Good Com Asset Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥29.39B
• Operating Income: ¥2.57B
• Net Income: ¥1.43B
• EPS: ¥49.22

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

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AI Financial Analysis

Executive Summary

FY2026 Q2 was a strong top-line and operating-profit acceleration quarter, albeit with weaker cash conversion and higher leverage. Revenue rose 53.2% YoY to 293.9bn JPY, driving operating income up 61.0% YoY to 25.73bn JPY and ordinary income up 43.9% YoY to 21.77bn JPY. Net income increased 41.2% YoY to 14.11bn JPY, with EPS at ¥49.22. Gross margin expanded to 18.6%, up roughly 140 bps YoY, supported by scale benefits despite a mix still anchored in low-margin wholesale. Operating margin improved to 8.8%, up about 43 bps YoY, while net margin settled at 4.8%, compressing roughly 41 bps YoY on heavier interest and taxes. EBITDA was 26.15bn JPY with an 8.9% margin; EBITDA pre-goodwill amortization was 26.37bn JPY, indicating minimal JGAAP amortization drag. Earnings quality deteriorated: operating cash flow was -90.11bn JPY versus net income of 14.11bn JPY (OCF/NI -6.39x), mainly due to a 108.96bn JPY inventory build to support back-half deliveries. Leverage increased materially, with interest-bearing debt at 338.55bn JPY and D/E at 3.07x; Debt/EBITDA stands at 12.95x, while interest coverage remains acceptable at ~7x. Liquidity appears ample on a current-ratio basis (3.01x), but asset quality is inventory-heavy (inventory ratio ~70.9%), and cash/short-term debt coverage is only ~1.08x. Segmentally, Wholesale remained the core profit engine (67.5% of sales, 10.4% margin), Real Estate Management delivered high margins (36.3%) on a smaller base, and Retail Sales posted losses. Extraordinary gains included 0.59bn JPY of negative goodwill from an acquisition, partially offset by minor impairment and closure-related provisions in Livenup Group. Against full-year guidance, H1 progress is behind the typical 50% run-rate: revenue 37%, operating income 33%, ordinary income 32%, and net income 31%, implying a back-half weighted plan requiring timely closings and inventory monetization. Strategically, the company is scaling its wholesale platform and adjacent fee businesses, but execution depends on converting the expanded inventory into sales, managing debt costs, and sustaining margins amid a higher-rate environment. Overall, the quarter validates demand and operating leverage, but underscores funding intensity and the need for disciplined working-capital turns to support guidance.

Profitability Analysis

ROE decomposition (DuPont 3-factor): ROE 9.8% = Net Margin 4.8% × Asset Turnover 0.502 × Financial Leverage 4.07x. YoY, net margin eased from ~5.2% to 4.8% (≈-41 bps), asset turnover improved from ~0.414 to 0.502, and leverage rose from ~3.27x to 4.07x. The largest drivers were higher asset turnover and increased leverage, reflecting faster revenue growth on a larger asset base funded by debt. Business rationale: scale-up of wholesale transactions boosted volume throughput while financing expanded inventory, enabling more closings but raising interest costs. Sustainability: turnover gains look tied to wholesale mix and could persist if pipeline conversion remains strong; leverage elevation is less sustainable and sensitive to refinancing costs. Operating leverage was positive—gross profit rose faster than sales—yet SG&A grew ~69.6% YoY, outpacing revenue growth of 53.2%, a watchpoint for cost discipline if growth normalizes.

Growth Assessment

Top-line growth of 53.2% YoY was led by Wholesale (+49.5% YoY) and Real Estate Management (+30.3% YoY), offset by Retail Sales (-18.3% YoY). Operating income grew 61.0% YoY on better gross margin and scale, with EBITDA margin at 8.9%. Growth quality is mixed: recurring, high-margin management fees are expanding, but the model remains predominantly sales-driven and wholesale-concentrated. The inventory build of 108.96bn JPY indicates a robust pipeline for 2H, supporting the back-end loaded plan. However, the guidance progress rates (sales 37%, OP 33%, NP 31%) trail the standard H1 50%, implying reliance on timely closings and financing availability in 2H. Near-term outlook hinges on monetizing current inventory, maintaining 10%+ wholesale margins, and containing interest costs amid a higher leverage base.

