Quick View
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥10234.0B | ¥9397.2B | +8.9% |
| Operating Income | ¥1209.6B | ¥1022.5B | +18.3% |
| Ordinary Income | ¥1160.7B | ¥982.4B | +18.1% |
| Net Income | ¥812.6B | ¥741.8B | +9.6% |
| ROE | 13.8% | 13.8% | - |
Executive Summary
In addition to revenue and profit growth, this earnings result reflects margin improvement, with the operating income growth rate exceeding the revenue growth rate, indicating that earnings quality has improved from the previous year. Revenue was ¥10,234.0B (+8.9% YoY), Operating Income was ¥1,209.6B (+18.3%), Ordinary Income was ¥1,160.7B (+18.1%), and Net Income attributable to owners of the parent was ¥812.6B (+9.6%). The primary drivers of profit growth were steady expansion in the detached housing-related business and product-mix improvement resulting from the expansion of high-margin segments such as Condominiums and Pressance.
Factors Affecting Earnings
【Revenue】Revenue was ¥10,234.0B, an increase of +8.9% YoY. By segment, the core detached housing-related business accounted for the largest revenue scale at ¥5,655.4B (55.3% of total, +8.6%), while income-producing real estate (formerly PropertyResales) generated ¥1,541.3B (+8.5%), Other generated ¥1,140.4B (+3.2%), Pressance was nearly flat at ¥1,500.5B (-0.3%), and the Condominiums Business increased substantially by +123.1% YoY to ¥424.4B. The sharp expansion of the Condominiums Business contributed to revenue growth, while revenue concentration in the detached housing-related business remains high.
【Profit and Loss】Operating Income was ¥1,209.6B (+18.3%), and Ordinary Income was ¥1,160.7B (+18.1%), with both expanding at rates exceeding revenue growth. The gross margin was 19.5% and the SG&A expense ratio was 7.7%, indicating margin expansion alongside cost control. In non-operating items, interest expenses of ¥75.1B exceeded interest income of ¥21.5B, leaving Ordinary Income slightly below Operating Income, although the difference was limited. Net Income was ¥812.6B (+9.6%), and the effective tax rate was approximately 30.0%, with no significant change from the previous year. Given that revenue and profit both increased and the profit growth rate exceeded the revenue growth rate, the earnings result can be concluded to have been driven by improved profitability.
Segment Analysis
The detached housing-related business made the largest contribution to segment profit, leading the company with Operating Income of ¥618.4B (+10.5% YoY; margin of 10.9%). Income-producing real estate generated Operating Income of ¥163.7B (+12.1%; margin of 10.6%), while Pressance generated ¥207.6B (+13.8%; margin of 13.8%), achieving profit growth despite virtually no revenue growth and confirming improved profitability. Against revenue growth of +123.1%, the Condominiums Business generated Operating Income of ¥75.7B (+2,802.1%; margin of 17.8%), the highest margin among all segments, indicating simultaneous progress in scale expansion and mix improvement. Other generated Operating Income of ¥133.8B (-1.0%), a slight decline and the only loss-making segment among the five segments. While growth in the high-margin Condominiums Business and Pressance contributed to company-wide margin expansion, the concentration of revenue in the detached housing-related business (55.3% of total) increases sensitivity to demand fluctuations.
Key Financial Indicators
【Profitability】The Operating Income margin was 11.8%, improving from approximately 10.9% in the previous year, while the gross margin also increased to 19.5%. The Net Income margin was 7.9%, virtually unchanged from approximately 7.9% in the previous year, indicating that profit growth was primarily attributable to cost efficiency improvements and mix improvement at the operating level.【Cash Flow Quality】Cash and deposits were ¥3,664.1B, down from ¥4,219.0B at the end of the previous year, as the buildup of real estate under development and real estate for sale increased funding requirements.【Investment Efficiency】ROE was 13.8%; among the three components of the DuPont analysis—Net Income margin, total asset turnover, and financial leverage—improved profitability was the primary driver of the increase. Total assets were ¥15,299.1B, net assets were ¥5,885.5B, and the Equity Ratio was 38.5%, a slight improvement from 38.1% in the previous year.【Financial Soundness】Current assets of ¥14,051.5B compared with current liabilities of ¥4,466.5B indicate that the current ratio remained high. Non-current liabilities, centered on long-term borrowings of ¥4,785.2B, totaled ¥4,947.1B. While the short-term liquidity safety margin is substantial, reliance on borrowings remains at a considerable level.
