| Metric | Current Period | Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥490.8B | ¥466.7B | +5.2% |
| Operating Income | ¥52.8B | ¥38.5B | +37.3% |
| Ordinary Income | ¥55.1B | ¥40.2B | +37.0% |
| Net Income | ¥40.5B | ¥29.4B | +21.2% |
| ROE | 17.6% | 14.2% | - |
Against a backdrop of improved occupancy rates and pricing in the core elderly care business, the Company delivered higher revenue and earnings, with Operating Income increasing by more than 37%, confirming a structural improvement in profitability. Revenue was ¥490.8B (¥466.7B in the previous year, YoY +5.2%), Operating Income was ¥52.8B (¥38.5B, YoY +37.3%), and Ordinary Income was ¥55.1B (¥40.2B, YoY +37.0%). Net Income attributable to owners of the parent was ¥40.5B (¥29.4B, YoY +37.8%), with the emergence of operating leverage from improved gross margin being the primary driver of earnings growth.
【Revenue】Revenue was ¥490.8B, up +5.2% year on year. While the elderly care business led growth at ¥440.2B (+12.7%), Other Businesses, including personnel dispatch and home-visit nursing, declined to ¥50.6B (¥76.1B in the previous year, -33.5%), weighing on consolidated revenue growth.
【Profit and Loss】Operating Income was ¥52.8B (YoY +37.3%), and the Operating Income margin improved by approximately 2.5pt to 10.8% from 8.2% in the previous year. The primary driver of the improvement was the increase in gross margin to 18.5% (15.5% in the previous year, +3.0pt); Operating Income in the elderly care business was ¥63.4B (+32.1%, margin 14.4%), driving Company-wide earnings. Although the SG&A ratio increased to 7.8% from 7.3% in the previous year, the benefit of gross margin improvement more than offset this increase, resulting in operating leverage. Ordinary Income was ¥55.1B (+37.0%). Non-recurring gains and losses amounted to a net gain of +¥2.3B, comprising a ¥3.4B gain on the sale of fixed assets and a ¥1.1B impairment loss on Company-wide assets, increasing Profit Before Tax to ¥57.4B. Net Income attributable to owners of the parent was ¥40.5B (+37.8%). In conclusion, the Company achieved higher revenue and earnings, with earnings growth significantly outpacing revenue growth being the defining characteristic.
The elderly care business generated Revenue of ¥440.2B (YoY +12.7%) and Operating Income of ¥63.4B (YoY +32.1%), with a margin of 14.4%, driving higher revenue and earnings as the core business accounting for approximately 90% of consolidated revenue. Other Businesses, including personnel dispatch and placement and home-visit nursing, recorded lower Revenue of ¥50.6B (¥76.1B in the previous year, -33.5%), while Operating Income increased to ¥2.9B (¥1.9B in the previous year, approximately +50%), indicating improved profitability. The adjustment for Company-wide expenses and other items was -¥13.5B (-¥11.5B in the previous year), constituting the difference between total segment income of ¥66.3B and consolidated Operating Income of ¥52.8B. The Company remains highly concentrated in the elderly care business, and operating trends in this business continue to have a significant impact on consolidated results.
【Profitability】Operating Income margin was 10.8% (8.2% in the previous year), Net Income margin was 8.2% (6.3% in the previous year), and ROE was 17.6% (up from the previous year’s ROE level), all improving year on year. The increase in gross margin to 18.5% (15.5% in the previous year) was the starting point for the improvement in profitability.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥73.0B, equivalent to 1.8 times Net Income, demonstrating strong cash-generation capacity underpinning earnings.【Investment Efficiency】Capital expenditures were ¥28.7B, 2.5 times depreciation and amortization of ¥11.2B, indicating continued growth investment in the construction and renovation of elderly care facilities.【Financial Soundness】The Equity Ratio increased to 43.6% from 39.4% in the previous year. While current assets of ¥222.6B and current liabilities of ¥224.8B were nearly balanced, short-term borrowings were reduced year on year, and cash and deposits of ¥101.2B provided a substantial cushion, significantly exceeding short-term borrowings of ¥38.3B.
Operating Cash Flow was ¥73.0B, an increase of +95.7% from ¥37.3B in the previous year, exceeding Net Income of ¥40.5B and indicating good consistency between earnings and cash flow. Investing Cash Flow was -¥13.7B; proceeds from the sale of fixed assets of ¥22.1B partially offset capital expenditures of ¥28.7B, while the reduction in investment from -¥85.1B in the previous year contributed to improved financial flexibility. Financing Cash Flow was -¥49.6B, reflecting the allocation of funds toward the reduction of short-term borrowings and dividend payments. As a result, Free Cash Flow, calculated as Operating Cash Flow plus Investing Cash Flow, was positive at ¥59.3B. After fully covering cash outflows from financing activities with internally generated funds, cash and deposits at the end of the period increased by ¥9.7B year on year to ¥101.2B.
