| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥376.6B | ¥350.7B | +7.4% |
| Operating Income / Operating Profit | ¥39.6B | ¥35.5B | +11.6% |
| Ordinary Income | ¥39.7B | ¥36.0B | +10.2% |
| Net Income / Net Profit | ¥24.9B | ¥23.4B | +6.3% |
| ROE | 15.0% | 15.4% | - |
For FY2026, Revenue was ¥376.6B (YoY +¥25.9B +7.4%), Operating Income was ¥39.6B (YoY +¥4.1B +11.6%), Ordinary Income was ¥39.7B (YoY +¥3.7B +10.2%), and Net Income was ¥24.9B (YoY +¥1.5B +6.3%), achieving both revenue and profit growth. Profit growth outpaced revenue growth indicating quality improvement; gross margin expanded to 32.4% (YoY +122bp) and Operating Margin improved to 10.5% (YoY +40bp). Selling, General & Administrative Expense ratio rose to 21.9% (+84bp) as advance investments, primarily advertising expense of ¥15.1B (YoY +¥2.6B +21.1%), partially offset profits. Net Income growth lagged Ordinary Income due to a net negative impact of ¥3.7B from special losses of ¥5.95B (impairments, etc.) and special gains of ¥2.25B (gain on sale of fixed assets). ROE remained high at 15.0% (prior year 15.9%), Operating Cash Flow (OCF) was ¥42.0B (YoY +8.1%), and Free Cash Flow (FCF) was ¥37.8B, demonstrating ample cash generation.
【Revenue】 Revenue expanded steadily to ¥376.6B (YoY +7.4%). The company operates a single education-related segment; increases in student numbers and improvements in lesson pricing/mix are presumed to have contributed. Cost of Sales rose to ¥254.7B (YoY +4.3%), growing at a slower pace than revenue, resulting in Gross Margin of 32.4% (YoY +122bp). This likely reflects higher utilization and optimization of lesson mix. SG&A rose to ¥82.3B (YoY +¥8.7B +11.8%), outpacing revenue growth. The main drivers were advertising expense +21.1% (¥15.1B) and salaries & allowances +7.3% (¥13.6B), reflecting aggressive investment in student recruitment and instructor retention. As a result, SG&A ratio increased to 21.9% (+84bp), but improvement in gross margin outweighed this, raising Operating Margin to 10.5% (+40bp).
【Profitability】 Operating Income reached ¥39.6B (YoY +11.6%), achieving profit growth above the rate of revenue increase. Ordinary Income was ¥39.7B (YoY +10.2%); non-operating income of ¥0.79B (interest income ¥0.23B, dividend income ¥0.22B, etc.) and non-operating expenses of ¥0.71B (interest expense ¥0.10B, etc.) largely offset, preserving operating-level profitability. A net negative effect of ¥3.7B from special gains of ¥2.25B (gain on sale of fixed assets) and special losses of ¥5.95B (impairment ¥5.95B, fixed asset disposal loss ¥0.45B) narrowed pre-tax income to ¥36.0B (YoY -0.04%), effectively flat. After deducting corporate tax etc. of ¥11.1B (effective tax rate 30.9%), Net Income was ¥24.9B (YoY +6.3%). In conclusion, the core business delivered higher revenue and Operating Margin due to gross margin improvement while advance SG&A investments offset some gains; one-off items constrained Net Income growth.
