| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥6891.8B | ¥6434.3B | +7.1% |
| Operating Income | ¥844.0B | ¥737.8B | +14.4% |
| Ordinary Income | ¥814.6B | ¥715.9B | +13.8% |
| Net Income | ¥570.0B | ¥501.7B | +13.6% |
| ROE | 9.8% | 9.3% | - |
For the cumulative Q2 of the fiscal year ending March 2026, Revenue was ¥6,891.8B (YoY +¥457.5B +7.1%), Operating Income was ¥844.0B (YoY +¥106.2B +14.4%), Ordinary Income was ¥814.6B (YoY +¥98.7B +13.8%), and Net Income attributable to owners of the parent was ¥570.0B (YoY +¥68.2B +13.6%), achieving double-digit profit growth across all profit measures. Operating margin improved to 12.2% (YoY +0.8pt) and net margin improved to 8.3% (YoY +0.5pt), indicating realization of operating leverage. By segment, the Condominium Business surged with Revenue ¥260.7B (YoY +330.1%) and Operating Income ¥44.5B (YoY +346.2%), and the Income Property Business also performed robustly with Revenue ¥1,134.0B (YoY +18.1%). The core Detached-Related Business grew steadily with Revenue ¥3,827.9B (YoY +5.4%) and Operating Income ¥431.2B (YoY +5.3%), maintaining a margin of 11.3%. Presance saw Revenue decline to ¥975.5B (YoY -9.0%) but Operating Income edged up to ¥142.2B (YoY +0.3%), preserving a high margin of 14.6%. On a company-wide basis, revenue and profits increased, but Operating Cash Flow was -¥371.6B (prior year -¥52.9B, a material deterioration), primarily due to an Inventory increase of -¥879.3B, indicating weak cash conversion of earnings. Total assets expanded to ¥1,5096.6B (YoY +¥976.6B), and Net Assets increased to ¥5,831.3B (YoY +¥443.0B); Equity Ratio was 38.6% (YoY +0.4pt), showing a stable financial base.
[Revenue] Revenue of ¥6,891.8B (YoY +7.1%) was driven by high growth in the Condominium Business and Income Property Business. The Detached-Related Business accounted for ¥3,827.9B or 55.4% of the total and grew steadily YoY +5.4%. The Condominium Business expanded significantly to ¥260.7B (from ¥60.6B last year, +330.1%), reflecting the progress of property handovers. The Income Property Business continued double-digit growth to ¥1,134.0B (from ¥960.0B last year, +18.1%), successfully capturing demand in the resale market. Presance entered an adjustment phase with Revenue ¥975.5B (from ¥1,071.5B last year, -9.0%) but still constituted 14.2% of the total. Other segments declined slightly to ¥713.8B (from ¥733.5B last year, -2.7%). Sales to external customers comprised Revenue from customer contracts of ¥6,784.6B (98.4% of total) and other revenue ¥107.2B (1.6% of total), indicating a high proportion of core revenue.
[Profitability] Gross profit was ¥1,356.2B with a gross margin of 19.7% (improved +1.2pt from 18.5% last year), helped by price revisions, integrated production-and-sales cost control, and improved product mix. Selling, general and administrative expenses were ¥512.2B (from ¥450.5B last year, +¥61.7B +13.7%) but were absorbed by revenue growth and gross margin improvement, leaving SG&A ratio at 7.4% (from 7.0% last year, +0.4pt) only slightly higher. Operating Income was ¥844.0B (from ¥737.8B last year, +14.4%), and Operating margin expanded to 12.2% (from 11.5% last year, +0.7pt). Non-operating income totaled ¥27.0B, aided by interest income ¥15.0B and foreign exchange gains ¥4.3B. Non-operating expenses were ¥56.4B, with interest expense ¥48.0B (from ¥32.5B last year, +47.5%) increasing, though the burden rise was limited relative to the increase in borrowings. Ordinary Income was ¥814.6B (from ¥715.9B last year, +13.8%), reflecting core business profit growth. Extraordinary gains consisted only of ¥5.5B from the sale of subsidiary shares, so recurring earnings constituted the bulk of profits. Income taxes were ¥244.6B, with an effective tax rate of 30.0%, and Net Income attributable to owners of the parent was ¥570.0B (from ¥501.7B last year, +13.6%). In conclusion, revenue and profit increased driven by high growth in condominiums and resale as well as gross margin improvement, with operating leverage effectively at work.
The Detached-Related Business is the core segment, accounting for 51.1% of total Operating Income with Operating Income ¥431.2B. Revenue ¥3,827.9B (YoY +5.4%), Operating Income ¥431.2B (YoY +5.3%) show stable growth and maintained an 11.3% margin. The Condominium Business saw Operating Income soar to ¥44.5B (from ¥10.0B last year, +346.2%), achieving the highest segment margin at 17.1% due to concentrated property handovers. The Income Property Business maintained high profitability with Operating Income ¥132.5B (from ¥109.4B last year, +21.1%) and margin 11.7%, supported by sales strength in the resale market. Presance’s Operating Income was ¥142.2B (from ¥141.7B last year, +0.3%), a marginal increase, while keeping a high margin of 14.6%; cost management preserved profitability despite revenue decline. Other segments posted Operating Income ¥81.8B (from ¥89.5B last year, -8.7%) with margin 11.5%, slightly lower. Segment margin dispersion shows Condominium (17.1%) and Presance (14.6%) at the high end, balanced against the large-scale Detached-Related Business (11.3%) to form company-wide profitability.
