Yamaichi Real Estate (2984) FY2026 Q3 Earnings Report

Quick View

Executive Summary

For the cumulative Q3 ended March 2026, the Company fell into an operating loss and net loss due to a significant decline in revenue from the condominium business and an increase in company-wide expenses. Revenue was ¥9.36B (-23.1% YoY), operating income was ¥-0.01B (deteriorating from ¥0.81B in the same period of the previous year), ordinary income was ¥-0.55B (deteriorating from ¥0.41B), and net income was ¥-0.43B (deteriorating from ¥0.21B). The primary cause of the revenue decline was a 43.4% decrease in revenue from the condominium business. SG&A expenses increased by 1.4% despite lower revenue, increasing the fixed-cost burden. Higher interest expense also weighed on ordinary income.

Factors Affecting Performance

【Revenue】Revenue was ¥9.36B, down -23.1% YoY. By segment, the condominium business experienced a significant revenue decline to ¥3.68B (-43.4% YoY), becoming the main driver of the consolidated revenue decrease. The real estate development and sales business was nearly flat at ¥3.02B (-2.3% YoY), while the real estate development and leasing business maintained revenue growth at ¥2.43B (+2.9% YoY). The decrease in condominium deliveries significantly reduced the consolidated top line.

【Profit and Loss】Operating income fell into the red at ¥-0.01B, compared with ¥0.81B in the same period of the previous year. The gross profit margin was nearly flat at 26.3% (26.6% in the previous year), and the primary causes of deterioration were not a decline in the gross profit margin but an increase in SG&A expenses amid lower revenue (¥2.47B, +1.4% YoY) and a 31.3% increase in company-wide expenses. Ordinary income deteriorated to ¥-0.55B due to non-operating expenses of ¥0.61B, including interest expense of ¥0.42B (+42.4% YoY). Even including extraordinary income of ¥0.07B, comprising a gain on the sale of fixed assets of ¥0.05B, pretax income was ¥-0.49B and net income was ¥-0.43B. Both revenue and earnings declined.

Segment Analysis

The real estate development and leasing business maintained the highest profitability, with segment income of ¥0.79B (margin of 32.3%, +3.3% YoY), serving as a pillar supporting consolidated earnings. The real estate development and sales business recorded revenue of ¥3.02B (-2.3% YoY), while segment income deteriorated significantly to ¥0.05B (-67.5% YoY; margin of 1.6%). The condominium business reported revenue of ¥3.68B (-43.4% YoY) and segment income of ¥0.10B (-82.5% YoY; margin of 2.8%), experiencing simultaneous revenue decline and margin deterioration. Company-wide expenses of ¥0.99B exceeded total segment income of ¥0.94B, resulting in a consolidated operating loss. A high degree of earnings dependence on the leasing business is a defining characteristic of the Company’s consolidated performance.

Key Financial Indicators

【Profitability】The operating margin declined from 6.6% in the previous year to -0.1%, while the net profit margin was -4.6%; both shifted from positive to negative. The gross profit margin was 26.3%, nearly unchanged from 26.6% in the previous year, indicating that the deterioration in profitability was primarily due to increases in SG&A expenses and non-operating expenses.【Cash Quality】Cash and deposits declined 43.5% YoY to ¥3.23B, while short-term borrowings surged to ¥8.90B.【Investment Efficiency】Annualized ROE was -4.4%, primarily due to the net profit margin turning negative. ROIC also remained near zero, indicating impairment in the returns generated on invested capital.【Financial Soundness】The equity ratio declined to 22.2% from 26.8% in the previous year. Interest-bearing debt includes long-term borrowings of ¥24.46B and bonds of ¥0.39B, among other items. The sharp increase in short-term borrowings indicates room to improve the maturity structure. The current ratio was 199.1%, appearing sound on the surface.

Cash Flow Analysis

Although the Company does not disclose a cash flow statement, its funding trends are analyzed based on changes in the balance sheet. Cash and deposits declined by ¥2.48B YoY to ¥3.23B, while short-term borrowings increased by ¥7.43B YoY to ¥8.90B, suggesting a structure in which investment funding for real estate under development of ¥22.54B (+51.3% YoY) is being financed through short-term borrowings. Accounts receivable also increased 211.1% YoY to ¥0.42B, and this increase amid a shrinking revenue base warrants verification of collection conditions. Overall, the Company is covering excess investment with short-term borrowings, making the certainty of fund recovery and refinancing key determinants of financial soundness.

