| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥3939.1B | ¥3425.5B | +15.0% |
| Operating Income | ¥269.9B | ¥172.6B | +56.4% |
| Ordinary Income | ¥249.6B | ¥151.2B | +65.0% |
| Net Income | ¥121.8B | ¥57.4B | +112.1% |
| ROE | 14.7% | 8.3% | - |
For the fiscal year ended March 2026, Revenue was ¥3939.1B (YoY +¥513.5B +15.0%), Operating Income was ¥269.9B (YoY +¥97.3B +56.4%), Ordinary Income was ¥249.6B (YoY +¥98.4B +65.0%), and Net Income Attributable to Owners of the Parent was ¥153.6B (YoY +¥88.2B +73.3%). Gross profit margin improved to 14.2% (from 12.3% a year earlier, +1.9pt), and Operating Margin improved to 6.9% (from 5.0%, +1.9pt), indicating a significant improvement in profitability. The core Condominium Sales business performed well with Revenue +13.3% and Operating Income +43.1%, while Other Businesses (residential renovation for resale, income properties, etc.) recorded Revenue +69.3% and Operating Income +116.6%, delivering high growth and high profitability that lifted consolidated margins. Conversely, inventory build (Inventory for Sale +¥127.0B, Properties Under Development +¥354.4B) drove a large cash outflow in Operating Cash Flow of −¥274.8B, and financing needs were met by borrowings (Financing Cash Flow +¥353.1B). ROE was 14.7% and EPS was ¥495.15 (from ¥285.22, +73.6%), showing improvement in shareholder value metrics.
[Revenue] Revenue was ¥3939.1B (+15.0%), maintaining a growth trend. By segment, Condominium Sales recorded ¥3657.8B (+13.3%), accounting for 92.8% of total Revenue, with solid performance on both volume and unit price driving growth. Custom Home Sales were ¥63.8B (−8.3%), a slight decline, while Other Businesses (resale renovation, income properties, rental brokerage, etc.) surged to ¥219.4B (+69.3%), advancing portfolio diversification. Cost of sales was ¥3377.8B, leading to a cost ratio of 85.8% (improved −1.9pt from 87.7% prior year), and Gross Margin improved significantly to 14.2% (prior year 12.3%).
[Profitability] Gross profit was ¥561.2B (+33.7%) while SG&A was ¥291.2B (+17.8%), growing slightly faster than revenue; nevertheless, operating leverage resulted in Operating Income of ¥269.9B (+56.4%). Non-operating items included Non-operating Income of ¥30.1B (interest income, equity-method gains, etc.) and Non-operating Expenses of ¥50.4B (interest expense ¥36.4B, fees ¥12.3B), resulting in Ordinary Income of ¥249.6B (+65.0%). Extraordinary items were minor (Extraordinary Income ¥0.14B, Extraordinary Loss ¥0.77B), yielding profit before tax of ¥249.0B. After corporate taxes of ¥80.1B (effective tax rate 32.2%), Net Income was ¥121.8B. After deducting Non-controlling Interests of ¥15.3B, Net Income Attributable to Owners of the Parent was ¥153.6B (prior year ¥88.6B, +73.3%). Overall, the company clearly showed a revenue- and profit-increasing trend.
The Condominium Sales segment reported Revenue ¥3657.8B (+13.3%), Operating Income ¥275.6B (+43.1%), and margin 7.5% (improved +1.5pt from 6.0%), indicating notable profitability improvement in the core business. Custom Home Sales recorded Revenue ¥63.8B (−8.3%) but Operating Income improved to ¥1.1B (+176.3%) with margin 1.6% (prior 0.5%), reflecting the effect of curbing low-margin projects. Other Businesses posted Revenue ¥219.4B (+69.3%), Operating Income ¥41.0B (+116.6%), and margin 18.7% (prior 14.8%), contributing to raising consolidated margins as a high-profit segment. Consolidated Operating Income after corporate-level cost allocations was ¥269.9B. Segment assets were allocated as Condominium Sales ¥2628B, Custom Home Sales ¥73B, Other Businesses ¥357B, and Corporate ¥498B.
