| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥113.5B | ¥141.7B | -19.9% |
| Operating Income | ¥11.2B | ¥13.3B | -16.1% |
| Ordinary Income | ¥8.4B | ¥11.7B | -28.0% |
| Net Income | ¥16.0B | ¥7.4B | +114.2% |
| ROE | 7.4% | 3.6% | - |
2026 FY Q1 results: Revenue ¥113.5B (YoY -¥28.1B -19.9%), Operating Income ¥11.2B (YoY -¥2.1B -16.1%), Ordinary Income ¥8.4B (YoY -¥3.3B -28.0%), Net Income ¥16.0B (YoY +¥8.6B +114.2%). Despite an overall decline in revenue and profit, Net Income rose sharply due to a ¥15.9B gain on business disposal recognized as special income. Gross margin improved to 23.1% (vs 19.6% in the prior year, +3.5pt), but SG&A ratio rose to 13.3% (+2.1pt), leaving Operating Margin at 9.8% (vs 9.4% prior, +0.4pt) with only a marginal increase. Ordinary margin declined to 7.4% (vs 8.3% prior, -0.9pt), reflecting the impact of financial costs — interest expense rose to ¥2.6B (prior ¥1.6B, +68.3%). Net margin jumped to 14.2% (vs 5.3% prior, +8.9pt) but this is largely driven by one-off gains, so attention to earnings quality is warranted.
[Revenue] Revenue was ¥113.5B, down ¥28.1B YoY (-19.9%). By segment, RealEstate (income-producing real estate sales business) was ¥103.5B (-19.0%) and StockTypeFee (recurring fee business) was ¥10.0B (-32.9%), both declining. RealEstate is the core business representing 91.2% of total revenue, and its slowdown primarily drove the overall revenue decline. Inventory of properties held for sale increased substantially to ¥620.9B (prior ¥417.8B, +48.6%), suggesting that deferred property closings/deliveries are the main cause of lower revenue. Although StockTypeFee is small at 8.8% of sales, it functions as a low-inventory-dependent recurring revenue source.
[Profit & Loss] Cost of sales was ¥87.3B (prior ¥112.6B, -22.5%), improving gross margin to 23.1% (vs 19.6% prior, +3.5pt). Improvements in procurement costs or sales mix likely contributed to the higher gross margin. SG&A was ¥15.1B (prior ¥15.8B, -4.4%), but given revenue fell by 19.9% and SG&A contains a high fixed-cost component, SG&A ratio rose to 13.3% (vs 11.2% prior, +2.1pt). Operating Income was ¥11.2B (-16.1%), with Operating Margin 9.8% (vs 9.4% prior, +0.4pt); gross margin improvements outweighed SG&A ratio increases, resulting in a slight operating performance improvement. Non-operating expenses rose to ¥3.3B (prior ¥1.9B, +74.1%), mainly due to higher interest expense of ¥2.6B (prior ¥1.6B, +68.3%). Long-term borrowings increased to ¥535.2B (prior ¥380.1B, +40.8%), expanding interest burden. Ordinary Income was ¥8.4B (-28.0%) with Ordinary Margin 7.4% (vs 8.3% prior, -0.9pt), pressured by higher interest costs. Recognition of special income ¥15.9B (mainly gain on business disposal ¥15.9B) pushed profit before tax to ¥24.3B (prior ¥11.7B, +107.9%). After deducting income taxes of ¥8.4B, Net Income was ¥16.0B (+114.2%). In conclusion, while underlying revenue and profit declined, one-off special income led to a large final profit increase.
The RealEstate segment reported Revenue ¥103.5B (-19.0%) and Operating Income ¥14.7B (-4.9%), with Operating Margin 14.2% (vs 15.5% prior, -1.3pt). Despite revenue decline, profit decline was limited, supported by improved gross margin. StockTypeFee segment reported Revenue ¥10.0B (-32.9%) and Operating Income ¥3.2B (+3.6%), with Operating Margin 32.0% (vs 31.0% prior, +1.0pt), maintaining high profitability. Segment profit total was ¥17.9B; after corporate adjustments of -¥6.7B, consolidated Operating Income was ¥11.2B. Corporate costs increased to -¥6.7B (prior -¥5.2B, +28.8%), suggesting higher fixed costs at headquarters.
