| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥182.6B | ¥110.5B | +65.2% |
| Operating Income / Operating Profit | ¥61.1B | ¥55.5B | +10.2% |
| Ordinary Income | ¥57.3B | ¥53.4B | +7.2% |
| Net Income | ¥38.3B | ¥35.9B | +6.8% |
| ROE | 10.8% | 10.9% | - |
FY2026 Q1 results: Revenue ¥182.6B (YoY +¥72.1B +65.2%), Operating Income ¥61.1B (YoY +¥5.7B +10.2%), Ordinary Income ¥57.3B (YoY +¥3.9B +7.2%), Net Income attributable to owners of the parent ¥38.3B (YoY +¥2.4B +6.8%). Revenue achieved a substantial increase, but Operating Margin contracted to 33.5% (prior 50.2%) — a shrinkage of 1,670bp — and Net Margin fell to 21.0% (prior 32.4%) — a decline of 1,140bp, making this quarter characterized by strong revenue growth but margin compression. Progress against full-year forecasts is: Revenue 32.5%, Operating Income 38.3%, Ordinary Income 40.9%, Net Income 41.7%, all materially above a standard Q1 pace of 25%, suggesting a first-half weighted plan or conservative full-year guidance. Total assets are ¥1,311.2B and total equity is ¥354.0B, retaining an inventory-concentrated balance sheet with inventory for sale (real estate) comprising 75.6% of total assets.
[Revenue] Revenue ¥182.6B (YoY +65.2%) was driven by a large increase in property deliveries within the real estate sales business. Cost of sales ratio rose from 44.6% in the prior comparable period to 62.7% in this period — an increase of 1,810bp — resulting in Gross Profit of ¥68.0B (Gross Margin 37.3%) versus ¥61.2B (Gross Margin 55.4%) in the prior year: absolute gross profit increased but margin contracted significantly. This is estimated to be primarily due to changes in project mix (development-type projects vs. asset-sale projects) and higher acquisition costs. SG&A was ¥6.9B (SG&A ratio 3.8%), up from ¥5.7B (5.1%) prior — an absolute increase of +21.1% — but well below the revenue growth rate, indicating operating leverage.
[Profitability] Operating Income ¥61.1B (Operating Margin 33.5%) represents an increase of +10.2% YoY, but operating margin declined by 1,670bp due to the large contraction in gross margin. Non-operating net expense was ¥3.9B, mainly due to higher interest expense ¥3.4B (prior ¥2.8B) and higher fees paid ¥1.6B (prior ¥1.1B). The rise in interest expense reflects higher borrowings (long-term borrowings increased from ¥585.4B to ¥713.3B, +21.9%) and higher interest rates. Ordinary Income ¥57.3B (YoY +7.2%) and Net Income attributable to owners of the parent ¥38.3B (YoY +6.8%) show single-digit profit growth. Income taxes were ¥17.7B (effective tax rate 31.7%); there were no special gains/losses, so deviation from ordinary income to profit before tax is driven only by tax burden. In conclusion: revenue and profits grew, but contraction of gross margin and higher interest expense significantly slowed profit growth.
[Profitability] Operating Margin 33.5% (prior 50.2%), Net Margin 21.0% (prior 32.4%) — both materially lower year-over-year. Gross Margin 37.3% (prior 55.4%) — a 1,810bp contraction — is the main driver compressing operating margin. SG&A ratio improved to 3.8% (prior 5.1%), a 137bp improvement, indicating scale benefits. [Cash Quality] Interest coverage is high: Operating Income ¥61.1B ÷ Interest Expense ¥3.4B = 18.0x, indicating solid ability to cover interest. Non-operating income is minor at ¥1.1B, indicating earnings are mainly from operating activities. [Investment Efficiency] ROE 10.8% (equity ¥354.0B, Net Income ¥38.3B annualized in a simple calc) can be explained by DuPont: Net Margin 21.0% × Total Asset Turnover 0.14 (Revenue ¥182.6B ÷ Total Assets ¥1,311.2B) × Financial Leverage 3.7x; decline in Net Margin is the largest downward factor. Total Asset Turnover 0.14 (annualized ~0.56) reflects the inventory-heavy business profile. [Financial Health] Equity Ratio 27.0% (prior 26.5%) slightly increased; D/E ratio 2.70x; Debt/Capital 73.0% — high leverage. Current Ratio 1,280.3% appears large, but this includes inventory (inventory for sale ¥991.2B) so liquidity must be assessed carefully. Cash and deposits ¥132.8B are 8.7x short-term borrowings ¥15.3B, securing short-term liquidity. Long-term borrowings ¥713.3B (prior ¥585.4B, +21.9%), short-term borrowings ¥15.3B (prior ¥5.3B, +187.6%) — funding is mainly long-term but short-term borrowings are increasing. LTV (interest-bearing debt ÷ total assets) is 55.6%, moderately high.
