Good Com Asset (3475) FY2026 Q1 Earnings Report

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Executive Summary

Despite a sharp 82.6% increase in revenue, the operating loss widened, raising questions about the quality of revenue growth. Revenue was ¥4.69B (¥2.57B in the previous year, YoY +82.6%), Operating Income was ¥-0.24B (¥-0.06B in the previous year), Ordinary Income was ¥-0.36B (¥-0.08B in the previous year), and Net Income was ¥-0.38B (¥-0.09B in the previous year). The primary driver of revenue growth was the sharp expansion of the Wholesale Business; however, the business recorded a substantial operating loss, resulting in deteriorated consolidated profitability compared with the previous year.

Factors Behind Earnings Changes

【Revenue】Revenue was ¥4.69B (+82.6% YoY). Wholesale surged to ¥0.83B (+317.6%), while Livenup Group newly recorded ¥1.32B, making these the primary drivers of revenue growth. Retail Sales of ¥1.98B (+3.1%) and Real Estate Management of ¥0.56B (+26.6%) also contributed to the increase in revenue.

【Profitability】The gross profit margin declined by approximately 570bp, from 26.0% in the previous year to 20.3%, indicating that revenue growth has not translated into improved profitability. SG&A expenses were ¥1.19B (+63.5%), increasing at a slower pace than revenue. Although the SG&A ratio improved, the impact of the lower gross profit margin was significant, and the operating loss widened to ¥0.24B (¥0.06B in the previous year). Ordinary loss was ¥0.36B, with non-operating expenses of ¥0.22B, including interest expense of ¥0.13B (¥0.06B in the previous year), further widening the loss. Net loss was ¥0.38B (¥0.09B in the previous year). In conclusion, the company experienced increased revenue but decreased profit.

Segment Analysis

By segment, the polarization of the earnings structure is clear. Real Estate Management was the only highly profitable business, recording Revenue of ¥0.56B, Operating Income of ¥0.14B, and a margin of 25.3% (+101.8% YoY), thereby partially mitigating the consolidated loss. In contrast, Wholesale recorded Revenue of ¥0.83B and an Operating Loss of ¥0.29B (margin of -35.3%), making it the largest contributor to the deterioration in consolidated profitability. Retail Sales, the core business with Revenue of ¥1.98B, recorded an Operating Loss of ¥0.03B and did not contribute to earnings, while Livenup Group recorded an Operating Loss of ¥0.04B on Revenue of ¥1.32B and recognized an impairment loss of ¥0.005B related to stores scheduled for closure.

Key Financial Indicators

【Profitability】The Operating Income Margin deteriorated to -5.0% (from -2.3% in the previous year), while the Net Profit Margin was -8.1%, indicating deteriorating profitability despite revenue growth. The gross profit margin declined to 20.3% from 26.0% in the previous year, suggesting the impact of project mix or rising costs.【Cash Flow Quality】Cash and cash equivalents were ¥5.61B, down 41.2% from ¥9.54B in the previous year. The total of real estate for sale of ¥35.09B and real estate under development of ¥13.04B accounted for 78.2% of total assets, indicating an asset-intensive structure.【Investment Efficiency】Annualized ROE was -12.2%, and total asset turnover remained low, indicating that the substantial real estate inventory has not yet translated into earnings.【Financial Soundness】The Equity Ratio declined to 20.3% from 29.9% in the previous year, while long-term borrowings increased to ¥30.08B (+70.7% YoY). Dependence on liabilities has increased, confirming a reduction in the capital cushion.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is unavailable, analysis of funding trends based on changes in the balance sheet indicates that the operating loss and investment in inventory are putting pressure on cash management. Cash and cash equivalents declined by ¥3.93B year on year (-41.2%) to ¥5.61B. Meanwhile, real estate for sale increased by ¥18.36B (+109.8%), long-term borrowings increased by ¥12.46B (+70.7%), and short-term borrowings also increased by ¥2.26B (+35.4%). This indicates that the company is financing the buildup of real estate inventory through borrowings and expanding its business while drawing down cash and cash equivalents. Retained earnings declined by ¥1.65B, indicating that the simultaneous recognition of losses and expansion of inventory is weakening the capital base. Going forward, the speed of cash recovery through property sales will be key to cash management.

