| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2630.2B | ¥2493.3B | +5.5% |
| Operating Income / Operating Profit | ¥291.6B | ¥263.6B | +10.6% |
| Ordinary Income | ¥292.8B | ¥268.5B | +9.1% |
| Net Income / Net Profit | ¥132.1B | ¥137.9B | -4.2% |
| ROE | 7.9% | 9.2% | - |
For the fiscal year ended March 2026, Revenue/Net Sales were ¥2,630.2B (YoY +¥136.9B +5.5%), Operating Income was ¥291.6B (YoY +¥28.0B +10.6%), Ordinary Income was ¥292.8B (YoY +¥24.3B +9.1%), and Net Income attributable to owners of the parent was ¥209.1B (YoY +¥69.7B +38.4%). The operating margin improved to 11.1% (prior year 10.6%), a 0.5pt improvement, achieving both revenue and profit growth. By segment, the Hotel & Restaurant Business turned substantially profitable with Operating Income of ¥56.4B (YoY +175.0%), driving profitability improvements. The Medical Business also continued double-digit growth with Revenue ¥570.7B (+9.9%) and Operating Income ¥83.0B (+10.5%), while the Membership Business is in a consolidation phase with Operating Income ¥255.5B (-6.9%). Operating Cash Flow was strong at ¥502.6B (+37.0%), and Free Cash Flow secured ¥147.3B. ROE was 7.9%, supported by the expansion of operating margins. Dividends were ¥34 per annum (payout ratio 32.6%), maintaining stable shareholder returns.
[Revenue] Revenue was ¥2,630.2B (+5.5%), with all segments recording revenue growth. The Membership Business was ¥956.1B (+2.1%), reflecting modest growth centered on recurring fees. The Hotel & Restaurant Business progressed steadily at ¥1,159.7B (+7.0%), supported by post-COVID occupancy recovery and higher average spend per guest. The Medical Business recorded the highest growth at ¥570.7B (+9.9%), driven by facility expansion and improved utilization at existing facilities. Other Businesses declined slightly to ¥24.4B (-3.2%), with negligible impact on the consolidated result. Gross profit was ¥2,045.9B (gross margin 77.8%), up 1.5pt YoY, maintaining a high-margin structure.
[Profitability] Operating Income was ¥291.6B (+10.6%), outpacing revenue growth. Selling, General & Administrative expenses (SG&A) were ¥1,754.3B (SG&A ratio 66.7%), up 5.2% YoY, but the SG&A ratio improved by 0.2pt from 66.9% due to revenue growth. By segment, the Hotel & Restaurant Business showed substantial improvement with Operating Income of ¥56.4B (+175.0%), raising its operating margin to 4.9%. The Medical Business continued stable growth with Operating Income ¥83.0B (+10.5%, operating margin 14.5%). Conversely, the Membership Business saw a decline in Operating Income to ¥255.5B (-6.9%), with an operating margin of 26.7%, still high but down from 27.4% the prior year. Ordinary Income was ¥292.8B (+9.1%), reflecting a similar increase to Operating Income, with non-operating items being neutral (interest income received ¥9.2B, dividend income received ¥1.5B). Extraordinary items netted +¥2.3B (extraordinary gains ¥9.4B - extraordinary losses ¥7.1B), with ¥3.5B gain on disposal of fixed assets offset by ¥6.4B impairment losses. Profit before income taxes was ¥295.1B (+3.9%); after income taxes of ¥84.5B (effective tax rate 28.6%), Net Income attributable to owners of the parent was ¥209.1B (+38.4%). The large YoY increase in net income is attributable to changes in tax expenses and the increase in the amount attributable to the parent company. In conclusion, revenue and profit grew supported by improved profitability in the hotel business and expansion in the medical business.
The Membership Business posted Revenue ¥956.1B (+2.1%) and Operating Income ¥255.5B (-6.9%), with an operating margin declining to 26.7% (prior year 27.4%). Although revenue rose modestly, changes in sales mix and increased promotional expenses likely pressured profits. The Hotel & Restaurant Business recorded Revenue ¥1,159.7B (+7.0%) and Operating Income ¥56.4B (prior year ¥20.5B), turning substantially profitable with operating margin improving to 4.9%. Post-COVID occupancy recovery, higher spending per guest, and operational efficiencies contributed to the improvement. The Medical Business achieved Revenue ¥570.7B (+9.9%) and Operating Income ¥83.0B (+10.5%), maintaining an operating margin of 14.5%; growth was supported by contributions from new facilities and high utilization at existing facilities. Other Businesses had Revenue ¥24.4B (-3.2%) and Operating Income ¥7.2B (-5.7%), with a high operating margin of 29.6% but limited scale and therefore limited impact on consolidated results. After corporate adjustments (corporate expenses, etc.), consolidated Operating Income was ¥291.6B.
