Open House Group Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥1.34T
• Operating Income: ¥145.93B
• Net Income: ¥99.98B
• EPS: ¥875.20

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

Open House Group (3288) delivered resilient FY2025 Q4 consolidated results under JGAAP, with revenue of ¥1,336.5bn (+3.1% YoY) despite a housing market marked by higher rates and cost inflation. Gross profit of ¥206.9bn implies a gross margin of 15.5%, indicating maintained pricing power and disciplined project selection in the core for-sale residential business. Operating income rose to ¥145.9bn (+22.5% YoY), expanding operating margin to approximately 10.9%, suggesting favorable operating leverage and effective SG&A control. Ordinary income of ¥139.5bn and net income of ¥100.7bn (+8.3% YoY) translate to a net margin of 7.53%, consistent with the provided DuPont metrics. ROE was robust at 18.68%, driven by a balanced mix of margin (7.53%), asset turnover (0.947x), and moderate leverage (2.62x). Interest coverage of 26.5x (EBIT/interest) highlights strong debt service capacity even as the business remains capital-intensive. Liquidity appears solid with current assets of ¥1,198.6bn versus current liabilities of ¥348.8bn, yielding a current ratio of 3.44x and working capital of ¥849.8bn. Operating cash flow of ¥29.5bn, however, represents only 0.29x of net income, pointing to weak cash conversion typical for developers during land procurement and build-out phases. Free cash flow was positive at ¥18.4bn after investing outflows of ¥11.1bn, reflecting some capex discipline. The reported equity ratio metric (0.0%) and cash balance (¥0) appear undisclosed rather than true zeros; similarly, inventories are not reported in this dataset, so liquidity indicators using quick ratio should be interpreted cautiously. There is a numerical gap between reported total assets (¥1,412.0bn) and the sum of liabilities and equity provided (¥1,285.0bn), suggesting partial disclosure of certain components (e.g., non-controlling interests, other comprehensive items, or classification differences) rather than an accounting issue. Using net income and tax expense, the implied effective tax rate is roughly 25%, broadly in line with Japan’s statutory level, despite the 0.0% value shown in the calculated metric. Overall profitability quality is strong at the P&L level, but cash flow quality is mixed due to working capital intensity and timing. Dividend data indicate DPS of ¥0 and payout of 0%, implying either a retained-earnings focused policy or missing disclosure; with positive FCF and strong ROE, the capacity for returns exists but must be balanced against inventory/land bank funding needs. Key data limitations—especially zero placeholders for cash, inventories, equity ratio, and share count—necessitate caution; conclusions are based on the available non-zero metrics provided.

Profitability Analysis

ROE_decomposition: Reported ROE is 18.68%, decomposed as Net Profit Margin 7.53% x Asset Turnover 0.947x x Financial Leverage 2.62x. This indicates healthy margins for a developer, efficient use of assets, and moderate leverage supporting equity returns. margin_quality: Gross margin is 15.5% (¥206.9bn/¥1,336.5bn), and operating margin is approximately 10.9% (¥145.9bn/¥1,336.5bn). Net margin is 7.53%. The step-down from gross to operating margin implies disciplined SG&A. Interest expense (¥5.5bn) is small relative to EBIT, limiting drag below the operating line. operating_leverage: Operating income grew 22.5% YoY on 3.1% revenue growth, evidencing positive operating leverage from mix and cost control. Low D&A (¥2.26bn) means earnings are close to cash EBITDA operationally, though working capital needs materially affect cash realization.

Growth Assessment

revenue_sustainability: Revenue growth of +3.1% YoY suggests stable volumes and pricing despite macro headwinds. Sustained growth likely depends on land pipeline health, construction capacity, and demand in key metropolitan areas. profit_quality: Operating income outpaced sales growth, reflecting mix/pricing discipline and SG&A efficiency. Net income growth of +8.3% YoY is supported by strong operating results and manageable financing costs. outlook: With margins and ROE at robust levels and interest coverage at 26.5x, earnings resilience appears solid. However, the low OCF/NI ratio (0.29x) indicates reliance on working capital recycling; near-term growth hinges on inventory turn and market absorption rates. Monitoring housing demand elasticity to rates and build cost trends remains critical.

