| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥575.3B | ¥517.1B | +11.3% |
| Operating Income | ¥30.6B | ¥27.1B | +12.8% |
| Ordinary Income | ¥23.5B | ¥21.2B | +10.6% |
| Net Income | ¥14.6B | ¥13.9B | +5.6% |
| ROE | 9.5% | 12.3% | - |
For the fiscal year ended March 2026, Revenue was 575.3B (YoY +58.2B, +11.3%), Operating Income was 30.6B (YoY +3.5B, +12.8%), Ordinary Income was 23.5B (YoY +2.3B, +10.6%), and Net Income attributable to owners of the parent was 14.3B (YoY +0.4B, +3.1%). Both Revenue and Operating Income achieved double-digit growth, but interest-bearing debt of 266.1B generated interest expense of 6.2B, producing non-operating expenses of -7.1B at the ordinary income stage and reducing the net income margin to 2.5% (prior year 2.7%, -0.2pt). Operating margin slightly improved to 5.3% (prior year 5.2%, +0.1pt) and gross margin improved to 15.9% (prior year 15.6%, +0.3pt), but a rise in SG&A ratio to 10.6% (prior year 10.4%, +0.2pt) offset gross margin gains, limiting operating leverage. Operating Cash Flow (OCF) improved substantially to 38.0B (prior year -73.1B, +152.0%), generating FCF of 37.5B and achieving a cash conversion of 2.6x of Net Income. Of total assets of 573.1B (prior year 545.1B, +5.1%), Inventories were 432.1B (share 75.4%), and interest-bearing debt was 266.1B (D/E 2.73x), indicating a continued asset mix concentrated in inventory and borrowings. ROE of 9.5% (prior year 12.9%) declined by -3.4pt YoY due to denominator expansion from equity issuance and deterioration in net income margin. While top- and bottom-line growth continued, interest burden and inventory turnover management are key to medium-term growth.
Revenue of 575.3B (+11.3%) was driven by the DX Real Estate Business at 532.5B (+10.8%, revenue share 92.5%) and the DX Promotion Business at 44.8B (+19.0%, share 7.8%). DX Real Estate benefited from steady progress in new condominium sales and purchase-resale of existing properties; DX Promotion benefited from expansion of contracted system development and distribution channels for facial recognition solutions. Of external customer revenue, amounts subject to revenue recognition standards were 562.7B (share 97.8%), and other revenue (real estate securitization schemes) was 12.7B (share 2.2%). Consolidated revenue reconciles to 575.3B after excluding intersegment transactions of 1.9B. Growth accelerated from 7.9% in the prior year, driven by DX Promotion’s +19.0% growth pulling overall portfolio expansion.
Cost of sales was 483.6B (84.1% of Revenue), yielding a gross margin of 15.9% (prior year 15.6%, +0.3pt), reflecting improved project mix and cost control. SG&A was 61.1B (10.6% of Revenue, prior year 10.4%) rising +0.2pt and including goodwill amortization of 1.0B. Operating Income of 30.6B (margin 5.3%) improved +0.1pt from 5.2% in the prior year, but the higher SG&A ratio offset gross margin improvement, limiting operating leverage. Non-operating income was 0.3B (including 0.1B from investment partnership gains) while non-operating expenses were 7.5B (interest expense 6.2B, fees paid 1.2B), netting -7.1B and resulting in Ordinary Income of 23.5B (margin 4.1%). Extraordinary gains included 2.1B from sale of investment securities and extraordinary losses included 0.9B from valuation losses on investment securities, producing profit before tax of 22.5B. After corporate taxes of 7.9B (effective tax rate 35.1%) and non-controlling interests of 0.3B, Net Income attributable to owners of the parent was 14.3B (margin 2.5%, prior year 2.7%, -0.2pt). The divergence from Ordinary Income to Net Income is driven by interest expense of 7.1B and an effective tax rate of 35%. While revenue and profit growth were achieved, high leverage and interest burden constrained margin improvements.
The DX Real Estate Business recorded Revenue of 532.5B (+10.8%) and Operating Income of 42.4B (+9.8%, margin 8.0%). The DX Promotion Business recorded Revenue of 44.8B (+19.0%) and Operating Income of 3.7B (prior year 0.8B, +384.0%, margin 8.2%), achieving a substantial turnaround to profitability. Corporate adjustments amounted to -15.5B (prior year -12.3B), indicating increased corporate overhead. While DX Promotion’s monetization progress contributes to overall profit stability, revenue concentration in DX Real Estate remains high at 92.5%, leaving the company sensitive to property sales cycles and market conditions.
