J.S.B.Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥76.05B
• Operating Income: ¥7.66B
• Net Income: ¥4.87B
• EPS: ¥244.40

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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

JSB (3480) reported FY2025 Q4 consolidated results under JGAAP with solid top-line expansion but pressure at the operating and bottom-line levels. Revenue grew 9.4% YoY to 760.45, reflecting stable demand and likely higher occupancy and rents in the core student housing-related businesses. Gross profit rose to 136.84 with an 18.0% gross margin, but operating income declined 5.5% YoY to 76.58 as cost growth and higher depreciation offset revenue growth. The operating margin based on reported figures is approximately 10.1% (76.58/760.45), indicating resilient core profitability despite YoY compression. Non-operating balance was a drag (income 1.83 vs. expenses 4.95), chiefly due to interest and other costs, reducing ordinary income by about 3.1. Ordinary income declined 6.8% YoY to 73.47 and ordinary margin stands near 9.7%. Profit before tax was 75.12 and net income fell 30.9% YoY to 51.51, with an effective tax rate of 31.4%, suggesting last year likely benefited from a lower tax burden and/or transitory items. DuPont-based ROE is 12.4%, driven by a 6.8% net margin, 0.855x asset turnover, and 2.14x financial leverage. EBITDA was 95.81, implying a 12.6% EBITDA margin and an EBIT/interest coverage of 25.1x, demonstrating healthy capacity to service debt. On the balance sheet, total assets were 889.47 and equity 416.29, implying a calculated equity ratio of about 46.8% and total liabilities/equity of 1.14x. Liquidity is sound with a current ratio of 129.9% and cash & deposits of 173.64 exceeding current liabilities of 153.34. Operating cash flow of 68.05 exceeded net income (OCF/NI 1.32x), but elevated growth investment (capex 104.80) drove negative free cash flow of -25.19. Dividend data are not disclosed in detail; however, the calculated payout ratio is 30.7%, while FCF coverage is negative (-1.59x), indicating dividend reliance on operating cash or financing in this elevated investment phase. Overall, the business shows good operating quality and financial resilience, but near-term profit growth is constrained by cost inflation, higher depreciation, and non-operating expense headwinds. We acknowledge several line items are unreported (e.g., detailed SG&A and dividend breakdowns), so conclusions rely on the disclosed aggregates and calculated metrics.

Profitability Analysis

ROE of 12.4% is decomposed as: net profit margin 6.8% x asset turnover 0.855 x financial leverage 2.14x. Operating margin is approximately 10.1% (76.58/760.45), down YoY given operating income fell 5.5% despite 9.4% revenue growth, indicating modest negative operating leverage. Gross margin is 18.0%, suggesting cost of sales grew faster than revenue; tight cost control will be a key lever to stabilize margins. EBITDA margin of 12.6% highlights a material non-cash component of cost (depreciation 19.23), which increased operating cost intensity. Ordinary income margin is roughly 9.7%; non-operating expenses (4.95) exceeded non-operating income (1.83), with interest expense of 3.05 the main known component, diluting margins. Net margin of 6.8% was further compressed by a 31.4% effective tax rate, implying fewer tax benefits versus the prior year. Overall margin quality remains reasonable for an asset-intensive rental/management business, but the YoY decline in operating profit signals some cost pressure and diminishing operating leverage in the period.

Growth Assessment

Top-line growth of 9.4% appears healthy and likely demand-driven, consistent with stable occupancy and incremental rent or unit expansion. However, profits lagged: operating income -5.5% and ordinary income -6.8% YoY indicate that cost inflation (utilities, maintenance), higher depreciation from recent capex, and higher non-operating costs outpaced revenue growth. Net income fell 30.9%, primarily due to the heavier tax burden and non-operating headwinds. The investment profile is expansionary: capex of 104.80 (about 5.5x depreciation) and investing CF of -93.24 imply capacity growth, which should support medium-term revenue. Asset turnover of 0.855 is stable for an asset-heavy model; future gains would depend on occupancy, pricing, and mix shift to fee-light management revenues. Profit quality is supported by positive OCF (68.05) exceeding net income, but near-term earnings growth may remain muted until new investments mature. Over the next 12–18 months, revenue sustainability looks solid given the student housing demand backdrop, while margin recovery depends on cost pass-through, occupancy optimization, and normalization of non-operating costs.

