| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥3083.7B | ¥1916.3B | +60.9% |
| Operating Income | ¥144.0B | ¥66.6B | +116.1% |
| Profit Before Tax | ¥1112.0B | ¥116.9B | +851.1% |
| Net Income | ¥759.3B | ¥80.5B | +842.6% |
| ROE | 11.0% | 1.2% | - |
In addition to increases in revenue and profit for the quarter, net income was significantly boosted by a sharp increase in financial income. Revenue was ¥3,083.7B (+60.9% YoY), operating income was ¥144.0B (+116.1%), profit before tax was ¥1,112.0B, and net income attributable to owners of the parent was ¥761.4B (+840.4%). The increase in revenue was primarily attributable to expanded progress on construction and civil engineering projects, while the sharp increase in net income resulted from the recognition of ¥995.4B in financial income. It should be noted that the nature of this increase differs from the growth in operating income.
【Revenue】Revenue was ¥3,083.7B, representing a 60.9% YoY increase. By segment, the Civil Engineering Business showed the largest increase at ¥850.8B (+162.9%), while the Building Construction Business also drove overall growth at ¥1,374.9B (+67.3%), accounting for 44.6% of total revenue and representing the largest segment. The Paving Business remained solid at ¥682.8B (+14.6%), as did the Machinery Business at ¥91.8B (+7.9%). Meanwhile, the Infrastructure Operations Business was the only segment to report a revenue decline, at ¥76.2B (-9.1%).
【Profit and Loss】Operating income was ¥144.0B (+116.1%), and the operating margin improved to 4.7% from 3.5% in the previous year. Segment profit growth was led by the Building Construction Business at ¥72.4B (+139%) and the Civil Engineering Business at ¥58.5B (+243%), while the Infrastructure Operations Business posted a wider loss of ¥-14.9B. Although profit before tax reached ¥1,112.0B, this was primarily attributable to financial income of ¥995.4B (¥65.1B in the previous year), resulting in an extremely large gap with business profit of ¥147.7B. Of net income of ¥761.4B, growth derived from the core businesses was limited. Thus, although revenue and profit increased, most of the growth in bottom-line profit depended on non-operating factors.
The Building Construction Business was the largest contributor to profit, with revenue of ¥1,374.9B (44.6% composition ratio, +67.3% YoY) and business profit of ¥72.4B (+139% YoY). The Civil Engineering Business recorded revenue of ¥850.8B (27.6% composition ratio, +162.9% YoY) and business profit of ¥58.5B (+243% YoY), achieving the highest growth rate and profit margin (6.9%) across the Company. The Paving Business remained stable, with revenue of ¥682.8B and business profit of ¥34.8B (5.1% profit margin). The Machinery Business was low-margin, generating business profit of ¥0.5B (0.5% profit margin) on revenue of ¥91.8B. The Infrastructure Operations Business recorded business profit of ¥-14.9B (–19.6% profit margin) on revenue of ¥76.2B, with its loss widening and becoming a structural factor depressing the Company-wide profit margin.
【Profitability】The operating margin improved to 4.7% from 3.5% in the previous year, while the gross margin also expanded to 13.7% YoY. The net profit margin was extremely high at 24.7%, but this was attributable to the recognition of ¥995.4B in financial income. Given the large gap with the operating margin, the operating margin should be prioritized as an indicator of core earnings power.【Cash Flow Quality】Operating cash flow (OCF) was ¥554.9B, representing coverage of 0.73x against net income of ¥761.4B, below 1x and indicating a delay in cash conversion of earnings. Although the collection of trade receivables progressed, the decrease in trade payables (-¥489.7B) restrained OCF.【Investment Efficiency】ROE was 11.0%, supported by the high net profit margin. However, total asset turnover was low, and improvement in the efficiency of operating assets themselves was limited.【Financial Soundness】The equity ratio was 32.3%. Current assets of ¥9,580.6B versus current liabilities of ¥6,752.4B resulted in a current ratio of approximately 1.42x, indicating no short-term liquidity issues. Interest-bearing debt totaled ¥4,230.5B, primarily non-current, with current debt of ¥1,465.8B, resulting in a structure centered on long-term debt.
Cash flow from operating activities was ¥554.9B, up 9.1% YoY. However, compared with net income of ¥761.4B, it remained at 0.73x, indicating challenges in cash generation relative to earnings. Cash flow before changes in working capital was ¥710.0B, but the decrease in trade payables of -¥489.7B was a cash outflow factor. This was partially offset by progress in collecting trade receivables (a decrease equivalent to +¥663.3B) and a decrease in contract assets of +¥204.5B. Cash flow from investing activities was ¥-181.6B, primarily due to capital expenditures of ¥241.8B, partially supplemented by ¥111.7B in proceeds from the recovery of other investments. Cash flow from financing activities was ¥-428.8B, with the main outflows consisting of dividend payments of ¥240.4B, ¥85.9B in expenditures for the acquisition of subsidiary interests from non-controlling shareholders, and ¥58.8B in lease liability repayments. Free cash flow, comprising operating CF and investing CF, was ¥373.4B, below the combined total of dividends and capital expenditures (approximately ¥482B). During the quarter, cash and cash equivalents decreased by ¥5.2B, resulting in an ending residual of ¥3,557.8B.
