B-Lot Company Limited FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥29.69B
• Operating Income: ¥6.78B
• Net Income: ¥4.45B
• EPS: ¥215.50

Income Statement

Balance Sheet

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

B-Lot Co., Ltd. (34520) reported FY2025 Q3 consolidated results under JGAAP with revenue of ¥29.687bn, up 7.3% YoY, indicating continued topline momentum despite a mixed profit profile. Gross profit was ¥9.158bn, implying a solid gross margin of 30.8%, consistent with a high-value-added real estate solutions and asset-trading business model. Operating income was ¥6.778bn, up 2.3% YoY, suggesting negative operating leverage this quarter as SG&A and other operating costs grew faster than revenue. Ordinary income stood at ¥5.890bn, reflecting non-operating costs including interest expense of ¥0.43bn. Net income declined 9.1% YoY to ¥4.044bn, compressing bottom-line growth versus operating profit, largely due to non-operating items and taxes. Net margin was 13.62%, healthy for the sector but down YoY given the net profit decline. DuPont analysis shows ROE of 20.6%, driven by a strong net margin (13.62%), modest asset turnover (0.309x), and high financial leverage (4.89x). The high leverage is typical for real estate trading/investment models but warrants attention in a rising rate environment. Interest coverage is comfortable at 15.8x (operating income/interest expense), indicating manageable interest burden at current earnings levels. Liquidity appears strong with a current ratio of 298% and working capital of ¥32.027bn, supporting ongoing project execution and inventory carry (though inventories were not disclosed in XBRL). Balance sheet disclosures show total assets of ¥96.003bn and total equity of ¥19.627bn; the implied liabilities from A−E differ from the reported total liabilities figure, signaling data limitations in the available extract. Cash flow statements were not disclosed (zeros indicate unreported), preventing assessment of operating cash conversion and free cash flow. Dividend data show DPS unreported and payout ratio recorded as 0.0%, so dividend policy and sustainability cannot be assessed from this dataset. Overall, profitability remains solid with resilient gross and operating margins, but the QoQ/YoY trajectory indicates some cost pressure and higher non-operating drag. The outlook hinges on deal flow, inventory monetization, funding conditions, and real estate market liquidity; ROE north of 20% is attractive but is leverage-assisted and sensitive to cycle and rates. Data incompleteness around cash flows, inventories, and detailed liabilities is a key constraint to a full quality-of-earnings review.

Profitability Analysis

ROE decomposition: ROE is 20.6% per DuPont, comprised of net profit margin 13.62%, asset turnover 0.309x, and financial leverage 4.89x. The margin component is the primary driver, while asset turnover is modest, consistent with a balance sheet-intensive asset business. Operating margin (operating income/revenue) is approximately 22.8% (¥6.778bn/¥29.687bn), signaling strong value capture on transactions/services relative to peers in real estate trading and asset management. Net income margin at 13.6% trails operating margin due to non-operating costs, notably interest expense of ¥0.43bn, and taxes of ¥1.879bn. Ordinary income margin is ~19.8% (¥5.890bn/¥29.687bn), bridging operating to net levels. Margin quality: Gross margin at 30.8% suggests attractive spreads on deals and fee income; however, the slower growth of operating income (+2.3% YoY) versus revenue (+7.3% YoY) implies increased SG&A or lower unit economics on recent transactions. Operating leverage: Negative in the period—revenue growth exceeded operating income growth, compressing OPM. Interest coverage remains robust at ~15.8x, cushioning against rate volatility. With leverage at 4.89x (Assets/Equity), ROE is amplified; sustaining 20%+ ROE will depend on preserving high margins and turnover while managing funding costs.

Growth Assessment

Revenue grew 7.3% YoY to ¥29.687bn, indicating steady execution and demand for the company’s real estate solutions and trading activities. Operating income increased 2.3% YoY to ¥6.778bn, lagging sales growth, signaling either mix deterioration, higher SG&A, or timing effects in deal recognition. Net income declined 9.1% YoY to ¥4.044bn, reflecting greater non-operating drag (interest/taxes) and possibly lower ordinary gains YoY. The net margin of 13.6% remains strong despite the decline, suggesting the underlying business retains pricing power or favorable deal economics. Asset turnover at 0.309x is typical for inventory/asset-heavy models and implies growth depends on efficient asset cycling and pipeline velocity. Sustainability: Growth appears transaction-driven; maintaining a healthy backlog/pipeline of properties and mandates is critical, especially as funding costs normalize upward. Profit quality: The step-down from operating to net profit highlights sensitivity to non-operating items—interest and taxes must be monitored. Outlook: Near-term growth hinges on market liquidity, cap rate stability, and successful exits from current holdings; macro headwinds from rates could temper volume and margins, while stable or improving market conditions could re-accelerate operating profit.

