| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥884.8B | ¥505.5B | +75.0% |
| Operating Income / Operating Profit | ¥82.0B | ¥93.7B | -12.5% |
| Ordinary Income | ¥70.5B | ¥79.0B | -10.7% |
| Net Income / Net Profit | ¥45.4B | ¥51.3B | -11.5% |
| ROE | 6.0% | 13.4% | - |
For the FY2026 Q3 cumulative period (Sep 2025–May 2026), results were: Revenue ¥884.8B (YoY +¥379.3B +75.0%), Operating Income ¥82.0B (YoY -¥11.7B -12.5%), Ordinary Income ¥70.5B (YoY -¥8.5B -10.7%), Net Income attributable to owners of the parent ¥45.4B (YoY -¥5.9B -11.5%). Revenue reached 58.9% of the full-year forecast over three quarters, with inventory buildup underway; however, Operating Income progress was 30.9%, Ordinary Income 29.4%, and Net Income 27.6%, all materially below the standard Q3 pace (75%), highlighting a revenue recognition structure that depends on large Q4 closings.
[Revenue] Revenue reached ¥884.8B (YoY +75.0%), a significant increase. In the single Real Estate Consulting segment, inventory for sale rose from ¥363.8B in the prior-year period to ¥723.6B (+¥359.8B, +98.9%), roughly doubling, indicating preparation for large handover projects toward period end. Gross profit was ¥263.8B (gross margin 29.8%), down about 12.2pp from 42.0% in the prior-year period, likely reflecting changes in development project mix and higher cost ratios. SG&A was ¥181.8B (20.5% of revenue), up ¥63.5B from ¥118.3B in the prior-year period; upfront investment related to headcount and site expansion pressured operating margin.
[Profitability] Operating Income decreased to ¥82.0B (YoY -12.5%), with operating margin falling to 9.3%. Ordinary Income was ¥70.5B (YoY -10.7%); non-operating income of ¥13.4B (including foreign exchange gains ¥9.4B and interest income ¥2.6B) contributed, while non-operating expenses of ¥24.9B (including interest expense ¥17.9B and fees ¥6.1B) weighed on results, highlighting increased interest burden. The foreign exchange gain of ¥9.4B reversed a prior-year foreign exchange loss of ¥4.2B and is a temporary factor; assessment of recurring earnings should focus on operating improvement. Extraordinary items were roughly neutral (extraordinary gains ¥0.1B, extraordinary losses ¥1.0B). Profit before tax was ¥69.6B; after deducting income taxes of ¥24.2B (effective tax rate 34.8%) and with non-controlling interests shifting from +¥10.8B in the prior-year period to -¥0.1B, Net Income attributable to owners of the parent was ¥45.4B (YoY -11.5%), a smaller decline than at the operating and ordinary income levels. Comprehensive income was ¥55.6B, with ¥11.3B of foreign currency translation adjustments lifting Net Income, producing comprehensive income attributable to owners of the parent of ¥55.7B. In conclusion, the company delivered higher revenue but lower profit, and aims to meet the full-year forecast through concentrated Q4 closings.
[Profitability] Operating margin 9.3%, Net margin 5.1%, Gross margin 29.8%, all down from prior-year levels of 18.5% (operating), 10.1% (net), and 42.0% (gross). ROE 6.0% is materially below 13.4% a year earlier, driven by lower net margin and reduced leverage due to an increase in the Equity Ratio (29.7% → 39.2%). Compression of profit margins is mainly due to a decline in gross margin and higher SG&A ratio (23.4% → 20.5%), with project mix changes and accelerated growth investments weighing on profitability. [Cash Quality] Interest coverage is Operating Income ¥82.0B ÷ Interest Paid ¥17.9B = 4.58x, down from 11.08x in the prior-year period but remaining in a healthy range. A foreign exchange gain of ¥9.4B is included in non-operating items; sustainable cash generation depends on recovery at the operating level. [Investment Efficiency] Total Asset Turnover was 0.459x (annualized 0.612x), slightly up from 0.415x (annualized 0.553x) in the prior-year period. Accumulation of inventory for sale has increased total assets, limiting upside in turnover while assets await period-end handovers. [Financial Soundness] Equity Ratio 39.2% (prior-year 29.7%), Current Ratio 282.8% (prior-year 218.3%), Quick Ratio 282.8% — liquidity is very ample. Cash and deposits ¥400.5B cover 85.7% of short-term debt ¥467.2B. Debt/Equity Ratio 1.55x, Debt/Capital Ratio 38.3%, indicating restrained reliance on interest-bearing debt. Long-term borrowings ¥319.9B and convertible bonds with stock acquisition rights ¥220.0B comprise the bulk of total interest-bearing debt, making medium- to long-term repayment and interest management key issues.
As the cash flow statement data is not disclosed, funding trends are analyzed from balance sheet movements. Cash and deposits rose from ¥240.2B in the prior-year period to ¥400.5B (+¥160.4B, +66.8%), securing ample liquidity to support period-end closings and inventory buildup. Long-term borrowings increased from ¥161.9B to ¥319.9B (+¥158.0B, +97.6%), reflecting long-term fundraising to meet project funding needs. The ¥359.8B increase in inventory for sale can absorb working capital and pressure free cash flow, but substantial cash balances and borrowing capacity support inventory investment. Tangible fixed assets increased from ¥129.1B to ¥230.1B (+¥101.0B, +78.2%), indicating progress in investment for leasing bases and development infrastructure. Capital stock and capital surplus combined rose from ¥190.0B to ¥542.1B (+¥352.1B), strengthening equity via equity financing and improving financial safety. Interest coverage of 4.58x against interest paid ¥17.9B is sound, but in a rising-rate environment interest payments could increase; recovery of operating earnings and timely conversion of inventory to cash are key to liquidity management.
