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

Good Life Company (TSE:2970) delivered a strong FY2025 Q3 performance under JGAAP on a consolidated basis, with revenue of ¥16.98bn, up 41.0% YoY, and operating income of ¥1.90bn, up 54.6% YoY. Net income was ¥1.19bn, rising 47.6% YoY, translating to EPS of ¥72.12. DuPont analysis indicates ROE of 22.65%, driven by a 7.01% net margin, 0.891x asset turnover, and 3.63x financial leverage. Profit growth outpaced revenue, evidencing positive operating leverage and margin improvement. The reported gross margin is 10.5%, but operating margin of roughly 11.2% (¥1.90bn/¥16.98bn) exceeds the gross margin, implying significant net operating gains or reversals within operating income (e.g., other operating income or favorable SG&A dynamics), which is not uncommon in real estate where classification of gains can vary. There is an internal inconsistency between the presented cost of sales (¥10.26bn) and the reported gross profit (¥1.79bn), as the latter implies a higher cost of sales; for analysis, we anchor to the provided gross margin (10.5%) and gross profit figure. Liquidity appears solid with a current ratio of 159% and working capital of ¥5.99bn, though cash levels are undisclosed in the XBRL snapshot. The capital structure shows total liabilities of ¥14.71bn against equity of ¥5.26bn, implying a debt-to-equity proxy of 2.80x (using total liabilities) and an assets/equity ratio of 3.63x. Interest expense is modest at ¥39m, yielding a strong interest coverage of 48.8x on operating income. The effective tax burden implied by net income and reported tax expense appears around the mid-20s percent (based on simple reconciliation), despite the dashboard’s “0.0%” effective tax rate, which appears to reflect non-disclosure rather than actual zero. Cash flow statements are not disclosed in this snapshot (zeros reflect unreported), so OCF/NI and FCF data cannot be evaluated; this is a key limitation for assessing earnings quality and dividend capacity. No dividend was reported (DPS ¥0, payout 0%), consistent with a reinvestment stance or timing of dividend announcements, but dividend sustainability cannot be evaluated without cash flow disclosure. Balance-sheet equity ratio is shown as 0.0% but based on reported assets and equity, the equity ratio is approximately 27.6%, which is typical for an asset-heavy property developer/real-estate firm. The strong ROE is supported by both profitability and leverage; however, sustainability hinges on project pipeline, market conditions, and funding availability. Overall, the quarter indicates robust execution and operating leverage, but the absence of cash flow disclosures and certain line-item inconsistencies warrant cautious interpretation and monitoring.

Profitability Analysis

ROE (22.65%) decomposes into a 7.01% net margin, 0.891x asset turnover, and 3.63x financial leverage, indicating balanced contributions from margin and efficient asset use augmented by leverage. Gross margin is 10.5% (anchored to provided metric), while operating margin is approximately 11.2% (¥1,902m/¥16,982m), suggesting material positive other operating items or SG&A credits; margin quality should be scrutinized for non-recurring components. The YoY delta (revenue +41%, operating income +54.6%) indicates meaningful operating leverage as fixed costs were spread over higher volumes and/or pricing improved. Ordinary income (¥1,884m) is slightly below operating income, consistent with modest net non-operating expense (notably ¥39m interest). Net margin at 7.01% is healthy for a real estate-related business and reflects improved profitability, but durability depends on project mix and recognition timing. Effective tax burden inferred from net and tax expense appears c. 25% (indicative), contrasting with the displayed 0.0% metric that reflects non-disclosure. EBITDA and depreciation are undisclosed; given the sector, depreciation is typically modest relative to revenue, but absence of data limits assessment of cash earnings. Overall profitability is strong, but the relationship between gross and operating margins points to classification effects and possible one-offs, requiring validation in management commentary.

Growth Assessment

Top-line growth of 41.0% YoY signals strong demand and/or robust project deliveries in the period. Operating income growth of 54.6% YoY suggests mix improvement and operating leverage, with margin expansion despite sectoral cost pressures. Net income increased 47.6% YoY, tracking operating performance while absorbing interest and tax. Sustainability hinges on development pipeline continuity, land acquisition pace, and sales progress; real estate revenues are inherently lumpy due to completion-based revenue recognition. The 0.891x asset turnover highlights relatively efficient asset cycling for the industry, but the figure can fluctuate with inventory/project balances. Given the large delta between gross and operating margins, growth quality should be reassessed for non-recurring gains or reclassifications; repeated performance over several quarters would strengthen confidence. Outlook considerations: interest rate environment, lending appetite of banks, cap rates, and buyer sentiment in core regions will influence deliveries and margins. In the absence of order backlog or contracted sales data here, we treat growth momentum as positive but subject to higher-than-average visibility risk typical for developers.

