| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥1159.6B | ¥1008.0B | +15.0% |
| Operating Income | ¥108.8B | ¥43.3B | +151.1% |
| Ordinary Income | ¥108.7B | ¥38.7B | +180.6% |
| Net Income | ¥78.6B | ¥18.4B | +327.6% |
| ROE | 14.1% | 3.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1,159.6B (YoY +¥151.6B +15.0%), Operating Income was ¥108.8B (YoY +¥65.5B +151.1%), Ordinary Income was ¥108.7B (YoY +¥70.0B +180.6%), and Net Income attributable to owners of parent was ¥75.9B (YoY +¥57.2B +243.6%), delivering significant revenue and profit growth. Operating margin improved to 9.4% (up +5.1pt from 4.3% a year ago), ROE rose to 14.1% (up +8.9pt from 5.2%), and Operating Cash Flow was ¥156.6B (YoY +235.3%). Free Cash Flow was positive ¥46.5B, indicating strengthened cash generation.
[Revenue] Revenue reached ¥1,159.6B (YoY +15.0%), achieving double-digit growth. Domestic operations accounted for ¥949.6B (+14.4%), representing 81.9% of the total, supported by progress on large local projects and a recovery in private demand. Overseas operations were ¥210.5B (+17.8%), or 18.1% of revenue, driven by expanding construction demand centered on the Vietnamese subsidiary Phan Vu Investment Corporation. Gross margin improved substantially to 19.5% (up +4.2pt from 15.3% a year earlier), and Gross Profit rose to ¥226.2B (¥+72.0B +46.7%). Stabilization of material prices, strengthened project profitability management, and an improved project mix were the main drivers of gross margin improvement.
[Profit/Loss] Operating Income was ¥108.8B (YoY +151.1%), with Operating Margin expanding to 9.4% (up +5.1pt). SG&A expenses were contained at ¥117.4B (¥+6.4B +5.8%), rising well below the revenue growth rate (+15.0%), resulting in positive operating leverage. SG&A ratio improved to 10.1% (down -0.9pt from 11.0%). Non-operating results were roughly neutral (Non-operating income ¥7.9B, Non-operating expenses ¥8.1B), with interest income ¥2.4B and foreign exchange gains ¥1.6B offset by interest expenses ¥7.3B. Ordinary Income was ¥108.7B (YoY +180.6%), with an Ordinary Income margin of 9.4% (up +5.6pt from 3.8%). Extraordinary gains were ¥6.9B (mainly gains on sale of investment securities ¥6.6B) and extraordinary losses were ¥5.7B (including ¥4.95B related to withdrawal from Myanmar operations), netting to +¥1.2B and thus limited, expanding profit before tax to ¥109.9B (YoY +205.5%). After deducting corporate taxes of ¥31.3B (effective tax rate 28.5%), Net Income attributable to owners of parent was ¥75.9B (YoY +243.6%), with a Net Margin of 6.5% (up +4.7pt from 1.8%), delivering significant revenue growth with large profit increases.
Domestic business delivered Revenue of ¥949.6B (YoY +14.4%), Operating Income of ¥94.6B (+96.3%), and Operating Margin of 10.0% (up +5.1pt from 4.9%), achieving substantial revenue and profit growth. Progress on large local construction projects, recovery in private demand, and improved project profitability drove margin expansion; the domestic segment remains the core, accounting for 81.9% of revenue and 86.9% of Operating Income. Overseas business reported Revenue of ¥210.5B (+17.8%), Operating Income of ¥14.2B (+372.8%), and Operating Margin of 6.7% (up +7.2pt from -0.5%), progressing into profitability. Expansion of construction demand in Vietnam and strengthened cost management contributed, absorbing the impact of withdrawal from Myanmar operations (deconsolidated June 2025). Overseas ratio is 18.1% of revenue and 13.1% of profit, with domestic operations continuing to contribute the majority of earnings.
