| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥1102.6B | ¥1038.5B | +6.2% |
| Operating Income | ¥97.6B | ¥84.2B | +15.9% |
| Ordinary Income | ¥96.7B | ¥85.1B | +13.6% |
| Net Income | ¥16.2B | ¥21.8B | -25.9% |
| ROE | 2.3% | 3.5% | - |
For the fiscal year ended March 2026, Revenue was ¥1,102.6B (YoY +¥64.1B +6.2%), Operating Income was ¥97.6B (YoY +¥13.4B +15.9%), Ordinary Income was ¥96.7B (YoY +¥11.6B +13.6%), and Net Income attributable to owners of the parent was ¥62.5B (YoY +¥1.9B +3.2%). The operating margin improved by 0.7pt to 8.8% (prior year 8.1%), achieving revenue and profit growth. High margins in the core Real Estate segment and a strong recovery in the Transportation segment (Operating Income +139.6%) drove improved operating-level profitability. Conversely, the booking of Extraordinary Losses of ¥10.2B (including impairment losses ¥1.34B, etc.) kept Profit Before Tax at ¥88.6B (+4.5%), leaving Net Margin largely flat at 5.7% (prior year 5.8%). Operating Cash Flow (OCF) was ¥78.7B (YoY -13.6%), with an increase in inventories of ¥59.4B pressuring liquidity; Free Cash Flow was -¥9.9B, reflecting an investment-prioritized phase. Total assets were ¥1,915B and Net Assets ¥705B, improving the Equity Ratio to 36.8% (prior year 34.6%) and strengthening the financial base, but the current ratio of 82.7% indicates short-term liquidity challenges.
Revenue totaled ¥1,102.6B (YoY +6.2%), with all segments recording revenue increases. The Real Estate segment contributed ¥361.5B ( +6.4%), representing 32.8% of company revenue, supported by steady demand for condominium sales and rentals. The Transportation segment recorded ¥246.1B (+8.6%), aided by recovery in bus and taxi demand. Leisure & Services posted ¥164.0B (+9.3%)—the highest growth rate—driven by improved occupancy at hotels, inns, and golf courses. The Logistics segment increased modestly to ¥331.0B (+2.8%), with stable sales of petroleum products and daily necessities. Intersegment revenue was ¥80.3B (prior year ¥71.5B), indicating expanded internal transactions. Gross profit margin improved by 1.1pt to 60.0% (prior year 58.9%), reflecting a lower cost ratio and improved profitability.
On the earnings side, Operating Income rose to ¥97.6B (YoY +15.9%), outpacing revenue growth. SG&A was ¥212.4B (prior year ¥202.5B, +4.9%), bringing the SG&A ratio down 0.2pt to 19.3% (prior year 19.5%), indicating effective expense control. By segment, Real Estate generated Operating Income of ¥66.8B (margin 18.5%, +9.0%), contributing roughly 70% of consolidated operating profit. Transportation recovered substantially to ¥12.4B (margin 5.0%, +139.6%) from ¥5.2B a year earlier, aided by demand recovery and cost efficiency. Logistics operating income was ¥7.8B (margin 2.3%, +29.0%), and Leisure & Services was ¥11.0B (margin 6.7%, -3.6%), where cost increases offset occupancy improvements. Ordinary Income stood at ¥96.7B (+13.6%), with non-operating income of ¥6.3B (including dividend income ¥3.8B) partially offsetting non-operating expenses of ¥7.1B (interest expense ¥6.9B), resulting in an ordinary income margin of 8.8%. Special gains were ¥2.1B and special losses ¥10.2B (impairment loss ¥1.34B, loss on disposal of fixed assets ¥1.33B, asset retirement obligation fulfillment difference ¥1.86B, etc.), yielding Profit Before Tax of ¥88.6B (+4.5%). Corporate taxes were ¥25.8B (effective tax rate 29.1%), and Net Income attributable to owners of the parent was ¥62.5B (+3.2%), with a net margin of 5.7%. In conclusion, while revenue and operating profit increased, the booking of special losses limited growth in net income relative to operating results.
Overall, high margins in Real Estate and the recovery in Transportation drove consolidated profits, with Logistics and Leisure providing support.
Profitability: Operating margin 8.8% (prior 8.1%, +0.7pt), Net margin 5.7% (prior 5.8%, -0.1pt), ROE 9.4% (calculated from Equity ¥705B and Net Income ¥62.5B; prior year ROE 9.6% with Net Assets ¥632B and Net Income ¥60.6B). Gross profit margin improved to 60.0% (prior 58.9%, +1.1pt), and SG&A ratio declined to 19.3% (prior 19.5%, -0.2pt). Real Estate’s margin of 18.5% underpins consolidated profitability, while the booking of special losses of ¥10.2B pressured Net margin.