Financial Health

Liquidity appears sound with current assets of ¥16.10bn and current liabilities of ¥10.11bn, yielding a current ratio of 159% and working capital of ¥5.99bn. Quick ratio mirrors current ratio due to inventories being undisclosed; actual quick ratio could be lower if inventories are material (common in real estate), so this metric is potentially overstated. Total assets are ¥19.07bn against total liabilities of ¥14.71bn and equity of ¥5.26bn; the inferred equity ratio is roughly 27.6% (equity/assets), despite the dashboard showing 0.0% due to non-disclosure. Debt-to-equity using total liabilities stands at 2.80x; true interest-bearing debt is not disclosed, so solvency interpretation is constrained. Interest expense of ¥39m is modest relative to operating income, producing an interest coverage of ~48.8x, which indicates ample buffer at current earnings levels. The capital structure employs leverage consistent with sector norms, aiding ROE, but refinancing and interest-rate risks remain pertinent given the macro backdrop. Absent cash balances and debt maturities, short-term liquidity and covenant headroom cannot be fully assessed.

Cash Flow Quality

Operating, investing, and financing cash flows are undisclosed in this dataset (zeros represent unreported), preventing a direct assessment of earnings-to-cash conversion. OCF/Net Income is shown as 0.00 solely due to non-disclosure and should not be interpreted as weak cash conversion. Free cash flow cannot be computed without OCF and capex/land acquisition data; for developers, FCF tends to be volatile and negative during expansion/land banking phases. Working capital dynamics (receivables, payables, inventories) are not visible here; given the business model, inventories and advances are typically key drivers of OCF volatility. The absence of depreciation suggests non-disclosure rather than no non-cash expenses; thus, accrual quality cannot be evaluated. Until full cash flow statements are available, we cannot opine on cash earnings quality, reliance on external financing, or coverage of growth investments.

Dividend Sustainability

No dividend per share is reported for the period (DPS ¥0; payout 0%), which could reflect timing of declaration or a reinvestment-focused policy. Without OCF and FCF, we cannot assess coverage of dividends by cash generation. Net income of ¥1.19bn and strong ROE would support the capacity to distribute in principle, but developers often prioritize liquidity for land acquisition and project funding. Balance-sheet equity of ¥5.26bn and leverage of 2.80x (using total liabilities) suggest room must be maintained for funding needs; hence, dividend policy likely balances growth capex/land banking against returns to shareholders. Outlook on dividends remains data-limited; confirmation requires management guidance and full-year cash flow disclosure.

Risk Assessment

Business Risks:

• Revenue recognition lumpiness tied to project completion and handover timing
• Market cyclicality in residential/investment property demand and pricing
• Land acquisition and pipeline replenishment risk affecting future deliveries
• Construction cost inflation and subcontractor availability impacting margins
• Regulatory and zoning changes affecting development timelines
• Geographic concentration risk if operations are focused in specific regions

Financial Risks:

• Dependence on external financing amidst changing interest-rate environment
• Refinancing and covenant risks not assessable due to undisclosed debt maturity profile
• Potential overstatement of quick ratio due to undisclosed inventories
• Cash flow volatility from working capital swings typical of development cycles
• Sensitivity of ROE to leverage given a 3.63x assets/equity profile

Key Concerns:

• Inconsistency between reported cost of sales and gross profit; reliance on provided gross margin to reconcile
• Absence of cash flow statement data (OCF/FCF not disclosed), limiting earnings quality assessment
• Equity ratio shown as 0.0% despite calculable ~27.6%, reflecting data capture limitations
• Operating income exceeding gross profit suggests material other operating items; recurrence uncertain

Investment Implications

Key Takeaways:

• Strong top-line growth (+41% YoY) with operating income growing faster (+55%), evidencing operating leverage
• High ROE (22.65%) supported by solid margins, decent asset turnover, and leverage
• Interest coverage is robust at ~49x, indicating manageable financing burden
• Liquidity looks adequate (current ratio ~159%), but true quick liquidity may be lower due to undisclosed inventories
• Data gaps (cash flows, inventories, share count) and line-item inconsistencies necessitate cautious interpretation

Metrics to Watch:

• Contracted sales/backlog and land bank to gauge revenue visibility
• Full cash flow statements (OCF, FCF) and working capital movements
• Gross vs operating margin reconciliation and quality of operating income
• Interest-bearing debt, maturity ladder, and effective interest rate
• Equity ratio trend and asset turnover as projects cycle
• Dividend guidance and capital allocation between growth and returns

Relative Positioning: Within Japanese real estate developers of comparable scale, the company exhibits above-average ROE and interest coverage with healthy liquidity, though visibility on cash generation and inventory structure is below peers due to disclosure gaps in this snapshot.

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