Financial Health

• Liquidity: Current ratio 3.01x and quick ratio 3.01x indicate ample short-term liquidity, though quality is inventory-heavy (current assets 92.2% of total; inventory ratio ~70.9%). Cash and deposits are 89.52bn JPY; cash/short-term debt coverage is ~1.08x.
• Leverage/solvency: D/E 3.07x (warning), Debt/EBITDA 12.95x (high). Debt/Capital 70.2% and LTV ~57.8% reflect an aggressive capital structure typical of developers but elevated versus conservative benchmarks.
• Maturity profile: Short-term loans 83.27bn JPY plus current portion of LT loans 49.38bn JPY create sizable near-term obligations relative to cash; refinancing and asset liquidation (project closings) are critical. Interest coverage (~7x EBITDA) is currently comfortable but could compress if rates rise or closings slip.
• Notable changes: Long-term loans +44.9% YoY (to 255.28bn JPY) and short-term loans +30.7% YoY (to 83.27bn JPY) underscore funding intensity for inventory expansion.

Notable B/S Changes

Long-term Loans: +79.10bn JPY (+44.9%) - Funding inventory expansion; raises refinancing and interest rate exposure. Short-term Loans: +19.93bn JPY (+30.7%) - Higher near-term refinancing needs; monitor cash/STD coverage. Real Estate for Sale: +121.77bn JPY (+72.8%) - Significant pipeline build underpinning 2H closings; elevates liquidity and price risk.

Cash Flow Quality

• OCF/Net Income: -6.39x signals weak earnings cash conversion, primarily driven by a 108.96bn JPY inventory increase and higher interest paid (46.62bn JPY). Subtotal OCF was -80.57bn JPY.
• FCF: -104.92bn JPY (OCF -90.11bn JPY, CapEx -0.12bn JPY, other investing outflows), financed by net debt inflows (proceeds from LT loans 264.59bn JPY vs repayments 173.91bn JPY).
• Sustainability: Cash returns to shareholders (cash dividends paid 12.90bn JPY; share repurchases 4.63bn JPY) were effectively debt-funded this half; future distributions depend on 2H inventory monetization. Working capital signals reflect operational build rather than manipulation; however, persistent negative OCF would elevate refinancing risk.

Dividend Sustainability

• Policy/execution: No interim DPS; cash dividends paid during the period totaled 12.90bn JPY (prior period distribution). Full-year guidance implies DPS ¥46.
• Payout ratio: Based on guided EPS ¥158.44, payout ~29%, appearing conservative if earnings materialize.
• Coverage: H1 FCF was negative and dividends were debt-funded; year-end sustainability depends on 2H free cash flow from closings. With Debt/EBITDA at 12.9x, management prudence on cash returns is advisable until OCF normalizes.

Risk Assessment

Business risks include Concentration in Wholesale (67.5% of revenue) exposes earnings to transaction timing and market liquidity., Inventory-heavy model (inventory ratio ~70.9%) raises exposure to housing/condominium demand cycles and price movements., Execution risk on 2H back-end loaded plan; guidance requires timely closings and buyer financing availability., Margin pressure risk if SG&A growth (69.6% YoY) continues to outpace revenue..

Financial risks include High leverage: D/E 3.07x and Debt/EBITDA 12.95x increase refinancing and covenant headroom risk., LTV ~57.8% elevates sensitivity to asset valuation and lender appetite., Cash conversion weakness: OCF/NI -6.39x; reliance on external funding during build-out., Interest rate risk: interest burden ratio 0.865 indicates rising debt costs could erode ordinary income..

Key concerns include Progress shortfall vs full-year (sales 37%, OP 33%, NI 31% at H1) requires strong 2H execution., Retail Sales segment losses (-2.79bn JPY OP) and restructuring within Livenup Group may weigh on consolidated margins., Non-recurring items (0.59bn JPY negative goodwill) lifted pre-tax income; underlying run-rate should be monitored..

Investment Implications

Key takeaways include Strong revenue and operating profit momentum with modest margin expansion., Earnings quality weak in H1 due to large inventory build; 2H monetization is pivotal., Balance sheet leverage increased materially; funding costs and refinancing windows are key., High-margin Real Estate Management is scaling but remains a small earnings contributor., Guidance is back-half weighted; progress rates trail the typical 50% H1 benchmark..

Metrics to watch include Inventory turnover and monthly closings (Wholesale margin sustainability near 10%)., OCF/NI recovery and Debt/EBITDA trajectory., Interest coverage and effective interest rate on new/refinanced debt., SG&A growth vs revenue growth to preserve operating leverage., LTV and cash/short-term debt coverage as maturities roll..

Regarding relative positioning, Within Japanese mid-cap residential/investment apartment developers, Good Com Asset exhibits above-peer growth and operating scale in wholesale but carries higher leverage and weaker H1 cash conversion. The portfolio tilt toward transactional wholesale raises volatility relative to rental-focused peers, partially mitigated by a growing, high-margin management/fee base.