Cash Flow Analysis
Although detailed disclosure of the statement of cash flows is not available, cash trends can be inferred from changes in the balance sheet. Cash and deposits declined by approximately ¥555B from ¥4,219.0B at the end of the previous year to ¥3,664.1B. Meanwhile, inventory-related assets, including real estate under development and real estate for sale, increased, suggesting that the buildup of working capital associated with business expansion was the primary cause of the decline in cash. Property, plant and equipment also increased from ¥30.6B to ¥40.7B, indicating continued investment in business-use real estate and equipment. The real estate industry tends to experience seasonality in quarterly cash generation due to the timing of property deliveries, and the current buildup of inventory highlights the importance of cash collection through progress in future deliveries.
Earnings Quality
No recognition of temporary factors equivalent to the gain on negative goodwill of approximately ¥51.5B or extraordinary income totaling ¥56.9B recorded in the previous year was identified for the current period. Earnings growth was achieved based on operating activities, indicating that earnings quality has improved from the previous year. Non-operating income was ¥38.6B, approximately 0.4% of revenue, and was relatively small, consisting primarily of non-core items such as dividend income and foreign exchange gains; its impact on recurring business profit was limited. Non-operating expenses were ¥87.5B, primarily consisting of interest expenses of ¥75.1B. The increase in financial costs associated with higher borrowings was the primary cause of the approximately ¥49.0B difference between Ordinary Income and Operating Income. Comprehensive Income was ¥906.5B, exceeding Net Income of ¥812.6B, with the difference primarily attributable to foreign currency translation adjustments of ¥93.5B, reflecting valuation fluctuations in overseas-related assets.
Earnings Forecast and Guidance
Progress against the full-year forecast was 68.2% for Revenue (¥10,234.0B/¥15,000.0B), 67.2% for Operating Income (¥1,209.6B/¥1,800.0B), and 68.3% for Ordinary Income (¥1,160.7B/¥1,700.0B), all below the 75% benchmark corresponding to three-quarters of the fiscal year having elapsed. However, because property deliveries in the real estate industry tend to be concentrated in Q4, this degree of deviation in progress can be viewed as within the range of industry seasonality. The full-year forecast calls for increases over the previous year in Revenue of +12.2%, Operating Income of +23.3%, and Ordinary Income of +21.9%. Considering the current-period Operating Income growth rate of +18.3%, progress in Q4 property deliveries will be the key to achieving the plan. Both the earnings forecast and dividend forecast were revised during the current quarter.
Shareholder Returns
An interim dividend of ¥100 has been paid, and the full-year forecast is ¥205, increased from ¥84 in the previous year. Based on projected full-year Net Income of ¥1,185.0B and the number of issued shares excluding treasury shares, the forecast Payout Ratio is approximately 20%, indicating that the dividend burden remains conservative relative to earnings power. As no disclosure regarding share repurchases could be confirmed in the available data, this report evaluates shareholder returns based solely on the Payout Ratio. The substantial increase in the dividend forecast from the previous year indicates strengthened shareholder returns reflecting the ongoing profit growth trend.
Risk Factors
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Working capital risk associated with inventory buildup: Cash and deposits decreased by approximately ¥555B from the end of the previous year due to increases in real estate under development and real estate for sale. If the progress of property deliveries slows, this could affect liquidity.
