JINUSHI Co.,Ltd. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥43.43B
• Operating Income: ¥4.29B
• Net Income: ¥4.86B
• EPS: ¥134.03

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 Integrated Analysis

Analysis integrating XBRL data (GPT-5) and PDF earnings presentation (Claude)

Executive Summary

地主株式会社 (32520) reported FY2025 Q3 consolidated results under JGAAP showing clear earnings pressure alongside a still-solid balance sheet. Revenue was ¥43.4bn, down 9.3% YoY, indicating a weaker top line likely driven by softer transaction volumes or price pressure in its core businesses. Gross profit was ¥10.68bn, yielding a gross margin of 24.6%, which is respectable but suggests some compression versus a typical mid-to-high 20s level for asset/land-related revenues when conditions tighten. Operating income declined sharply to ¥4.29bn (-40.5% YoY), implying significant margin compression at the operating level due to either lower gross margin, higher SG&A, or both. Ordinary income of ¥3.12bn sits notably below operating income, implying net non-operating losses (approximately ¥1.17bn), with ¥465m of interest expense a clear headwind and likely other non-operating costs. Net income of ¥2.76bn fell 43.1% YoY, resulting in a net margin of 6.36%. DuPont analysis shows ROE of 5.85%, driven by a 6.36% net margin, asset turnover of 0.281x, and financial leverage of 3.27x; the drop in profitability is the main drag on ROE rather than leverage or asset utilization. Asset turnover of 0.281x reflects the asset-intensive nature of the business and likely subdued transaction activity this period. The balance sheet remains sizable with total assets of ¥154.7bn and total liabilities of ¥70.6bn; implied equity is ¥47.3bn, suggesting an equity ratio around the low-30% range based on reported assets and equity, even though the disclosed equity ratio figure is not available. Liquidity appears strong with current assets of ¥95.4bn versus current liabilities of ¥7.79bn, yielding a current ratio of roughly 12.3x and working capital of ¥87.6bn. Interest coverage remains adequate at 9.2x (operating income to interest expense), though the decline in operating income reduces headroom compared to prior periods. Cash flow statements were not disclosed in this dataset, limiting assessment of cash conversion and free cash flow. Depreciation and amortization were also not disclosed, limiting EBITDA interpretation; therefore, the EBITDA margin presented as 0.0% should be treated as not available rather than zero. The absence of dividend data in this dataset suggests dividends were not disclosed here; EPS is ¥134.03, but share count and book value per share are not available in this extract. Overall, earnings softness is the central theme, with operating deleverage and non-operating costs compressing profitability, while liquidity and solvency remain comfortable.

From Earnings Presentation: Jinushi Co., Ltd.'s Q3 FY2025/12 results showed revenue of 43.4 billion yen (-9.3% YoY) and net income of 2.7 billion yen (-43.1% YoY), representing decreased revenue and profit. However, the company revised its full-year forecast upward, targeting a record-high net income of 7.1 billion yen (+1.0 billion yen vs. initial forecast). Property acquisitions accelerated to 86.7 billion yen (+92.2% YoY) in Q1-Q3, exceeding the initial target of 70.0 billion yen, with full-year acquisitions expected to surpass 100.0 billion yen. The company plans to record profits primarily in Q4, implementing asset replacement and sales project reviews. Jinushi REIT decided on its 10th capital increase, expanding asset size to 291.1 billion yen in January 2026, ensuring achievement of the mid-term plan target of 300.0 billion yen during 2026. Dividends will increase to 110 yen (+10 yen), continuing progressive dividend policy. The company announced fund formation with Mitsubishi HC Capital Realty, realizing enhanced acquisition capacity and diversified sales channels. Since the company name change three years ago, acquisitions have grown 2.9x and net income 1.9x, with the mid-term plan target of 7.0 billion yen net income expected to be achieved one year ahead of schedule.

Financial Analysis

Profitability

ROE_decomposition: ROE 5.85% = Net margin 6.36% × Asset turnover 0.281 × Financial leverage 3.27. The decline in net income (-43.1% YoY) and operating income (-40.5% YoY) indicates the net margin component is the principal source of ROE pressure this period. margin_quality: Gross margin at 24.6% is acceptable but suggests pressure versus stronger markets; operating margin implied at 9.9% (¥4.293bn/¥43.428bn) shows significant contraction, pointing to operating deleverage and/or higher SG&A. Ordinary income below operating income indicates additional non-operating burdens, including ¥465m interest expense and other items. operating_leverage: Revenue declined 9.3% YoY while operating income fell 40.5% YoY, indicating high operating leverage and fixed-cost rigidity. This magnifies earnings volatility and underscores sensitivity to top-line fluctuations.

Growth

revenue_sustainability: Revenue of ¥43.4bn (-9.3% YoY) suggests softer demand or fewer/lower-value transactions. Asset turnover at 0.281x indicates slower asset cycling. Sustainability depends on recovery in transaction volumes and pricing in the company’s end-markets. profit_quality: Operating income down 40.5% YoY and ordinary income below operating income point to weaker core profitability and higher non-operating drag. Net margin at 6.36% is compressed versus historical levels indicated by the YoY declines. outlook: Near-term recovery requires stabilization of volumes and improved cost discipline. With interest expense of ¥465m and non-operating losses, profit recovery will benefit from cost control and financing efficiency. Absent disclosure on backlog or segment mix, visibility is limited.