Profitability: Operating margin 5.3% (prior year 5.2%, +0.1pt), Ordinary Income margin 4.1% (prior year 4.1%, flat), Net Income margin 2.5% (prior year 2.7%, -0.2pt). Gross margin 15.9% (prior year 15.6%, +0.3pt) suggests improved project mix, but SG&A ratio of 10.6% (prior year 10.4%, +0.2pt) suppresses operating leverage. ROE 9.5% (prior year 12.9%) fell -3.4pt YoY due to higher equity and lower net margin. ROA (Ordinary Income basis) 4.2% (prior year 4.1%) was flat. OCF margin 6.6% (OCF 38.0B / Revenue 575.3B) is high, indicating strong cash conversion. Cash quality: OCF/Net Income 2.6x, FCF 37.5B (2.6x Net Income) indicating high-quality cash generation. Accrual ratio -4.1% (OCF - Net Income / Average Total Assets) is within a healthy range. Interest coverage 5.0x (Operating Income 30.6B / interest expense 6.2B) provides some cushion, but interest burden ratio 23.7% (interest expense / profit before deduction of non-operating expenses) indicates roughly one-quarter of profit is allocated to interest. Investment efficiency: Total asset turnover 1.0x (Revenue 575.3B / Total assets 573.1B), inventory turnover 1.4x (Cost of sales 483.6B / Inventories 432.1B) shows relatively slow inventory turns. Capex/Depreciation 0.3x (Capex 0.4B / Depreciation 1.2B) continues an asset-light model. Financial soundness: Equity Ratio 26.8% (prior year 20.7%, +6.1pt) improved due to a capital increase; D/E 2.73x (prior year 3.84x) also improved but remains high. Current ratio 239.2% (Current assets 548.7B / Current liabilities 229.5B), Quick ratio 50.8% (Quick assets 116.6B / Current liabilities 229.5B) indicate short-term liquidity is provisionally secured despite high inventory dependence. Cash and deposits 99.7B vs interest-bearing debt 266.1B gives cash / interest-bearing debt of 37.5%, and Debt/EBITDA 8.4x (interest-bearing debt 266.1B / EBITDA approx. 31.7B) implies limited repayment capacity.
OCF improved substantially to 38.0B (prior year -73.1B, YoY +152.0%). Pre-tax profit of 22.5B and working capital improvements contributed (increase in accounts payable 9.5B, decrease in inventories 10.3B, increase in trade receivables -0.6B). After corporate tax payments of -10.0B, cash generation remained ample. OCF subtotal before working capital changes was 55.3B; after tax and interest payments of -16.3B and working capital changes of +10.2B, OCF was 38.0B. Investing CF was -0.5B (Capex -0.04B, intangible asset acquisitions -1.6B, proceeds from sale of securities 2.9B, etc.), minor in scale. FCF (OCF + Investing CF) was 37.5B, 2.6x Net Income of 14.3B, confirming strong cash conversion. Financing CF was -6.6B (repayment of long-term borrowings -133.8B, new borrowings +118.4B, dividends -4.1B, equity issuance +29.6B), a net outflow; cash and deposits increased from opening balance 68.9B to closing 99.7B (+30.9B). Accounts payable increase of +80.3% reflected expansion of working capital alongside procurement and construction progress, supporting liquidity; inventory reduction suggests sales progress. OCF/EBITDA was 1.2x, indicating healthy cash conversion quality. Working capital management risks include seasonality of accounts payable and timing of procurement, requiring continued monitoring.
Core recurring earnings are led by Operating Income of 30.6B, with non-operating income of 0.3B (interest income 0.2B, investment partnership gains 0.1B) limited. Most non-operating expenses of 7.5B are interest expense 6.2B and fees paid 1.2B, structural costs arising from interest-bearing debt of 266.1B. Extraordinary items contributed a net +1.2B from 2.1B sale of investment securities (one-off) less valuation losses 0.03B and 0.9B loss on sale of equity. OCF of 38.0B substantially exceeds Net Income of 14.3B, with an accrual of -23.7B (OCF - Net Income), indicating solid cash realization of earnings. Comprehensive income of 14.6B versus Net Income of 14.3B differed by -1.2B from valuation differences on investment securities, a minor effect. The divergence from Ordinary Income 23.5B to Net Income 14.3B (-39.1%) is primarily due to non-operating expenses of 7.1B and an effective tax rate of 35.1%, with structural interest burden the main cause of margin compression.
