| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥692.5B | ¥644.4B | +7.5% |
| Operating Income / Operating Profit | ¥47.6B | ¥41.9B | +13.5% |
| Ordinary Income | ¥51.1B | ¥43.7B | +16.8% |
| Net Income / Net Profit | ¥30.4B | ¥23.8B | +28.0% |
| ROE | 9.8% | 9.1% | - |
For the fiscal year ended March 2026, the company achieved significant revenue and profit growth: Revenue ¥692.5B (vs prior year +¥48.1B +7.5%), Operating Income ¥47.6B (vs prior year +¥5.7B +13.5%), Ordinary Income ¥51.1B (vs prior year +¥7.4B +16.8%), and Net Income attributable to owners of the parent ¥30.4B (vs prior year +¥6.6B +28.0%). Both the Building Facilities Maintenance segment ¥416.5B (+4.6%) and Building Facilities Construction ¥276.0B (+12.1%) contributed to growth, improving gross profit margin to 21.5% (from 20.1% +1.4pt) and operating margin to 6.9% (from 6.5% +0.4pt). Net margin rose to 4.4% (from 3.7% +0.7pt) and ROE improved to 9.8% (from 9.2% +0.6pt), enhancing shareholder capital efficiency. Non-operating items included dividend income ¥2.3B and foreign exchange gains ¥0.8B, which supported Ordinary Income. Comprehensive income increased substantially to ¥64.2B (prior year ¥33.8B), driven by a ¥26.5B increase in valuation gains on marketable securities.
[Revenue] Revenue was ¥692.5B (+7.5% YoY), showing solid growth. Building Facilities Maintenance was ¥416.5B (+4.6%) and Building Facilities Construction was ¥276.0B (+12.1%), with the construction division achieving double-digit growth. Both segments grew in balance due to demand for facility renewals and accumulation of maintenance services. Gross profit increased to ¥149.1B (+15.1%), with gross profit margin improving to 21.5% (from 20.1% +1.4pt) due to optimized project mix and successful price pass-through.
[Profitability] SG&A was ¥101.5B (+15.8%), rising faster than revenue growth (+7.5%), but was absorbed by improved gross profit, resulting in Operating Income of ¥47.6B (+13.5%). Operating margin improved to 6.9% (from 6.5% +0.4pt). Non-operating income totaled ¥3.9B, mainly dividend income ¥2.3B and foreign exchange gains ¥0.8B. Non-operating expenses were minor at ¥0.4B, centered on interest expense ¥0.3B. Ordinary Income was ¥51.1B (+16.8%), with an Ordinary Income margin of 7.4% (from 6.8% +0.6pt). Extraordinary items were net positive ¥0.2B, supported by gains on sales of investment securities ¥0.3B. Profit before income taxes was ¥51.3B (+17.6%); after income taxes of ¥14.4B (effective tax rate 28.0%), Net Income attributable to owners of the parent was ¥30.4B (+28.0%). Net margin rose to 4.4% (from 3.7% +0.7pt), resulting in a revenue-and-profit growth type of settlement.
The company operates a single reportable segment (integrated business of Building Facilities Maintenance and Renewal Construction), so segment-level operating profit disclosure is not provided. By product/service, Building Facilities Maintenance was ¥416.5B (60.2% of total, +4.6% YoY) and Building Facilities Construction was ¥276.0B (39.9% of total, +12.1% YoY), with construction contributing significantly to growth. The power sales business is immaterial and is included in maintenance. Geographically, domestic sales account for over 90% and over 90% of tangible fixed assets are located domestically. Major customers are diversified; there is no customer accounting for over 10% of sales.