【Profitability】Operating Margin improved to 10.5% (YoY +40bp), primarily due to expansion of Gross Margin to 32.4% (YoY +122bp). ROE was 15.0% (prior year 15.9%), maintained at a high level, driven by Net Margin 6.6% × Total Asset Turnover 1.44x × Financial Leverage 1.58x. 【Cash Quality】Operating Cash Flow (OCF) of ¥42.0B is 1.69x Net Income of ¥24.9B, indicating cash-driven revenue recognition. The accrual ratio is -6.5% ((OCF - Net Income)/Total Assets), favorable and indicative of high quality of earnings. OCF/EBITDA (OCF/(Operating Income + Depreciation)) is 0.82x, somewhat suppressed by corporate tax payments of ¥13.7B and working capital movements. 【Investment Efficiency】CapEx of ¥6.0B / Depreciation ¥11.7B ratio is 0.51x, low and indicating continued investment restraint. Total Asset Turnover is stable at 1.44x, but there is headroom for incremental investment in classroom renewals and digital initiatives. 【Financial Soundness】Equity Ratio is 63.2% (prior year 62.0%) and rising; Current Ratio 229.5% and Quick Ratio 227.4% indicate ample liquidity. Interest-bearing debt is limited and interest coverage is 386x, extremely healthy. Asset retirement obligations of ¥20.44B account for 21.2% of total liabilities of ¥96.4B, requiring provision for future cash outflows at classroom renewals/closures.
OCF was ¥42.0B (YoY +8.1%). Pre-tax income was ¥36.0B, with non-cash charges of Depreciation ¥11.7B and Amortization of Goodwill ¥1.8B added back. Working capital was nearly neutral: increase in trade receivables -¥1.2B, decrease in inventories ¥0.1B, decrease in trade payables -¥0.6B. After reflecting corporate tax payments of -¥13.7B, OCF subtotal of ¥55.3B resulted in final OCF of ¥42.0B. Investing Cash Flow was -¥4.2B, driven primarily by CapEx -¥6.0B (tangible -¥6.0B), acquisitions of intangible fixed assets -¥4.5B (software, etc.), partially offset by proceeds from sale of fixed assets ¥6.99B. FCF was ¥37.8B (OCF + Investing CF), comfortably covering dividend payments -¥11.1B and share buybacks -¥10.5B (total return ¥21.7B). After Financial Cash Flow -¥13.2B, Cash and Deposits increased by ¥25.0B to ¥105.9B. Given the strong ending cash balance and high OCF/Net Income ratio (1.69x), liquidity risk is extremely limited.
Most of Ordinary Income of ¥39.7B is based on Operating Income ¥39.6B derived from lesson revenues; non-operating income ¥0.79B (0.2% of sales) is minor and centered on interest and dividend income. One-off items included special gains ¥2.25B (gain on sale of fixed assets) and special losses ¥5.95B (impairment ¥5.95B, disposal loss ¥0.45B), resulting in a net negative effect of ¥3.7B that depressed Net Income. This impact represents approximately 14.9% of Net Income ¥24.9B, warranting attention to the recurrence frequency in future periods. While OCF exceeds Net Income by 1.69x, OCF/EBITDA is 0.82x—somewhat low—due to corporate tax payments and seasonality in working capital, which suppress cash conversion efficiency. The accrual ratio of -6.5% indicates cash-led earnings with limited signs of earnings management. The divergence between Ordinary Income and Net Income is largely explainable by corporate tax (effective tax rate 30.9%) and special items; overall, the quality of earnings is assessed as sound.
Company plan for FY2027 projects Revenue ¥405.2B (YoY +7.6%), Operating Income ¥42.4B (YoY +7.0%), Ordinary Income ¥42.7B (YoY +7.7%), Net Income ¥27.5B (YoY +10.7%), and EPS ¥149.00. Maintaining Operating Margin around ~10.5% is assumed, with gross margin improvement and SG&A efficiency being key. The plan assumes normalization of this period’s special items (e.g., impairment ¥5.95B), implying Net Income growth could outpace Ordinary Income. Expected dividend is ¥30.00 (including ¥10.00 commemorative dividend), with payout ratio around 20% and ample capacity for returns. Based on current progress, achieving the plan depends on student recruitment and lesson mix improvements, and the cost-effectiveness of advertising and personnel expenses will be closely monitored.
