Hoosiers Holdings Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

In 2027 Fiscal Year Q1, Revenue increased substantially by +49.5% year on year, and the Company returned to operating profitability; however, Ordinary Income and below remained in the red due to the heavy interest burden. Revenue was ¥145.2B (¥97.1B in the same period of the previous year, +49.5%), Operating Income was ¥2.3B (¥-8.1B in the previous year), Ordinary Income was ¥-3.8B (¥-12.2B in the previous year, +69.0%), and Net Income was ¥-2.9B (¥-11.7B in the previous year, +75.6%). The primary driver of the Revenue increase was progress in deliveries in the condominium-focused Condominium Business. Gross profit margin also improved to 26.4% (25.9% in the previous year); however, interest expenses of ¥5.8B exceeded Operating Income, resulting in continued losses at the Ordinary Income level.

Factors Affecting Performance

【Revenue】Revenue increased to ¥145.2B, up +49.5% year on year. By segment, Condominium increased sharply to ¥84.1B (+209.9%), leading overall Revenue growth, with its share of total Revenue reaching 57.9%. Meanwhile, Asset Management was ¥38.2B (-20.1%), and Property Management was ¥25.3B (-0.5%), indicating roughly flat performance or declines, resulting in increased dependence on the condominium business.

【Profit and Loss】Operating Income was ¥2.3B, representing a return to profitability from ¥-8.1B in the previous year. However, interest expenses of ¥5.8B among non-operating expenses weighed heavily, resulting in Ordinary Income of ¥-3.8B and Net Income of ¥-2.9B, with losses continuing. The Operating Income margin of 1.6% remained low but improved from the negative level in the previous year, indicating a structure of higher Revenue and Operating Income; however, the final profit remained negative due to the interest burden.

Segment Analysis

In terms of segment profit, Property Management and Related Services was the most stable source of earnings, at ¥1.9B (+98.9%), with a margin of 7.4%. Asset Management declined sharply to ¥2.1B (-79.8%), indicating reduced earnings capacity in the asset management business. Condominium, which accounts for the core Revenue, posted an operating loss of ¥-2.2B (loss narrowed by +88.7% year on year); losses continued despite higher Revenue, highlighting the high earnings volatility of the condominium-based business. Service businesses have higher profit margins, while the condominium business has limited profit contribution relative to its Revenue scale.

Key Financial Indicators

【Profitability】The Operating Income margin improved substantially to 1.6% (‑8.3% in the previous year), while the Net Income margin improved to -2.1% (-12.1% in the previous year), although both remained at low levels. ROE remained negative at -0.5%. 【Cash Flow Quality】Interest expenses of ¥5.8B among non-operating expenses exceeded Operating Income of ¥2.3B, creating a structure that pressures Ordinary Income; earnings quality is therefore highly dependent on the interest rate environment. 【Investment Efficiency】Against total assets of ¥1,948.0B, Operating Income was ¥2.3B, indicating low asset efficiency, with low asset turnover serving as a constraint on margin improvement. 【Financial Soundness】The Equity Ratio declined slightly to 27.4% (29.2% in the previous year), and the Company remains highly dependent on interest-bearing debt, centered on long-term borrowings of ¥785.0B. Cash and deposits of ¥343.0B provide a certain degree of coverage for current liabilities of ¥553.5B, indicating some flexibility in short-term liquidity management.

Cash Flow Analysis

Although direct data from the statement of cash flows has not been provided, funding trends can be inferred from changes in the balance sheet. Cash and deposits were ¥343.0B, down from approximately ¥374.8B in the previous year. Meanwhile, real estate under development increased to ¥993.0B from ¥840.2B in the previous year, while completed inventory (Real Estate for Sale) decreased to ¥354.2B from ¥410.1B in the previous year. Accounts payable contracted substantially to ¥11.0B from ¥59.2B in the previous year, indicating cash outflows on the payment side. Advances received increased to ¥84.5B from ¥71.9B in the previous year, providing a certain level of upfront funds associated with sales progress; however, overall, investment in development projects is preceding cash recovery, suggesting a cash-absorbing phase.

