PARK24 Co.,Ltd. FY2026 Q3 Earnings Report

Quick View

Executive Summary

In addition to increased revenue from the domestic parking and mobility businesses, progress in profit-margin improvement through cost efficiencies resulted in an earnings performance in which the growth rate of operating income substantially exceeded the revenue growth rate. Revenue was ¥3,040.5B (+2.7% YoY), operating income was ¥289.5B (+16.2%), and ordinary income was ¥267.3B (+20.0%). Net income surged to ¥363.5B (+265.1% YoY); however, profit before tax was ¥150.1B, down -20.2% YoY. This divergence was attributable to tax effects, including a deferred tax benefit of ¥318.7B, while extraordinary losses of ¥126.5B associated with the liquidation of overseas subsidiaries also weighed on profit before tax. Although growth in operating and ordinary income reflects a genuine improvement in earnings power, the levels of net income and ROE include one-time tax effects and therefore require careful interpretation.

Factors Affecting Earnings

【Revenue】Revenue was ¥3,040.5B, up +2.7% YoY. By segment, Domestic Parking generated ¥1,607.0B (+9.1% YoY, 52.9% composition ratio), while Mobility generated ¥1,033.4B (+12.3% YoY, 34.0% composition ratio), both driving double-digit growth. Overseas Parking, however, generated ¥452.1B (-26.8% YoY), with business restructuring associated with the removal of consolidated subsidiaries being the primary cause of the decline.

【Profit and Loss】Operating income was ¥289.5B (+16.2% YoY), and the gross margin improved to 26.5% from 25.1% in the previous year, an improvement of approximately 140bp, absorbing an increase of approximately 30bp in the SG&A expense ratio. Overseas Parking’s segment earnings turned from a loss of ¥17.7B in the previous year to a profit of ¥4.0B, contributing to an improvement in the consolidated profit margin. Meanwhile, the Domestic Parking segment profit margin declined to 17.7% from 19.4% in the previous year. Ordinary income was ¥267.3B (+20.0% YoY), also benefiting from a decline in interest expense. Net income was ¥363.5B (+265.1% YoY); however, the substantial divergence from profit before tax of ¥150.1B was attributable to one-time factors, including extraordinary losses of ¥126.5B (a loss on liquidation of subsidiaries of ¥91.5B and a loss on sale of shares of ¥33.9B), as well as the accounting factor of a deferred tax benefit of ¥318.7B. The company delivered an increase in both revenue and profit.

Segment Analysis

The Domestic Parking Business generated revenue of ¥1,607.0B (+9.1% YoY) and segment profit of ¥285.0B (+3.4% YoY), making it the core business and accounting for 72.6% of total reported segment profit of ¥392.7B. Its profit margin was high at 17.7%, but declined from 19.4% in the previous year, indicating the impact of cost increases. The Mobility Business continued to achieve increases in both revenue and profit, with revenue of ¥1,033.4B (+12.3% YoY), profit of ¥103.8B (+14.3% YoY), and a profit margin of 10.0%. The Overseas Parking Business saw revenue decline to ¥452.1B (-26.8% YoY) due to the removal of consolidated subsidiaries; however, segment earnings turned from a loss of ¥17.7B in the previous year to a profit of ¥4.0B. Goodwill in this business decreased by ¥103.8B in connection with the removal of subsidiaries.

Key Financial Indicators

【Profitability】The operating margin of 9.5% improved by approximately 110bp from 8.4% in the previous year, as the improvement in gross margin (+approximately 140bp) exceeded the increase in the SG&A expense ratio (+approximately 30bp). The net profit margin of 12.0% and ROE of 30.9% were high, but were significantly supported by the recognition of a deferred tax benefit of ¥318.7B; caution is therefore warranted when using these figures as indicators of recurring earnings power.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥395.6B, equivalent to 1.09 times net income, while the cash conversion ratio relative to EBITDA of ¥575.0B was only 0.69 times. Changes in accounts receivable and inventories were limited, and there were no signs of significant distortion in earnings quality.【Investment Efficiency】Capital expenditures of ¥424.7B were 1.49 times depreciation and amortization expense of ¥285.6B, indicating that the company remains in a phase of growth investment. Free cash flow was negative ¥91.3B, meaning that investments were not fully funded by internal funds alone.【Financial Soundness】The equity ratio improved to 33.2% from 27.7% in the previous year, but the current ratio was 92.2%, below 100%. Short-term borrowings surged +1,450.6% YoY to ¥365.6B. Cash and deposits of ¥314.7B were below short-term borrowings, indicating a need to monitor the company’s liquidity position.

Cash Flow Analysis

OCF increased +7.5% YoY to ¥395.6B, securing a level equivalent to 1.09 times net income of ¥363.5B. Investing Cash Flow (ICF) was an outflow of ¥486.9B, including capital expenditures of ¥424.7B, which increased by ¥180.1B from ¥244.6B in the previous year, reflecting continued growth investment in areas such as expansion of the parking network. Financing Cash Flow (FCF) was an outflow of ¥403.9B. While the company repaid ¥756.6B in long-term borrowings, short-term borrowings increased net by ¥339.2B, indicating a shift toward shorter-term financing. As a result, free cash flow, calculated as OCF less capital expenditures, was negative ¥91.3B, and cash and cash equivalents decreased by ¥489.9B from ¥804.7B at the end of the previous year to ¥314.7B. The company is financing excess investment through borrowings, making expansion of OCF and stabilization of its financing structure key areas of focus going forward.

