Good Com Asset (3475) FY2026 Q3 Earnings Report

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Executive Summary

The Company posted substantial increases in both revenue and earnings, driven by the expansion of real estate sales and the higher profitability of its real estate management business. Revenue was ¥349.9B (+40.9% YoY), Operating Income was ¥26.4B (+143.7%), Ordinary Income was ¥20.9B (+130.4%), and Net Income attributable to owners of the parent was ¥13.8B (+199.4%). The earnings growth rate exceeding the revenue growth rate indicates the effects of operating leverage resulting from an improved gross profit margin and the relative containment of SG&A expenses. However, progress toward the full-year company forecasts remained limited, at 44.1% for Revenue and 34.1% for Operating Income, indicating a results profile highly dependent on property sales and deliveries in Q4.

Factors Affecting Results

【Revenue】Revenue was ¥349.9B, representing a 40.9% YoY increase. Wholesale, the core business, was the largest segment at ¥208.1B (59.5% of total, +37.8% YoY), while Livenup Group, which became subject to consolidation from the current period, recorded ¥58.6B. Retail Sales continued to decline, generating revenue of ¥61.2B (-24.0% YoY). Real Estate Management remained relatively small at ¥21.7B (+30.6% YoY), but continued to trend upward.

【Profit and Loss】Operating Income increased significantly to ¥26.4B (+143.7% YoY), Ordinary Income to ¥20.9B (+130.4%), and Net Income to ¥13.8B (+199.4%). The gross profit margin improved to 19.4% from 17.1% in the previous year period, while the SG&A expense growth rate (+31.1%) remained below the revenue growth rate (+40.9%), contributing to earnings growth. Among non-operating expenses, interest expenses increased from ¥2.6B to ¥5.8B, causing the growth in Ordinary Income (+130.4%) to trail the growth in Operating Income (+143.7%). Extraordinary income included a gain on negative goodwill of ¥0.6B arising from the conversion of Sanki Shoji into a consolidated subsidiary, meaning that a portion of Net Income reflects a non-recurring factor. In conclusion, the Company achieved increases in both revenue and earnings.

Segment Analysis

Clear differences in profitability were observed among the segments. Real Estate Management demonstrated the highest profitability, generating revenue of ¥21.7B, Operating Income of ¥9.2B, and an Operating Income margin of 42.6% (approximately +1250bp YoY). It is increasing its presence as a revenue source that complements dependence on Wholesale. Wholesale generated revenue of ¥208.1B and Operating Income of ¥17.7B (margin of 8.5%); profit growth (+25.5%) was somewhat slower than revenue growth (+37.8%), and the margin declined from approximately 9.4% in the previous year period. Retail Sales generated revenue of ¥61.2B (-24.0% YoY) and recorded an Operating Loss of ¥1.6B, although the deficit narrowed from the ¥6.3B loss in the previous year period. Livenup Group generated revenue of ¥58.6B and Operating Income of ¥1.3B (margin of 2.2%), turning profitable; however, an impairment loss of ¥0.05B and a provision expense of ¥0.06B related to store closures were incurred, and its earnings base remains in the process of restructuring.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 7.5% from 4.4% in the previous year period, an improvement of approximately 318bp, while the Net Income margin also improved to 3.9% from 1.8%, an improvement of approximately 207bp. The gross profit margin improved to 19.4% from 17.1% in the previous year period, but remains below 20% and is susceptible to fluctuations depending on the project mix.【Cash Flow Quality】The ¥0.6B gain on negative goodwill included in extraordinary income is a non-recurring item and should be considered as a component of Net Income of ¥13.8B.【Investment Efficiency】Annualized ROE was 12.8%. Of the three components—Net Income margin, total asset turnover, and financial leverage—the substantial support provided by high financial leverage is notable.【Financial Soundness】The Equity Ratio declined to 21.3% from 29.9% in the previous year period. Long-term borrowings increased to ¥296.5B (+68.3% from ¥176.2B in the previous year period), while short-term borrowings increased to ¥103.5B (+62.5%), indicating that the expansion of interest-bearing debt is supporting the growth of inventories of real estate for sale and real estate under development, which totaled ¥517.3B, or 76.7% of total assets.

Cash Flow Analysis

Although cash flow statement data was not disclosed, the movement of funds can be inferred from changes in the balance sheet. Cash and deposits declined to ¥73.4B from ¥95.4B in the previous year period, while real estate for sale increased substantially to ¥381.9B (+128.3% YoY) and real estate under development to ¥135.4B (+5.1%). This suggests that funds were invested in the acquisition and development of real estate inventory. To finance this funding requirement, long-term borrowings increased to ¥296.5B (+68.3% YoY) and short-term borrowings to ¥103.5B (+62.5%), indicating that debt financing is supporting inventory expansion. Cash and deposits of ¥73.4B are below short-term borrowings of ¥103.5B, indicating a high degree of dependence in the short term on the progress of inventory sales and refinancing.