Full-year forecast: Revenue 650.0B (YoY +13.0%), Operating Income 33.0B (YoY +7.8%), Ordinary Income 24.5B (YoY +4.4%), Net Income 15.0B (YoY +4.6%), EPS 23.33 yen. First-half results (Revenue 575.3B, Operating Income 30.6B) represent 88.5% and 92.7% of the full-year forecast respectively, indicating high progress; the company assumes modest revenue and profit increases in the second half. Forecasted Operating margin is 5.1%, slightly below first-half 5.3%, reflecting a conservative plan incorporating potential SG&A ratio increases and changes in sales mix. Assumptions that Ordinary Income and Net Income will grow less than Operating Income reflect continued interest burden. Full-year dividend forecast 3.00 yen (first-half actual 8.5 yen after adjusting for stock split) suggests continued dividend post-adjustment for the stock split. Achievement depends on maintaining inventory turnover, controlling SG&A, and stable interest-rate environment.
Annual dividends total Year-end 5.5 yen + Interim 3.0 yen = 8.5 yen (after stock split adjustment), with payout ratio 29.4% (dividend 8.5 yen / EPS 28.96 yen calculated on post-split adjusted basis). Dividend cash outflow of 4.1B is fully covered by FCF of 37.5B, giving FCF coverage of 9.1x. Share buybacks were effectively zero (-0.0B), so Total Return Ratio equals the payout ratio at 29.4%. Payout ratio remains unchanged from prior year 29.4%, reflecting a capital policy that prioritizes growth investment and deleveraging. Full-year forecast dividend 3.00 yen is on a post-split basis indicating continued dividend; while there is scope for dividend increases given FCF generation, the company prioritizes internal reserves to strengthen the balance sheet for the time being.
Inventory concentration risk: Inventories of 432.1B account for 75.4% of total assets, comprising 207.0B of properties for sale and 224.2B of properties under development. Price declines or sales delays in a downturn could trigger impairments or liquidity stress. An inventory turnover of 1.4x is consistent with real estate industry characteristics, but elongated sales cycles would pressure liquidity.
High leverage and interest burden: Interest-bearing debt 266.1B (D/E 2.73x, Debt/EBITDA 8.4x) and interest expense 6.2B compress Operating Income by 20.3%. In rising-rate environments, interest payments would increase and further reduce Net Income margin, constraining ROE improvement. Short-term borrowings of 85.9B and long-term debt due within one year of 84.1B create short-term repayment pressure of 170.0B versus cash of 99.7B, posing refinancing risk.
Business concentration and market sensitivity: DX Real Estate accounts for 92.5% of Revenue, making performance sensitive to housing investment trends and interest-rate movements. Customer concentration (e.g., 59.1B sales to Tokyu Land Corporation representing 10.3% of revenue) is also a potential order volatility risk. While DX Promotion’s monetization diversifies revenue, portfolio concentration remains high.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.3% | 10.7% (6.8%–17.9%) | -5.3pt |
| Net Income Margin | 2.5% | 5.8% (2.5%–11.9%) | -3.3pt |
Both Operating and Net Income margins are below industry medians, placing the company in a lower profitability position within the real estate sector. Interest burden and a relatively high SG&A ratio are the main drivers.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 11.3% | 12.8% (4.2%–29.2%) | -1.5pt |
Revenue growth is roughly in line with the industry median. DX Promotion’s +19.0% growth is a high-growth segment, but its share of total revenue remains small.
※ Source: Company compilation
Concurrent revenue growth and cash generation: Revenue +11.3%, Operating Income +12.8% maintaining double-digit growth, with OCF 38.0B (2.6x Net Income) and FCF 37.5B indicating high-quality cash conversion. DX Promotion’s profitability expansion (Operating Income +384%) contributes to diversification of the profit portfolio and improved earnings stability. Gross margin improvement of +0.3pt suggests progress in project mix and cost management, indicating medium-term margin expansion potential.
Structural constraints from leverage and interest burden: Interest-bearing debt 266.1B (D/E 2.73x, Debt/EBITDA 8.4x) and interest expense 6.2B compress Operating Income by 20.3%, reducing Net Income margin to 2.5%. Operating-level profit gains are diluted at the Ordinary and Net Income stages. Although Equity Ratio improved to 26.8%, it remains low, and medium-term capital policy (reducing borrowing dependence and boosting gross margin) is key to ROE improvement. Heavy inventory weighting of 432.1B (75% of total assets) results in a Quick ratio of 50.8% and a limited short-term liquidity buffer; sales-cycle management is a prerequisite for stable cash flow.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial results analysis document. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions should be made at your own responsibility and, if necessary, in consultation with a professional advisor.