Financial Health

liquidity: Current assets ¥95.4bn vs. current liabilities ¥7.79bn yield a current ratio of roughly 12.25x and quick ratio similar given inventories are not disclosed. Working capital stands at ¥87.64bn, indicating strong short-term liquidity. solvency: Total liabilities ¥70.62bn vs. total equity ¥47.28bn implies a debt-to-equity of 1.49x. Based on total assets ¥154.69bn and equity ¥47.28bn, implied equity ratio is approximately 30.6%, indicating a moderate leverage profile. capital_structure: Financial leverage (assets/equity) is 3.27x. Interest coverage is 9.2x (operating income ¥4.293bn / interest ¥0.465bn), adequate but decreased alongside operating income, reducing cushion if earnings weaken further.

Cash Flow

earnings_quality: Operating cash flow was not disclosed in this dataset, so OCF/Net Income shown as 0.00 should be treated as not available. Without OCF and D&A, we cannot triangulate accrual intensity or cash conversion. FCF_analysis: Free cash flow not disclosed. Capex and investment cash flows are unavailable, preventing assessment of reinvestment needs or FCF sustainability. working_capital: Reported working capital is ¥87.64bn. Detailed components (receivables, payables, inventories) are not available, limiting analysis of collection cycles and potential cash release/absorption.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio are not disclosed in this dataset (zeros indicate non-disclosure). EPS is ¥134.03, but without DPS we cannot compute payout from the provided data. FCF_coverage: Not assessable due to lack of OCF/FCF disclosure. Coverage metrics presented as 0.00x should be treated as not available. policy_outlook: Given earnings compression and non-operating burdens, dividend flexibility would depend on internal policy and actual cash generation; absent cash flow and policy disclosure here, visibility is limited.

Business Outlook

For FY2025/12, the company plans to record profits primarily in Q4, with all sales projects confirmed, ensuring high confidence in achieving revised forecast. The mid-term plan (FY2026/12) target of 7.0 billion yen net income is expected to be achieved one year ahead of schedule. Jinushi REIT asset size of 300.0 billion yen is certain to be achieved during 2026, with early target of 500.0 billion yen. Against the backdrop of accelerating acquisitions (full-year exceeding 100.0 billion yen), the company is realizing dual growth in flow revenue (sales gains) and stock revenue (asset management fees). Despite rising interest rates, Jinushi REIT secured demand exceeding募集総額, with strengthened fundraising capability centered on pension funds and corporations. The leasehold land market is projected to expand from approximately 6 trillion yen in 2023 to approximately 10 trillion yen in 2026 (Japan Real Estate Institute survey), and the company is enjoying first-mover advantage as a top runner in market creation. Three growth strategies since company name change (January 2022) - tenant industry diversification, business area expansion, and land sale & leaseback proposals - have been successful, achieving 2.9x growth in acquisitions and 1.9x growth in net income.

Management Guidance

Management has clearly stated their emphasis on "sustainable growth in net income," with a policy of conservative sales project selection that avoids profit declines when formulating forecasts. This fiscal year, the company implemented asset replacement (recording 1,587 million yen extraordinary gain from fixed asset sales) and sales project reviews, deciding on upward revision to 7.1 billion yen net income. Dividends will continue progressive dividend policy, aiming for increases along with profit growth. In the medium term, the company is executing capital allocation conscious of balance between growth investment and shareholder returns through strengthened financial foundation anticipating acquisition acceleration (completed approximately 8.2 billion yen public offering in July 2024). Aiming to maintain ROE of approximately 13% (mid-term plan target) while adhering to financial discipline of equity ratio above 30%. Under management philosophy of becoming "Japan's major landowner" through Jinushi REIT growth, the company has clarified its stance to continue leading leasehold land market expansion. Emphasizing track record of exceeding initial forecasts for five consecutive years (average +12.4%), appealing high plan achievement capability.

Strategic Initiatives

• Jinushi Fund formation: basic agreement with Mitsubishi HC Capital Realty for medium to long-term leasehold land operations (targeting 100.0 billion yen scale in 2 years), granting priority negotiation rights to Jinushi REIT for fund assets, contributing to growth
• Bridge scheme expansion: established comprehensive purchase framework of 60.0 billion yen with two leasing companies, with high sales ratio to Jinushi REIT of 67.3%, acquiring stock revenue without using balance sheet, contributing to high ROE management
• Strengthening land sale & leaseback proposals: targeting potential market of 45 trillion yen in land holdings by listed companies (retail 19 trillion yen, manufacturing etc. 26 trillion yen), with business opportunities significantly expanding on tailwinds from TSE reform and investor demands, track record of 33 projects totaling 92.4 billion yen
• Capital alliance with Couklev Advisors: accelerating acquisitions through CRE domain expertise and joint development of AI-powered real estate tech system, utilizing information linkage of 35,000 land properties and 600 monthly updates
• Business area expansion: opened Kyushu branch (December 2022), accumulated track record with cumulative U.S. investment of 8.8 billion yen (sold 3.5 billion yen), nationwide expansion centered on population concentration areas
• Tenant industry diversification: expanded to social infrastructure including hospices and nursing homes, and business real estate including factories and logistics, growing tenant count to 162 companies (1.7x in past 4 years)
• Jinushi Club (for retail investors): investment from 100,000 yen, expanding investor base with expected yields of 3.0-7.0% and investment periods of 9 months to 13 years 7 months, cumulative investment of 1.2 billion yen through 7th project
• ESG promotion: continuing carbon neutrality (Scope 1 & 2), achieved 100% incorporation rate of ESG clauses in fixed-term land lease contracts with tenants, introduced 68 solar power generation projects, 46 EV charging stations, and 26 greening projects