Quality of Earnings

The current-period loss includes an impairment loss of ¥0.005B as a temporary factor, relating to stores operated by Livenup Group that are scheduled for closure. However, the amount is small, and the primary causes of deteriorating profitability are the recurring decline in the gross profit margin and the increase in interest expense. Interest expense accounted for ¥0.13B of non-operating expenses of ¥0.22B, approximately 2.2 times the ¥0.06B recorded in the previous year, and should be viewed as a recurring increase in the burden associated with higher borrowings. Non-operating income was limited at ¥0.10B, and the temporary uplift from dividend income and other income was modest. Comprehensive income was ¥-0.38B, almost identical to Net Income of ¥-0.38B, indicating that the impact of valuation differences on securities and other items was minimal and that the divergence between comprehensive income and net income was small. Overall, most of the loss was attributable to structural factors—deteriorating profitability in the core business and financial costs—and the quality of earnings was not excessively distorted by temporary factors.

Earnings Forecast and Guidance

The full-year company forecast calls for Revenue of ¥79.28B (YoY +45.4%), Operating Income of ¥7.73B (YoY +170.0%), and Ordinary Income of ¥6.84B (YoY +172.3%), with no revisions to either the earnings forecast or the dividend forecast. Q1 revenue progress was 5.9% (¥4.69B/¥79.28B), significantly below the standard quarterly progress rate of 25%. Operating Income, Ordinary Income, and Net Income were all negative in Q1, and achieving full-year profitability will require a substantial improvement in the gross profit margin and the recognition of revenue from large-scale projects during the remaining three quarters. Although the real estate sales business is characterized by quarterly earnings concentration depending on the timing of property handovers, the full-year plan assumes an Operating Income Margin of 9.7%, leaving substantial room for improvement from the negative 5.0% recorded in Q1.

Shareholder Returns

The full-year dividend forecast remains unchanged at ¥46.0 per share. Based on forecast full-year EPS of ¥158.44, the Payout Ratio is approximately 29.0%, below the general benchmark for sustainable levels. As the dividend in the same period of the previous year was ¥0, the current forecast represents a dividend increase. However, as of Q1, the company recorded a quarterly Net Loss attributable to owners of the parent of ¥0.36B. The realization of the forecast dividend therefore depends on a recovery in full-year earnings and progress in recovering cash through property sales. Given the increase in long-term borrowings and the higher interest expense burden, a comprehensive review of dividend capacity is required, including trends in cash and cash equivalents and inventory turnover.

Risk Factors

1. Real Estate Inventory Disposal Progress Risk: The combined total of real estate for sale of ¥35.09B and real estate under development of ¥13.04B accounts for 78.2% of total assets. Delays in sales or declines in property prices would affect both revenue and cash recovery, making this risk particularly important given the full-year progress rate of 5.9%.

2. Leverage and Interest Burden Risk: Long-term borrowings increased to ¥30.08B, up +70.7% YoY, while the Equity Ratio declined from 29.9% in the previous year to 20.3%. Interest expense increased to ¥0.13B, approximately 2.2 times the previous year, and financial costs are pressuring Ordinary Income amid the operating loss.

3. Deterioration in Wholesale Business Profitability: Revenue surged by +317.6% YoY, but the business recorded an Operating Loss of ¥0.29B and a margin of -35.3%, making it the largest contributor to the deterioration in consolidated profitability. The key focus going forward will be whether profitability improves on a project-by-project basis.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the company’s Operating Income Margin and Net Profit Margin were negative, and median data is currently insufficient to determine its relative position within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate was high at 82.6%, but median data for comparison is currently insufficient.