-
Segment concentration risk: The detached housing-related business accounts for 55.3% of Revenue, indicating a high degree of reliance on a single segment. The business structure is relatively sensitive to changes in housing market conditions and interest rates, which may affect overall performance.
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Risk of rising financial costs: Long-term borrowings increased to ¥4,785.2B from ¥4,437.5B at the end of the previous year, while interest expenses increased to ¥75.1B from ¥54.9B in the previous year. If borrowing rates continue to rise, Ordinary Income may come under pressure through higher non-operating expenses.
Industry Benchmark (For Reference; Compiled by the Company)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 11.8% | 8.0% (2.8%–11.2%) | +3.9pt |
| Net Income Margin | 7.9% | 4.4% (1.2%–7.2%) | +3.5pt |
Both profitability indicators clearly exceed the industry median and are at levels positioned in the upper tier of the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.9% | 18.5% (6.9%–54.7%) | −9.6pt |
The Revenue growth rate is below the industry median, representing a relatively moderate growth pace within an industry containing many high-growth companies.
※Source: Compiled by the Company
Key Takeaways from the Earnings
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The continued structure in which the profit growth rate exceeds the revenue growth rate indicates that performance is being supported not by simple scale expansion but by mix improvement through the expansion of high-margin segments such as the Condominiums Business and Pressance.
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The pace of inventory growth, including real estate under development and real estate for sale, has been accompanied by a decline in cash. Together with the relatively moderate full-year progress rates of 68.2% for Revenue and 67.2% for Operating Income, the execution status of property delivery absorption in Q4 will be an important focus for assessing future performance.
-
While the dividend forecast has increased from ¥84 in the previous year to ¥205, the forecast Payout Ratio remains restrained at approximately 20%, reflecting a balance between strengthening shareholder returns in line with profit growth and retaining earnings.
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 period). It is not a forecast of the market share price or a recommendation of any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | 7,157円 |
| base | 7,394円 |
| bull | 7,590円 |
| Calculation Assumption | Value |
|---|---|
| Book Value Per Share (BPS) | 5,329円 |
| Adjusted Forecast EPS | 1,129.0円 |
| Cost of Equity r | 9.27%（10-year Japanese government bond 2.77% + equity risk premium 6.00% + size premium 0.50%） |
| Persistence Parameter for Residual Income ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 19.3% |
| Forecast EPS Confidence Adjustment | ×1.062（based on the track record of guidance achievement rates for comparable companies） |
| Implied PBR / PER | 1.39倍 / 6.5倍 |
Sensitivity: 7,176円–7,622円 at Cost of Equity ±1%, and 7,338円–7,480円 at ω±0.1.
Notes:
- Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
- Because 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 predict or guarantee the future share price）
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. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and, as necessary, after consulting with a professional.
---End of Report---
AI Financial Analysis
Executive Summary
FY2026 Q3 performance was strong, with profit growth materially outpacing revenue growth despite a sales-dependent real-estate business mix. Revenue increased 8.9% YoY to ¥1,023.4bn. Operating income increased 18.3% to ¥121.0bn. Ordinary income rose 18.1% to ¥116.1bn. Profit attributable to owners rose 15.1% to ¥81.3bn, equivalent to EPS of ¥727.21. Gross profit increased 15.3% to ¥199.5bn, faster than revenue growth. The gross margin expanded 107bp YoY to 19.5% from 18.4%. Operating margin expanded 94bp YoY to 11.8% from 10.9%. The improvement indicates that gross-profit expansion more than absorbed a modest rise in the SG&A-to-sales ratio, which increased 14bp to 7.7%. The annualized ROE was 18.4%, supported by a 7.9% net margin, 0.892x asset turnover, and 2.60x financial leverage. The core detached-house-related segment remained the largest contributor to segment profit, while the condominium business delivered the sharpest improvement. Income-property and Presance operations also generated double-digit or near-double-digit operating margins. The balance sheet remains highly liquid, with a 314.6% current ratio and cash equal to 1.70x short-term debt. However, inventory, including real estate for sale and development in progress, represented 59.3% of total assets, making execution of project sales and inventory valuation central to the outlook. Interest-bearing debt reached ¥693.6bn and interest expense rose faster than operating income, although interest coverage remained strong at 16.11x. Q3 progress toward full-year guidance is below the normal 75% seasonal benchmark, requiring a substantial but achievable fourth-quarter contribution. The full-year forecast implies further revenue and profit acceleration in Q4, making sales completions, gross margins, and inventory rotation the principal near-term indicators.