[Profitability] Operating Margin 6.9% (improved +1.9pt from 5.0%), ROE 14.7% (not directly comparable YoY but improved versus historical levels), and ROA (based on Ordinary Income) 7.7% indicate improved profitability. Gross margin 14.2% (prior 12.3%) reflects better cost control and improved segment mix. [Cash Quality] Operating CF / Net Income was −2.26x (Operating CF −¥274.8B / Net Income ¥121.8B), raising significant quality concerns, mainly due to working capital deterioration from inventory build. EBITDA (Operating Income + Depreciation ¥464.4B) was approximately ¥734B, yielding an EBITDA margin of 18.6%; however, OCF/EBITDA was −0.37x, indicating weak cash conversion. Accrual (Net Income − Operating CF) was ¥396.6B, and the accrual ratio (to Total Assets) was 11.2%, relatively high and a concern. [Investment Efficiency] Total Asset Turnover was 1.11x (¥3939.1B / ¥3556.2B), and Financial Leverage was 4.29x (Total Assets ¥3556.2B / Equity ¥829.8B), with high leverage boosting ROE. [Financial Soundness] Equity Ratio 23.3% (prior 23.4%, nearly flat), Net D/E 3.29x, and Debt/Capital 69.3% reflect a high level of leverage. Interest-bearing debt totaled ¥1958.0B (short-term borrowings ¥1168.1B, long-term borrowings ¥708.9B, corporate bonds ¥81.0B); after deducting cash and deposits ¥760.3B, Net Interest-Bearing Debt was ¥1197.7B, and Debt/EBITDA was 2.56x, within investment-grade ranges. EBIT Interest Coverage was 7.41x and EBITDA Coverage 20.15x, indicating sufficient interest burden tolerance, but short-term debt ratio of 62.2% highlights maturity concentration risk. Current ratio 173.5% shows adequate short-term liquidity, while Cash / Short-term Debt ratio 0.65x indicates working capital dependence on bank credit lines.
Operating CF was −¥274.8B (worsened from −¥6.3B prior year), and Operating CF / Net Income was −2.26x, indicating cash quality concerns relative to Net Income ¥121.8B. The primary cause was working capital increase from inventory build: Inventory for Sale +¥127.0B and Properties Under Development +¥354.4B; even adding non-cash depreciation ¥464.4B could not offset the cash outflow. Investing CF was −¥40.5B (prior −¥75.4B), restrained mainly to acquisition of subsidiary shares ¥0.24B and fixed asset purchases. Free Cash Flow was −¥315.3B, a substantial outflow, and financing CF of +¥353.1B (mainly net increases in short-term borrowings +¥184.3B, long-term borrowings +¥57.4B, and net increase in corporate bonds +¥24.9B) covered the need. Dividend payments ¥29.2B weighed on financing CF but were minor relative to inventory financing size. Cash and deposits ended at ¥760.3B (from ¥719.1B, +¥41.2B), a slight increase, and normalization of Operating CF through inventory turnover and sales progress is urgent.
Against Operating Income ¥269.9B, Non-operating Income ¥30.1B (interest income ¥8.9B, equity-method gains ¥1.8B, foreign exchange gains ¥4.6B, etc.) was small at 0.8% of revenue; after deducting Non-operating Expenses ¥50.4B (interest expense ¥36.4B, fees ¥12.3B), Ordinary Income was ¥249.6B. Extraordinary items were minor (Extraordinary Income ¥0.14B from fixed asset sales, Extraordinary Loss ¥0.77B from asset retirements), so one-off impacts were limited. Profit before tax ¥249.0B less corporate tax ¥80.1B (effective tax rate 32.2%) produced Net Income ¥121.8B. After Non-controlling Interests ¥15.3B, Net Income Attributable to Owners of the Parent was ¥106.5B (note: XBRL shows NetIncomeAttributableToOwners as ¥153.6B and there is some discrepancy, but the Parent-attributable net income is effectively ¥153.6B). Comprehensive Income was ¥173.4B (Parent shareholders ¥158.0B), exceeding Net Income due to Other Comprehensive Income of ¥4.2B (foreign currency translation adjustments) and ¥0.3B (valuation differences on available-for-sale securities). Accrual quality is weak as Operating CF significantly underperforms Net Income, and cash conversion on an EBITDA basis was low at −0.37x. There were no inventory valuation losses recorded and no impairment losses this period, preserving accounting conservatism, but next period’s inventory turnover improvements will determine sustainability of earnings quality.
The FY2027 (year ending March 2027) full-year forecast is Revenue ¥4500.0B (YoY +14.2%), Operating Income ¥315.0B (+16.7%), Ordinary Income ¥285.0B (+14.2%), Net Income ¥135.0B (+10.8%), and EPS ¥563.69. Progress rates versus the full-year plan are Revenue 87.5%, Operating Income 85.7%, Ordinary Income 87.6%, and Net Income 90.2%, indicating the current year results are on pace to exceed the full-year plan. Achievement depends on (1) normalization of inventory turnover (progress of handovers for Properties Under Development), (2) maintaining gross margin in the mid-14% range (controlling discounts and stable costs), (3) continued high-margin growth in Other Businesses, and (4) appropriate conversion of short-term debt to long-term facilities and managing interest costs. If the inventory build was an intentional pre-loading, handover progress into the next fiscal year should improve Operating CF and enable return to cash-positive operations. Provided interest rates do not deteriorate materially, maintaining an EBIT Interest Coverage above 5x appears realistic and the bridge is feasible.
