Q3 FY2026 results delivered significant top-line and earnings growth: Revenue 289.0B yen (YoY +80.3B yen +38.5%), Operating Income 21.9B yen (YoY +11.8B yen +116.4%), Ordinary Income 19.3B yen (YoY +11.0B yen +131.2%), and Net Income 13.3B yen (YoY +7.5B yen +131.8%). Sales of higher-priced properties in the Tokyo 23 wards drove performance, lifting the average selling price to ¥3,067 ten-thousand yen (YoY +19.4%) and expanding units sold to 744 (YoY +19.6%). Gross margin improved by 1.5ppt to 15.8% (14.3% in the prior-year period), with the inventory rotation strategy contributing to higher profitability. Short-term borrowings increased to 111.11B yen (YoY +37.7%), reflecting expanded working capital needs accompanying stronger property acquisitions in the Tokyo 23 wards (purchase amount 92.09B yen, YoY +134.8%).
[Revenue] Top line was 289.0B yen, up +38.5% YoY. Residential Property Sales were 228.19B yen (YoY +42.8%), led by growth in units sold in the Tokyo 23 wards (15.9% of total units vs. 9.5% in the prior-year period) and higher average selling price (¥3,067 ten-thousand yen, YoY +19.4%). Income Property Sales were 55.79B yen (YoY +23.1%), and Rental Income was 4.67B yen (YoY +44.9%), achieving revenue growth across income-generating businesses. Market conditions supported sales, including 14 consecutive months of increases in concluded transactions in the Greater Tokyo area pre-owned condominium market and a YoY decline in inventory levels.
[Profit and loss] Gross profit was 45.64B yen with a gross margin of 15.8% (14.3% in the prior-year period), improving by 1.5ppt. Smooth inventory rotation in residential properties and a higher mix of higher-priced units (8.7% for ¥50M+ properties, 9.9% in the ¥40M range) contributed to gross margin improvement. Selling, General and Administrative expenses were 23.77B yen, with an SG&A ratio of 8.2%, restrained relative to sales expansion, enabling operating leverage. Operating Income was 21.9B yen (YoY +116.4%), and the operating margin improved by 2.7ppt to 7.6% from 4.9% in the prior-year period. Non-operating expenses of 3.03B yen were recorded (primarily interest expense of 2.72B yen), resulting in Ordinary Income of 19.3B yen (YoY +131.2%) and Net Income of 13.3B yen (YoY +131.8%). The gap between Ordinary Income and Net Income was 5.9B yen (30.6%), attributable to income taxes of 5.98B yen, with no impact from one-off extraordinary gains/losses. In sum, revenue and earnings growth were achieved by balancing a shift to higher-priced properties and increased units sold.
Residential Property Sales recorded Revenue of 228.19B yen (78.9% of total) and are positioned as the core business on an Operating Income basis as well. Units sold were 744 (622 in the prior-year period, +19.6%), and the average selling price was ¥3,067 ten-thousand yen (YoY +19.4%), expanding on both volume and price. Sales in the Tokyo 23 wards totaled 77.88B yen, accounting for 34.1% of the total, demonstrating the success of the regional strategy. Income Property Sales were 55.79B yen (19.3% of total, YoY +23.1%), with the sale of six whole-building apartments and one strata-title unit contributing to profits. Rental Income was 4.67B yen (1.6% of total, YoY +44.9%), securing stable income from owned properties. The substantial improvement in Operating Income (+116.4%) was mainly driven by Residential Property Sales, reflecting focus on higher-priced areas within the Tokyo 23 wards and gross margin improvement through inventory rotation. Across segments, margin improvement in Residential Property Sales drove overall performance, complemented by revenue growth in Income Property Sales.
Profitability: ROE 10.8% (Reference: the prior-year period estimate is inferred low from shareholders’ equity and net income levels), Operating Margin 7.6% (4.9% in the prior-year period), Gross Margin 15.8% (14.3% in the prior-year period), Net Margin 4.6% Cash quality: Operating Cash Flow (OCF) not disclosed; FCF not computable (OCF/Net Income ratio also not assessed) Investment efficiency: Total Asset Turnover 0.798x, Return on Assets 3.7% Financial soundness: Equity Ratio 34.0% (36.7% in the prior-year period), Current Ratio 250.6%, Debt/Capital ratio 63.4%, Short-term Debt Ratio 52.2% Interest coverage: Operating Income/Interest Expense approximately 8.0x (21.9B yen/2.72B yen), indicating sufficient interest coverage
As Operating CF, Investing CF, and Financing CF are not disclosed, analysis based on the cash flow statement is not possible. However, inventories have built up, with Real Estate for Sale at 204.03B yen and Real Estate under Development at 71.36B yen, indicating a structure where cash generation from inventory sales serves as the source of OCF. Short-term borrowings increased to 111.11B yen (YoY +30.40B yen +37.7%), with working capital needs for strengthened acquisitions in the Tokyo 23 wards (purchases 201.54B yen, YoY +55.9%) funded by short-term debt. Cash and deposits were 58.18B yen, and the cash/short-term liabilities ratio was 0.52x, suggesting limited cushion for short-term repayments. Monitoring sales progress of inventories (real estate for sale, etc.) and actual OCF is crucial; assessment of cash generation warrants ongoing monitoring.