Earnings Quality

Special items consisted solely of special income of ¥0.1B, indicating a limited impact from one-time factors, and the divergence between Ordinary Income and Net Income was small. The primary cause of the loss in the current period was interest expenses of ¥5.8B among non-operating expenses, which were not fully offset by non-operating income of ¥1.9B, including foreign exchange gains of ¥0.4B and gains on operation of investment partnerships of ¥0.5B, among others. Although the Company returned to profitability at the operating level, the structural cost factor of the interest burden continues to determine final earnings, leaving earnings quality highly dependent on the interest rate environment. Income taxes and other taxes were ¥-0.8B and minor, while adjustments from tax effects were also limited.

Earnings Forecast and Guidance

Progress against the full-year plan was 11.4% for Revenue, at ¥145.2B/¥1278.0B, and 1.7% for Operating Income, at ¥2.3B/¥139.0B, both substantially below the standard quarterly level of 25%. The full-year plan calls for a Revenue decline of -7.8% year on year, while projecting a +0.7% increase in Operating Income, based on concentrated sales deliveries and improved profitability in the second half of the fiscal year. As of the current quarter, no revisions have been made to the earnings forecast or dividend forecast.

Shareholder Returns

The Company’s full-year dividend forecast is ¥75 per share (¥37 in the previous year), resulting in a Payout Ratio of approximately 42.6% based on the full-year EPS forecast of ¥176.03. As of the current quarter, no revisions have been made to the dividend forecast. Although profit progress was low as of Q1, the dividend is based on the full-year earnings plan, with progress in sales during the second half and management of interest costs serving as prerequisites for achieving the plan.

Risk Factors

1. Concentration of sales dependence: The Condominium Business accounts for 57.9% of Revenue and posted an operating loss of ¥-2.2B in the current period. The business structure is susceptible to the timing of condominium deliveries.

2. Earnings pressure from the interest burden: Interest expenses of ¥5.8B exceeded Operating Income of ¥2.3B, weighing on Ordinary Income. As dependence on interest-bearing debt centered on long-term borrowings of ¥785.0B continues, changes in the interest rate environment will directly affect performance.

3. Inventory buildup and working capital pressure: Real estate under development increased to ¥993.0B (¥840.2B in the previous year), while accounts payable contracted substantially to ¥11.0B (¥59.2B in the previous year). Delays in inventory sales progress could affect liquidity management.

Industry Benchmark (For Reference; Company Analysis)

Profitability and Returns

Both the Operating Income margin and Net Income margin were below the industry median, indicating that profitability was relatively low within the industry.

Growth and Capital Efficiency

The Revenue growth rate was substantially above the industry median, and top-line growth was notably high within the industry.

※Source: Company analysis

Key Takeaways from the Financial Results

1. Operating Income turned around from a loss in the same period of the previous year to ¥2.3B, while the gross profit margin also improved to 26.4%. The expansion of the top line and improvement in the cost structure represent clear changes in the financial results data.

2. Ordinary Income and Net Income remained negative, primarily due to interest expenses of ¥5.8B among non-operating expenses. The fact that improvement at the operating level has not extended to final earnings demonstrates the structural weight of the interest burden.

3. Progress against the full-year plan was low, at 11.4% for Revenue and 1.7% for Operating Income, indicating a high degree of dependence on progress in the second half. Changes in inventory composition, namely the buildup of real estate under development and the decline in completed inventory, are reference points for monitoring future sales progress.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,437–¥1,520 at ±1% for the cost of equity, and ¥1,473–¥1,483 at ±0.1 for ω.

Notes:

• Net Income is substantially compressed relative to Operating Income due to tax burdens, acquisition-related expenses, and non-controlling interests, among other factors (Net Income ÷ Operating Income 52%). This value reflects that compression at face value, and if the factors are temporary, the normalized value may be higher.
• Net assets as of the end of the quarter are used (there is a timing gap relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee future share prices)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. 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, in consultation with professionals as necessary.

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