※Source: Compiled by the Company

Key Points from the Financial Results

1. Revenue expanded sharply by 82.6% YoY, but the Operating Loss widened to ¥0.24B. The decline in the gross profit margin from 26.0% in the previous year to 20.3% was behind the simultaneous increase in revenue and decrease in profit. The key point to monitor going forward is whether profitability improves, rather than the sustainability of revenue growth.

2. By segment, Real Estate Management was the only highly profitable business, with a margin of 25.3%, and helped mitigate the consolidated loss. Meanwhile, the Wholesale Operating Loss of ¥0.29B significantly damaged consolidated profitability. An earnings structure imbalance within the business portfolio is evident.

3. Q1 revenue progress against the full-year plan was 5.9%, significantly below the standard level of 25%, while the Q1 Operating Income Margin was negative 5.0% versus the full-year assumption of 9.7%. Long-term borrowings increased by +70.7% YoY, and interest expense also increased by approximately 2.2 times. The expansion of inventory and changes in the funding structure should be monitored as structural changes that may affect both future earnings and financial conditions.

Theoretical Share Price (Reference Value)

Sensitivity: ¥863–¥917 at ±1% for the cost of equity, and ¥876–¥910 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat on the high side.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is a financial results analysis document automatically generated by AI based on XBRL financial summary data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial results data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional where necessary.

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AI Financial Analysis

Executive Summary

FY2026 Q1 was a weak earnings quarter despite exceptionally strong top-line growth, with property-development revenue not converting into operating profit. Revenue increased 82.6% YoY to ¥4.693bn. Gross profit rose to ¥0.954bn from ¥0.669bn in the prior-year quarter. However, gross margin compressed by 570bp to 20.3% from 26.0%, indicating a less favorable project mix, lower sale margins, or both. SG&A increased 63.5% YoY to ¥1.190bn, remaining above gross profit and producing an operating loss of ¥0.235bn. The operating margin deteriorated by 270bp to -5.0% from -2.3%. Net income attributable to owners was a loss of ¥0.356bn, versus a ¥0.093bn loss a year earlier, and basic EPS was -¥12.44. Interest expense more than doubled to ¥0.134bn from ¥0.062bn as borrowing expanded materially. Consequently, ordinary loss widened to ¥0.356bn and the annualized ROE was -11.4%. The Q1 loss was also affected by a ¥0.011bn extraordinary loss, including a ¥0.005bn impairment related to a planned Livenup Group store closure. The balance sheet expanded substantially, but this was principally inventory-led and debt-funded rather than equity-funded. Real estate for sale increased 109.8% YoY to ¥35.093bn, while real estate for sale in progress stood at ¥13.038bn. Interest-bearing debt increased to ¥38.706bn and D/E rose to 3.92x, creating a more leveraged earnings and refinancing profile. Liquidity is adequate on a current-ratio basis at 313.6%, although cash covered only 0.65x of short-term loans. The full-year plan calls for ¥79.281bn of revenue, ¥7.729bn of operating income, and ¥4.540bn of net income attributable to owners, making the Q1 revenue progress rate only 5.9% and placing substantial reliance on sales and profit recognition in later quarters. Management has not revised either earnings or dividend guidance. The central issue for subsequent quarters is whether the enlarged inventory pipeline can be sold at margins sufficient to reverse the Q1 operating loss while containing funding costs.