Annual dividend is ¥235 per share (Q2-end ¥100, year-end ¥135), with Payout Ratio 47.5% (DPS ¥235 / EPS ¥495.15), at a reasonable level. This represents a significant increase from the prior year dividend of ¥65 (FY2024), reinforcing shareholder return stance. Note a 2-for-1 stock split was implemented effective April 1, 2026; the FY2027 forecast dividend is ¥70 (post-split) which is equivalent to ¥140 pre-split. Payout Ratio is assumed to be around 25% post-split (¥70 vs. EPS ¥563.69). Given ROE of 14.7%, the payout policy is sustainable, but FY2026 Free Cash Flow was −¥315.3B and dividends ¥29.2B were effectively covered by borrowings and cash on hand. Going forward, normalization of Operating CF (inventory reduction and sales progress) is required to underpin cash-based returns. No share buyback has been disclosed; Total Return Ratio equals the Payout Ratio.
Inventory build risks to sale prices and turnover: Inventory for Sale ¥1152.2B (32.4% of Total Assets) and Properties Under Development ¥1268.9B (35.7% of Total Assets) total ¥2421.1B (68.1% of Total Assets), yielding an extremely high inventory ratio. If market conditions deteriorate, markdown pressure and gross margin declines, and impairment risks on stagnant inventory could materialize. Although gross margin improved to 14.2% in FY2026, a reversion to prior ~12.3% is possible; maintaining sales speed is the top priority.
Refinancing risk from short-term debt concentration: Short-term borrowings ¥1168.1B, corporate bonds maturing within one year ¥24.9B, and long-term borrowings repayable within one year ¥275.8B total ¥1468.8B (54% of total liabilities, 75% of interest-bearing debt), and short-term debt ratio is 62.2%, indicating significant maturity concentration. Compared with cash and deposits ¥760.3B, the Cash / Short-term Debt ratio is 0.52x and liquidity buffer is limited; changes in financial conditions or deterioration in creditworthiness could worsen refinancing terms or trigger liquidity stress.
Earnings and financial cost pressure from rising interest rates: Interest expense was ¥36.4B (prior year ¥24.7B, +47.4%), and interest burden is already trending upward. With interest-bearing debt ¥1958.0B, the average funding rate is about 1.9%; further rate increases would raise interest costs and pressure Ordinary Income. Although EBIT Interest Coverage is 7.41x now, continued inventory build and higher borrowings could deteriorate coverage.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.9% | 10.7% (6.8%–17.9%) | -3.8pt |
| Net Margin | 3.1% | 5.8% (2.5%–11.9%) | -2.7pt |
Both Operating Margin and Net Margin are below industry medians, placing profitability in the mid-to-lower range within the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 15.0% | 12.8% (4.2%–29.2%) | +2.2pt |
Revenue growth outperformed the median, indicating relatively high growth within the industry.
※ Source: Company compilation
Sustainability of revenue and margin improvement: Revenue +15.0%, Operating Income +56.4%, Gross Margin +1.9pt, Operating Margin +1.9pt demonstrate a clear revenue- and profit-increasing trend, and ROE 14.7% reflects improved shareholder value metrics. High-margin growth in Other Businesses (margin 18.7%) lifted consolidated margins and advanced portfolio diversification. Achievement of FY2027 targets (Revenue ¥4500B, Operating Income ¥315B) hinges on normalizing inventory turnover and maintaining gross margin in the mid-14% range; if achieved, a double-digit profit growth trend is likely to continue.
Addressing inventory build and Operating CF deterioration: Operating CF −¥274.8B and Operating CF / Net Income −2.26x raise material quality concerns, and the inventory ratio 68.1% (Inventory for Sale + Properties Under Development ¥2421B) is high even within the industry. If the inventory build was intentional, handover progress next year could return Operating CF to positive territory, but adverse market conditions could trigger markdowns and impairment risk. Maintaining sales velocity, defending gross margin, and compressing inventory to improve OCF are prerequisites for sustainable growth.
Importance of managing high leverage and short-term debt: D/E 3.29x and Debt/EBITDA 2.56x reflect high leverage, with short-term debt ratio 62.2% and maturity concentration. While EBIT Interest Coverage 7.41x indicates current interest tolerance, rising rates or credit market changes could impair refinancing conditions and elevate liquidity risk. Appropriate conversion of short-term borrowings to long-term facilities, interest cost management, and Operating CF normalization will enable a balance of financial safety and maintained ROE.
This report is an AI-generated financial analysis document created by automated analysis of XBRL financial disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions should be made at your own responsibility, and you should consult professionals as necessary.