[Profitability] Operating margin improved to 11.1% (prior year 10.6%), a 0.5pt improvement, and gross profit margin rose to 77.8% (prior year 77.4%). SG&A ratio decreased to 66.7% (prior year 66.9%), indicating operating leverage. ROE was 7.9% (prior year estimate 8.3%), generally stable, with margin improvements supporting returns on equity. [Cash Quality] Operating CF / Net Income ratio was a high 2.4x, indicating good cash realization of reported profits. OCF/EBITDA ratio was 1.27x (Operating CF ¥502.6B / EBITDA ¥395.5B), indicating solid cash generation. The accrual ratio ((Net Income - Operating CF) / Total Assets) was -5.6%, negative, indicating cash generation above accounting profits. [Investment Efficiency] Total asset turnover was 0.50x (Revenue ¥2,630.2B / Total Assets ¥5,253.1B), with asset efficiency roughly stable. Capital expenditures were ¥177.9B, 1.7x depreciation expense of ¥104.4B, indicating continued growth investment. [Financial Soundness] Equity Ratio was 31.7% (prior year 30.6%), slightly higher, and Net Assets increased to ¥1,666.8B (prior year ¥1,507.4B). Interest-bearing debt (short-term borrowings ¥36.1B + long-term borrowings ¥18.8B) was ¥54.9B, minimal, with Debt/EBITDA at 0.14x, indicating very low leverage. Liquidity assets combining cash & deposits ¥330.1B and short-term securities ¥130.5B amounted to ¥460.6B, providing ample coverage for short-term liabilities. Current ratio was 119.6% (current assets ¥2,066.4B / current liabilities ¥1,728.0B), indicating no short-term liquidity concerns.
Operating Cash Flow was ¥502.6B (prior year ¥366.9B, +37.0%), significantly increased, supported by profit growth and improvement in working capital. Operating CF subtotal (before working capital changes) was ¥610.9B, with reductions in inventories of ¥103.7B and decreases in trade receivables of ¥97.8B contributing to cash generation, while increases in trade payables were limited to ¥2.2B. After income tax payments of ¥115.5B, final Operating CF was ¥502.6B. Investing Cash Flow was -¥355.3B (prior year -¥309.4B), with capital expenditures of ¥177.9B (1.7x depreciation) and acquisition of investment securities ¥148.1B as main uses. Free Cash Flow (Operating CF + Investing CF) secured ¥147.3B, exceeding dividend payments of ¥66.2B. Financing Cash Flow was -¥107.0B (prior year -¥92.7B), mainly due to dividend payments of ¥73.7B (of which ¥66.2B to the parent company) and borrowings repayments of ¥6.5B. Cash on hand increased by ¥39.9B during the period from beginning cash ¥288.9B to ending cash ¥328.9B. The growth in Operating CF outpaced profit growth, with inventory reduction and slight increases in advance receipts (advance receipts ¥1,078.0B → ¥1,078.0B, deferred revenue ¥173.9B → ¥173.9B) contributing positively to working capital. Despite high levels of capital expenditure, FCF was secured, indicating robust cash generation capability.
Against Net Income of ¥209.1B, Operating CF was ¥502.6B, yielding an OCF/Net Income ratio of 2.4x, indicating strong cash realization. Ordinary Income of ¥292.8B was accompanied by a net extraordinary items amount of +¥2.3B (extraordinary gains ¥9.4B - extraordinary losses ¥7.1B), small overall; gain on disposal of fixed assets ¥3.5B and impairment losses ¥6.4B largely offset each other, so one-time effects were minimal. Non-operating income was ¥18.6B (interest income received ¥9.2B, dividend income received ¥1.5B, other ¥4.7B) and non-operating expenses were ¥17.4B, roughly balanced, indicating non-core items were neutral. Comprehensive income was ¥228.4B, and the difference from Net Income ¥132.1B of ¥96.3B is attributable to other comprehensive income (valuation differences on securities ¥12.1B, adjustments related to retirement benefits ¥9.8B, foreign currency translation adjustments -¥4.2B, etc.). The divergence between comprehensive income and net income is primarily accounting adjustments and does not detract from earnings quality. Working capital movements saw inventory reductions of ¥103.7B lift Operating CF, partially offset by increases in trade receivables of ¥97.8B. Advance receipt balances (advance receipts ¥1,078.0B + deferred revenue ¥173.9B) increased slightly by ¥5.8B YoY, and the advance receipt structure of the membership business supports stable cash generation. The accrual (Net Income - Operating CF) was -¥293.4B, negative, indicating cash generation in excess of accounting profits, which supports a high assessment of earnings quality.