Financial Health

Liquidity is comfortable with a current ratio of 129.9% and a quick ratio of 128.2%; cash & deposits of 173.64 cover current liabilities of 153.34. Working capital stands at 45.80, providing a buffer for operations. Total liabilities are 473.18 against equity of 416.29 (liabilities/equity 1.14x), while a calculated equity ratio is about 46.8%, indicating a balanced capital structure for an asset-intensive business. Long-term loans total 283.12 and short-term loans 0.50; approximate net debt using cash suggests around 110, but total interest-bearing debt could be higher if lease liabilities or other borrowings are excluded from reported items. Interest expense of 3.05 is well covered by EBIT (25.1x) and by EBITDA (>30x), implying low immediate refinancing risk. Noncurrent liabilities (319.84) dominate the liability mix, aligning with long-lived assets and supporting duration matching. Overall solvency is solid, with ample equity cushion and moderate leverage for the sector.

Cash Flow Quality

OCF of 68.05 exceeds net income of 51.51 (OCF/NI 1.32x), indicating earnings are reasonably cash-backed. Working capital appears well managed given strong liquidity and cash generation, though detailed receivables/payables data are unreported. Free cash flow was -25.19 due to elevated capex (104.80), consistent with a growth investment phase. Depreciation of 19.23 vs. capex implies significant expansionary spend (capex/depreciation ~5.45x). Investing CF of -93.24 likely includes construction, acquisitions, or major refurbishment; specific components are not disclosed. Financing CF of +25.31 suggests reliance on external funding (and/or reduced debt repayments) to bridge growth investments. Overall, cash flow quality is solid operationally, with negative FCF driven by intentional growth capex rather than weak underlying cash conversion.

Dividend Sustainability

Detailed dividend payments and DPS are unreported, but the calculated payout ratio is 30.7%, which appears conservative against earnings. Reported DOE is 0.0% and payout ratio (reported) 0.2% appear inconsistent with calculated metrics; we rely on calculated figures derived from EPS and net income. FCF coverage is -1.59x this year, indicating dividends were not covered by free cash flow during the heavy investment period and were likely funded by operating cash and/or financing. With OCF comfortably positive and leverage moderate, the current payout looks serviceable in the near term, but sustained elevated capex would keep FCF coverage tight. Policy-wise, the company has room to balance growth investments with shareholder returns; visibility is constrained by unreported DPS and total dividend paid data.

Risk Assessment

Business Risks:

• Occupancy and rent sensitivity in student housing/managed properties
• Cost inflation in utilities, maintenance, and repairs pressuring margins
• Execution risk on large capex program and timing of returns
• Regional concentration and demographic trends affecting demand
• Regulatory or university policy changes impacting student flows

Financial Risks:

• Higher interest rates increasing interest expense and non-operating costs
• Negative free cash flow during expansion necessitating external funding
• Potential refinancing risk on long-term loans if credit conditions tighten
• Asset impairment risk if new projects underperform
• Tax rate volatility impacting net profit

Key Concerns:

• Operating income declined 5.5% YoY despite 9.4% revenue growth, indicating cost pressure
• Net income down 30.9% YoY due to non-operating costs and higher effective tax rate
• FCF negative (-25.19) amid capex of 104.80, pressuring cash coverage of dividends
• Non-operating expenses (4.95) outpaced non-operating income (1.83), dampening ordinary income

Investment Implications

Key Takeaways:

• Revenue growth is strong (+9.4%), but margin compression led to a 5.5% decline in operating income
• ROE of 12.4% is healthy, supported by decent net margin and moderate leverage
• OCF exceeds net income (1.32x), but heavy capex drove negative FCF
• Balance sheet is solid with an estimated equity ratio of ~46.8% and strong liquidity
• Interest coverage is robust at 25.1x, mitigating near-term rate risk

Metrics to Watch:

• Operating margin trajectory (currently ~10.1%) and gross margin (18.0%) for cost pass-through
• Capex intensity vs. depreciation and timing of project cash-on-cash returns
• Occupancy rates and rent growth to sustain revenue momentum
• Non-operating cost line items, especially interest expense (3.05) and any new borrowing
• OCF/NI and FCF trends to assess dividend coverage and funding mix

Relative Positioning: Within asset-intensive residential management peers, JSB exhibits above-average liquidity and solid ROE with a moderate leverage profile; current profitability is resilient but near-term earnings growth lags revenue due to cost and investment-driven pressures.

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