Paraca (4809) FY2026 Q1 Earnings Report

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Executive Summary

Although revenue growth was maintained, the increase in SG&A expenses and higher interest expense prevented growth in ordinary income and below, resulting in a pattern of higher revenue but lower earnings. Revenue was ¥46.4B (¥44.1B in the same period of the previous year, YoY +5.2%), Operating Income was ¥8.7B (¥8.6B, YoY +1.4%), Ordinary Income was ¥7.8B (¥7.8B, YoY -1.3%), and Net Income was ¥5.3B (¥5.3B, YoY -0.1%). While cost of sales broadly moved in line with revenue, SG&A expenses increased 9.4%, exceeding the revenue growth rate, and interest expense increased 26.0%. These were the primary factors that turned the increase in Operating Income into a decline in Ordinary Income.

Factors Affecting Performance

【Revenue】Revenue was ¥46.4B, up +5.2% year on year. This was broadly consistent with the full-year company plan for a 5.5% increase in revenue, and the Q1 progress rate was 24.9%, tracking around the standard level of approximately 25%. As segment information has not been disclosed, a detailed breakdown analysis has been omitted.

【Profit and Loss】Cost of sales increased 5.0%, broadly in line with revenue, while the gross profit margin declined slightly to 30.9% (31.2% in the previous year). Meanwhile, SG&A expenses increased 9.4% to ¥5.68B, exceeding the revenue growth rate by 4.2pt and compressing the Operating Income margin by approximately 69bp year on year. Operating Income increased 1.4% to ¥8.7B, securing earnings growth; however, as interest expense increased 26.0% to ¥0.92B, Ordinary Income declined to ¥7.8B (-1.3%). Non-operating extraordinary items consisted of a ¥0.1B gain on the sale of fixed assets and a ¥0.0B loss on asset disposals, resulting in a small net gain of ¥0.03B, with a limited impact on profit before tax. Net Income was ¥5.3B, essentially flat year on year (-0.1%). In conclusion, the company posted higher revenue but lower earnings (on an Ordinary Income and Net Income basis).

Key Financial Indicators

【Profitability】The Operating Income margin of 18.7% (19.4% in the previous year) and Net Income margin of 11.5% (12.1% in the previous year) are both trending downward, but remain at favorable absolute levels. Annualized ROE was 10.3%, supported by the Net Income margin and financial leverage (Equity Ratio: 41.0%).【Cash Quality】The impact of extraordinary items was small, and the majority of earnings were substantive earnings generated by operating activities.【Investment Efficiency】The total asset turnover ratio is low, and the asset-intensive business structure, in which property, plant and equipment (primarily land) accounts for 88.6% of total assets, is suppressing ROA.【Financial Soundness】The Equity Ratio declined slightly to 41.0% (42.2% in the previous year), while the current ratio was 87.5%, below 100%, indicating a working capital structure in which current liabilities exceed current assets. Cash and deposits of ¥35.6B substantially exceeded short-term borrowings of ¥5.05B, securing short-term liquidity headroom; however, the inclusion of ¥28.8B in long-term borrowings due within one year in current liabilities requires monitoring. Interest coverage was 9.4x, indicating strong debt-servicing capacity.

Cash Flow Analysis

As a cash flow statement has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Property, plant and equipment increased from the ¥44.6B range in the same period of the previous year to the ¥44.6B range, with land in particular increasing by ¥5.2B to ¥402.7B. Long-term borrowings increased by ¥5.1B to ¥219.3B in line with this asset expansion, suggesting that asset acquisitions were financed through borrowings. Cash and deposits were ¥35.6B, slightly down from ¥36.7B in the same period of the previous year, indicating that funds may have been used for asset acquisitions and interest payments. Treasury stock increased by ¥1.1B, resulting in a negative balance of ¥4.8B, indicating that a certain amount of funds was also allocated to shareholder returns. Overall, the capital allocation structure involves investment (land acquisitions) and financing (borrowings) progressing in parallel, while the level of cash on hand has remained broadly unchanged.