[Profitability] Operating Margin 9.8% improved slightly from 9.4% prior (+0.4pt), as gross margin improvement of +3.5pt outpaced the SG&A ratio increase of +2.1pt. Net Margin 14.2% rose from 5.3% prior (+8.9pt), but this was largely due to a ¥15.9B special income; on an ordinary basis, margin declined to 7.4% (vs 8.3% prior). ROE 7.4% improved from 3.6% prior, but this is also influenced by the one-off Net Income increase. [Cash Quality] Interest coverage ratio is 4.2x (Operating Income ¥11.2B ÷ Interest Expense ¥2.6B), indicating neutral coverage of interest burden. [Investment Efficiency] Total asset turnover is 0.13x (annualized 0.50x), deteriorated by inventory accumulation. Of total assets ¥900.2B, properties held for sale ¥620.9B account for 69.0%; the pace of inventory liquidation is key to asset efficiency. [Financial Soundness] Equity Ratio 24.0% (vs 28.5% prior, -4.5pt), D/E ratio 3.17x (interest-bearing debt ¥684.1B ÷ Net Assets ¥216.1B) indicate a high-leverage structure. Current ratio 532.0% and Cash & Deposits ¥109.8B provide ample liquidity, limiting short-term funding risk.
Net Income ¥16.0B includes special income ¥15.9B, so recurring earnings power is assessed at ¥8.4B (on an ordinary income basis). Properties held for sale increased by ¥203.1B (+48.6%) from ¥417.8B to ¥620.9B, driving significant working capital absorption. Cash & Deposits were ¥109.8B (prior ¥119.1B, -¥9.3B), suggesting cash used for inventory buildup. Long-term borrowings increased to ¥535.2B (prior ¥380.1B, +¥155.0B), implying inventory acquisitions were financed with long-term debt. Accounts receivable decreased sharply to ¥0.4B (prior ¥2.8B, -84.7%), indicating progress in collecting receivables from property closings. Accounts payable rose to ¥8.4B (prior ¥6.5B, +29.4%), reflecting upfront payments for procurement/development. With interest payments up to ¥2.6B, accelerating inventory liquidation and controlling interest expense are important for free cash flow.
Ordinary Income ¥8.4B was supplemented by Special Income ¥15.9B (mainly gain on business disposal), so the bulk of Net Income ¥16.0B is due to one-off items. Ordinary margin 7.4% declined from 8.3% prior, and increased interest burden is pressuring sustainable profitability. The rise in non-operating expenses is driven by interest expense, reflecting higher interest-bearing debt and the interest-rate environment. Comprehensive Income ¥15.2B undershot Net Income by -¥0.8B, with foreign currency translation adjustments -¥0.6B and valuation differences on securities -¥0.1B reducing other comprehensive income. Operating Cash Flow is not disclosed, but given Net Income ¥16.0B alongside inventory build-up of +¥203.1B, OCF is likely negative or substantially reduced, indicating a large gap between profit and cash. From an earnings quality perspective, profitability is dependent on one-off gains and ordinary earning power has weakened YoY.
Full Year guidance is unchanged: Revenue ¥770.0B (YoY +14.0%), Operating Income ¥43.0B (YoY -13.8%), Net Income ¥31.0B. Q1 progress rates are: Revenue 14.7% (¥113.5B ÷ ¥770.0B) — lagging; Operating Income 26.0% (¥11.2B ÷ ¥43.0B) — standard; Net Income 51.6% (¥16.0B ÷ ¥31.0B) — front-loaded. The front-loading of Net Income is attributable to the ¥15.9B special income, so Q2+ plans should factor in the drop-off of one-off items. The lagging revenue progress aligns with inventory accumulation; accelerating liquidation of properties for sale from Q2 onward is a prerequisite for achieving full-year targets. The full-year Operating Income guidance (-13.8% YoY) assumes a downtrend, but if Q1 Operating Margin 9.8% is maintained throughout the year, the company would be on track to exceed the full-year Operating Margin of 5.6% (¥43.0B ÷ ¥770.0B), implying an assumption of lower margins in H2.