Cash Quality: OCF to Net Income ratio was 1.26x (OCF ¥78.7B / Net Income ¥62.5B), indicating reasonable cash backing of accounting profits, but OCF to EBITDA ratio was 0.52x (EBITDA ≈ ¥152.4B = Operating Income ¥97.6B + Depreciation ¥54.9B), reflecting cash pressure from inventory increases.
Investment Efficiency: Total Asset Turnover was 0.576x (Revenue ¥1,102.6B / Total Assets ¥1,915B). Capital expenditure to depreciation ratio was 1.62x (tangible fixed asset acquisitions ¥88.8B / depreciation ¥54.9B), indicating prioritization of growth investment.
Financial Soundness: Equity Ratio 36.8% (prior 34.6%, +2.2pt) strengthened through retained earnings. Interest-bearing debt totaled ¥549.0B (short-term borrowings ¥149.8B + long-term borrowings ¥399.2B), with Debt/EBITDA at 3.60x (¥549B / ¥152.4B), indicating somewhat elevated leverage. Interest coverage ratio was 14.2x (Operating Income ¥97.6B / interest expense ¥6.9B), suggesting sufficient capacity to service interest. Current ratio 82.7% (current assets ¥508.1B / current liabilities ¥614.6B) points to short-term liquidity below 1.0; cash and deposits were ¥47.3B versus short-term borrowings of ¥149.8B, giving cash coverage of 0.32x and requiring careful liquidity management.
Operating Cash Flow was ¥78.7B (prior ¥91.0B, -13.6%). Despite higher Operating Income, increases in working capital constrained cash. Subtotal (OCF before tax adjustments) was ¥106.9B, but inventory increase of ¥59.4B (accumulation of properties for sale), increase in trade receivables ¥3.9B, and increase in trade payables ¥5.4B resulted in net working capital outflow of -¥57.9B. Corporate tax payments were ¥25.6B, interest and dividend receipts ¥3.9B, and interest payments ¥6.5B, resulting in final OCF of ¥78.7B.
Investing Cash Flow was -¥88.6B, mainly due to acquisitions of tangible fixed assets ¥88.8B. Net changes in time deposits resulted in a ¥0.5B increase, and acquisition of investment securities ¥0.1B, reflecting ongoing active investment. Financing Cash Flow was +¥2.6B, with long-term borrowings procured ¥235.2B and repayments ¥249.6B (net -¥14.4B), while net increase in short-term borrowings ¥33.2B turned financing CF slightly positive. Dividend payments totaled ¥16.1B. Free Cash Flow was -¥9.9B (OCF ¥78.7B - Investing CF ¥88.6B), as growth investments exceeded OCF. Cash and deposits decreased by ¥6.9B from ¥54.2B at the beginning of the period to ¥47.3B at the end, reflecting prioritization of investment and dividends. Resolving inventory-driven working capital pressures and improving OCF are key to restoring cash-generating capacity.
Recurring earnings are primarily derived from Operating Income of ¥97.6B, supported by improvements in gross margin and expense control, indicating high sustainability. Of non-operating income ¥6.3B (0.6% of Revenue), dividend income ¥3.8B provides stable returns from investment securities of ¥185.5B; reliance on non-operating income is low and does not raise concerns about recurring earnings quality. However, one-off items—Special Losses of ¥10.2B (impairment loss ¥1.34B, loss on disposal of fixed assets ¥1.33B, asset retirement obligation fulfillment difference ¥1.86B, etc.)—reduced Profit Before Tax by roughly 10%, causing Net Income to fall from Ordinary Income ¥96.7B by ¥30.5B to ¥62.5B. The divergence between Ordinary Income and Net Income is -35.4%, mainly due to special losses and an effective tax rate of 29.1%. From an accrual perspective, OCF to Net Income ratio of 1.26x indicates generally healthy cash backing of accounting profits, but OCF to EBITDA ratio of 0.52x shows cash conversion efficiency has declined due to rising inventories; normalization of timing and turnover of properties for sale should improve earnings quality.
The company plan for FY2027 (full year to March 2027) is Revenue ¥1,120.0B (YoY +1.6%), Operating Income ¥92.0B (-5.7%), and Ordinary Income ¥87.0B (-10.1%), projecting conservative declines. The Operating Income progression shows first-half results of ¥97.6B / full-year plan ¥92.0B, already at 106.1%, but management appears to embed conservative assumptions for the second half. We infer these include the plateauing of recoveries in Transportation and Leisure, cost and interest rate increases, and a smoothing of Real Estate project recognition pace. Dividend is planned at ¥11 per share annually (including a ¥2 interim commemorative dividend for the 20th anniversary), down from ¥18 last year; excluding the commemorative dividend, the effective dividend is ¥9. Forecast EPS is ¥59.75, implying a Payout Ratio of approximately 18.4%, reflecting a conservative stance prioritizing investment and liquidity. Assumptions underlying the forecast are detailed in management disclosures, and actual results may deviate materially due to external conditions.