The full-year forecast expects Revenue/Net Sales ¥2,550.0B (YoY -3.0%), Operating Income ¥310.0B (+6.3%), and Ordinary Income ¥305.0B (+4.2%). The revenue forecast is below the current year result of ¥2,630.2B, potentially reflecting conservative estimates for membership sales and adjustments to per-share dividends following a stock split. Operating Income is expected to increase, presumably on assumptions of continued occupancy improvement in the hotel business and expansion in the medical business. Progress rates are Revenue 103.1%, Operating Income 94.1%, Ordinary Income 96.0%, indicating revenue has already exceeded the forecast and profits are generally tracking plan. EPS forecast is ¥98.99 (current period ¥98.58), nearly flat, and dividend forecast is ¥18.00 (post-split basis). Considering the stock split (1 share → 2 shares), the effective dividend level is expected to be maintained. Revision history of forecasts is unknown, but with current results exceeding revenue forecasts, demand conditions appear to have outperformed expectations.
Annual dividend is ¥34 (interim ¥17 + year-end ¥17, pre-stock-split basis), with a payout ratio of 32.6% (total dividends ¥66.2B / net income attributable to owners of the parent ¥209.1B). The absolute dividend amount is unchanged from the prior year, so payout ratio remains at 32.6% with higher profits. Share buybacks were zero this period (¥1 million prior year), and Total Return Ratio is the same as the payout ratio at 32.6%. Against Free Cash Flow of ¥147.3B, dividend payments of ¥66.2B yield an FCF coverage of 2.2x, indicating ample cushion. Cash and deposits of ¥330.1B equate to approximately five years of dividend payments, so dividend continuity is not a concern. A 2-for-1 stock split effective April 1, 2025, was implemented; the next period dividend forecast on a post-split basis is ¥18.00 (equivalent to ¥36 pre-split), indicating an effective increase in dividend on a per-share basis and a stance toward maintaining shareholder returns while balancing growth investments. The dividend policy appears to prioritize stable dividends aligned with profit growth, with a target payout ratio in the 30% range.
Variability in Membership Sales: The Membership Business reported Operating Income ¥255.5B (-6.9%) and an operating margin that fell to 26.7% (prior year 27.4%). Membership sales are sensitive to macroeconomic conditions and affluent consumer sentiment; fluctuations in units sold or average price can significantly affect consolidated profits. As the Membership Business still accounts for the majority of consolidated Operating Income, downside in sales would directly impair profitability.
Hotel Business Occupancy and ADR Risk: Although the Hotel & Restaurant Business improved Operating Income to ¥56.4B (prior year ¥20.5B), its operating margin at 4.9% remains relatively low. Domestic travel demand, inbound tourism trends, and competitive dynamics may affect occupancy and average daily rate, potentially worsening profitability. Seasonality and presence or absence of major events are also drivers of performance variability.
Investment Burden from Medical Business Expansion: The Medical Business performed well with Revenue ¥570.7B (+9.9%) and Operating Income ¥83.0B (+10.5%), but facility expansion requires capital expenditures and staffing. Capital expenditures this period were ¥177.9B, 1.7x depreciation, and if high investment levels continue, there is risk of Free Cash Flow compression or delayed payback. Tightness in medical personnel markets or delays in opening new facilities could also negatively affect earnings.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.1% | 8.1% (3.6%–16.0%) | +3.0pt |
| Net Profit Margin | 5.0% | 5.8% (1.2%–11.6%) | -0.8pt |
Operating margin exceeds the industry median by 3.0pt, indicating relatively high profitability. Net profit margin is slightly below the median, attributable to tax burden and minority interests; core operating strength remains advantageous.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.5% | 10.1% (1.7%–20.2%) | -4.6pt |
Revenue growth lags the industry median by 4.6pt, indicating a somewhat slower growth pace. Stagnation in membership sales contributes, but solid growth in the Hotel and Medical segments sustains overall revenue growth.
※ Source: Company aggregation
Continued improvement in hotel profitability: The Hotel & Restaurant Business recovered sharply, with Operating Income up +175.0% YoY and operating margin improving to 4.9%. Post-COVID occupancy recovery and higher average spend are primary drivers; if travel demand remains strong, further margin improvement is possible. The hotel business is an important variable for lifting consolidated operating margin to 11.1%.
Stable growth in the Medical Business and continued capital investment: The Medical Business continued double-digit growth (Revenue +9.9%, Operating Income +10.5%) and maintained a 14.5% operating margin. Expansion of facilities and high utilization at existing facilities support growth amid structural demand from an aging population. However, capital expenditure is high at 1.7x depreciation, and continued investment will need monitoring for its impact on Free Cash Flow.
Strong cash generation and stable shareholder returns: Operating CF was ¥502.6B (+37.0%), OCF/Net Income ratio 2.4x, indicating good cash realization. Free Cash Flow of ¥147.3B comfortably covers dividend payments of ¥66.2B. With a payout ratio of 32.6% and FCF coverage of 2.2x, dividend sustainability is high. The stock split also implies an effective post-split dividend maintenance or increase, suggesting the company has a financial base to balance shareholder returns and growth investment.
This report was automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial data. Investment decisions are your responsibility; please consult a professional advisor where appropriate.