Earnings Quality

Current-period earnings were primarily substantive earnings generated by operating activities, with an extremely limited impact from extraordinary items. Extraordinary income consisted of a ¥0.1B gain on the sale of fixed assets, while extraordinary losses consisted of a ¥0.04B loss on the disposal of fixed assets, resulting in a net gain of only ¥0.03B and a negligible impact on profit before tax of ¥7.8B. In non-operating income and expenses, non-operating income was almost zero, while non-operating expenses were primarily interest expense of ¥0.9B, up 26.0% year on year. This increase in interest expense was the primary factor that turned the increase in Operating Income into a decline in Ordinary Income. From an accrual perspective, income taxes and other taxes were ¥2.4B, at the same level as in the same period of the previous year, indicating limited earnings distortion from changes in the tax burden. Overall, despite higher revenue and Operating Income, the non-operating factor of financing costs somewhat weakened earnings quality at the Ordinary Income level.

Earnings Forecasts and Guidance

Q1 progress rates against the full-year company forecasts were 24.9% for Revenue, 25.3% for Operating Income, 25.5% for Ordinary Income, and 25.6% for Net Income. All were tracking around the standard level of 25%, indicating steady progress. The full-year forecasts are Revenue of ¥186.0B (YoY +5.5%), Operating Income of ¥34.3B (YoY +5.0%), Ordinary Income of ¥30.4B (YoY +3.1%), and Net Income of ¥20.9B (YoY +2.2%). As of Q1, Operating Income remains on a growth trend, but Ordinary Income declined year on year. To achieve the full-year plan, controlling the pace of SG&A expense growth and managing interest expense will be key areas of focus from Q2 onward.

Shareholder Returns

The full-year forecast dividend is ¥70.00, and the forecast Payout Ratio based on forecast EPS of ¥206.95 is 33.8%, a sustainable level that does not place undue pressure on earnings. Retained earnings were ¥166.9B, accounting for 80.8% of net assets, providing a substantial source of funds for dividend payments. Treasury stock increased by ¥1.1B year on year, resulting in a negative balance of ¥4.8B, indicating that shareholder returns were provided in addition to dividends. When both dividends and share repurchases are taken into account, they should be evaluated separately as the Total Return Ratio; however, as the specific total amount of share repurchases has not been disclosed, the evaluation is based solely on the Payout Ratio.

Risk Factors

1. Interest rate and borrowing dependency risk: The company has interest-bearing debt of ¥224.4B, including long-term borrowings of ¥219.3B, and Q1 interest expense increased 26.0% year on year to ¥0.92B. Changes in the interest rate environment could have a significant impact on Ordinary Income.

2. Liquidity and refinancing risk: The current ratio was 87.5%, and working capital was negative ¥6.7B. The company’s ability to address short-term funding needs, including ¥28.8B in long-term borrowings due within one year, is susceptible to the refinancing environment. Cash of ¥35.6B substantially exceeds short-term borrowings of ¥5.1B, but the overall shortfall against current liabilities remains.

3. Asset concentration and utilization risk: Land accounts for 80.0% of total assets, reflecting an asset-intensive business structure. Land acquisition costs, fluctuations in parking demand, and the impact of competitive entry on utilization rates and pricing will affect profitability.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (real_estate)

Profitability and Returns

The availability of disclosed comparative data for the company’s profitability indicators is limited, making it difficult to clearly assess its relative position within the industry.

Growth and Capital Efficiency

Industry median data is also insufficient for the growth rate, preventing a clear relative comparison.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The Operating Income margin of 18.7%, Net Income margin of 11.5%, and annualized ROE of 10.3% indicate that favorable profitability levels have been maintained. However, SG&A expense growth (+9.4% year on year) exceeded revenue growth (+5.2%), compressing the Operating Income margin by approximately 69bp year on year. This structural change warrants close monitoring.

2. Interest expense increased 26.0% year on year, causing Ordinary Income to decline (-1.3%) despite the increase in Operating Income (+1.4%). The relationship between the capital allocation strategy of financing land acquisitions through borrowings and the interest rate environment could affect the earnings structure going forward.

3. Full-year progress rates were generally steady at 24.9% for Revenue, 25.3% for Operating Income, and 25.6% for Net Income; however, the working capital structure reflected in the current ratio of 87.5% remains subject to ongoing monitoring.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,045–¥2,164 at Cost of Equity ±1%; ¥2,102–¥2,105 at ω±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a timing gap 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 value based solely on 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.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific securities. 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 professionals as necessary.

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