Year-end dividend was ¥35.00 (including ¥10.00 commemorative dividend; prior year ¥15.00). Combined with interim dividend ¥20.00, total annual dividend was ¥55.00 (prior year ¥15.00). The ¥10 commemorative year-end dividend is a one-off, so the normal annual dividend is viewed as equivalent to ¥45. Dividend payout ratio is 42.0% (GPT draft states 43.3%, but the precise calculation is Annual Dividend ¥55 ÷ EPS ¥134.61 = 40.9%; excluding the commemorative dividend it is 33.4%), which is within a sustainable range. FCF ¥37.8B covers total dividends of approximately ¥11.1B with FCF coverage of 3.4x; total return including ¥10.5B share buybacks was ¥21.7B, with Total Return Ratio about 57% (FCF basis), which is healthy. DOE is low, but with ROE 15.0% and strengthened equity, the stable dividend policy is highly sustainable. Next-year dividend forecast ¥30 (company plan) removes the commemorative dividend and indicates a stable return policy on a normal basis.
Investment restraint and asset deterioration risk: CapEx ¥6.0B / Depreciation ¥11.7B ratio of 0.51x indicates restrained investment, raising risk of classroom asset aging and delayed updates to digital/content platforms. If competitors increase IT investment, long-term service competitiveness could decline. Visibility into maintenance and renewal plans for tangible fixed assets ¥49.8B and intangible fixed assets ¥16.1B is important.
Rising SG&A and lagging cost efficiency: Advertising expense rose +21.1% YoY and SG&A overall +11.8%, significantly outpacing revenue growth of 7.4%, pushing SG&A ratio to 21.9% (+84bp). If cost-effectiveness (inquiries → enrollment rates) does not improve amid intensified student recruitment competition, pressure on Operating Margin will increase. Instructor personnel costs may overshoot depending on labor market conditions; precision in cost control is key to maintaining profitability.
Asset retirement obligations and cash-out risk for classroom renewals: Asset retirement obligations ¥20.44B constitute 21.2% of liabilities and could lead to concentrated cash outflows when renewing or closing classrooms. While the cash balance of ¥105.9B provides buffer, simultaneous renewal/closures of many classrooms could challenge liquidity and alignment with investment plans. Advance renewal planning and smoothing of costs are required.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.5% | 8.1% (3.6%–16.0%) | +2.4pt |
| Net Margin | 6.6% | 5.8% (1.2%–11.6%) | +0.8pt |
Both Operating Margin and Net Margin exceed the median, indicating strong profitability within the industry.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 7.4% | 10.1% (1.7%–20.2%) | -2.7pt |
Revenue growth is below the median but within the IQR, and the company has achieved quality revenue and profit growth.
※Source: Company compilation
Gross margin improvement and Operating Margin +40bp indicate steady improvement in core profitability; ROE 15.0% and OCF/Net Income 1.69x show high capital efficiency and earnings quality. FCF ¥37.8B comfortably exceeds total return ¥21.7B, and net cash accumulation indicates continued healthy capital allocation. This strong financial position provides room for increased investment in classroom renewals and digital initiatives, expanding options for future growth investment.
However, volatility from special items (impairment ¥5.95B, gain on sale of fixed assets ¥2.25B) substantially affects Net Income; normalization in subsequent periods is key to EPS progress. CapEx/Depreciation 0.51x indicates a low investment level, making monitoring of classroom and IT updates essential. Asset retirement obligations representing 21.2% of liabilities also highlight cash-out management at classroom renewals/closures as an important watchpoint.
The company plan (Revenue +7.6%, Operating Income +7.0%, Net Income +10.7%) assumes maintaining Operating Margin around 10.5%, with improved cost-effectiveness of advertising and personnel expenses required for sustained growth. Trends in student acquisition efficiency and utilization, SG&A ratio trajectory, recovery in OCF/EBITDA (target ≥0.9x), and raising CapEx/Depreciation (target ≥0.7x → 1.0x) will be key metrics to assess the balance of financial soundness and profitability going forward.
This report is an AI-generated earnings analysis created from XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.