Good Com Asset Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥54.58B
• Operating Income: ¥2.94B
• Net Income: ¥1.66B
• EPS: ¥53.30

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

Verdict: Weak quarter with significant profit compression and negative operating cash flow against a resilient balance sheet liquidity buffer. Revenue declined 8.7% YoY to 545.8, while operating income fell 46.2% YoY to 29.4, and net income declined 54.2% YoY to 15.2. Operating margin compressed to 5.4% from an estimated 9.1% a year ago (down ~375 bps), and net margin fell to 2.8% from an estimated 5.6% (down ~278 bps). Gross profit of 78.8 implies a gross margin of 14.4%; without prior-period disclosure, the full driver split between gross margin and SG&A is not available, but the magnitude of operating margin compression indicates weaker unit economics and/or higher fixed cost absorption. Ordinary income dropped 47.6% YoY to 25.9 with margin down to 4.7% from ~8.3% (down ~352 bps). Earnings quality was poor: operating cash flow was -11.0 versus net income of 15.2 (OCF/NI = -0.72x), suggesting working capital outflows typical of real estate project timing under JGAAP. Free cash flow was -36.6, driven by negative OCF and investing outflows of -25.5 (likely investment securities/land bank placements rather than capex, as capex was unreported). Leverage is elevated with a reported D/E of 2.18x (total liabilities/equity), though liquidity is strong (current ratio 313%). Interest coverage remains solid at 7.24x, mitigating near-term solvency risk despite higher debt loads (short-term loans 63.7; long-term loans 176.2). The effective tax rate was high at 42.3%, further weighing on bottom-line conversion. DuPont ROE printed 10.5% (NPM 2.8% × AT 1.179 × leverage 3.18x), with ROE supported primarily by leverage rather than margins. Dividend sustainability looks stretched on this period’s cash generation: a calculated payout of 82.3% contrasts with FCF coverage of -2.92x. Forward-looking, margin repair and normalization of OCF will be key, alongside disciplined balance sheet management in a higher-rate, tighter-credit environment for property developers. Management’s ability to monetize inventory/land bank and maintain sell-through will dictate recovery in profitability and cash conversion. Data gaps (notably inventories and DPS) limit precision, but the direction of travel is clear: profitability compressed, cash flow under pressure, liquidity adequate, leverage high.

Profitability Analysis

ROE decomposition: 10.5% = Net Profit Margin 2.8% × Asset Turnover 1.179 × Financial Leverage 3.18x. The most material change YoY appears to be net profit margin compression: operating income fell 46.2% on an 8.7% revenue decline, implying significant operating deleverage and weaker unit margins; operating margin fell to 5.4% from ~9.1% (≈ -375 bps). Asset turnover of 1.179 is decent for a developer with sizable inventory/land holdings (inventory is unreported, but total assets are 462.9 vs sales 545.8), suggesting stable asset utilization relative to the scale of the balance sheet. Financial leverage remains high (equity/asset ≈ 31.4%, leverage ≈ 3.18x), supporting ROE despite margin pressure. Business drivers of margin compression likely include softer selling conditions (lower ASP/volume), mix effects, and lower fixed cost absorption, with potential price incentives to move units; non-operating headwinds (net non-op -3.49) and a high tax rate (42.3%) further dampened net profit. Sustainability: the leverage component is persistent, but the current margin pressure may normalize if sell-through improves; however, real estate cycle sensitivity makes a rapid recovery uncertain. Concerning trends: operating margin fell much faster than revenue, indicating negative operating leverage; SG&A detail is unreported, but the gap between gross profit (78.8) and SG&A (49.4) leaves a slimmer buffer than likely in the prior year. Monitor whether SG&A growth is outpacing revenue (data not disclosed) and whether interest expense (4.06) begins to erode coverage if EBIT weakens further.

Growth Assessment

Revenue declined 8.7% YoY to 545.8, pointing to softer market demand or slower project handovers. Profit contraction was sharper than top-line decline (OP -46.2%, NI -54.2%), indicating weaker pricing/mix and negative operating leverage. With EBITDA margin at 5.5% and operating margin at 5.4%, limited D&A implies operating results closely track cash earnings before working capital swings. Near-term growth visibility hinges on project delivery timing and inventory monetization; lack of inventory disclosure limits assessment of pipeline depth. Non-operating profile shows net expense (-3.49), a modest drag on ordinary income. Outlook: expect cautious growth with emphasis on restoring gross margin and controlling SG&A; interest rate and credit conditions will be decisive for transaction velocity. The high effective tax rate may normalize, offering some EPS relief if underlying profits stabilize.

