| Indicator | Current Period | Prior-year Period | YoY |
|---|---|---|---|
| Revenue | ¥73.0B | ¥75.5B | -3.3% |
| Operating Income | ¥6.0B | ¥5.4B | +10.7% |
| Ordinary Income | ¥6.5B | ¥6.0B | +9.6% |
| Net Income | ¥3.9B | ¥3.1B | +27.3% |
| ROE | 4.4% | 3.6% | - |
Q3 FY2026 results showed a slight decline in Revenue to ¥73.0B (YoY ▲¥2.5B ▲3.3%), but Operating Income improved to ¥6.0B (YoY +¥0.6B +10.7%), Ordinary Income to ¥6.5B (YoY +¥0.6B +9.6%), and Net Income to ¥3.9B (YoY +¥0.8B +27.3%), indicating a significant enhancement in profitability. The Operating Margin improved by 1.4pt to 8.2%, and the Net Margin expanded to 5.3%, up 27.3% from the prior-year profit level of ¥3.1B. Profit growth amid declining revenue was driven by SG&A control and improved business profitability, with the Funeral Services Business generating Operating Income of ¥4.2B as the core earnings contributor.
[Profitability] ROE 4.4% (approximately 3.6% in the prior-year period on a calculated basis, showing improvement), Operating Margin 8.2% (+1.1pt from 7.1% in the prior year), Net Margin 5.3% (+1.2pt from 4.1% in the prior year), and Return on Assets (ROA) 2.0%. DuPont three-factor breakdown comprises Net Margin 5.3% × Total Asset Turnover 0.377 × Financial Leverage 2.17x, yielding ROE 4.4%. The effective tax rate is approximately 39.0%, with tax burden pressuring net income. [Cash Quality] Cash and deposits ¥49.2B (+¥12.2B from ¥36.9B in the prior year), and short-term liability coverage measured by Cash and deposits/Current liabilities is 4.0x, indicating extremely ample liquidity. Interest coverage measured by Operating Income/Interest expense is approximately 314x, rendering interest burden negligible. [Investment Efficiency] Total Asset Turnover 0.377x (declining from 0.394x in the prior year) and Fixed Asset Turnover 0.96x. Investment Securities increased to ¥9.7B (+¥6.6B from ¥3.2B in the prior year), altering the asset mix and weighing on asset turnover. [Financial Soundness] Equity Ratio 46.0% (+1.2pt from 44.8% in the prior year), Current Ratio 511.3%, and Quick Ratio 478.5%, indicating extremely high short-term solvency. Interest-bearing debt ¥0.9B (▲¥0.8B from ¥1.6B in the prior year), Liabilities-to-Equity Ratio 1.17x, and D/E ratio 1.0%, indicating a status close to virtually debt-free. Goodwill of ¥4.8B and Intangible Assets of ¥5.4B are recognized, but limited relative to total assets.
As Q3 results do not include detailed cash flow statement disclosures, we analyze funding trends from balance sheet movements. Cash and deposits increased by +¥12.2B (+33.1%) from ¥36.9B in the prior-year period to ¥49.2B, confirming profit growth and enhanced cash generation. Given Net Income of ¥3.9B alongside a larger build-up in cash, it is inferred that cash generation from operating activities is running above the level of net income. Investment Securities increased by +¥6.6B from ¥3.2B to ¥9.7B, with part of cash allocated to financial assets. Long-term borrowings decreased by ▲¥0.8B from ¥1.6B to ¥0.9B, reflecting progress in the repayment of interest-bearing debt. Short-term borrowings remained close to zero, and finance costs were a very modest ¥0.02B. In working capital, accounts receivable and other receivables were ¥2.4B, inventories ¥0.8B—both small—while accounts payable and other payables were ¥6.1B, indicating utilization of trade payables. Current liabilities decreased by ▲¥3.1B from ¥15.3B to ¥12.2B, indicating concurrent deleveraging and cash accumulation. Cash coverage of short-term liabilities is 4.0x, ensuring ample liquidity, and there is sufficient capacity to execute dividends (annual dividend ¥30 estimated at approximately ¥1.2B) and share buybacks.