Operating Income ¥82.0B is the core of recurring earnings, sourced from gross profit on real estate development and consulting projects. Extraordinary items totaled -¥0.9B, so one-off effects were limited. Of non-operating income ¥13.4B, foreign exchange gains ¥9.4B reversed a prior-year foreign exchange loss of ¥4.2B; currency moves are unpredictable and not highly reproducible, so excluding FX is appropriate for assessing recurring strength. Interest income ¥2.6B reflects stable secondary income from ample cash balances. Of non-operating expenses ¥24.9B, interest expense ¥17.9B constitutes the majority, with rising borrowing dependence and interest rate changes increasing interest burden. Non-controlling interests turned from +¥10.8B to -¥0.1B, acting as a temporary factor that increased parent shareholders’ attributable profit. Comprehensive income ¥55.6B exceeded Net Income ¥45.4B by ¥10.2B, mainly due to ¥11.3B in foreign currency translation adjustments. For evaluating recurring earning power, improving operating gross margin, SG&A efficiency, and managing interest burden are important; non-recurring elements such as FX and goodwill have limited impact.
The full-year forecast is unchanged: Revenue ¥1,500.0B (YoY +55.4%), Operating Income ¥265.0B (YoY +40.0%), Ordinary Income ¥240.0B (YoY +40.1%), Net Income ¥165.0B. Q3 cumulative progress is 58.9% for Revenue, but only 30.9% for Operating Income, 29.4% for Ordinary Income, and 27.6% for Net Income — significant shortfalls in profit items. Compared with the standard Q3 progress of 75%, there is a gap exceeding -40pp, requiring Q4 standalone recognition of Revenue ¥615.2B, Operating Income ¥183.0B, and Ordinary Income ¥169.5B. The large build-up of inventory for sale ¥723.6B suggests preparation for period-end handovers and assumes concentration of large closings. The company expects operating margin recovery via improved project mix and relative dilution of SG&A, but continued interest burden and low reproducibility of FX gains imply that achieving the full-year forecast depends critically on the firm execution of handover schedules.
No interim dividend. Full-year dividend forecast is ¥165 per share, expressed in pre-split terms (stock split 1→2 effective Sep 1, 2025). With forecast EPS ¥672.42, the payout ratio is approximately 24.5%, a conservative level; given earnings and cash deposits ¥400.5B, distributable capacity appears sufficient. However, considering the inventory build-up and working capital needs for growth investments, the dividend policy appears set to prioritize a balance with internal reserves. No share repurchase disclosure; shareholder returns are concentrated on dividends.
Concentration risk of period-end project closings: As of Q3, progress toward full-year Operating Income is 30.9%, requiring ¥183.0B in Operating Income in Q4 alone. Delays in handover schedules or price adjustments for inventory for sale ¥723.6B would increase the risk of missing full-year forecasts. Slow inventory turnover could pressure both gross margin and cash generation.
Increased interest payment burden from rising rates: Interest paid ¥17.9B increased by ¥9.4B (+111.3%) from ¥8.5B in the prior-year period. Total interest-bearing debt of over ¥540B (long-term borrowings ¥319.9B + convertible bonds ¥220.0B) raises interest-rate sensitivity. Although Interest Coverage of 4.58x remains in a healthy range, rising rates could compress operating income and limit improvement in Net margin.
Volatility in FX and non-operating items: FX gain ¥9.4B supported Ordinary Income this period, whereas the prior year recorded an FX loss of ¥4.2B. Large swings in FX reduce predictability of earnings. Greater reliance on non-operating gains/losses lowers the predictability of recurring earning power.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.3% | 8.0% (2.8%–11.2%) | +1.3pt |
| Net Margin | 5.1% | 4.4% (1.2%–7.2%) | +0.7pt |
Both operating and net margins exceed industry medians, placing the company in a relatively profitable position within the real estate sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 75.0% | 18.5% (6.9%–54.7%) | +56.5pt |
Revenue growth of +75.0% substantially outpaces the industry median +18.5%, reflecting high-growth driven by inventory buildup and expanded project activity.
※ Source: Company aggregation
Revenue recognition concentrated at period end and monitoring Q4 progress: With full-year Operating Income guidance ¥265.0B and Q3 cumulative progress of 30.9%, the plan is heavily skewed to Q4 which requires ¥183.0B. The inventory for sale build-up ¥723.6B secures handover funding but timely execution and price maintenance at closings are critical to meeting full-year targets. Timing, gross margins, and SG&A dilution effects from large project handovers are key monitoring items in quarterly reports, and disclosure of Q4 progress toward closings will be important.
Balancing interest burden and recovery of operating earning power: Interest paid ¥17.9B rose +111.3% YoY due to increased borrowings and higher rate environment, pressuring Net margin. FX gains ¥9.4B are temporary; recurring earnings depend on operating income recovery. If Q4 project mix improvement reverses gross margin declines and relative SG&A dilution occurs, operating and net margins could recover. Changes in interest rates, refinancing terms, and trends in Interest Coverage are key to assessing sustainability of medium- to long-term profit growth.
This report is an AI-generated earnings analysis document created from XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed before making investment decisions.