URBANET CORPORATION CO.,LTD. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥14.23B
• Operating Income: ¥2.65B
• Net Income: ¥-200M
• EPS: ¥46.23

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

Urbanet Corporation (TSE: 32420) posted an exceptionally strong topline in FY2026 Q1 with revenue of ¥14.234bn, up 697.1% YoY, highlighting the inherent lumpiness of real estate project recognition under JGAAP. Despite the revenue surge, operating income rose only 4.1% YoY to ¥2.647bn and net income rose 2.7% YoY to ¥1.653bn, implying that current-quarter earnings strength is likely driven by non-recurring or non-core operating items rather than core gross profit expansion. The reported gross profit is ¥514m, implying a low gross margin of 3.6%, which contrasts with the operating margin of 18.6% (operating income/revenue) and suggests significant other operating income or unusual items within operating results. Ordinary income of ¥2.420bn is below operating income, consistent with the ¥91.6m interest expense and other non-operating costs. The tax line shows a tax benefit (income tax of -¥62m), effectively bringing the reported effective tax rate to 0.0% in the provided metrics, though the actual implied rate is negative for the quarter. DuPont analysis indicates ROE of 8.51%, decomposed into an 11.61% net margin, 0.223x asset turnover, and 3.29x financial leverage, signaling that current ROE is supported more by leverage and margin than by asset utilization. The balance sheet shows total assets of ¥63.838bn, liabilities of ¥44.975bn, and equity of ¥19.432bn, implying an equity ratio around 30.4% (calculated), even though the disclosed equity ratio field is unreported (0.0%). Liquidity appears strong on headline metrics, with current assets of ¥53.748bn versus current liabilities of ¥14.670bn, yielding a current ratio of 366% and working capital of ¥39.077bn; however, inventory and cash balance details were not disclosed in the XBRL mapping, limiting visibility into liquid resources versus real estate inventories. Interest coverage is robust at 28.9x (operating income/interest expense), reducing near-term refinancing risk. Cash flow statements were not disclosed (all zeros), so operating cash conversion and free cash flow cannot be assessed this quarter. Dividend information is also not disclosed (DPS and payout ratio reported as zero placeholders), preventing an evaluation of near-term shareholder return policy from the provided data alone. Overall, the quarter underscores substantial revenue recognition but with low reported gross margin and unusually high operating income relative to gross profit, pointing to potential one-off gains or reclassifications within operating results under JGAAP. Given the project-based nature of the business, earnings remain inherently volatile; clarity on the composition of operating income and the pipeline (backlog/land bank) will be critical to assess sustainability. Balance sheet leverage (D/E 2.31x) is meaningful but appears manageable given the strong current ratio and coverage. The absence of cash flow disclosure is a key limitation to assessing earnings quality and dividend capacity. Investors should monitor whether the net margin and ROE are repeatable as project mix and recognition normalize over the fiscal year.

Profitability Analysis

ROE_decomposition: Reported ROE is 8.51%, driven by net profit margin of 11.61%, asset turnover of 0.223x, and financial leverage of 3.29x. This mix indicates ROE is more leverage- and margin-driven than utilization-driven this quarter. margin_quality: Gross margin is low at 3.6% (gross profit ¥514m on revenue ¥14.234bn) while operating margin is 18.6% (operating income ¥2.647bn). The wide gap suggests material other operating income or one-off items within operating results. Net margin stands at 11.61%. The negative tax expense (¥-62m) further inflates net margin for the quarter. operating_leverage: Despite revenue +697.1% YoY, operating income rose only +4.1% YoY, implying weak incremental margins on the recognized sales and/or a high prior-year base from one-offs. This indicates limited positive operating leverage on a YoY basis and points to unusual items or mix effects overshadowing core margin dynamics.

Growth Assessment

revenue_sustainability: The 697.1% YoY revenue growth is unlikely to be sustainable and likely reflects timing of project handovers/recognition typical in real estate development. Visibility into contracted backlog and the land bank is needed to gauge forward revenue. profit_quality: The disparity between gross margin (3.6%) and operating margin (18.6%) suggests non-recurring operating gains or reclassifications. Negative taxes also boost net income. Absent cash flow disclosure, earnings quality cannot be corroborated. outlook: Short-term performance looks strong on an operating basis with interest coverage at 28.9x and ROE at 8.51%. However, sustainability hinges on the project pipeline, normalization of margins, and the absence of one-off operating gains. Monitor subsequent quarters for margin reversion and revenue cadence.