This period’s earnings growth was based on recurring business activities. The improvement in the Operating Income margin (10.8%, compared with 8.2% in the previous year) was primarily attributable to the increase in gross margin, indicating limited dependence on one-time factors. Net non-operating income and expenses amounted to +¥2.4B, including ¥0.6B in dividend income, and remained below 0.5% of Revenue, indicating a limited contribution to Ordinary Income. Non-recurring gains and losses amounted to a net gain of +¥2.3B, comprising a ¥3.4B gain on the sale of fixed assets and a ¥1.1B impairment loss on Company-wide assets. Although one-time factors accounted for a small portion of Profit Before Tax of ¥57.4B, it is useful to evaluate the underlying earnings power excluding this amount. Operating Cash Flow of ¥73.0B exceeded Net Income of ¥40.5B, indicating no significant divergence between accounting earnings and actual cash generation and supporting a favorable assessment of accrual quality.
The full-year earnings forecast calls for Revenue of ¥514.5B (up +4.8% year on year), Operating Income of ¥59.6B (up +13.0%), and Ordinary Income of ¥60.5B (up +9.8%), anticipating continued growth in both revenue and earnings following the current period’s results. Forecast Net Income attributable to owners of the parent is calculated at ¥40.55B (up +0.2% year on year), consistent with forecast EPS of ¥124.08, indicating that planned Net Income growth will be modest compared with the growth rates at the Operating Income and Ordinary Income levels. The dividend forecast is ¥48 per year, an increase from the previous year’s actual dividend of ¥43, reflecting plans to expand shareholder returns against a backdrop of earnings growth. Compared with the current period’s 2.5pt improvement in the Operating Income margin, the planned Operating Income growth rate of +13.0% for the next fiscal year represents a conservative assumption.
The annual dividend was ¥43 (an interim dividend of ¥20, including a ¥3 commemorative dividend celebrating the 20th anniversary of the opening of the first home, and a year-end dividend of ¥23), resulting in a Payout Ratio of 34.7%. No share repurchases were confirmed; as shareholder returns consist solely of dividends, the return ratio is evaluated based on the Payout Ratio. Free Cash Flow of ¥59.3B significantly exceeded total annual dividend payments of ¥14.1B, indicating substantial capacity to continue dividend payments using internally generated funds. The Company plans to increase the dividend to ¥48 in the next fiscal year, suggesting a policy of expanding shareholder returns against a backdrop of earnings growth.
Liquidity and Refinancing Risk: The current ratio is approximately 0.99x, slightly below 1x, based on current assets of ¥222.6B divided by current liabilities of ¥224.8B. However, cash and deposits of ¥101.2B are equivalent to 2.6 times short-term borrowings of ¥38.3B, indicating that the Company has secured substantial underlying liquidity resilience.
Business Concentration Risk: The elderly care business accounts for approximately 90% of consolidated Revenue of ¥490.8B, with revisions to elderly care reimbursement rates and trends in labor and recruitment costs having a significant impact on overall results. The SG&A ratio increased to 7.8% from 7.3% in the previous year, and the continuing impact of increases in labor and other costs on margins warrants close monitoring.
Working Capital and Advance Payment Structure Risk: Contract liabilities (advance payments) stood at ¥124.5B, representing more than half of current liabilities. Changes in occupancy trends may therefore affect cash flow through changes in working capital.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income margin | 10.8% | 8.1% (3.7%–16.1%) | +2.7pt |
| Net Income margin | 8.2% | 5.9% (2.2%–11.8%) | +2.3pt |
Profitability exceeds the median and is positioned at a relatively high level within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (year on year) | 5.2% | 10.1% (1.8%–20.2%) | -4.9pt |
Although the Revenue growth rate is below the median, the Company’s high margins offset its relative disadvantage in growth.
※Source: Compiled by the Company
Gross margin improved by +3.0pt year on year to 18.5%, while the Operating Income margin rose by +2.5pt to 10.8%. This suggests the emergence of operating leverage driven by improvements in occupancy rates and pricing in the elderly care business and can be viewed as a qualitative change in the earnings structure accompanying business scale expansion.
Operating Cash Flow of ¥73.0B, equivalent to 1.8 times Net Income, was secured, while Free Cash Flow of ¥59.3B covered dividends and debt repayments and enabled the Company to increase its cash balance. Cash-generation capacity underpinning earnings remains strong.
The Company has a high degree of concentration in the elderly care business, which accounts for approximately 90% of consolidated revenue, while Revenue from Other Businesses contracted by -33.5% year on year. Changes in the business portfolio and the resulting concentration of earnings remain areas requiring ongoing monitoring.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation to take any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥880 |
| base | ¥909 |
| bull | ¥945 |
| Calculation Assumption | Value |
|---|---|
| Book value per share (BPS) | ¥704 |
| Adjusted forecast EPS | ¥136.8 |
| Cost of equity r | 9.77% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 1.00%) |
| Residual income persistence factor ω / explicit forecast period | 0.62 / 5 years |
| Assumed Payout Ratio | 38.7% |
| Forecast EPS confidence adjustment | ×1.049 (based on the industry’s historical guidance achievement rate) |
| Implied PBR / PER | 1.29x / 6.6x |
Sensitivity: ¥883–¥935 at ±1% for the cost of equity, and ¥904–¥916 at ±0.1 for ω.
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. 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, and you should consult a professional as necessary.
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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.