[Profitability] Operating Margin improved to 9.4% (up +5.1pt from 4.3%), and Net Margin improved to 6.5% (up +4.7pt from 1.8%). Gross Margin rose to 19.5% (up +4.2pt from 15.3%) due to stabilizing material prices and better project profitability management. SG&A ratio improved to 10.1% (down -0.9pt from 11.0%). ROE climbed to 14.1% (up +8.9pt from 5.2%), ROA to 7.4% (up +5.5pt from 1.9%), and an ROIC-equivalent (Operating Income ÷ Invested Capital) was approximately 17.5%, indicating improved capital efficiency. [Cash Quality] Operating Cash Flow was ¥156.6B (YoY +235.3%), 1.99x Net Income of ¥78.6B, with an accrual ratio of -0.77, demonstrating high cash generation. Contract liabilities (advances received) increased to ¥23.3B (up +159.0%), reflecting improved order conditions. Working capital improvements (Accounts receivable decrease +¥15.0B, Accounts payable increase +¥6.0B) supported Operating CF. Interest coverage was 14.9x (EBIT ¥108.8B ÷ Interest expense ¥7.3B), indicating a light interest burden. [Investment Efficiency] Total asset turnover improved to 1.10x (from 1.04x), aided by revenue growth and correction in working capital turnover. Capital expenditures were ¥56.9B, 1.68x depreciation of ¥33.9B, indicating a growth investment mode. Goodwill was ¥6.0B (1.1% of net assets), limited impairment risk. Tangible fixed assets were ¥275.1B with a fixed asset turnover of 4.22x, indicating high operating efficiency. [Financial Soundness] Equity Ratio was 52.8% (up +5.8pt from 47.0%), and D/E ratio was 0.25x (interest-bearing debt ¥138.8B ÷ Net assets ¥558.0B), reflecting a conservative capital structure. Current ratio was 156.9%, quick ratio 139.9%, indicating solid short-term payment ability. Cash and deposits of ¥256.3B far exceeded short-term borrowings of ¥105.7B (Cash/Short-term liabilities 2.43x), showing ample liquidity. Interest-bearing debt ratio was 13.1% (Interest-bearing debt ¥138.8B ÷ Total assets ¥1,057.1B), reflecting a high level of financial safety.
Operating Cash Flow was ¥156.6B (YoY +235.3%), 1.99x Net Income of ¥78.6B, achieving high-quality cash generation. Operating CF subtotal (before working capital changes) was ¥181.2B (YoY +173.5%), showing strengthened cash generation from core operations, with significant contribution from working capital improvement. Decrease in trade receivables ¥15.0B (DSO improvement effect), increase in trade payables ¥6.0B, and increase in contract liabilities (advances received) ¥14.4B boosted Operating CF; inventory increase -¥4.1B was within appropriate levels associated with revenue expansion. Corporate tax payments were ¥19.1B (similar to ¥18.5B prior year). Investing Cash Flow was -¥110.2B, mainly capital expenditures -¥57.0B (growth investments), acquisition of investment securities -¥5.4B net of sales gains +¥9.6B, and acquisition of subsidiary shares -¥7.5B. Free Cash Flow was positive ¥46.5B (Operating CF ¥156.6B + Investing CF -¥110.2B), demonstrating strong cash generation. Financing Cash Flow was -¥32.4B, mainly repayments of long-term borrowings -¥20.9B, dividends paid -¥17.7B, and lease repayments -¥4.4B. Cash and cash equivalents at period-end increased to ¥212.4B (from ¥197.0B at beginning of period, +¥15.5B), further strengthening liquidity.
Quality of earnings is high. Of Ordinary Income ¥108.7B, Operating Income was ¥108.8B, indicating core operations drove virtually all profit, while non-operating results were roughly neutral (Non-operating income ¥7.9B, Non-operating expenses ¥8.1B). One-off items—Extraordinary gains ¥6.9B (mainly gains on sale of investment securities ¥6.6B) and Extraordinary losses ¥5.7B (including ¥4.95B related to Myanmar withdrawal)—netted +¥1.2B, contributing only about 1.6% to Net Income attributable to owners of parent of ¥75.9B, and thus limited. Main components of non-operating income were interest income ¥2.4B, foreign exchange gains ¥1.6B, and dividend income ¥1.1B, each being recurring financial revenues. Comprehensive income was ¥83.9B (Net Income ¥78.6B + Other comprehensive income ¥5.3B); other comprehensive income comprised valuation differences on available-for-sale securities +¥6.2B, foreign currency translation adjustments -¥0.8B, and retirement benefit adjustments +¥0.1B. Operating CF ¥156.6B is 1.99x Net Income ¥78.6B, with an accrual ratio of -0.77 ((Net Income ¥78.6B - Operating CF ¥156.6B) ÷ Total assets ¥1,057.1B), indicating a high degree of cash realization. Decrease in accounts receivable ¥15.0B, increase in contract liabilities ¥14.4B, and increase in accounts payable ¥6.0B show working capital improvement and support the soundness of revenue recognition. Improvements in Gross Margin to 19.5% and Operating Margin to 9.4% are attributable to stabilized material prices and stronger project profitability management, representing structural earnings improvement accompanied by a better project mix.