The difference between Ordinary Income of 19.3B yen and Net Income of 13.3B yen is 5.9B yen (30.6%), mainly due to income taxes of 5.98B yen. No one-off extraordinary gains/losses were recorded, and non-operating P/L mainly comprised non-operating expenses of 3.03B yen, including interest expense of 2.72B yen. Non-operating income was 0.49B yen (0.2% of revenue) and limited, indicating a business model primarily driven by core operations. Improvements to a 15.8% Gross Margin and a 7.6% Operating Margin are the results of the inventory rotation and higher-priced property shift strategies, which can be evaluated as strengthening recurring earnings power. However, real estate sales depend on delivery timing, so attention is needed to inter-period earnings volatility. As OCF is not disclosed, the correlation between net income and cash cannot be directly confirmed, but in an inventory-based business model, sales progress governs the quality of earnings.
Full-year forecast: Revenue 405.67B yen, Operating Income 29.56B yen, Ordinary Income 26.04B yen, Net Income 18.34B yen. Progress versus Q3 results: Revenue 71.2% (289.0B yen/405.67B yen), Operating Income 74.0% (21.9B yen/29.56B yen), Ordinary Income 74.2% (19.3B yen/26.04B yen), Net Income 72.8% (13.3B yen/18.34B yen). Versus standard progress (Q3 = 75%), Revenue is slightly behind while Operating Income and below are roughly in line. In the remaining Q4 period, incremental Revenue of 116.67B yen (progress 28.8%) and Operating Income of 7.66B yen (25.9%) are needed; these levels are achievable depending on inventory delivery timing. Versus the prior fiscal year, the company expects strong growth: Revenue +33.0%, Operating Income +98.7%, Ordinary Income +110.2%, Net Income +108.4%. As no revisions to full-year guidance have been announced this quarter, the forecast remains unchanged at this time.
Dividend policy: annual dividend of ¥46 (disclosure indicates both interim actual and year-end forecast of ¥41 each; interpreted as effectively ¥41 interim + ¥41 year-end). Assuming full-year Net Income of 18.34B yen based on Q3 Net Income of 13.3B yen, the full-year EPS is ¥301.05; with a dividend of ¥46, the Payout Ratio is 15.3% (however, if effectively ¥41 interim + ¥41 year-end = ¥82, the Payout Ratio would be 27.2%). As disclosed annual dividend is ¥46, the Payout Ratio is around 15%, a conservative level. With cash and deposits of 58.18B yen and OCF undisclosed, FCF coverage of dividends cannot be evaluated, but the low Payout Ratio suggests high dividend sustainability. As there is no disclosure of share repurchases, calculation of the Total Return Ratio is not applicable.
[Short term] Progress of property deliveries during Q4 and likelihood of achieving full-year guidance; sales trends for higher-priced properties in the Tokyo 23 wards; sustainability of concluded transaction and inventory trends in the Greater Tokyo area pre-owned condominium market; refinancing terms for short-term borrowings
[Long term] Continued focus strategy on the Tokyo 23 wards and advancement of the higher-priced property shift; sustainability of profitability improvement via inventory rotation strategy; expansion of the income property business and establishment of a stable income base; impact of interest rate environment changes on interest expense and earnings structure; management of the size and turnover period of real estate for sale inventories
[Industry positioning] (Reference information; our research) Profitability: ROE 10.8% (industry median 11.0%, 2025 Q3, n=14), roughly in line with the industry median. Operating Margin 7.6% (industry median 8.5%), slightly below the median. Net Margin 4.6% (industry median 5.0%), roughly at the median Growth: Revenue growth +38.5% (industry median 13.5%, IQR 2.9%–51.3%), high within the industry and above the third quartile Efficiency: Return on Assets 3.7% (industry median 3.6%), roughly in line with the industry median Soundness: Equity Ratio 34.0% (industry median 30.4%, IQR 27.5%–45.7%), slightly above the industry median. Current Ratio 250.6% (industry median 2.21x = 221%), above the industry median with sound liquidity Leverage: Net Debt/EBITDA ratio not disclosed and thus not computed, but versus the industry median of 4.24 (IQR -1.50–6.20), the Short-term Debt Ratio of 52.2% indicates a high reliance on short-term borrowings, a level warranting attention even within the industry
Note: Industry: Real Estate (n=14 companies); comparison period: 2025 Q3; source: our compilation
Key takeaways from results (facts derived from disclosed financial data)
This report is an automatically generated earnings analysis document, produced by AI integrating XBRL earnings release data and PDF results presentation materials. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by us based on publicly available financial data. Investment decisions are your own responsibility; please consult a professional as needed.