[Profitability] Operating margin 12.2% (from 11.5% last year, +0.7pt), Net margin 8.3% (from 7.8% last year, +0.5pt), ROE 9.8% (from 9.3% last year, +0.5pt) — overall profitability metrics improved. Gross margin 19.7% (from 18.5% last year, +1.2pt) was the main driver, aided by price revisions and product mix optimization. Revenue-to-Ordinary-Income ratio was 11.8% (from 11.1% last year, +0.7pt), with non-operating items a mild drag while core operations drove Ordinary Income. [Cash Quality] Operating CF/Net Income -0.65x (from -0.11x last year, materially worse), OCF/EBITDA -0.44x — cash conversion weakened. Inventory increase -¥879.3B was the main cause, with work-in-progress accumulation pressuring working capital. Accrual ratio 6.2% is neutral-to-slightly-high, indicating timing gaps between profit recognition and cash generation. [Investment Efficiency] Total asset turnover 0.457x (from 0.455x last year, flat), EBITDA margin 12.4% (Operating Income ¥844.0B + Depreciation ¥9.8B = ¥853.8B / Revenue ¥6,891.8B) suggests stable earning power. Debt/EBITDA 7.95x indicates high leverage and interest-rate sensitivity. Interest coverage is 17.6x (EBIT ¥844.0B / Interest expense ¥48.0B), showing strong short-term interest payment capacity. [Financial Soundness] Equity Ratio 38.6% (from 38.1% last year, +0.5pt), Current Ratio 316.8%, Debt/Capital 53.8% — capital structure is neutral-to-moderately-aggressive. Interest-bearing debt ¥6,783.5B (short-term borrowings + long-term borrowings + corporate bonds) against total assets ¥1,5096.6B yields Debt/Equity 1.16x, a mid-level. Cash and deposits ¥4,137.6B substantially exceed short-term borrowings ¥2,090.5B, limiting short-term liquidity risk. Inventory dependence is high at Inventory ¥8,632.9B / Total assets ¥1,5096.6B = 57.2%, making the balance sheet sensitive to price volatility and turnover speed.
Operating CF was -¥371.6B (from -¥52.9B last year, materially worse), a -0.65x divergence against Net Income ¥570.0B. The main cause was Inventory increase -¥879.3B, with accumulation of properties for sale and work-in-progress pressuring working capital. Operating CF before working capital changes was -¥87.4B, with non-cash depreciation addition ¥9.8B, corporate tax payments -¥250.8B, and interest payments -¥48.0B as major items. Increase in contract liabilities +¥80.4B indicates accumulation of advance payments and is a positive leading indicator, but accelerated inventory digestion is required. Decrease in trade receivables +¥30.8B and increase in trade payables +¥4.7B contributed modestly but could not offset the impact of inventory increase. Investing CF was -¥285.4B, driven by capital expenditures -¥79.1B, acquisition of subsidiary shares -¥52.2B, and purchases of investment securities -¥19.2B — indicating growth investments. Financing CF was +¥428.4B, funded by long-term borrowings +¥1,172.5B and net increase in short-term borrowings +¥170.7B, while repayments of long-term borrowings -¥711.2B, dividend payments -¥105.8B, and share buybacks -¥99.3B were implemented. Free Cash Flow was -¥656.9B (Operating CF -¥371.6B + Investing CF -¥285.4B), meaning dividends and capex were not covered by internal CF. Cash and deposits increased by +¥58.8B from opening balance ¥4,078.8B to closing ¥4,137.6B, relying on external funding. If inventory turnover and handover progress accelerate in H2, a reversal in Operating CF is expected.
Against Ordinary Income ¥814.6B, Extraordinary gains were only ¥5.5B, so recurring earnings make up most of profit. Non-operating income ¥27.0B is 0.4% of Revenue, under 5%, indicating limited distortion in earnings quality. Composition of non-operating income: interest income ¥15.0B, foreign exchange gains ¥4.3B, other ¥6.0B — financial income is central. Most of non-operating expenses ¥56.4B is interest expense ¥48.0B, so interest burden is the main item. Interest burden ratio 0.965 (Non-operating expenses / Non-operating income) and tax burden ratio 0.700 (Income taxes / Profit before tax) are in normal ranges, with no abnormal distortions in profit structure. Accrual ratio 6.2% is neutral-to-slightly-high and consistent with Operating CF being below Net Income. Operating CF/Net Income -0.65x and OCF/EBITDA -0.44x clearly show weak cash conversion, indicating significant timing differences between profit recognition and cash collection. The gap between Ordinary Income and Net Income is attributable to taxes, with a standard tax rate of 30.0%. Comprehensive Income ¥644.2B exceeded Net Income ¥570.0B, with ¥73.9B in foreign currency translation adjustments recorded in Other Comprehensive Income. The difference of +¥74.2B relative to Net Income is a temporary valuation gain; Ordinary Income should be emphasized for evaluating core earning power. Overall, recurring earnings constitute the majority of profits and one-off factors are limited, but weak cash conversion is the primary concern regarding earnings quality.