Full-year guidance is Revenue ¥1,200.0B (YoY +3.5%), Operating Income ¥112.0B (+2.9%), Ordinary Income ¥112.0B (+3.1%), and Net Income attributable to owners of parent ¥77.0B (+1.4%), indicating continued revenue and profit growth. Operating margin is projected at 9.3% (vs. 9.4% last year, -0.1pt), broadly unchanged, with the company planning to sustain this period's significant improvement. Revenue progress ratio is 96.6% (Actual ¥1,159.6B ÷ Forecast ¥1,200.0B), and Operating Income progress ratio is 97.1% (Actual ¥108.8B ÷ Forecast ¥112.0B), meaning the full-year forecast is largely achieved already and upside in the second half is limited. The company forecast appears conservative, incorporating uncertainty around material prices and project profitability. EPS forecast is ¥202.16 (vs. ¥199.33 prior year +1.4%). Dividend forecast is annual ¥35 (interim ¥24, year-end changed from ¥31). Payout Ratio is 17.3% (Dividend ¥35 ÷ EPS ¥202.16), down from 27.6% a year ago, suggesting a policy to bolster retained earnings.
Annual dividend was ¥55 (interim ¥24 + year-end ¥31) with a Payout Ratio of 27.6% (Dividend ¥55 ÷ EPS ¥199.33), and DOE approx. 3.8% (Total dividends ¥17.7B ÷ Beginning net assets ¥493.1B). With Free Cash Flow ¥46.5B and total dividends ¥17.1B, FCF coverage is 2.72x, indicating high dividend sustainability. Prior year dividend was annual ¥22.5, and this year’s increase of +¥32.5 (+144.4%) reflects improvement in performance passed on to shareholders. Next fiscal year dividend forecast is annual ¥35 (interim/year-end TBD), with implied Payout Ratio 17.3%, a conservative level prioritizing retained earnings accumulation and reallocation to growth investments. No share buybacks were conducted; total shareholder return consists solely of dividends. Payout Ratio 27.6% is reasonable, and given FCF coverage and cash balance (¥256.3B), dividend sustainability is high with medium-term scope for further increases.
Project mix and profitability volatility risk: Although Gross Margin improved to 19.5%, it remains below industry standard (around 20%), so deterioration in profitability on large projects or renewed rises in material costs could compress gross margin and widen volatility in Operating Margin. Domestic business accounts for 81.9% of revenue, so shifts in the mix between public and private demand can directly affect margins.
Working capital and collection risk: Days Sales Outstanding (DSO) is long at 93 days (Accounts receivable ¥295.5B ÷ (Revenue ¥1,159.6B ÷ 365)), and prolonged inspection/collection cycles on large projects could strain liquidity. An increase in contract liabilities of ¥23.3B indicates strong order flow but also embeds the risk of refunding advances if projects are delayed.
Short-term debt concentration and interest rate risk: Short-term borrowings of ¥105.7B account for 76.1% of interest-bearing debt, posing refinancing and maturity mismatch risk. Although cash of ¥256.3B covers this, in a rising interest rate environment interest expense could increase and compress profits. Interest coverage is 14.9x and sound, but reliance on short-term debt raises liquidity risk in an economic slowdown.
Profitability / Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.4% | 7.8% (4.6%–12.3%) | +1.6pt |
| Net Margin | 6.8% | 5.2% (2.3%–8.2%) | +1.6pt |
Operating and Net Margins both exceed the median, securing top-tier profitability within the industry.
Growth / Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 15.0% | 3.7% (-0.4%–9.3%) | +11.3pt |
Revenue growth significantly outpaces the industry median, driven by domestic and overseas demand expansion.
※ Source: Company compilation
Profit margin improvement driven by core operations and high cash generation: Operating Margin 9.4% (up +5.1pt) and ROE 14.1% (up +8.9pt) improved markedly due to stabilizing material prices and tighter project profitability management. Operating Cash Flow ¥156.6B (1.99x Net Income) and Free Cash Flow ¥46.5B remained positive, maintaining a high cash conversion rate. Accrual ratio -0.77 indicates high earnings quality and sustained core-driven earnings improvement.
Conservative financial structure and ample liquidity: Equity Ratio 52.8%, D/E 0.25x, and cash ¥256.3B far exceeding short-term borrowings ¥105.7B (Cash/Short-term liabilities 2.43x). Interest coverage 14.9x indicates strong financial safety. Although short-term borrowing dependency at 76.1% poses maturity mismatch risk, ample liquidity mitigates this, suggesting sufficient financial capacity even in a downturn.
Continued growth investment and conservative dividend policy: Capital expenditure ¥56.9B (1.68x depreciation) shows continued growth investment, with intangible fixed assets up +186.1% reflecting progress in digitalization investments. Payout Ratio 27.6% and FCF coverage 2.72x indicate dividend sustainability. Next fiscal year dividend forecast ¥35 (Payout Ratio 17.3%) is conservative to prioritize retained earnings and reallocation to growth investment, preserving room for medium-term dividend increases. Monitoring of extended DSO of 93 days and short-term debt concentration is required, but strong cash generation and liquidity provide resilience; improvement in project mix and continued overseas profitability will be medium-term growth drivers.
This report is an AI-generated earnings analysis document created by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.