With Ordinary Income at ¥6.5B and Operating Income at ¥6.0B, non-operating income and expenses contributed a net positive of +¥0.6B. Non-operating income included interest and dividend income of ¥0.2B, commission income of ¥0.1B, and rental income of ¥0.1B, reflecting financial income and rental income as components of non-operating profit. Non-operating expenses included interest expense of ¥0.02B, which is extremely small, making the interest burden effectively close to zero. In extraordinary items, Extraordinary Income of ¥0.8B (Gain on sale of Investment Securities ¥0.6B, Gain on sale of shares of affiliates ¥0.2B) and Extraordinary Losses of ¥0.6B (Loss on disposal of fixed assets ¥0.3B, Impairment loss ¥0.2B, etc.) offset each other, resulting in a net positive contribution of +¥0.2B. With Profit Before Tax at ¥6.8B and income tax expense at ¥2.6B, the effective tax rate is approximately 39.0%, exerting a high tax burden that compresses net income. The Operating Margin of 8.2% has improved from 7.1% in the prior year, confirming enhanced core operating profitability. Non-operating income is limited to about 0.8% of Revenue, indicating a core business-driven earnings structure. The increase in Cash and deposits of +¥12.2B far exceeds Net Income of ¥3.9B, suggesting that cash generation from operating activities is running above profit levels, with solid cash backing for earnings.
[Position within industry] (Reference information, Company Research) Compared with the healthcare sector (N=44 companies, as of 2025 Q3), both profitability and soundness are at mid-range levels within the sector. In profitability, the Operating Margin of 8.2% is nearly equal to the industry median of 8.2% and falls within the mid-range of the IQR (5.2%–10.9%). The Net Margin of 5.3% is slightly below the industry median of 5.7% but remains within the mid-range of the IQR (3.1%–9.1%), with the high effective tax rate seen as one factor. ROE at 4.4% is well below the industry median of 9.7% (IQR: 3.9%–15.0%), primarily due to low Total Asset Turnover and conservative financial leverage. ROA at 2.0% is also below the industry median of 4.7% (IQR: 2.4%–8.1%), highlighting substantial room for improvement in capital efficiency. In soundness, the Equity Ratio of 46.0% is slightly below the industry median of 49.0% (IQR: 38.8%–66.3%), but the Current Ratio of 511.3% significantly exceeds the industry median of 206.0% (IQR: 153.0%–295.0%), indicating extremely high short-term liquidity. The Net Debt/EBITDA multiple is negative (virtually net cash), and compared with the industry median ▲1.75 (IQR: ▲4.12–0.60), financial conservatism is high. In growth, the Revenue growth rate of ▲3.3% is far below the industry median of +9.5% (IQR: +2.7%–+15.2%), making sales recovery a challenge. In the company’s own historical trend, the Operating Margin is on an improving trajectory, indicating ongoing efforts to enhance profitability. Overall, liquidity and financial soundness are top-tier within the sector, profitability is mid-tier, while growth and capital efficiency are in the lower tier.
There are three key takeaways from the results. First, profit growth amid declining revenue. Despite a ▲3.3% decline in Revenue, Operating Income increased by +10.7% and Net Income by +27.3%, showing a significant improvement in profitability, with tangible results from cost control and business profitability improvements. The Operating Margin of 8.2% is on par with the industry median, indicating that core operating profitability has reached the industry standard. Second, concurrent cash accumulation and reduction of interest-bearing debt. Cash and deposits increased by +¥12.2B and long-term borrowings decreased by ▲¥0.8B, further reinforcing financial conservatism, with short-term liability coverage at 4.0x and interest coverage at 314x—both extremely healthy levels in terms of liquidity and interest burden. Third, challenges in capital efficiency. ROE at 4.4%, Total Asset Turnover at 0.377x, and ROA at 2.0% are all below industry medians, while the Fixed Asset Ratio of 67.8% indicates increasing asset rigidity. The +¥6.6B increase in Investment Securities is altering the asset mix, warranting attention to the investment policy and the sustainability of earnings contribution. Revenue recovery and asset efficiency improvement are key to medium- to long-term growth.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on publicly available earnings data. Investment decisions are your own responsibility; please consult a professional as needed before making any investment decisions.