Risk Assessment

Business Risks:

• Revenue volatility due to market cycles affecting transaction volumes and pricing
• High operating leverage amplifying profit swings on modest revenue changes
• Potential project timing risks influencing quarterly revenue recognition
• Margin pressure from cost inflation and competitive dynamics

Financial Risks:

• Interest rate and refinancing risk given interest expense of ¥465m
• Non-operating losses reducing ordinary income below operating income
• Dependence on asset recycling; slower asset turnover (0.281x) can weigh on returns
• Limited visibility into cash generation due to undisclosed cash flow statements

Key Concerns:

• Sharp YoY decline in operating income (-40.5%) and net income (-43.1%)
• Compression in net margin to 6.36% with ordinary income lagging operating income
• Absence of cash flow and D&A disclosure constraining assessment of earnings quality and FCF

Risk Factors from Presentation:

• Risk of rising funding costs and spread compression due to interest rate increases (countermeasure: cost control through long-term and variable borrowing, low-risk operation with LTV of 33%)
• Risk of downward asset valuation revisions due to real estate market fluctuations (CAP rate increases)
• Risk of tenant departure and rent reduction (track record: only 2 departures and 1 rent reduction, extremely minimal)
• Profit volatility due to sales dependence (countermeasure: expanding stock revenue to cover 75% of SG&A expenses, targeting 100% in future)
• Risk of revenue decline due to project formation delays (securing over 600 monthly land information through diverse acquisition methods)
• Risk of temporary leverage increase during large-scale investments (financial discipline: equity ratio above 30%, healthy net D/E of 0.87x)

Investment Implications

Key Takeaways:

• Top-line declined 9.3% YoY to ¥43.4bn amid softer operating conditions
• Operating deleverage significant: operating income down 40.5% YoY to ¥4.29bn
• Ordinary income of ¥3.12bn reflects non-operating drag including ¥465m interest
• ROE at 5.85% primarily pressured by lower net margin; leverage and asset turnover stable
• Liquidity strong: current ratio ~12.25x and working capital ¥87.64bn
• Moderate leverage: liabilities/equity 1.49x; interest coverage 9.2x remains adequate
• Cash flow, D&A, and dividend details not disclosed in this dataset, limiting valuation and payout analysis

Metrics to Watch:

• Revenue trajectory and backlog/contract pipeline to gauge recovery potential
• Operating margin and SG&A ratio trends to assess cost control
• Ordinary income vs. operating income gap to monitor non-operating impacts
• Interest coverage and effective financing costs amid rate environment
• Asset turnover improvements via asset recycling or sales execution
• Disclosure of OCF/FCF and capex to evaluate cash conversion and dividend capacity

Relative Positioning: The company exhibits weaker profitability this period versus a typical stable environment due to operating deleverage, but maintains robust liquidity and moderate leverage; its return profile (ROE 5.85%) is constrained by margin compression relative to asset intensity.

Supplementary Insights (Key Highlights)

• Full-year forecast revised upward: net income of 7.1 billion yen (initial forecast 6.1 billion yen → revised 7.1 billion yen, +16.4% YoY), achieving record-high profit
• Annual dividend increased to 110 yen (initial forecast 100 yen → revised 110 yen, +25 yen YoY), including 10 yen commemorative dividend for 25th anniversary
• Property acquisitions accelerated significantly to 86.7 billion yen in Q1-Q3 (+92.2% YoY), with full-year expectations exceeding 100.0 billion yen
• Jinushi REIT's 10th capital increase (January 2026) expands asset size to 291.1 billion yen, achieving 10 consecutive years of capital increases
• Fund formation with Mitsubishi HC Capital Realty (targeting 100.0 billion yen in assets), realizing bridge scheme and diversified sales channels
• Accelerating land sale & leaseback proposals: 45 trillion yen potential market among listed companies, tailwinds from TSE reform and investor demands
• Capital alliance with Couklev Advisors, accelerating acquisitions through CRE domain expansion and AI utilization
• Litigation settlement with BALM (formerly BIG MOTOR), recording 900 million yen extraordinary gain (Q4)
• Tenant count expanded to 162 companies (1.7x in past 4 years), advancing industry diversification and area expansion
• Porter Prize winner (FY2023), recognized for unique business model and high profitability

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