[Profitability] Operating margin 6.9% (from 6.5% +0.4pt), Gross Profit Margin 21.5% (from 20.1% +1.4pt), Net Margin 4.4% (from 3.7% +0.7pt) — profitability improved at each level. ROE 9.8% (prior year 9.2%), ROA (on Ordinary Income basis) 10.0% (prior year 9.6%) — capital efficiency improved. EBITDA was ¥53.9B (Operating Income ¥47.6B + Depreciation ¥6.3B), with an EBITDA margin of 7.8%, indicating solid cash-generation capacity. [Cash Quality] Operating Cash Flow (OCF) was ¥27.6B versus Net Income ¥30.4B, giving an OCF/Net Income ratio of 0.91x, as OCF lagged Net Income due to increases in working capital. Increases in trade receivables ¥6.6B, inventory ¥2.6B, and a decrease in trade payables ¥14.9B were the main causes. Free Cash Flow was ¥12.2B (OCF ¥27.6B - Investing CF ¥15.4B) and was below dividend payments ¥16.5B, yielding an FCF coverage ratio of 0.74x. [Investment Efficiency] Capital expenditure ¥14.3B was 2.3x depreciation ¥6.3B, indicating a growth-investment phase. R&D expense was ¥0.2B (0.0% of sales), negligible. [Financial Soundness] Equity Ratio 58.2% (from 53.8% +4.4pt), Current Ratio 181.2% (from 171.6%) — financial base is solid. Interest-bearing debt comprised short-term borrowings ¥5.5B, long-term borrowings ¥20.0B, and long-term borrowings due within one year ¥6.5B, totaling ¥32.0B; Debt/EBITDA was 0.59x, a low level. Interest coverage was 154.2x (OCF ¥27.6B / Interest paid ¥0.3B), indicating ample ability to service interest. Cash and deposits ¥82.0B were 6.8x short-term interest-bearing debt ¥12.0B, reflecting very high liquidity.
Operating Cash Flow was ¥27.6B (down -44.4% from prior year ¥49.6B). Starting from profit before tax ¥51.3B and adding non-cash items such as depreciation ¥6.4B, cash flow before working capital changes was ¥42.4B; however, working capital reversal—decrease in trade payables ¥14.9B, increase in trade receivables ¥6.6B, increase in inventories ¥2.6B—pressed on OCF. Payment of corporate taxes ¥16.9B was also deducted, leaving final OCF at ¥27.6B. Investing CF was -¥15.4B, mainly capital expenditures ¥14.3B. Due to active investment in tangible fixed assets, investing CF improved from -¥34.7B in the prior year, but growth investment continues. Financing CF was -¥20.8B, mainly dividend payments ¥16.5B and repayment of long-term borrowings ¥7.2B. There were ¥3.1B of proceeds from long-term borrowings, but net repayments exceeded proceeds. Free Cash Flow was ¥12.2B (OCF ¥27.6B + Investing CF -¥15.4B), insufficient for dividend payments, resulting in depletion of cash on hand. Cash and cash equivalents decreased by ¥8.5B from opening balance ¥81.4B to closing ¥72.96B.
Quality of earnings is generally good, with recurring operating activities comprising the majority of profits. Non-operating income ¥3.9B (0.6% of sales) consists of dividend income ¥2.3B, foreign exchange gains ¥0.8B, insurance dividend ¥0.1B, etc., well below a 5% threshold. Extraordinary items were net positive ¥0.2B, with gains on sales of investment securities ¥0.3B offset by loss on retirement of fixed assets ¥0.1B; the impact of one-off items is limited. Comprehensive income ¥64.2B notably exceeded Net Income ¥30.4B, with Other Comprehensive Income ¥27.2B (valuation difference on marketable securities ¥26.5B, actuarial gains on retirement benefits ¥0.8B) contributing, though these are unrealized gains on securities and not yet monetized. The fact that OCF lags Net Income warrants attention from an accrual perspective, as working capital collection cycles are delayed. The gap between Ordinary Income and Net Income is explainable within the tax burden (effective tax rate 28.0%), and the earnings structure is transparent.