Profitability Analysis

The annualized DuPont ROE of -11.4% comprises a -7.6% net profit margin, 0.305x asset turnover, and 4.92x financial leverage. The negative net margin is the immediate driver of negative ROE, while elevated leverage magnifies the loss borne by equity holders. Revenue growth was strong, but gross-margin compression to 20.3% from 26.0% was the most important operating deterioration, reducing the incremental gross-profit conversion of sales. SG&A rose 63.5% YoY, slower than revenue growth but still exceeded gross profit by ¥0.236bn; the cost base therefore remains too high for the Q1 gross-profit level. Segment results identify Wholesale as the largest sales contributor at ¥0.828bn, but it posted the largest segment loss at ¥0.292bn and was the principal drag on consolidated profitability. Retail Sales generated ¥1.981bn of revenue but recorded a ¥0.034bn segment loss. Livenup Group contributed ¥1.315bn of revenue and a ¥0.042bn segment loss. Real Estate Management was the core business by segment-profit contribution, producing a ¥0.558bn revenue base and a ¥0.141bn segment profit, equivalent to a 25.3% segment margin before consolidation adjustments. This recurring-management-related profit pool was insufficient to offset losses in the sales-oriented segments. The five-factor analysis shows an EBIT margin of -5.0% and an interest burden of 1.561x; with negative EBIT, this ratio should not be interpreted as evidence of favorable financing, as interest expense instead deepened the pre-tax loss. Interest coverage was -1.76x, confirming that Q1 operating earnings did not cover cash interest expense. The ¥0.005bn impairment in Livenup Group is non-recurring in nature but is too small to explain the overall loss. A sustainable recovery requires normalization of project-level gross margins, profitable wholesale execution, and lower SG&A intensity relative to gross profit.

Growth Assessment

Revenue growth of 82.6% YoY reflects a sharply larger sales volume across all principal operating segments, including the first-time consolidation-scale contribution from Livenup Group revenue of ¥1.315bn. Wholesale revenue grew to ¥0.828bn from ¥0.198bn, Retail Sales revenue increased to ¥1.981bn from ¥1.922bn, and Real Estate Management revenue rose to ¥0.558bn from ¥0.441bn. Revenue growth was not accompanied by profit growth: consolidated operating loss widened to ¥0.235bn from ¥0.058bn. This divergence indicates that volume growth alone is not currently demonstrating earnings scalability. Real estate for sale and development in progress totaled ¥48.132bn, providing a sizable development and sales pipeline relative to Q1 revenue. The full-year revenue forecast of ¥79.281bn implies a substantial acceleration in recognized sales from later-quarter project completions and handovers. Q1 revenue represents 5.9% of full-year guidance, materially below the 25% standard Q1 progress reference by 19.1 percentage points. Operating income and net income were negative in Q1 versus full-year targets of ¥7.729bn and ¥4.540bn, respectively, so delivery is highly dependent on back-end-loaded transaction timing and successful inventory monetization. The forecast embeds 45.4% revenue growth, 170.0% operating-income growth, and 213.5% net-income growth for the year. No forecast revision was announced. The recurring Real Estate Management segment is profitable and growing, but its revenue contribution remains much smaller than the sales-focused businesses. Accordingly, near-term growth quality is determined primarily by the margin and turnover of development inventory rather than by recurring income.

Financial Health

The company has a strong reported current ratio of 313.6% and working capital of ¥39.473bn, reflecting the predominance of current assets. However, the asset base is highly concentrated in property inventory: real estate for sale was ¥35.093bn and real estate for sale in progress was ¥13.038bn, together representing 78.2% of total assets. This concentration means liquidity depends materially on orderly property sales, project completion, and continued availability of development financing. Interest-bearing debt was ¥38.706bn, including ¥8.625bn of short-term loans and ¥30.081bn of long-term loans. Long-term loans increased 70.7% YoY and short-term loans increased 35.4% YoY, funding the expansion of the balance sheet and inventory. Total debt represented 62.9% of total assets, above the 55% real-estate leverage alert threshold, while debt/capital was 75.6%. D/E of 3.92x exceeds the 2.0x warning threshold and signals aggressive debt financing. This is a material financial-risk factor because the Q1 operating loss did not service interest expense, as shown by interest coverage of -1.76x. Current liabilities of ¥18.476bn are below current assets of ¥57.948bn, so there is no reported near-term current-asset/current-liability mismatch. Nevertheless, cash and deposits fell 41.2% YoY to ¥5.610bn and covered only 0.65x of short-term loans, increasing reliance on inventory conversion and refinancing. Equity declined 11.8% YoY to ¥12.513bn, reducing the capital buffer as debt rose. The capital adequacy ratio declined to 19.8% from 29.9%. Intangible assets are limited at 0.4% of total assets, so balance-sheet risk is primarily property-inventory and debt related rather than acquisition-intangible related.