Profitability Analysis
The annualized 18.4% ROE decomposes into a 7.9% net profit margin, 0.892x asset turnover, and 2.60x financial leverage. Profitability was the principal driver of returns: operating margin improved 94bp YoY to 11.8%, while gross margin increased 107bp to 19.5%. The gross-margin gain was partly offset by SG&A increasing 11.0% YoY to ¥78.5bn, faster than revenue growth of 8.9%; consequently, the SG&A ratio rose to 7.7% from 7.5%. Even so, operating income growth of 18.3% demonstrates positive operating leverage below the gross-profit line. The 19.5% gross margin is marginally below the 20% quality-alert threshold, reflecting the relatively low-margin nature of property sales and leaving profitability exposed to land, construction, and financing-cost inflation. The five-factor DuPont view shows a 70.0% tax burden and a 96.0% interest burden, indicating that interest costs reduce pre-interest earnings by only 4.0% at present. Interest coverage of 16.11x remains robust, but interest expense increased 36.8% YoY to ¥7.5bn, well above EBIT growth of 18.3%, so the interest burden should be monitored. Segment profitability was led by the detached-house-related business, the core business, with revenue of ¥563.0bn (+8.7% YoY) and segment profit of ¥61.8bn (+10.5%), for an approximately 11.0% margin. The condominium business recorded revenue of ¥42.4bn (+123.3%) and segment profit of ¥7.6bn versus a ¥2.8bn loss a year earlier, representing the largest incremental margin improvement. Income-property revenue was ¥154.1bn (+8.6%) and profit was ¥16.4bn (+12.1%), with a 10.6% margin. Other businesses generated revenue of ¥113.9bn (+3.2%) and profit of ¥13.4bn (-1.0%), with an 11.8% margin. Presance generated revenue of ¥150.0bn (-0.3%) and profit of ¥20.8bn (+13.8%), delivering the highest segment margin at 13.8%.
Growth Assessment
Growth quality improved at the operating level, as revenue growth of 8.9% translated into operating-income growth of 18.3% and owner-attributable profit growth of 15.1%. Detached-house-related operations supplied the largest absolute revenue and profit increase, underlining continued demand and execution in the group’s principal residential-sales franchise. The condominium segment’s return to profitability materially broadened earnings growth, although the scale of its revenue increase also means that future performance may be influenced by project-delivery timing. Income-property earnings grew faster than sales, evidencing improved monetization, while Presance held revenue broadly flat but expanded profit through margin improvement. Current-period profit before tax was ¥116.1bn, with no extraordinary gains reported in the period. This provides a more operating-driven earnings base than the prior-year period, which included ¥57.0bn of extraordinary income, predominantly a ¥51.5bn gain on negative goodwill. Full-year guidance calls for revenue of ¥1,500.0bn (+12.2% YoY), operating income of ¥180.0bn (+23.3%), ordinary income of ¥170.0bn (+21.9%), and owner-attributable profit of ¥118.5bn. Q3 cumulative progress is 68.2% for revenue, 67.2% for operating income, 68.3% for ordinary income, and 68.6% for owner-attributable profit. These rates are 6.8 to 7.8 percentage points below the standard 75% Q3 run rate, but are not more than 10 percentage points below it. Achieving guidance requires Q4 revenue of ¥476.6bn, operating income of ¥59.0bn, and owner-attributable profit of ¥37.2bn, implying a Q4 operating margin of approximately 12.4%, above the Q3 cumulative 11.8% margin. The growth outlook is therefore dependent on planned property handovers, maintaining gross-margin discipline, and converting the development pipeline into completed sales.