Financial Health

Liquidity: Current assets ¥48.171bn vs current liabilities ¥16.144bn yields a current ratio of 298% and positive working capital of ¥32.027bn, providing a substantial cushion for near-term obligations and project needs. Quick ratio equals current ratio in the dataset due to unreported inventories; in reality, inventory-like assets likely exist and would reduce the true quick ratio. Solvency: Reported total assets ¥96.003bn and total equity ¥19.627bn imply financial leverage of 4.89x (Assets/Equity). The provided debt-to-equity ratio is 2.00x (likely interest-bearing debt/equity), but detailed debt composition is not disclosed here. Interest coverage is strong at 15.8x, indicating adequate headroom under current earnings. Capital structure: High reliance on liabilities/equity typical of the sector; however, the reported total liabilities figure (¥39.230bn) is inconsistent with assets minus equity, suggesting incomplete liability disclosures in the extract. Equity base of ¥19.627bn supports current operations but remains sensitive to valuation adjustments in real estate assets.

Cash Flow Quality

Operating cash flow, investing cash flow, and financing cash flow are unreported, preventing analysis of cash conversion. The OCF/Net Income ratio appears as 0.00 solely due to missing OCF data; it should not be interpreted as poor cash generation. Free cash flow is not computable from the provided data. Given the business model, period-to-period OCF may be volatile due to property acquisitions/disposals and working capital swings; inventory balances, advances, and project-level cash movements are key but not disclosed. Earnings quality at the accrual level appears reasonable given strong interest coverage and stable margins, but without OCF and inventory detail we cannot validate revenue recognition timing, cash realization of gains, or the extent of capitalized costs.

Dividend Sustainability

Dividend data are not disclosed for the period (DPS shown as 0.00 indicates unreported). The payout ratio and FCF coverage figures shown as 0.0%/0.00x reflect missing DPS and OCF/FCF, not actual zero distributions. Without DPS, historical payout policy, or cash flow data, we cannot assess dividend sustainability quantitatively. Qualitatively, a leverage-assisted 20.6% ROE and strong interest coverage could support distributions in normal conditions, but the real estate trading model often prioritizes growth capex/working capital over steady payouts. Any dividend outlook should be tied to realized gains and cash collections, debt covenants, and pipeline visibility.

Risk Assessment

Business Risks:

• Real estate market cyclicality affecting transaction volumes, pricing, and exit timing
• Interest rate increases compressing spreads and asset valuations
• Deal pipeline and inventory turnover risk leading to revenue volatility
• Concentration risk in specific property types/regions and counterparty risk
• Execution risk on value-add projects and development/refurbishment timelines
• Regulatory and tax changes impacting real estate transactions
• Competition for assets increasing acquisition prices and reducing margins

Financial Risks:

• High financial leverage (Assets/Equity 4.89x) amplifying earnings sensitivity
• Refinancing risk and funding cost volatility amid tighter credit conditions
• Potential cash flow volatility due to working capital swings and asset cycling
• Interest rate risk despite current healthy coverage (15.8x)
• Valuation risk on held properties impacting equity and covenants

Key Concerns:

• Negative operating leverage in the period (OP growth +2.3% vs sales +7.3%)
• Net income decline (-9.1% YoY) due to higher non-operating drag
• Incomplete disclosures on cash flows and inventories limit earnings quality assessment
• Inconsistencies between reported total liabilities and implied liabilities (A−E)
• Sensitivity of ROE to leverage and market conditions

Investment Implications

Key Takeaways:

• Solid topline growth (+7.3% YoY) with resilient gross margin (30.8%)
• Operating profit growth lagging sales indicates cost or mix headwinds
• ROE at 20.6% is attractive but leverage-assisted (4.89x)
• Interest coverage strong at 15.8x, supporting debt service capacity
• Liquidity robust with current ratio ~3.0x and ¥32.0bn working capital
• Data gaps on cash flows and inventories constrain cash conversion analysis

Metrics to Watch:

• Backlog/pipeline of property acquisitions and planned disposals
• Inventory and real estate-for-sale balances and turnover days
• Operating cash flow vs net income and free cash flow generation
• Interest-bearing debt levels, average funding cost, and maturity ladder
• Gross and operating margin trends per deal cohort
• Asset turnover and ROE sustainability as funding costs evolve

Relative Positioning: Within Japan’s real estate trading/asset solutions peer set, B-Lot exhibits above-peer ROE supported by healthy margins and high leverage, with moderate asset turnover; balance sheet intensity and rate sensitivity are higher than fee-centric peers but margins compare favorably to typical property traders.

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