Quality of Earnings

Non-operating income was ¥0.06B, equivalent to only 0.7% of revenue, indicating no dependence on recurring non-operating income. Interest expense accounted for ¥0.42B, or 68.6%, of non-operating expenses of ¥0.61B, making the rising reliance on borrowings the primary cause of the widening ordinary loss. Extraordinary income of ¥0.07B includes a gain on the sale of fixed assets of ¥0.05B, which should be distinguished as a temporary factor. Against an ordinary loss of ¥0.55B, the pretax loss was ¥0.49B, reflecting a ¥0.06B improvement from extraordinary gains and losses. The net loss attributable to owners of the parent of ¥0.44B includes the impact of a tax effect that resulted in income taxes and other taxes of negative ¥0.06B, indicating that the Company’s recurring earning power from its core business is at a more severe level.

Earnings Forecast and Guidance

Against the full-year revenue forecast of ¥17.61B, cumulative Q3 progress was 53.2%, significantly below the standard 75% level. Against full-year forecasts of ¥0.95B for operating income and ¥0.30B for ordinary income, cumulative Q3 results were losses of ¥-0.01B and ¥-0.55B, respectively, resulting in negative progress ratios. To achieve the forecasts, Q4 alone would require revenue of ¥8.25B and operating income of ¥0.96B, corresponding to an operating margin of 11.6%. Even considering the concentration of year-end deliveries characteristic of the real estate business, the required turnaround from results through Q3 is substantial.

Shareholder Returns

The Q2 dividend was ¥0 per share, while the Company’s full-year dividend forecast is ¥30 per share. Based on 8,672 thousand shares outstanding, the total annual dividend would be approximately ¥0.26B, whereas the full-year net income forecast is only ¥0.13B, implying an estimated payout ratio of approximately 200%. The Company recorded a cumulative Q3 net loss attributable to owners of the parent of ¥0.44B, making a substantial recovery in earnings in Q4 a prerequisite for paying the year-end dividend.

Risk Factors

1. Increased reliance on borrowings: Short-term borrowings increased 506.0% YoY to ¥8.90B, while cash and deposits were ¥3.23B, representing only 0.36 times the amount of short-term borrowings. Interest expense was ¥0.42B (+42.4% YoY), and due to the operating loss, interest coverage is effectively at a level insufficient to cover interest payments.

2. Deterioration in profitability of the condominium and sales businesses: The condominium business deteriorated significantly, with revenue down -43.4% and segment income down -82.5%. Segment income in the real estate development and sales business also declined by -67.5%. The Company has a structure in which changes in delivery timing and sales conditions significantly affect consolidated performance.

3. Increase in real estate under development: Real estate under development increased 51.3% YoY to ¥22.54B. If progress in completion, sales, or fund recovery is delayed, this could lead to risks related to cash management and valuation losses.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (real_estate)

Profitability and Returns

The Company’s operating margin and net profit margin were both significantly below the industry median, placing its profitability at a disadvantage within the industry.

Growth and Capital Efficiency

While companies across the industry are generally experiencing revenue growth, the Company recorded a revenue decline and was also at a disadvantage in terms of growth.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The real estate development and leasing business maintained both revenue and earnings growth and became a stable earnings base accounting for more than 80% of total segment income. However, volatility in the condominium and real estate development and sales businesses is driving consolidated performance.

2. Company-wide expenses increased 31.3% YoY and exceeded total segment income, directly causing the consolidated operating loss. Reviewing the cost structure will be a key focus going forward.

3. Achieving the full-year forecast will require substantial revenue and earnings growth in Q4. Progress in completing and delivering the ¥22.54B of real estate under development, as well as management of borrowing costs, will be key factors determining future performance.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,109–¥1,169 at ±1% for the cost of equity, and ¥1,128–¥1,145 at ±0.1 for ω.

Notes:

• Net income is significantly compressed relative to operating income due to tax burden, acquisition-related expenses, and non-controlling interests, among other factors (net income ÷ operating income: 14%). This value reflects that compression at face value; if these factors are temporary, underlying earnings power may be higher.
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used, creating a timing mismatch with the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific securities. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting professionals as necessary.

---End of Report---