Financial Health

liquidity: Current assets ¥1,198.6bn vs current liabilities ¥348.8bn yields a current ratio of 3.44x and working capital of ¥849.8bn. Quick ratio equals current ratio here due to undisclosed inventories, so true quick liquidity may be lower. solvency: Debt-to-equity is 1.38x (provided). Interest coverage 26.5x indicates comfortable servicing of interest. The implied effective tax rate is ~25% (¥33.7bn tax on ~¥134.3bn pre-tax), suggesting no unusual tax dependencies. capital_structure: Leverage (DuPont financial leverage 2.62x) supports ROE without over-reliance on debt. The reported equity and liabilities subtotals do not reconcile to total assets, implying missing components; interpretation of gearing should therefore rely on the provided leverage ratios rather than reconstructed balance sheet totals.

Cash Flow Quality

earnings_quality: OCF/Net Income is 0.29x, indicating weak cash conversion in the period, consistent with land/inventory build typical in real estate development cycles. FCF_analysis: Operating CF of ¥29.5bn less investing CF of -¥11.1bn yields FCF of ¥18.4bn, positive but modest relative to net income (¥100.7bn). This reflects capital-light fixed assets (low D&A) but capital-heavy working capital. working_capital: Large current assets vs liabilities indicate substantial inventory/receivables activity, though inventories are undisclosed in this dataset. Cash generation will be sensitive to project completions, settlements, and sales pacing.

Dividend Sustainability

payout_ratio_assessment: Reported DPS is ¥0 with a payout ratio of 0%. Given net income of ¥100.7bn, capacity exists for distributions, but current policy (or data) indicates full retention. FCF_coverage: With FCF of ¥18.4bn, a modest dividend would be serviceable in principle; however, low cash conversion and working capital demands argue for a conservative stance to fund growth and buffer cyclicality. policy_outlook: Given high ROE and growth funding needs, the company may prioritize reinvestment over cash returns in the near term. Any shift would depend on inventory turn, land acquisition cadence, and visibility on cash generation.

Risk Assessment

Business Risks:

• Housing demand sensitivity to mortgage rates and macroeconomic conditions
• Land acquisition pipeline and pricing risk in core metropolitan areas
• Construction cost inflation and subcontractor capacity constraints
• Sales pace and cancellation risk for for-sale housing projects
• Regulatory and tax policy changes affecting real estate transactions
• Geographic and product mix concentration risk
• Competitive pricing pressure in urban infill developments

Financial Risks:

• Working capital intensity leading to volatile operating cash flow
• Refinancing and interest rate risk given sector leverage norms
• Potential covenant headroom compression if margins narrow
• Liquidity misperception due to undisclosed cash/inventory data
• Balance sheet presentation gaps (partial disclosures) complicating leverage assessment

Key Concerns:

• OCF/NI of 0.29x indicates weak cash conversion in the period
• Inventories and cash balances are undisclosed, limiting liquidity analysis precision
• Reported total assets do not reconcile with liabilities plus equity subtotals in the provided data
• Dividend policy clarity is limited (DPS reported at ¥0 despite strong earnings)

Investment Implications

Key Takeaways:

• ROE of 18.68% supported by 7.53% net margin and 0.947x asset turnover
• Operating income growth (+22.5% YoY) far outpaced sales growth (+3.1%), evidencing operating leverage
• Interest coverage strong at 26.5x; financing burden is low
• Liquidity appears ample by current ratio (3.44x), but inventories/cash not disclosed
• Cash conversion weak (OCF/NI 0.29x); FCF positive at ¥18.4bn
• Balance sheet subtotals suggest partial disclosure; rely on provided ratios
• Dividend reported at ¥0; capital allocation skewed to reinvestment/conservation

Metrics to Watch:

• OCF/Net income and FCF sustainability
• Inventory and land bank levels and turnover (days), when disclosed
• Gross and operating margin trajectory by project mix
• Net debt and net debt/EBITDA once cash and debt details are disclosed
• Pre-sales, ASP, and cancellation rates
• Interest rate trends and funding costs
• SG&A-to-sales ratio and overhead efficiency

Relative Positioning: Within Japanese residential developers, the company demonstrates above-average profitability (high-teens ROE, double-digit operating margin) and strong interest coverage, offset by typical sector cash flow cyclicality and heavy working capital requirements.

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