Financial Health
Liquidity is strong. Current assets of ¥1,405.2bn exceeded current liabilities of ¥446.6bn, producing working capital of ¥958.5bn and a current ratio of 314.6%. Cash and deposits were ¥366.4bn, equal to 1.70x short-term debt of ¥215.0bn, which provides substantial near-term refinancing capacity. Total interest-bearing debt was ¥693.6bn, comprising ¥215.0bn of short-term loans, ¥478.5bn of long-term loans, and bonds. The short-term debt ratio was 31.0%, indicating that most debt is long term rather than immediately due. Debt-to-equity was 1.60x, below the 2.0x aggressive-leverage warning threshold, while debt-to-capital was 54.1%, indicating meaningful but manageable balance-sheet leverage for a developer. Total liabilities represented 61.5% of assets and equity represented 38.4% of assets. Interest coverage of 16.11x supports debt serviceability under current earnings conditions. Total assets increased ¥117.9bn YoY to ¥1,529.9bn, while total equity increased ¥49.7bn to ¥588.6bn, supported by retained earnings and foreign-currency translation gains. The asset base is heavily concentrated in current assets, including project inventory, which supports liquidity in normal sales conditions but creates sensitivity to transaction volumes, pricing, and asset valuations. Non-current provisions were limited at ¥2.1bn, including a ¥1.0bn net defined-benefit liability, and do not appear material relative to the balance sheet.
Notable B/S Changes
Development in progress: +¥131.8bn (+21.9%) to ¥734.2bn - major expansion of the project pipeline; increases future sales potential but elevates completion, valuation, and inventory-conversion risk. Cash and deposits: -¥55.5bn (-13.2%) to ¥366.4bn - reflects deployment of liquidity while remaining sufficient to cover short-term debt by 1.70x. Long-term loans: +¥34.8bn (+7.8%) to ¥478.5bn - supports funding of the expanding development asset base and contributes to higher interest-cost sensitivity. PPE: +¥10.1bn (+33.1%) to ¥40.7bn - significant percentage increase, though PPE remains modest at 2.7% of total assets; returns on this incremental capital should be monitored. Foreign-currency translation adjustment: +¥9.3bn (+64.1%) to ¥23.9bn - increased accumulated OCI and contributed to comprehensive income, but is subject to currency-market movements.
Cash Flow Quality
Cash and deposits declined by ¥55.5bn YoY to ¥366.4bn while real estate for sale and development in progress expanded, consistent with continued funding of the development pipeline. Real estate for sale was ¥173.8bn and development in progress was ¥734.2bn, together totaling ¥907.9bn. This inventory investment is significant relative to the asset base and heightens the importance of timely project completions and property sales for cash realization. The strong current ratio and cash coverage of short-term debt provide a liquidity buffer during the inventory conversion cycle. Profit quality at the income-statement level is supported by operating-income growth exceeding revenue growth and by the absence of current-period extraordinary gains.
Dividend Sustainability
The Q2 dividend was ¥100 per share. Based on cumulative owner-attributable profit, the calculated interim payout ratio was 14.4%, indicating a conservative distribution level. Full-year guidance specifies DPS of ¥205 and forecast EPS of ¥1,062.61, implying a forecast dividend payout ratio of approximately 19.3%. This level is well below the 60% sustainability benchmark and is supported by retained earnings of ¥552.4bn. The low payout leaves financial flexibility for land acquisition, development investment, debt management, and potential shareholder returns. Dividend capacity remains linked to the group’s ability to monetize its substantial property-development inventory at expected margins.
Risk Assessment
Business risks include Inventory and development-execution risk: real estate for sale plus development in progress totaled ¥907.9bn, and the inventory ratio was 59.3% of total assets, above the 50% quality-alert threshold. This concentration makes earnings and liquidity sensitive to completion schedules, customer demand, property prices, and inventory valuation., Housing-market and interest-rate risk: the detached-house-related business generated ¥563.0bn of revenue and ¥61.8bn of segment profit, making group earnings materially exposed to mortgage affordability, consumer confidence, land prices, and residential transaction conditions., Construction-cost inflation risk: the 19.5% gross margin is below the 20% quality-alert threshold. Higher land procurement, labor, materials, and subcontracting costs could narrow margins unless passed through in selling prices., Condominium project-timing risk: condominium revenue more than doubled to ¥42.4bn and the segment moved from a loss to ¥7.6bn profit. This sharp improvement raises sensitivity to the timing and profitability of individual property deliveries., Presance volume risk: Presance revenue declined 0.3% YoY to ¥150.0bn despite profit growth, indicating that continued earnings expansion depends on sustaining its 13.8% segment margin if sales volumes remain flat..
Financial risks include Leverage risk: interest-bearing debt was ¥693.6bn and debt-to-capital was 54.1%. While debt-to-equity of 1.60x remains below the aggressive threshold and liquidity is strong, funding costs and refinancing conditions can affect returns., Rising interest-cost risk: interest expense increased 36.8% YoY to ¥7.5bn, faster than operating income growth. Interest coverage remains strong at 16.11x, but a sustained increase in borrowing costs would pressure ordinary income., Foreign-currency translation sensitivity: comprehensive income exceeded net income by ¥9.4bn, primarily reflecting ¥9.3bn of foreign-currency translation adjustment. This supports equity but is not equivalent to operating earnings..
Key concerns include The principal quality alert is the 59.3% inventory ratio. High inventory is structurally common for developers with large projects in progress, but the scale raises the impact of a property-market slowdown or delayed sales., The 19.5% gross margin is only slightly below the 20% alert threshold. Current operating-margin expansion is positive, but limited gross-margin headroom increases exposure to construction and land-cost inflation., Q3 progress toward full-year operating-income guidance was 67.2%, below the standard 75% seasonal benchmark. The forecast requires a stronger Q4 operating margin of approximately 12.4%., The increase in PPE to ¥40.7bn from ¥30.6bn should be monitored for returns on incremental capital, although PPE remains only 2.7% of total assets..
Investment Implications
Key takeaways include Revenue, operating income, and owner-attributable profit increased 8.9%, 18.3%, and 15.1% YoY, respectively, demonstrating operating-margin expansion., The annualized 18.4% ROE is strong and is supported by profitability, efficient asset utilization, and meaningful financial leverage., The detached-house-related segment is the core earnings contributor, while condominium profitability rebounded and Presance delivered the highest segment margin., Balance-sheet liquidity is substantial, but asset concentration in development inventory makes project monetization the key determinant of financial flexibility., Full-year guidance requires a stronger Q4 than the Q3 cumulative run rate, particularly for operating income..
Metrics to watch include Gross margin and SG&A-to-sales ratio, Real estate for sale and development-in-progress balances, Q4 property handovers and segment revenue mix, Interest expense, interest coverage, and debt-to-capital, Presance revenue trend and segment margin, Progress versus full-year revenue of ¥1,500.0bn and operating income of ¥180.0bn, Dividend per share relative to forecast EPS.
Regarding relative positioning, The company combines strong annualized ROE of 18.4%, an 11.8% operating margin, and ample short-term liquidity with a sales-driven developer model. Its relative financial profile is stronger on liquidity and interest coverage than its 54.1% debt-to-capital ratio alone suggests, but it carries greater earnings cyclicality than rental-income-oriented real-estate operators because 59.3% of assets are tied to property inventory and development in progress.