Financial Health

liquidity: Current assets ¥53.748bn vs current liabilities ¥14.670bn yield a current ratio of 3.66x and working capital of ¥39.077bn. Quick ratio equals the current ratio in the provided dataset due to inventory being unreported. Cash & equivalents were not disclosed, limiting assessment of immediate liquidity. solvency: Total liabilities ¥44.975bn and equity ¥19.432bn imply a debt-to-equity ratio of 2.31x. Calculated equity ratio is approximately 30.4% (¥19.432bn/¥63.838bn). Interest coverage is strong at 28.9x, indicating manageable near-term debt service. capital_structure: Leverage is meaningful but balanced by ample current assets and strong coverage. The structure likely includes sizable interest-bearing debt typically used to finance inventory (projects), but inventory and interest-bearing debt breakdowns are not disclosed in the provided data.

Cash Flow Quality

earnings_quality: Operating cash flow, investing cash flow, and financing cash flow were not disclosed (reported as zeros). As such, we cannot validate earnings with cash conversion or assess working capital release/absorption this quarter. FCF_analysis: Free cash flow cannot be calculated given OCF and capex are unreported. The reported OCF/Net Income ratio of 0.00 reflects missing data, not cash earnings quality. working_capital: Working capital is ¥39.077bn, driven by large current assets. Given the business model, a significant portion is likely real estate for sale/under development, but inventories are unreported in the mapping. Monitoring advances received, accounts receivable, and inventory turnover would be key once disclosed.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are shown as zero due to non-disclosure; therefore, a payout ratio cannot be assessed from the provided data. EPS is ¥46.23 for the quarter. FCF_coverage: FCF coverage of dividends cannot be evaluated because OCF and capex are unreported. policy_outlook: Without disclosed dividend policy or historical DPS in this dataset, we cannot infer distribution stance. Sustainability would depend on recurring free cash flow and leverage trajectory; further disclosures are needed.

Risk Assessment

Business Risks:

• Project timing and recognition risk leading to volatile quarterly revenue and earnings
• Margin risk from construction cost inflation and sales price competition
• Land acquisition and pipeline risk in the Tokyo metropolitan market
• Concentration risk if projects are focused in limited geographies or segments
• Regulatory and zoning changes affecting development timelines
• Sales cycle and demand sensitivity to macro conditions and mortgage rates

Financial Risks:

• Leverage at 2.31x D/E heightens sensitivity to asset value and sales timing
• Refinancing and interest rate risk despite current 28.9x interest coverage
• Liquidity composition risk if current assets are predominantly inventories rather than cash
• Earnings quality risk due to reliance on non-recurring operating items
• Tax volatility given the negative tax expense this quarter

Key Concerns:

• Large gap between gross margin (3.6%) and operating margin (18.6%), implying potential one-offs
• Absence of cash flow disclosures, limiting assessment of earnings-to-cash conversion
• Unreported inventories and cash balances, which are critical for a developer’s liquidity profile

Investment Implications

Key Takeaways:

• Revenue surged to ¥14.234bn (+697.1% YoY), but operating income growth was modest (+4.1% YoY), signaling mix/timing effects
• Gross margin of 3.6% vs operating margin of 18.6% suggests material other operating income or unusual items
• ROE of 8.51% is supported by leverage (3.29x) and margin (11.61%) rather than asset turnover (0.223x)
• Balance sheet shows calculated equity ratio around 30.4% and D/E of 2.31x; interest coverage robust at 28.9x
• Cash flow data not disclosed; dividend data not disclosed, constraining visibility on cash generation and payouts

Metrics to Watch:

• Composition of operating income (recurring vs one-off gains)
• Gross margin normalization and SG&A trend
• Backlog/contracted sales and land bank to assess revenue sustainability
• Inventory levels and turnover; advances received and accounts receivable
• Operating cash flow and free cash flow; interest-bearing debt and average funding cost
• Equity ratio and net debt trajectory; ROE components (margin, turnover, leverage)

Relative Positioning: Within Japanese small- to mid-cap real estate developers, the company exhibits high revenue volatility, moderate leverage, and currently strong interest coverage; earnings appear more susceptible to project timing and potential one-off items than peers with steadier leasing income.

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