatable. Mix/timing in real estate handovers likely contributed to the strong quarter; this introduces volatility quarter to quarter. With ROIC at 16.1%, returns on invested capital are well above benchmark, suggesting growth has been value-accretive year to date. Outlook dependencies: delivery pipeline and land bank turnover, construction cost trends, and funding conditions. Absent OCF data or order backlog, we cannot confirm sustainability but near-term momentum is favorable.

Financial Health

Liquidity is solid: current ratio 187% and quick ratio 187%, with cash and deposits of 57.53 exceeding short-term loans of 31.94. Working capital stands at 73.48, providing a buffer for project execution. Solvency: total liabilities 138.12 vs equity 52.58, and reported D/E at 2.63x triggers a leverage warning (>2.0). Interest coverage is strong at 48.77x, mitigating near-term debt service risk. Maturity profile: the presence of 31.94 in short-term loans requires continued refinancing or conversion upon project cash inflows; cash on hand appears sufficient to cover near-term maturities. Long-term loans of 52.51 support the asset base of 190.70; leverage is elevated for a non-REIT developer, so maintaining sales velocity is crucial. No off-balance sheet obligations are disclosed in the provided data. Overall, liquidity is comfortable, but capital structure is aggressive; careful treasury management is needed.

Cash Flow Quality

Operating cash flow is unreported this quarter, so we cannot compute OCF/NI or validate earnings-to-cash conversion. Free cash flow is also unavailable; thus, coverage of dividends and capex cannot be assessed. In a development-heavy model, working capital swings (land acquisition, construction in progress, receivables from handovers) typically drive OCF volatility; without inventory details, we cannot gauge the extent. Interest expense is low relative to operating profit, which supports cash interest coverage if operating cash conversion is reasonable. With cash 57.53 and strong earnings, short-term liquidity is adequate, but the absence of OCF data is a limitation for assessing quality.

Dividend Sustainability

Dividend data are not disclosed; payout ratio and FCF coverage are therefore not calculable. EPS (basic) is 72.12 JPY with BVPS at 319.44 JPY, implying internal capital generation capacity given high ROE (22.6%). With leverage elevated (D/E 2.63x) and real estate cash flow cyclicality, a conservative payout policy would be prudent to preserve balance sheet strength. Without OCF and capex data, we cannot opine on FCF coverage; monitoring future disclosures for dividend policy, planned DPS, and cash requirements is essential.

Risk Assessment

Business Risks:

• Real estate cycle risk impacting sales velocity and pricing of delivered units
• Construction cost inflation and subcontractor availability affecting project margins
• Project concentration and delivery timing risk leading to earnings volatility
• Regulatory and zoning changes affecting development timelines
• Goodwill (7.19) and intangibles (7.33) introducing integration and impairment risk

Financial Risks:

• High leverage (D/E 2.63x) increasing refinancing and covenant headroom risk
• Short-term loans (31.94) requiring ongoing rollover or timely cash inflows from handovers
• Interest rate risk on floating-rate borrowings affecting interest expense
• Potential reliance on other operating income to achieve current margin levels

Key Concerns:

• Operating income exceeding gross profit indicates non-core operating gains, which may not be repeatable
• Absent operating cash flow and FCF disclosures limit assessment of earnings quality and dividend capacity
• Potential extraordinary/other items between ordinary income and profit before tax complicate P/L comparability

Investment Implications

Key Takeaways:

• Strong YoY growth with improved margins and high ROE (22.6%)
• Operating margin (11.2%) above gross margin (10.5%) suggests sizable other operating income
• Liquidity solid (current ratio 187%, cash 57.53) but leverage high (D/E 2.63x)
• Interest coverage robust at 48.77x; near-term debt service risk is low
• ROIC of 16.1% signals value-accretive growth
• Cash flow data missing; sustainability of earnings and dividends cannot be verified

Metrics to Watch:

• Backlog and delivery schedule to gauge revenue visibility
• OCF/Net income and working capital movements (inventories, advances) for cash conversion
• SG&A trend relative to revenue to confirm operating leverage durability
• Breakdown of other operating income to distinguish recurring vs one-off
• Leverage trajectory (net debt/EBITDA when available) and refinancing profile
• Land acquisition pace and gross margin on new projects

Relative Positioning: Within Japanese small/mid-cap residential developers, the company currently demonstrates above-peer ROIC and profit growth, supported by healthy liquidity; however, its elevated leverage and reliance on other operating income this quarter place it toward the higher-risk/higher-return end of the peer spectrum.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis