| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1138.5B | ¥1040.2B | +9.5% |
| Operating Income / Operating Profit | ¥598.5B | ¥542.1B | +10.4% |
| Ordinary Income | ¥605.9B | ¥548.8B | +10.4% |
| Net Income / Net Profit | ¥419.1B | ¥379.9B | +10.3% |
| ROE | 19.9% | 18.3% | - |
The fiscal year ended March 2026 recorded Revenue of ¥1,138.5B (YoY +¥98.3B / +9.5%), Operating Income of ¥598.5B (YoY +¥56.4B / +10.4%), Ordinary Income of ¥605.9B (YoY +¥57.1B / +10.4%), and Net Income attributable to owners of the parent of ¥413.6B (YoY +¥37.2B / +10.0%), achieving double-digit profit growth across all profit measures. The core Auto Auction Business drove results through higher handled volumes and improved fee prices, improving the Operating Margin to 52.6% (from 52.1%, +0.5pt) and Gross Margin to 62.8% (from 62.3%, +0.5pt). The company achieved profit growth exceeding revenue growth while maintaining high margins, demonstrating operating leverage. Double-digit growth in the Recycling Business (Revenue +22.4%, Profit +24.2%) also contributed complementarily, advancing portfolio diversification.
[Revenue] Revenue of ¥1,138.5B (YoY +9.5%) was driven by the core Auto Auction Business at ¥900.2B (+9.6%), accounting for 79.1% of consolidated revenue, with increases in handled units and improvements in pricing. By segment, Recycling continued high growth at ¥103.0B (+22.4%), supported by improved end-of-life vehicle and metal scrap market conditions and expanded handling volumes. Used Vehicle Purchase & Sales was slightly down at ¥124.7B (-1.4%) as the business prioritized profitability over scale expansion. Other businesses (Auto Loans, Solar Power, etc.) were ¥13.9B (+24.0%), small but favorable.
[Profitability] Cost of Sales remained at ¥424.0B (prior year ¥391.99B, +8.2%), growing less than revenue (+9.5%), resulting in Gross Margin improvement to 62.8% (+0.5pt). SG&A was ¥116.0B (prior year ¥106.15B, +9.3%), keeping the SG&A ratio stable at 10.2% (same), absorbing the revenue increase. Operating Income was ¥598.5B (+10.4%), with an Operating Margin of 52.6% (+0.5pt), achieving profit growth and margin improvement exceeding top-line growth. Non-operating income was ¥9.3B (including interest income ¥1.1B) and non-operating expenses were ¥1.9B (interest expense ¥0.1B), both minor, leading to Ordinary Income of ¥605.9B (+10.4%), nearly matching operating-stage growth. Extraordinary gains were ¥5.0B (including gain on sale of fixed assets ¥0.6B) and extraordinary losses were ¥5.1B (including loss on disposal of fixed assets ¥2.4B), essentially offsetting, producing Profit Before Tax of ¥605.8B (+10.2%). Income taxes were ¥186.7B (effective tax rate 30.8%, prior year 30.9%), with stable tax burden, resulting in Net Income attributable to owners of the parent of ¥413.6B (+10.0%).
The Auto Auction Business delivered Revenue of ¥900.2B (YoY +9.6%), Operating Income of ¥585.8B (+10.0%), and Operating Margin of 65.1% (prior 65.0%, +0.1pt), maintaining overwhelming profitability. It is the main pillar generating 97.9% of consolidated Operating Income, driven by a high-value-added model including dedicated terminals, internet connectivity services, and transport brokerage. Used Vehicle Purchase & Sales recorded Revenue of ¥124.7B (-1.4%) but Operating Income improved to ¥3.8B (+37.7%), with a margin of 3.0% (prior 2.2%, +0.8pt) due to stricter selection of low-margin transactions and efficiency gains. The Recycling Business achieved Revenue of ¥103.0B (+22.4%), Operating Income of ¥6.7B (+24.2%), and margin of 6.5% (prior 6.4%, +0.1pt), balancing high growth and stable margin, supported by improved markets for end-of-life vehicles and metal scrap and expanded volume, realizing portfolio diversification benefits. Other businesses posted Revenue of ¥13.9B (+24.0%) and Operating Income of ¥0.6B (+165.2%), showing high growth despite small scale.
[Profitability] Operating Margin of 52.6% (prior 52.1%, +0.5pt) ranks among the top in listed domestic companies, supported by Gross Margin improvement to 62.8% (prior 62.3%, +0.5pt) and containment of SG&A ratio at 10.2% (same). ROE of 19.9% (prior 18.9%, +1.0pt) remains high, underpinned by a slight improvement in Net Profit Margin to 36.3% (prior 36.2%, +0.1pt) and stable Asset Turnover of 0.42x (same). [Cash Quality] Operating Cash Flow (OCF) of ¥439.1B (YoY +15.1%) is 1.06x Net Income of ¥413.6B, indicating a very high cash conversion rate. Working capital movement resulted in net outflow of ¥-8.9B due to accounts receivable increase ¥-12.8B and accounts payable increase ¥+3.9B, within natural growth from business expansion. [Investment Efficiency] Capital expenditures were ¥93.5B (prior ¥27.7B), 1.84x depreciation ¥50.7B, indicating continued growth investments including facility upgrades and expansions. Intangible asset investment was modest at ¥16.9B, reflecting a tangible-asset-centric investment structure. [Financial Soundness] Equity Ratio was 78.1% (prior 76.2%, +1.9pt), Current Ratio 271.7% (prior 282.6%, -10.9pt), Quick Ratio 268.1% (prior 279.2%, -11.1pt), all at overwhelmingly strong levels. Cash and deposits of ¥1,104.3B are 2.1x short-term liabilities of ¥521.7B, eliminating maturity mismatch concerns. Interest-bearing debt remained ¥23.2B (short-term borrowings ¥7.0B, long-term borrowings ¥16.2B), with a Debt/Equity ratio of 1.1% and Interest Coverage of approximately 4,603x (Operating Income ¥598.5B / interest expense ¥0.1B), demonstrating exceptional financial resilience.
OCF was ¥439.1B (YoY +15.1%), with subtotal OCF before working capital movements at ¥621.8B, indicating robustness. Accounts receivable increase ¥-12.8B and accounts payable increase ¥+3.9B reflect natural working capital movements associated with business expansion. Corporate tax payments were ¥-183.1B (prior ¥-164.5B), a major cash outflow. Investing Cash Flow was ¥-212.7B, driven mainly by Capital Expenditures ¥-93.5B (prior ¥-27.7B) and net increase in time deposits ¥-100.0B. Proceeds from sale of tangible fixed assets were minor at ¥0.7B; in substance, the focus was on growth investment and liquidity management. Free Cash Flow (OCF + Investing CF) was ¥226.4B, yielding coverage of 1.01x against total dividends of ¥224.8B (excluding share buybacks), nearly balanced. Financing Cash Flow was ¥-384.3B, comprised mainly of share buybacks ¥-160.0B, dividend payments ¥-224.8B (including to non-controlling interests), long-term borrowings repayment ¥-5.2B, and proceeds from disposal of treasury shares ¥3.8B. Cash and cash equivalents at period end were ¥889.3B (from ¥1,047.2B at period start, change ¥-157.9B), indicating prioritization of dividends, share buybacks, and growth investment in cash allocation. Interest and dividends received were ¥0.6B and interest paid ¥-0.1B, showing minimal financial income/expense; the core business generates exceptionally high cash.
The difference between Ordinary Income ¥605.9B and Operating Income ¥598.5B is ¥+7.4B, attributable to Non-operating income ¥9.3B (including interest income ¥1.1B and other ¥2.1B) and Non-operating expenses ¥1.9B (including interest expense ¥0.1B and other ¥0.3B), both minor and highly recurring. Extraordinary gains ¥5.0B (including gain on sale of fixed assets ¥0.6B) and extraordinary losses ¥5.1B (including loss on disposal of fixed assets ¥2.4B) nearly offset, limiting one-off impacts. Profit Before Tax ¥605.8B and Ordinary Income ¥605.9B are nearly identical, indicating minimal non-recurring factors. Comprehensive income ¥419.3B vs. Net Income ¥419.1B difference of ¥+0.2B is due to valuation difference on available-for-sale securities ¥-0.1B and actuarial adjustments for retirement benefits ¥+0.4B, showing minor balance sheet fluctuations. OCF ¥439.1B is 1.06x Net Income ¥413.6B, and including working capital movements, earnings quality is very high. Goodwill amortization of ¥5.4B is only 0.9% of Operating Income ¥598.5B, negligible from an accounting burden perspective. Earnings are predominantly recurring and core-business derived, supporting high earnings sustainability.
The FY ending March 2027 consolidated forecast is Revenue ¥1,198.0B (YoY +5.2%), Operating Income ¥610.0B (+1.9%), Ordinary Income ¥618.0B (+2.0%), Net Income attributable to owners of the parent ¥416.0B (+0.6%), and EPS ¥91.35 (prior ¥88.78, +2.9%). Revenue growth is expected to decelerate from +9.5% to +5.2%, assuming a slowdown in handled units growth. Operating Income is planned to increase modestly by +1.9%, incorporating a decline in Operating Margin to 50.9% (from 52.6%, -1.7pt), reflecting conservative assumptions for external environment volatility (volume/price) and cost increases. Forecast Dividend is annual ¥27.50 (a reduction of ¥27.2 from prior-year dividend of ¥54.7), but the prior year may have included special dividends, suggesting a return to normalized levels. Progress toward full-year forecasts based on current period results is high: Revenue 95.0%, Operating Income 98.1%, Ordinary Income 98.1%, Net Income 99.4%, indicating clear visibility toward plan achievement. The company shows a realistic plan that maintains high margins while embedding buffers for market and competitive volatility.