No direct Operating Cash Flow disclosure; analyze funding via balance sheet movements. Inventory for sale is ¥991.2B (prior ¥925.7B, +¥6.6B +7.1%) and remains high, comprising 75.6% of total assets. Customer deposits (prepayments) are ¥18.5B (prior ¥34.3B, -¥15.8B -45.9%), a significant decrease, indicating a reduction in upfront cash inflows. Increases in long-term borrowings ¥127.9B and short-term borrowings ¥10.0B covered inventory buildup and working capital needs. Cash and deposits decreased slightly to ¥132.8B (prior ¥145.9B, -¥13.1B -9.0%), but sufficient headroom is maintained versus short-term liabilities ¥99.8B (prior ¥194.1B, -¥94.3B). Increased interest expense ¥3.4B (prior ¥2.8B) signals rising interest costs, but interest coverage of 18.0x remains healthy. As cash generation depends on inventory turnover, timing of property closings materially affects cash flow and should be monitored.
Most earnings are from operating activities; non-operating income is minor at ¥1.1B (0.6% of Revenue). Non-operating expenses ¥5.0B comprise mainly interest expense ¥3.4B and fees paid ¥1.6B, both recurring. No special gains/losses were recorded; the shift from Ordinary Income ¥57.3B to Profit before tax ¥56.0B is explained solely by non-operating items, with no one-off factors observed. Income taxes ¥17.7B (effective tax rate 31.7%) are at a reasonable level. Comprehensive Income ¥38.5B equals Net Income ¥38.3B plus valuation difference on available-for-sale securities ¥0.2B; the gap between comprehensive income and net income is minimal. From an accrual perspective, inventory-heavy businesses tend to have large timing differences between revenue recognition and cash realization; with inventory for sale comprising 75.6% of assets, revenue concentrates at property delivery dates, increasing quarter-to-quarter volatility in earnings.
Full-year forecasts: Revenue ¥561.5B (YoY +25.8%), Operating Income ¥159.8B (YoY +19.1%), Ordinary Income ¥140.1B (YoY +14.5%), Net Income attributable to owners of the parent ¥91.8B. Q1 progress rates: Revenue 32.5%, Operating Income 38.3%, Ordinary Income 40.9%, Net Income 41.7% — 10–17 percentage points above a standard 25% pace. Elevated progress in profit items post-operating income is likely due to early recognition of large projects and fixed SG&A producing leverage. Q1 Gross Margin 37.3% is well below historical levels, so full-year guidance likely assumes margin recovery in H2. If first-half weighted pattern continues, upside to full-year forecasts is possible; conversely, persistent low gross margin poses downside risk to profit margins.
Forecast year-end dividend is ¥0, implying a Payout Ratio of 0%. Profits are retained to strengthen equity and fund growth investments. Cash and deposits ¥132.8B secure short-term liquidity, and with no dividend burden the impact on financial health is limited. Given high leverage and continued inventory investment, the policy prioritizes improving Equity Ratio and securing debt repayment capacity over resuming dividends.
Gross Margin volatility risk: Gross Margin contracted to 37.3% (prior 55.4%) — a 1,810bp decline — indicating project mix changes and higher acquisition costs. With inventory for sale ¥991.2B comprising 75.6% of total assets, market fluctuations and project mix shifts could materially affect gross margins. Prolonged margin weakness could hinder achievement of full-year operating margin targets.
Interest rate risk: Interest-bearing debt assumed at ¥729.9B (sum of short-term borrowings ¥15.3B + long-term borrowings ¥713.3B + long-term borrowings due within one year ¥33.9B) with Interest Expense ¥3.4B (prior ¥2.8B, +23.2%) trending upward. Although Interest Coverage is 18.0x, continued growth in borrowings and higher interest rates could pressurize profits.
Inventory monetization risk: Inventory for sale ¥991.2B (75.6% of assets) results in very high inventory dependence. If the real estate market reverses or cap rates rise causing sale delays, inventory turnover could slow and valuation losses could occur. Customer deposits are ¥18.5B (prior ¥34.3B, -45.9%), indicating reduced upfront cash inflows; timely sales and inventory turnover are key to liquidity management.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 33.5% | – | – |
| Net Margin | 21.0% | – | – |
Industry median data are insufficient, making relative positioning within the industry difficult.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 65.2% | – | – |
Revenue growth 65.2% shows substantial top-line expansion, but lack of industry comparatives limits relative assessment.
※Source: Company aggregation
Revenue increased sharply YoY by +65.2%, but Gross Margin compressed to 37.3% (prior 55.4%) — a 1,810bp decline — and Operating Margin fell to 33.5% (prior 50.2%) — a 1,670bp decline. Project mix changes and higher acquisition costs are estimated causes; the pace of gross margin recovery will be a key determinant of future profit sustainability. Q1 progress against full-year forecasts is high (Operating Income 38.3%, Ordinary Income 40.9%, Net Income 41.7%), exceeding standard progress by over 10 points and suggesting a first-half weighted plan or conservative full-year outlook.
Interest-bearing debt remains high, centered on long-term borrowings ¥713.3B, with D/E 2.70x and LTV 55.6% indicating high leverage. Interest Expense ¥3.4B (prior ¥2.8B, +23.2%) is rising, though Interest Coverage of 18.0x provides a buffer. In this inventory-concentrated business where inventory for sale is 75.6% of assets, stable inventory turnover and interest cost management are critical to maintaining profitability.
This report was auto-generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the Company from publicly disclosed financial data for reference purposes only. Investment decisions are your responsibility; consult a professional advisor as needed before making investment decisions.