Financial Health

Liquidity is strong: current assets 425.8 vs current liabilities 136.0 (current ratio 313.1%, quick ratio 313.1%). No warning on current ratio (<1.0) as it is well above threshold. Solvency is mixed: reported D/E is 2.18x (warning threshold >2.0), and equity ratio is ~31.4% (145.5/462.9). Interest coverage is healthy at 7.24x, providing buffer against rate shocks at current earnings levels. Maturity profile: short-term loans 63.7 are more than covered by cash and deposits 95.4; long-term loans 176.2 dominate the debt stack, reducing near-term refinancing pressure. Maturity mismatch risk appears moderate given ample current assets, but dependence on bank funding is high for a developer. Off-balance sheet obligations are not disclosed in the provided data; contingent liabilities (e.g., guarantees, JVs) cannot be assessed.

Cash Flow Quality

OCF of -11.0 vs NI of 15.2 yields OCF/NI of -0.72x, flagging poor earnings quality for the period, likely driven by working capital outflows consistent with real estate project timing under JGAAP. FCF was -36.6 (OCF -11.0 + investing CF -25.5), with investing outflows likely related to investment securities or land bank accumulation; capex is unreported (value shown as 0). Dividend and buyback cash commitments included share repurchases of -7.65; dividends paid are unreported. Sustainability: current FCF does not cover shareholder returns or debt reduction; improvement requires inventory monetization and normalization of working capital. Potential manipulation signs are not evident, but the negative OCF alongside declining profits suggests genuine operational cash pressure rather than accrual-only earnings.

Dividend Sustainability

The calculated payout ratio is 82.3% against net income of 15.2, implying dividends of roughly 12.5 for the year; reported payout ratio (0.4%) is inconsistent with the calculated figure and likely reflects XBRL classification or timing differences. With FCF at -36.6 and FCF coverage of -2.92x, dividends were not covered by free cash in this period. Given leverage (D/E 2.18x) and negative OCF, sustaining a high payout would require a rebound in cash generation or use of balance sheet capacity; policy details and DPS are unreported, limiting precision. Expect management to balance payout with liquidity preservation if market conditions remain soft.

Risk Assessment

Business Risks:

• Sales volume/ASP volatility in residential real estate impacting gross margin and sell-through
• Project timing risk causing lumpy revenue recognition and cash flows under JGAAP
• Construction cost inflation compressing margins on pre-sold projects
• Regulatory and zoning changes affecting development pipeline and approvals

Financial Risks:

• High leverage (reported D/E 2.18x) increasing sensitivity to earnings downturns
• Negative OCF and FCF in the period, requiring external funding or asset sales
• Interest rate risk: higher rates raise borrowing costs and reduce buyer affordability
• Refinancing risk if earnings weaken and credit conditions tighten

Key Concerns:

• Operating margin contraction of ~375 bps YoY and net margin down ~278 bps
• OCF/NI of -0.72x indicating weak earnings quality
• Elevated effective tax rate (42.3%) pressuring net income
• Data gaps (inventories, DPS, SG&A detail) limit visibility on pipeline and cost structure

Investment Implications

Key Takeaways:

• Profitability deteriorated sharply with OP -46% and NI -54% on -9% revenue
• Operating and net margins compressed materially; DuPont ROE sustained mainly by leverage
• Liquidity strong but leverage high; interest coverage still comfortable
• Earnings quality weak: negative OCF and FCF driven by working capital and investments
• Dividend coverage strained on FCF basis; payout appears elevated versus cash generation

Metrics to Watch:

• Gross margin and operating margin trajectory (bps change QoQ/YoY)
• OCF/Net income and working capital movements (especially inventories/land bank)
• Debt mix, average interest rate, and interest coverage
• Sell-through rates, ASPs, and backlog/project delivery schedule
• Equity ratio and D/E trend as cash generation normalizes

Relative Positioning: Within Japanese residential developers, the company shows above-average leverage and below-trend margin performance this period, offset by strong liquidity; recovery depends on sell-through momentum and working capital normalization amid rate-sensitive demand.

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