Payout Ratio is 62.7% (Total dividends ¥225.5B / Net Income attributable to owners of the parent ¥413.6B, including shares held in company trust), up +7.7pt from 55.0% prior year. Annual dividend was ¥54.7 (Q2-end ¥25.2, Year-end ¥29.5), a substantial increase from prior-year dividend ¥20.6 (+¥34.1), though the prior year may have excluded special dividends, suggesting normalization. Share buybacks totaled ¥160.0B, bringing Total Return Amount to ¥385.5B (Dividends ¥225.5B + Share buybacks ¥160.0B), and Total Return Ratio to 93.2%, an extremely high level. Coverage of Total Returns by Free Cash Flow was 0.59x (Free Cash Flow ¥226.4B vs Total Returns ¥385.5B), implying a shortfall that was covered using ample cash on hand (Cash & Deposits ¥1,104.3B). Treasury shares decreased from ¥329.6B at the beginning of the period to ¥93.3B, a decline of ¥236.3B, reflecting share buybacks and simultaneous disposals (e.g., employee share trust). Forecast dividend for FY ending March 2027 is annual ¥27.50, implying a Payout Ratio of approximately 30% against forecast Net Income ¥416.0B, a conservative level leaving room for future dividend increases. Dividend sustainability is very high given large cash reserves and low leverage, so downside risk to dividends is limited.
Business concentration risk: The Auto Auction Business accounts for 79.1% of Revenue and 97.9% of Operating Income, indicating very high dependence. Handled volumes and bid prices are sensitive to used car market conditions and supply-demand balance; a recession or changes in new-car supply could reduce volumes and materially impact Revenue and Profit. While year-on-year growth in auction handling volume is not disclosed, Revenue growth of +9.6% reflects combined effects of volume and price; reversal of either factor could reverse the revenue growth trend.
Sustainability risk of dividends and total returns: Current Total Return Ratio of 93.2% and coverage of total returns by Free Cash Flow 0.59x show cash outflows significantly exceed cash generation. Although cash on hand of ¥1,104.3B is ample, maintaining high-level returns permanently could constrain investment capacity or require ongoing drawdown of cash. The company plans to lower Payout Ratio to 30% next fiscal year, but continuation and scale of share buybacks could cause fluctuation in total return levels.
Recovery risk on capital expenditures: Current Capital Expenditures of ¥93.5B are 1.84x Depreciation ¥50.7B, reflecting aggressive expansion and renewal investments. Investments in auction venues and system infrastructure are long-term in nature; if handled volumes or prices fall short of plan, investment efficiency may decline and growth in ROE and OCF could slow. Prolonged recovery periods for investments could create a trade-off with shareholder returns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 52.6% | 8.1% (3.6%–16.0%) | +44.5pt |
| Net Profit Margin | 36.8% | 5.8% (1.2%–11.6%) | +31.0pt |
Both Operating Margin and Net Profit Margin exceed industry medians by more than 40ppt, indicating top-tier industry profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 9.5% | 10.1% (1.7%–20.2%) | -0.6pt |
Revenue growth is approximately in line with the industry median; while growth is average, the company significantly outpaces peers in profit growth due to its overwhelming profitability.
※ Source: Company compilation
Overwhelming profitability and cash generation: Operating Margin 52.6%, ROE 19.9%, OCF/Net Income 1.06x demonstrate top-class profitability and earnings quality among domestic listed companies. The Auto Auction Business’s high-value-added model (margin 65.1%) forms a structural strength, and the low SG&A ratio of 10.2% yields highly efficient operations. The balance sheet is extremely robust with Equity Ratio 78.1%, Cash & Deposits ¥1,104.3B, and interest-bearing debt ¥23.2B, minimizing financial risk.
Focus on balancing total returns and investment: This period’s Total Return Ratio of 93.2% and Free Cash Flow coverage 0.59x mean cash outflows far exceeded generation. The company plans to constrain Payout Ratio to 30% next year, but attention will be on how total return levels evolve depending on continuation and scale of share buybacks. Capital expenditures are 1.84x depreciation, indicating aggressive investment; the balance among growth investment, returns, and liquidity will be key to capital allocation strategy.
Business concentration risk and preparedness for growth slowdown: High concentration in the Auto Auction Business (79.1% of Revenue, 97.9% of Operating Income) implies sensitivity to used car market fluctuations. Next-year plan assumes Revenue growth +5.2% and Operating Income +1.9% with conservative assumptions while aiming to maintain high margins. Continued double-digit growth in the Recycling Business supports portfolio diversification; monitoring whether this diversification materially reduces medium- to long-term concentration risk is important.
This report was automatically generated by AI analyzing XBRL financial statement disclosures. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.