Dividend forecast is maintained at ¥10.00 per share (interim ¥0, year-end ¥10.00). This represents an increase of +66.7% from prior-year dividend of ¥6.00. Based on 50,551 thousand shares outstanding less 1,181 thousand treasury shares, annual dividend payout on a free-float basis is estimated at approximately ¥4.9B. Dividend payout ratio against full-year Net Income plan ¥31.0B is about 16%, a conservative level. Q1 Net Income ¥16.0B depends on special income; considering recurring earnings power (back-calculated from full-year ordinary income outlook suggests low-¥20Bs), payout ratio would be in the mid-20s% and sustainability is maintained. Given high leverage (D/E 3.17x), preserving financial soundness is prioritized over additional shareholder returns.
Inventory liquidation delay risk: Properties held for sale ¥620.9B (69.0% of total assets) accumulated, up ¥203.1B YoY (+48.6%). Revenue progress at 14.7% is lagging, and continued delays in property closings would make achieving full-year Revenue target ¥770.0B difficult. Inventory turnover days are prolonged (annualized ~200 days — ¥620.9B ÷ (¥770.0B × Cost Rate 76.9%) × 365 days), increasing the risk of valuation losses from price adjustments or market deterioration.
Rising interest burden risk: Long-term borrowings ¥535.2B (prior ¥380.1B, +40.8%), total interest-bearing debt ¥684.1B (D/E 3.17x) create a high-leverage profile; interest expense increased to ¥2.6B (prior ¥1.6B, +68.3%). Interest coverage ratio 4.2x is neutral, but in a rising-rate environment it could further compress ordinary income. If interest payments expand to the order of ¥10B annually against full-year Operating Income plan ¥43.0B, Ordinary Margin could fall to around 5%.
Deterioration of operating leverage risk: SG&A ¥15.1B decreased only -4.4% despite Revenue falling -19.9%, indicating high fixed-costs. SG&A ratio rose to 13.3% (vs 11.2% prior, +2.1pt), so delayed revenue recovery risks further Operating Margin decline. Corporate costs increased to -¥6.7B (prior -¥5.2B, +28.8%), pointing to potential efficiency issues in headquarters functions. At current pace vs Revenue plan ¥770.0B, downside risks exist and stricter cost control is required to maintain Operating Margin.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.8% | – | – |
| Net Margin | 14.1% | – | – |
Company Operating Margin 9.8% and Net Margin 14.1% — relative assessment deferred due to lack of industry median data.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -19.9% | – | – |
Revenue growth -19.9% shows a contractionary trend; relative position unclear without industry comparatives.
※ Source: Company aggregation
Feasibility of inventory liquidation pace and revenue recovery: Properties held for sale rose to ¥620.9B, representing 69.0% of total assets. Q1 revenue progress of 14.7% suggests delayed inventory liquidation; accelerated closings from Q2 onward are required to meet full-year targets. Normalization of inventory turnover would improve OCF and ROIC. If gross margin improvement to 23.1% (vs 19.6% prior, +3.5pt) persists, profit generation upon inventory liquidation would be stronger.
Underlying profit level after one-off gains: Net Income ¥16.0B relies on ¥15.9B gain on business disposal; ordinary margin 7.4% declined from 8.3% prior. Although Q1 achieved 51.6% of full-year Net Income plan ¥31.0B, the true performance level for Q2+ will reflect the drop-off of one-off items. With continuing higher interest burden, sustaining Operating Margin and controlling financial costs are keys to persistent EPS growth. Dividend payout ratio 16% is conservative, and continuity of dividends appears likely after smoothing profits, but deleveraging and ROIC improvement are prerequisites for valuation uplift.
This report was auto-generated by an AI analyzing XBRL financial disclosure data. It is not a recommendation to invest in any particular security. Industry benchmark data are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.