Quality of Earnings

Of Net Income of ¥13.8B, the ¥0.6B gain on negative goodwill included in extraordinary income arose from the non-recurring conversion of Sanki Shoji into a consolidated subsidiary and must be distinguished from recurring earnings power. Meanwhile, Livenup Group also recorded temporary expenses, including an impairment loss of ¥0.05B related to assets scheduled for store closures and a provision expense of ¥0.06B for store closure losses. Thus, extraordinary gains and losses affected earnings in both directions. Non-operating income of ¥3.1B primarily consisted of dividends received and miscellaneous income and was largely recurring in nature. In contrast, interest expenses of ¥5.8B, which accounted for most of non-operating expenses of ¥8.5B, doubled from ¥2.6B in the previous year period in line with the increase in borrowings. The increase in financial expenses restrained the growth rate of Ordinary Income below that of Operating Income. Real estate for sale and real estate under development, both highly inventory-intensive assets, accounted for 76.7% of total assets. The timing of profit realization is therefore susceptible to the timing of property sales and deliveries, and attention should also be paid to earnings volatility from an accrual perspective.

Earnings Forecasts and Guidance

The full-year company forecasts are Revenue of ¥792.8B (+45.4% YoY), Operating Income of ¥77.3B (+170.0%), Ordinary Income of ¥68.4B (+172.3%), and Net Income of ¥45.4B (+213.5%). There were no revisions to the earnings or dividend forecasts during the current quarter. Progress through the cumulative Q3 period was 44.1% for Revenue, 34.1% for Operating Income, 30.5% for Ordinary Income, and 30.2% for Net Income, all substantially below the simple progress benchmark of 75%. Although real estate developers typically deliver properties toward the end of the fiscal year and progress cannot be assessed based solely on these ratios, achieving the full-year plan requires approximately ¥443B of Revenue and approximately ¥51B of Operating Income in Q4 alone. The realization of sales and deliveries of large-scale projects will therefore be the key focus.

Shareholder Returns

The Q2 dividend was ¥0 per share, while the full-year company forecast is an annual dividend of ¥46.00. Based on forecast EPS of ¥158.44, the forecast Payout Ratio is approximately 29.0%, below the general benchmark of 60%. Cumulative Q3 actual EPS remained at ¥47.84, meaning that securing the funds for the full-year dividend of ¥46.00 will depend heavily on profit recognition in Q4. No data regarding share repurchases has been disclosed.

Risk Factors

1. Concentration risk in real estate inventory: The combined ¥517.3B of real estate for sale of ¥381.9B and real estate under development of ¥135.4B accounted for 76.7% of total assets. If market conditions deteriorate or sales are prolonged, cash recovery and valuation may be affected.

2. Increase in financial leverage: Long-term borrowings increased 68.3% YoY to ¥296.5B, while short-term borrowings increased 62.5% YoY to ¥103.5B, and the Equity Ratio declined to 21.3%. Interest expenses also increased from ¥2.6B to ¥5.8B, making the trend in borrowing costs a key point to monitor.

3. Variability in profitability by segment: Retail Sales continued to decline, with revenue down 24.0% YoY and an Operating Loss of ¥1.6B. Although Livenup Group turned profitable, its margin remained at 2.2% and store closure-related expenses were incurred. Stabilizing the earnings of businesses undergoing restructuring remains a challenge.

Industry Benchmark (For Reference; Company Research)

Profitability and Returns

The Company’s Operating Income margin and Net Income margin are both slightly below the industry median.

Growth and Capital Efficiency

The Revenue growth rate is substantially above the industry median and indicates strong growth near the upper end of the IQR.

※Source: Company research

Key Points of the Results

1. Revenue increased 40.9%, while Operating Income increased 143.7%. The resulting improvement in profitability through an improved gross profit margin and relative containment of SG&A expenses is an observed fact indicating the quality of the results.

2. Real Estate Management is highly profitable, with an Operating Income margin of 42.6%, and diversification of the earnings structure to supplement dependence on Wholesale is progressing. Meanwhile, the continued losses in Retail Sales and restructuring expenses at Livenup Group are factors that will affect the stability of the earnings base going forward.

3. Progress toward the full-year forecast was low, at 34.1% for Operating Income and 30.2% for Net Income. Given the combination of increasing interest-bearing debt (long-term borrowings +68.3%) and an inventory real estate ratio of 76.7%, the realization of property sales and deliveries and the recovery of funds in Q4 are the principal points of focus in the results.

Theoretical Share Price (Reference Value)

Sensitivity: ¥884–¥939 at Cost of Equity ±1%; ¥899–¥929 at ω±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a time lag relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-08 / 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 an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting professionals as necessary.

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