Notable B/S Changes

Long-term loans: +¥12.464bn (+70.7%) to ¥30.081bn - substantial expansion in long-term development financing; raises interest-rate, refinancing, and leverage sensitivity. Short-term loans: +¥2.255bn (+35.4%) to ¥8.625bn - higher near-term funding obligations; cash/short-term-debt coverage is only 0.65x. Cash and deposits: -¥3.933bn (-41.2%) to ¥5.610bn - liquidity reserve declined while debt increased, increasing dependence on property sales and financing access. Real estate for sale: +¥18.363bn (+109.8%) to ¥35.093bn - major inventory build supporting future sales, but heightening market-cycle, turnover, and valuation risk. Total assets: +¥15.283bn (+33.0%) to ¥61.572bn - balance-sheet growth is concentrated in inventory and funded predominantly by debt. Total equity: -¥1.668bn (-11.8%) to ¥12.513bn - reduced capital buffer alongside increased borrowings; capital adequacy declined to 19.8% from 29.9%. Retained earnings: -¥1.646bn (-14.0%) to ¥10.105bn - accumulated losses and distributions reduced internally funded capital available to support the larger asset base.

Cash Flow Quality

Cash-flow quality cannot be quantified from the available period data because operating cash flow, investing cash flow, financing cash flow, capital expenditure, and free cash flow are not reported. Earnings quality nevertheless appears pressured at the accrual level because the company recorded a net loss while materially increasing property inventory and debt. Real estate for sale rose by ¥18.363bn YoY, while real estate for sale in progress remained substantial at ¥13.038bn; in a developer, these balances require eventual cash realization through sales and settlement. The ¥3.933bn YoY decline in cash and deposits alongside debt expansion indicates that inventory investment and other funding uses exceeded internally available cash during the comparison period. Q1 interest expense of ¥0.134bn exceeded the operating loss in magnitude sufficient to deepen the pre-tax loss, reinforcing the need for future project cash collections. The small ¥0.011bn extraordinary loss, including ¥0.005bn impairment, does not materially alter the underlying assessment of operating cash-generation capacity. Cash conversion and free-cash-flow coverage of dividends or debt maturities cannot be assessed from the reported figures.

Dividend Sustainability

The full-year dividend forecast is ¥46.00 per share, unchanged from prior guidance. Against forecast EPS of ¥158.44, the implied dividend payout ratio is approximately 29.0%, which is moderate on an earnings-guidance basis. Q1 EPS was -¥12.44, so there was no current-quarter earnings coverage for the planned annual dividend. Sustainability therefore rests on achievement of the heavily back-end-loaded full-year profit forecast and on cash realization from the enlarged real-estate inventory portfolio. With D/E at 3.92x, debt/capital at 75.6%, and negative Q1 interest coverage, preserving liquidity and meeting financing requirements are important constraints on shareholder distributions. No share-buyback information is reported, so a total return ratio cannot be assessed. No dividend revision was announced.