The quality of earnings for the quarter was characterized by a significant difference between the contributions of recurring business profit and non-recurring financial income. Business profit was ¥147.7B and operating income was ¥144.0B, whereas profit before tax reached ¥1,112.0B. The primary reason for this difference was financial income of ¥995.4B, equivalent to approximately 32% of revenue. This financial income appears to consist of valuation gains, interest income, and other items. As its nature differs from recurring earnings generated by operating activities, its reproducibility over the full fiscal year may be limited. OCF at 0.73x net income indicates that a portion of earnings has not been converted into cash. Although the collection of trade receivables progressed, the decrease in trade payables was a cash outflow factor. Comprehensive income attributable to owners of the parent was ¥711.0B, slightly below net income of ¥761.4B, primarily due to a valuation loss on other securities of -¥58.9B. Changes in the fair value of financial assets also affected comprehensive income.
Progress against the full-year plan varied substantially by indicator. Revenue reached 21.3% of the full-year plan of ¥14,450.0B, while operating income reached 17.0% of the full-year plan of ¥845.0B. Both were below the simple quarterly average benchmark of 25%. Meanwhile, net income reached 89.1% of the full-year plan of ¥855.0B, although this was largely attributable to the temporary contribution of ¥995.4B in financial income. This pace of progress is not necessarily sustainable through the full fiscal year. The delay in operating progress may reflect the tendency for revenue recognition on construction projects to be weighted toward the second half of the year, as well as the continued losses in the Infrastructure Operations Business. The Company revised its earnings forecast and dividend forecast in conjunction with its full-year financial results.
The Company’s published full-year dividend forecast is ¥132 per share. Dividend payments in the same period of the previous year were ¥89.5B, while dividend payments during the current quarter totaled ¥240.4B, suggesting that a portion of the annual dividend, including the year-end dividend, was recorded during the current quarter. Based on the full-year net income forecast of ¥855.0B, the payout ratio must be evaluated based on the total amount calculated from the annual dividend forecast and the average number of shares outstanding during the period. Share repurchases were negligible (¥0.0B), indicating that shareholder returns are primarily dividend-based. Current-quarter free cash flow of ¥373.4B exceeded dividend payments of ¥240.4B, providing cash support for dividends as of the end of the quarter.
Core earnings power and cash conversion: Against an operating margin of 4.7%, OCF remained at 0.73x net income. Although the collection of trade receivables and contract assets progressed, the decrease in trade payables was a cash outflow factor. Continued attention is therefore required regarding the cash conversion of earnings.
Structural losses in the Infrastructure Operations Business: Revenue in this business was ¥76.2B (-9.1% YoY), while business profit was ¥-14.9B, indicating widening losses. This partially offset profit growth in the other segments.
Dependence on financial income and reproducibility: Financial income of ¥995.4B accounted for a significant portion of profit before tax of ¥1,112.0B, equivalent to approximately 32% of revenue. Non-operating factors such as valuation gains appear to be the primary contributors, creating uncertainty regarding recurrence throughout the full fiscal year.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.7% | 4.5% (2.7%–6.6%) | +0.2pt |
| Net Profit Margin | 24.6% | 3.8% (-1.1%–4.4%) | +20.9pt |
The operating margin was around the industry median, while the net profit margin was significantly above the industry median due to the recognition of financial income.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 60.9% | 4.8% (3.4%–10.1%) | +56.1pt |
The revenue growth rate significantly exceeded the industry median, indicating high growth within the industry.
※Source: Compiled by the Company
Top-line growth was strong at +60.9% YoY, driven by increased progress in the Building Construction and Civil Engineering Businesses, representing a high growth rate within the industry. Business profit in both businesses also expanded significantly. Meanwhile, losses in the Infrastructure Operations Business widened, increasing the disparity in profitability among segments.
Financial income of ¥995.4B made a significant contribution to net income of ¥761.4B, and the gap with business profit of ¥147.7B is an important observation point when evaluating the quality of the results. The operating margin of 4.7% was around the industry median, confirming continued improvement in the profitability of the core businesses from the previous year.
OCF remaining at 0.73x net income is an important fact to note regarding the cash conversion of earnings. Full-year revenue and operating income progress were 21.3% and 17.0%, respectively, below a simple quarterly proportional pace. Progress in the second half of the year will be key to achieving the plan.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade period). It is not a forecast of the market share price or a recommendation of any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥2,858 |
| base | ¥2,973 |
| bull | ¥3,056 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥2,604 |
| Adjusted Forecast EPS | ¥367.4 |
| Cost of Equity r | 9.27% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 0.50%) |
| Residual Income Persistence Factor ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 40.1% |
| Forecast EPS Confidence Adjustment | ×1.117 (based on the historical guidance achievement rate of comparable companies) |
| Implied PBR / PER |
Sensitivity: ¥2,890–¥3,060 at cost of equity ±1%; ¥2,964–¥2,986 at ω±0.1.
Notes:
(Calculation model: Residual Income Model / Interest rate reference month: 2026-07 / This value 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. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial results. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.
---End of Report---
| 1.14x / 8.1x |
These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.