Full year guidance forecasts Revenue ¥740.0B (+6.9% YoY), Operating Income ¥53.0B (+11.4%), Ordinary Income ¥56.0B (+9.6%), and Net Income attributable to owners of the parent ¥32.0B (+5.1%). Progress against the initial forecast (actual / forecast) is: Revenue 93.6%, Operating Income 89.8%, Ordinary Income 91.3%, Net Income 95.0%, indicating generally steady progress. An operating margin of 7.2% (up from 6.9% +0.3pt) is assumed, contingent on SG&A efficiency and maintaining project profitability. EPS forecast is ¥112.52, dividend forecast ¥28.50 (maintaining payout ratio 50.0%). Given steady demand for building facility renewals, accumulation of maintenance contracts, and expansion of renewal construction orders, the probability of achieving the plan is assessed as high.
Annual dividend is ¥54.0 per share (interim ¥23.0, year-end ¥31.0), with a payout ratio of 50.0% (total dividends ¥15.5B against Net Income ¥30.4B), consistent with the shareholder return policy. DOE (dividend on equity) is 6.3%, continuing a dividend policy mindful of capital efficiency. No share buybacks were executed during the period; total returns consist solely of dividends. Free Cash Flow ¥12.2B is below dividend payments ¥16.5B, resulting in FCF coverage of 0.74x; however, dividend sustainability is supported by cash and deposits ¥82.0B and low leverage (Debt/EBITDA 0.59x). The dividend forecast for the next fiscal year is ¥28.50, maintaining a payout ratio of 50.0%. If working capital normalizes and FCF improves, dividend capacity could further increase.
Working capital management risk: Increase in trade receivables ¥6.6B and decrease in trade payables ¥14.9B caused OCF to fall below Net Income. Continued delays in collection cycles or changes in payment terms could reduce FCF generation and constrain dividend capacity and growth investments. Monitoring DSO (days sales outstanding) and strengthening collections, and optimizing DPO (days payable outstanding) are necessary.
SG&A inflation risk: SG&A rose to ¥101.5B (+15.8%), outpacing revenue growth (+7.5%). This was driven by wage pressures, recruitment costs, and fixed cost increases from expanded sales bases. Continued wage inflation or tight labor markets could erode operating leverage and slow margin improvement.
Valuation fluctuation risk of investment securities: Investment securities increased to ¥99.7B (18.8% of total assets), up +63.6% from prior ¥60.9B, and valuation difference on marketable securities reached ¥60.2B (19.5% of net assets). Market declines or rising interest rates could produce valuation losses, reducing net assets via Other Comprehensive Income and worsening ROE and Equity Ratio. Quantitative monitoring of holding policy and valuation risk is required.
Profitability & Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.9% | 8.1% (3.6%–16.0%) | -1.2pt |
| Net Margin | 4.4% | 5.8% (1.2%–11.6%) | -1.4pt |
The company's operating and net margins are below the industry median, placing it around mid-to-lower ranks within the industry.
Growth & Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.5% | 10.1% (1.7%–20.2%) | -2.6pt |
Revenue growth is below the industry median but represents a steady growth pace based on stable demand for building facilities.
※ Source: Company compilation
Sustainability of margin improvement: Gross Profit Margin 21.5% (+1.4pt) and Operating Margin 6.9% (+0.4pt) improved, achieving ROE 9.8%. Stable revenue base from Building Facilities Maintenance and improved profitability of renewal construction are the drivers, making mid-term attainment of operating margins in the 7% range attainable. If SG&A growth is controlled while continuing project selection and price pass-through, a trend of margin improvement is expected.
Normalization of working capital and cash flows: OCF ¥27.6B fell below Net Income ¥30.4B, with working capital reversal posing a challenge. Increases in trade receivables/inventories and decreases in trade payables are the main causes; strengthening collection management and optimizing payment terms are urgent. If working capital normalizes in subsequent periods, OCF could recover to exceed Net Income and FCF coverage could improve to above 1x. Improving cash flow quality is key to balancing dividend sustainability and growth investment.
Monitoring impact of investment securities: Investment securities ¥99.7B (18.8% of total assets) generated valuation differences on marketable securities ¥60.2B, significantly boosting comprehensive income. While favorable market conditions support net assets and ROE, market reversals could produce valuation losses and cause net asset volatility. Given the large scale of valuation differences, transparency in capital policy including downside risk to market values is required.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the company based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.