Risk Assessment

Business risks include Property-sales execution risk is high: sales-oriented segments were loss-making in Q1 despite 82.6% consolidated revenue growth, with Wholesale reporting a ¥0.292bn segment loss, Retail Sales a ¥0.034bn loss, and Livenup Group a ¥0.042bn loss., Real-estate market-cycle risk is elevated because inventory represented 78.2% of total assets. A slowdown in buyer demand, pricing pressure, or delayed project completions could defer revenue recognition and impair inventory turnover., Margin risk is material: gross margin fell 570bp YoY to 20.3%, and recovery in the full-year plan requires materially better project margins and sales mix., Construction-cost inflation and contractor availability can compress development margins or delay handovers, particularly given the ¥13.038bn development-in-progress balance., The Livenup Group recorded a ¥0.005bn impairment for a planned store closure, signaling localized execution and footprint-optimization risk..

Financial risks include High leverage is the primary financial risk. D/E of 3.92x is above the 2.0x warning threshold, debt/capital is 75.6%, and LTV is 62.9%, above the 55% real-estate alert threshold., Debt service risk is acute in Q1: interest coverage was -1.76x because EBIT was negative and interest expense was ¥0.134bn., Refinancing and liquidity risk are heightened by ¥8.625bn of short-term loans and cash/short-term-debt coverage of only 0.65x, notwithstanding the high current ratio., Equity-buffer risk increased as total equity declined ¥1.668bn YoY while long-term and short-term loans rose by a combined ¥14.876bn., Interest-rate sensitivity is significant because ¥38.706bn of interest-bearing debt exposes earnings and project returns to higher funding costs..

Key concerns include The quality alert for low operating efficiency is validated by the -5.0% EBIT margin and annualized ROIC of -2.1%; the expanded asset base is not currently earning an operating return., The Q1 revenue progress rate is only 5.9% of full-year guidance, far below the standard 25% Q1 reference, leaving a large concentration of forecast delivery in subsequent quarters., The reported current ratio is strong, but its protection is economically less immediate than a cash-rich balance sheet because property inventory dominates current assets., The combination of falling cash, rising debt, and inventory concentration raises the sensitivity of the investment profile to asset-sale timing and valuation., No cash-flow figures are reported, so the degree to which earnings, inventory investment, debt draws, and distributions are supported by operating cash generation cannot be independently verified..

Investment Implications

Key takeaways include Q1 revenue momentum was strong at +82.6% YoY, but profitability deteriorated, with operating loss widening to ¥0.235bn and gross margin declining to 20.3%., Real Estate Management is the only profitable reported segment and provides a growing, relatively stable earnings base, but it does not yet offset losses in Wholesale, Retail Sales, and Livenup Group., The company is pursuing an inventory-intensive growth model: real estate for sale and development in progress totaled ¥48.132bn, financed alongside a substantial rise in borrowings., Leverage is high, with ¥38.706bn of interest-bearing debt, 3.92x D/E, and 62.9% LTV; operating recovery must be accompanied by adequate cash conversion., Full-year guidance implies a pronounced later-quarter earnings recovery, and quarterly delivery against this plan is the critical fundamental validation point..

Metrics to watch include Quarterly gross margin and operating margin, particularly whether they recover from 20.3% and -5.0%, respectively., Wholesale segment profitability, given its ¥0.292bn Q1 segment loss despite ¥0.828bn of revenue., Real estate for sale and development-in-progress balances, sales velocity, and any valuation losses or impairments., Interest expense, interest coverage, short-term debt refinancing, and cash/short-term-debt coverage., Progress toward full-year guidance: Q1 revenue progress was 5.9%, versus a 25% standard Q1 reference., The scale and margin contribution of Real Estate Management, which generated ¥0.141bn of segment profit in Q1., Operating cash flow and free cash flow once reported, particularly relative to inventory investment, interest costs, and dividends..

Regarding relative positioning, Relative to a conservatively financed real-estate developer, the company currently has a more aggressive inventory-and-debt profile: its 62.9% LTV exceeds the 55% alert threshold, D/E is 3.92x, and Q1 interest coverage is negative. Its profitable Real Estate Management segment offers some recurring-income diversification, but the earnings mix remains dominated by more volatile property-sales activities.