Only the full-year dividend forecast of ¥100 has been disclosed; specific full-year revenue and profit forecasts have not been released. A revision to the quarterly performance forecast was made this quarter, but revised figures were not disclosed. The interim dividend is ¥100 with no change to the dividend forecast; progress toward the full-year dividend forecast of ¥100 is already achieved with the interim ¥100. Quantitative progress analysis of earnings forecasts is not possible, but given H1 results of revenue and profit growth and continued growth drivers in key segments, a full-year increase in profits is expected to be maintained. Increase in contract liabilities +¥80.4B is a positive leading indicator for H2 revenue recognition, and if inventory turnover acceleration is confirmed, cash improvement for the full year is also expected.
Interim dividend is ¥100; payout ratio relative to Net Income attributable to owners of the parent ¥570.0B is 20.5% (interim dividends total ¥115.8B / Net Income ¥570.0B), indicating sufficient capacity on a profit basis. Prior-year interim dividend was ¥84 with a similar payout ratio. Share buybacks of ¥99.3B were implemented during the period, and combined with dividends ¥105.8B total return amounted to ¥205.1B, yielding a Total Return Ratio of 36.0%. However, Free Cash Flow was -¥656.9B so dividends and share buybacks were not covered by internal cash and were supplemented by external financing (Financing CF +¥428.4B). FCF coverage is -5.63x (FCF -¥656.9B / Dividends + Share Buybacks ¥205.1B), so ongoing shareholder returns will require either working capital release or continued access to capital markets. Treasury stock balance is ¥328.4B (from ¥448.9B last year, -¥120.5B decrease), with concurrent acquisition and retirement/disposal to optimize capital efficiency. Dividend policy appears to maintain stable dividends linked to profit growth, but unless deleveraging and inventory reduction progress, flexibility in total returns may be constrained.
Inventory-dependent revenue model: Inventory ratio 57.2% (Inventory ¥8,632.9B / Total assets ¥1,5096.6B) indicates very high inventory dependence, posing material risk of margin deterioration in case of sales delays or price declines. Inventory increase -¥879.3B pressured Operating CF, and continued delays in inventory turnover would increase funding strain.
High leverage and interest-rate sensitivity: Debt/EBITDA 7.95x (Interest-bearing debt ¥6,783.5B / EBITDA ¥853.8B) places the company in a high-leverage range, raising the risk of increased interest payments and covenant breaches in a rising-rate environment. Interest expense ¥48.0B is +47.5% YoY, demonstrating high sensitivity to rate changes. While interest coverage of 17.6x is strong, it could deteriorate rapidly if operating income declines.
Concentration of business portfolio: Dependence on the Detached-Related Business at 55.4% of Revenue creates high exposure to fluctuations in the detached housing market and to demand declines driven by rising mortgage rates, which would directly impact company-wide performance. While Condominium and Resale segments are growing rapidly, they remain sensitive to real estate market conditions and diversification benefits are limited.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.2% | – | – |
| Net Margin | 8.3% | – | – |
Due to limited comparative data, the company’s relative position within the sector cannot be fully assessed, but Operating margin 12.2% and Net margin 8.3% are mid-to-upper level for the real estate industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.1% | – | – |
Revenue growth 7.1% cannot be positioned within the sector due to data limitations, but high growth in Condominium and Resale segments is driving overall growth and diversifying growth drivers.
※Source: Company aggregation
Revenue and profit growth trends continue, with gross margin +1.2pt improvement and Operating margin +0.7pt expansion, indicating realization of operating leverage. High growth in the Condominium Business (Revenue +330.1%, margin 17.1%) and the Income Property Business (Revenue +18.1%, margin 11.7%) is driving company-wide profitability and shows signs of easing dependency on Detached business, which is positive for medium-term earnings stability.
Operating CF deteriorated to -¥371.6B (from -¥52.9B last year), mainly due to Inventory increase -¥879.3B, weakening cash conversion. Increase in contract liabilities +¥80.4B is a positive leading indicator; H2 handover progress and inventory digestion acceleration would be catalysts for Operating CF recovery. With Debt/EBITDA 7.95x and high leverage, the skill of working capital management directly affects liquidity and capital cost, so monitoring inventory turnover days and contract liabilities trends is critical.
Payout ratio 20.5% and Total Return Ratio 36.0% indicate capacity on a profit basis, but FCF coverage -5.63x shows cash shortfall and shareholder returns were complemented by external financing. The approach of executing acquisition and retirement of treasury stock to optimize capital efficiency is commendable, but unless deleveraging and inventory reduction progress, sustainability of total returns remains uncertain. Interest rate trends and inventory turnover are conditions for continued dividends and share buybacks.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute a recommendation to invest in any specific security. Sector benchmarks are reference information aggregated by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.