Earnings Quality

The increases in operating and ordinary income were supported by recurring factors, namely higher revenue in the Domestic Parking and Mobility businesses and gross-margin improvement. In contrast, the sharp increase in net income to ¥363.5B (+265.1% YoY) does not necessarily reflect recurring earnings power. Profit before tax was ¥150.1B, down -20.2% YoY, as one-time extraordinary losses of ¥126.5B, including a loss on liquidation of subsidiaries and affiliates of ¥91.5B and a loss on sale of shares of ¥33.9B, reduced profit at the pre-tax level. Meanwhile, income taxes and other taxes were recorded as a benefit of ¥213.4B, and the deferred tax benefit of ¥318.7B significantly increased net income. Accordingly, the effective tax rate was negative, and when evaluating net income and ROE, the uplift attributable to these tax effects should be excluded. OCF remained above net income, indicating that earnings distortion from an accrual perspective was limited.

Earnings Forecasts and Guidance

The cumulative Q3 progress rates against the full-year company plan were 74.0% for revenue, 68.1% for operating income, 67.7% for ordinary income, and 82.6% for net income. Progress in operating and ordinary income was 6.9pt and 7.3pt, respectively, below the 75% benchmark generally used for quarterly progress, indicating a plan in which profit recognition is somewhat weighted toward Q4. The high progress rate for net income was attributable to the deferred tax benefit; therefore, it is appropriate to assess the underlying full-year earnings achievement based on progress toward operating income of ¥425.0B (+13.1% YoY forecast). Neither the earnings forecast nor the dividend forecast was revised during the current quarter.

Shareholder Returns

The full-year dividend forecast is ¥65.00 per share. Based on the period-average number of shares outstanding of 170,703 thousand shares and the full-year net income forecast of ¥440.0B, the payout ratio is approximately 25.2%, below a general benchmark for sustainability. No share repurchases were recorded, and evaluation based on the payout ratio, rather than the total return ratio, is appropriate. The Q2 dividend was ¥0, with dividends planned to be concentrated at year-end. Cumulative free cash flow was negative ¥91.3B, and post-investment cash flow for the current cumulative period alone was insufficient to fund the annual dividend entirely through internal funds. This reflects the company’s current phase of expansionary investment, in which capital expenditures exceed depreciation and amortization expense.

Risk Factors

1. Liquidity and Short-Term Financing Risk: The current ratio was 92.2%, below 100%, and working capital was negative ¥90.7B. Short-term borrowings surged +1,450.6% YoY to ¥365.6B, exceeding cash and deposits of ¥314.7B and resulting in high sensitivity to changes in the refinancing environment.

2. Overseas Business Restructuring Risk: Overseas Parking revenue declined -26.8% YoY following the removal of consolidated subsidiaries. Although segment earnings turned profitable at ¥4.0B, the profit margin remained only 0.9%. Restructuring-related extraordinary losses were recorded, including a loss on liquidation of subsidiaries of ¥91.5B and a loss on sale of shares of ¥33.9B. Stabilizing the earnings base following the restructuring remains a challenge.

3. Tax Effects and Recoverability of Deferred Tax Assets: Deferred tax assets totaled ¥369.2B, representing 10.4% of total assets, and net income was significantly increased by the recognition of a deferred tax benefit of ¥318.7B. Future income tax expense and net income may fluctuate depending on the realization of taxable income in the future.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The company’s profitability exceeds the industry median, with both its operating margin and net profit margin ranking in the upper tier.

Growth and Capital Efficiency

The revenue growth rate is substantially below the industry median, placing the company at a relatively low level within the industry in terms of growth.

※Source: Compiled by the company

Key Takeaways from the Earnings Results

1. The operating margin improved by approximately 110bp to 9.5%, confirming operating leverage as the operating income growth rate (+16.2%) exceeded the revenue growth rate (+2.7%). Growth in the Domestic Parking and Mobility businesses and the return to profitability of the Overseas Parking Business were the main drivers.

2. The strong growth in net income and ROE was significantly affected by the accounting factor of a deferred tax benefit of ¥318.7B, while profit before tax declined -20.2% YoY. Evaluation of the underlying earnings power should focus primarily on operating income, ordinary income, and OCF.

3. Capital expenditures reached 1.49 times depreciation and amortization expense, and free cash flow was negative ¥91.3B. Short-term borrowings increased sharply while cash and deposits declined in parallel, making changes in the financing structure during this investment phase a key monitoring point.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,460–¥1,554 at ±1% for the cost of equity, and ¥1,480–¥1,546 at ±0.1 for ω.

Notes:

• Goodwill amortization of ¥5.9 per share has been added back to earnings (to account for a non-cash expense and comparability with IFRS companies).
• Net assets as of the quarter-end have been used (there is a timing difference relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

（Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated using only publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share prices）

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

---End of Report---