Annual dividend was ¥18 (interim ¥8 + year-end ¥10), with total cash dividends of ¥16.1B. The Payout Ratio relative to Net Income attributable to owners of the parent (¥62.5B) was 25.7%, conservative. Dividends were funded from current profits; the OCF cover of dividend payments was strong at 4.9x (OCF ¥78.7B / dividend payments ¥16.1B), though Free Cash Flow was -¥9.9B, so dividend payments were financed from a combination of OCF and external funding. Next fiscal year’s dividend plan is ¥11 (including ¥2 interim commemorative), effectively ¥9, set at a conservative level to prioritize investment and liquidity. No share buybacks were conducted (share buyback CF -¥0.0B); shareholder returns are limited to dividends. If inventory turnover normalizes and FCF returns to positive, capacity for dividend increases may emerge.
Short-term liquidity risk: Current ratio 82.7% and Quick ratio 75.2%, both below 1.0; cash of ¥47.3B vs. short-term borrowings ¥149.8B yields cash coverage of 0.32x. Short-term liabilities, including long-term borrowings due within one year ¥260.9B, indicate a concentration of refinancing needs and warrant attention to funding stability. Working capital stands at -¥106.5B, creating a structure of short-term liability excess that assumes smooth periodic refinancing and new funding access.
Inventory and working capital risk: Inventories (including properties for sale) rose to ¥45.7B (prior ¥36.2B, +26.2%), pressuring OCF by ¥59.4B. Inventory increases stem from real estate project progress and timing of recognition, but carry risks of sales delays or valuation losses. OCF to EBITDA ratio of 0.52x reflects weakened cash conversion efficiency; normalization of inventory turnover and management of receivables are key to improving liquidity.
Leverage and interest rate risk: Interest-bearing debt ¥549.0B and Debt/EBITDA 3.60x indicate somewhat elevated leverage. Interest payments of ¥6.9B consume 7.1% of Operating Income; in a rising-rate environment, higher financing costs could compress profits. Current interest coverage of 14.2x indicates adequate capacity, but movements in interest rates and borrowing costs could impact the bottom line.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.8% | 10.7% (6.8%–17.9%) | -1.8pt |
| Net Margin | 1.5% | 5.8% (2.5%–11.9%) | -4.3pt |
Operating margin is 1.8pt below the industry median, and Net margin is 4.3pt below. While the Real Estate segment’s standalone margin of 18.5% is high, low-margin Transportation and Logistics businesses drag down consolidated averages, and special losses contributed to Net margin underperformance relative to industry medians.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.2% | 12.8% (4.2%–29.2%) | -6.6pt |
Revenue growth trails the industry median by 6.6pt, placing the company in the lower-middle range within the sector. The regionally focused business model results in more moderate growth compared with national-scale real estate firms, but offers higher stability.
Source: Company compilation
The core Real Estate segment maintains high profitability with an Operating margin of 18.5%, generating roughly 70% of consolidated Operating Income. The Transportation segment’s Operating Income recovered from ¥5.2B to ¥12.4B (+139.6%), confirming structural improvement due to demand recovery and cost efficiency. Consolidated Operating margin improved to 8.8% (prior 8.1%), and Gross profit margin rose to 60.0% (prior 58.9%) (+1.1pt), indicating ongoing uplift in profitability.
OCF was ¥78.7B, 1.26x Net Income ¥62.5B, showing cash backing of accounting profits, but the OCF to EBITDA ratio of 0.52x and inventory increase of ¥59.4B are constraining cash conversion. Free Cash Flow was -¥9.9B in an investment-prioritized phase, and with a current ratio of 82.7% and cash/short-term debt of 0.32x, short-term liquidity remains a concern. Inventory accumulation (including properties for sale) likely reflects project progress and may be temporary, but sales recognition progress and normalization of working capital are key to improving cash generation next year.
Company guidance is conservative with Operating Income ¥92.0B (-5.7%) and Ordinary Income ¥87.0B (-10.1%), embedding assumptions of a plateau in Transportation and Leisure recoveries and cost/interest headwinds. However, first-half results already exceed the full-year plan, so absence of second-half downside could prompt upward revisions. Investments in investment securities increased to ¥185.5B (+31.5%), supporting comprehensive income and forming a stable cushion of unrealized assets.
This report is an earnings analysis automatically generated by AI using XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary.