The Global Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥7.62B
• Operating Income: ¥440M
• Net Income: ¥684M
• EPS: ¥7.95

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

THE GLOBAL CO., LTD. reported FY2026 Q1 consolidated results under JGAAP showing a topline contraction and pronounced operating deleverage, typical of a real estate developer in a softer sales quarter. Revenue was ¥7.624bn, down 19.3% YoY, while operating income fell 52.3% YoY to ¥0.44bn, indicating cost absorption and weaker fixed-cost coverage. Gross profit was ¥2.055bn, implying a healthy gross margin of 27.0%, but operating margin compressed to roughly 5.8% as SG&A intensity remained high at about 21% of sales. Ordinary income declined to ¥0.108bn, well below operating income, reflecting sizable non-operating costs including ¥0.163bn of interest expense and additional non-operating losses. Net income was ¥0.225bn (down 67.1% YoY), which exceeded ordinary income, implying recognition of approximately ¥0.28bn of extraordinary gains in the quarter. DuPont metrics show net margin of 2.95%, asset turnover of 0.199x, and financial leverage of 3.85x, leading to a calculated ROE of 2.26% for the period; however, quarterly ROE is sensitive to seasonality and balance sheet timing. The interest coverage ratio sits at 2.7x (operating income/interest expense), adequate but not comfortable for a developer with meaningful leverage. Balance sheet totals indicate total assets of ¥38.336bn and total equity of ¥9.946bn, implying an equity ratio of roughly 25.9% despite the reported 0.0% figure likely being an undisclosed placeholder. Current ratio is 194%, and working capital is ¥19.227bn, suggesting near-term liquidity is acceptable. Debt-to-equity is 2.98x, consistent with an asset-heavy, inventory-financed business model. Cash flow statements are undisclosed for the quarter (zeros indicate unreported), limiting assessment of operating cash conversion and free cash flow. No dividend was reported for the period (DPS ¥0; payout 0%), aligning with a cautious capital allocation stance amid earnings volatility. Overall, the quarter reflects weaker revenue, compressed operating profitability, heavier non-operating drag, and reliance on extraordinary gains to support bottom-line profitability. Key data gaps (cash flows, inventories, share count) constrain depth of analysis; conclusions focus on disclosed non-zero figures and derived ratios from available totals.

Profitability Analysis

ROE decomposition (DuPont) for the quarter: Net margin 2.95% × Asset turnover 0.199 × Leverage 3.85 = ROE 2.26%. Net margin of 2.95% reflects low bottom-line profitability for the quarter, pressured by non-operating expenses and partly offset by extraordinary gains. Asset turnover at 0.199x is low, which is common in real estate development given significant work-in-process and land bank versus quarterly revenue recognition; seasonality likely depresses this metric in Q1. Financial leverage at 3.85x (Assets/Equity) amplifies returns but also increases sensitivity to earnings volatility and funding costs. Gross margin was 27.0%, indicating decent project-level economics; however, operating margin of roughly 5.8% shows SG&A at ~21% of sales (¥1.615bn), pointing to operating deleverage as revenue declined 19.3% YoY. The sharp YoY fall in operating income (-52.3%) versus revenue (-19.3%) evidences high fixed-cost absorption and potentially less favorable revenue mix or timing of completions. Ordinary income of ¥0.108bn versus operating income of ¥0.44bn highlights a material non-operating burden (interest expense ¥0.163bn plus other non-operating losses), reducing recurring profitability. Net income of ¥0.225bn exceeded ordinary income due to estimated extraordinary gains of ~¥0.28bn; thus, bottom-line quality appears reliant on non-recurring items this quarter. Interest coverage of 2.7x is modest; while covered, rising interest costs or further operating weakness would pressure profitability. Overall profitability quality is mixed: healthy gross margin but thin operating margin, material non-operating drag, and reliance on extraordinary items.

Growth Assessment

Revenue declined 19.3% YoY to ¥7.624bn, indicating a slower sales recognition quarter, likely tied to project timing and handover schedules typical in the developer model. Operating income fell 52.3% YoY to ¥0.44bn, underscoring operating deleverage as fixed costs weighed on lower revenue. Net income declined 67.1% YoY to ¥0.225bn; the magnitude of decline and the reliance on extraordinary gains suggest weaker underlying growth momentum in core operations for the quarter. The 27.0% gross margin implies that project margins remain intact, but the cost base scaling and non-operating burden overshadowed this. Sustainability of growth will depend on the pipeline of project completions, contract backlogs, and sales velocity; these data are not disclosed here. Without cash flow or inventory details, visibility on land bank turnover and future revenue recognition is limited. Near-term outlook is cautious given lower ordinary income and interest headwinds; any recovery would likely hinge on the timing of large handovers and cost control. Given the low asset turnover in the period (0.199x), stronger revenue conversion later in the year would be needed to support full-year growth.

Financial Health

Assets total ¥38.336bn and equity ¥9.946bn, implying an equity ratio of ~25.9% (reported 0.0% appears undisclosed). Total liabilities are ¥29.617bn, producing a debt-to-equity ratio of 2.98x, high but typical for developers relying on project financing. Current assets are ¥39.627bn versus current liabilities ¥20.400bn, yielding a current ratio of 194% and working capital of ¥19.227bn, which indicates ample short-term liquidity on reported figures. The quick ratio is shown as 194%, but inventories are undisclosed (0 placeholder); for a developer, inventories are usually significant, so the economic quick ratio is likely lower than reported. Interest expense is ¥0.163bn in the quarter, and interest coverage is 2.7x based on operating income, acceptable but offering limited cushion if profitability weakens. The leverage profile combined with modest ordinary income suggests sensitivity to financing costs and refinancing conditions. Overall solvency appears adequate given equity of ~26% of assets, but liquidity quality cannot be fully assessed without cash and inventory details.

Cash Flow Quality

Cash flow statements are undisclosed this quarter (OCF/NCF/FCF reported as 0 placeholders), so we cannot assess cash conversion from earnings. Given net income of ¥0.225bn and operating income of ¥0.44bn, evaluating accrual intensity, working capital swings, and FCF is not possible from the provided data. For a developer, OCF can be lumpy and negative during land acquisition and construction phases, then turn positive on handover; that cycle cannot be evaluated here. Depreciation and amortization are undisclosed, so EBITDA metrics are not meaningful this quarter. Working capital is positive at ¥19.227bn on reported figures, but with inventories undisclosed, the composition and liquidity of current assets are unclear. In sum, earnings quality cannot be validated via cash flow this quarter; conclusions should be revisited when cash flow statements and inventory data are available.

Dividend Sustainability

DPS is reported as ¥0 with a payout ratio of 0%. With FCF undisclosed, coverage cannot be assessed; the reported FCF coverage of 0.00x is a placeholder and not indicative of actual coverage. Given modest ordinary income and leverage, a conservative dividend stance is consistent with preserving liquidity for project funding. Future dividend capacity will depend on stabilization of ordinary income, interest cost management, and realized operating cash flows tied to project completions. No policy details are provided; absent guidance, we assume prudence in capital allocation until earnings and cash flow visibility improve.

Risk Assessment

Business Risks:

• Project timing and handover risk leading to revenue and earnings volatility
• Market demand fluctuations in residential/real estate segments affecting sell-through and margins
• Cost inflation in construction and materials compressing gross margins
• Competitive pressure in target geographies and segments
• Regulatory and zoning approval delays impacting project pipelines
• Concentration risk if revenue depends on a limited number of large projects

Financial Risks:

• Leverage at 2.98x D/E and equity ratio ~26% amplifies earnings volatility
• Interest rate and refinancing risk with interest coverage at 2.7x
• Cash flow timing risk inherent to development cycle; lack of disclosed OCF/FCF
• Potential covenant constraints if profitability weakens
• Liquidity assessment uncertainty due to undisclosed cash and inventories

Key Concerns:

• Operating deleverage with operating income down 52.3% YoY on a 19.3% revenue decline
• Non-operating drag reduces ordinary income; reliance on extraordinary gains to support net income
• Incomplete disclosures (cash flows, inventories) hinder assessment of cash conversion and liquidity quality
• Sensitivity to interest costs given leverage and moderate coverage

Investment Implications

Key Takeaways:

• Revenue contracted 19.3% YoY to ¥7.624bn with pronounced operating deleverage; operating margin ~5.8%
• Ordinary income of ¥0.108bn was depressed by interest and other non-operating losses; net income aided by ~¥0.28bn extraordinary gains
• Gross margin remains solid at 27.0%, but SG&A intensity (~21% of sales) pressured operating profitability
• Leverage is meaningful (D/E 2.98x; equity ratio ~26%), with interest coverage at 2.7x
• Liquidity appears adequate on reported current ratio (194%), but cash and inventories are undisclosed
• Data gaps (OCF, FCF, inventories, share count) limit clarity on earnings quality and per-share metrics

Metrics to Watch:

• Contracted sales/backlog and scheduled handovers for the remainder of FY2026
• Ordinary income trajectory versus interest expense; interest coverage trend
• SG&A control and operating margin recovery relative to gross margin
• Inventory levels, land bank turnover, and cash collections (when disclosed)
• Equity ratio and D/E trend as projects progress and profits are retained

Relative Positioning: Within Japan’s mid-sized real estate developers, THE Global shows respectable gross margins but weaker ordinary income due to financing and non-operating costs; leverage and limited coverage place it toward the more financially geared segment, making earnings more sensitive to project timing and interest rates.

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