OIZUMI (6428) FY2026 Q3 Earnings Report

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Executive Summary

In addition to higher revenue, the return to profitability in the Amusement Business and higher earnings in the Electricity Business contributed to a significant improvement in operating income of +117.5% YoY. Revenue was ¥17.22B (+7.4% YoY), operating income was ¥0.88B (+¥0.47B YoY), ordinary income was ¥0.87B (+120.0% YoY), and net income was ¥0.90B (+33.0% YoY). Profit growth substantially exceeding the rate of revenue growth reflects the effect of operating leverage; however, net income includes a ¥0.39B gain on the sale of fixed assets, which must be evaluated separately from recurring earnings power.

Factors Affecting Performance

【Revenue】Revenue was ¥17.22B, an increase of +7.4% YoY. By segment, the Amusement Business, which has the largest external revenue, generated ¥8.52B (49.5% of total, +8.9% YoY), the Food & E-Commerce Business generated ¥7.28B (42.3%, +5.9% YoY), the Electricity Business generated ¥0.78B (+6.6% YoY), and the Real Estate Business generated ¥0.64B (+4.5% YoY). All segments reported higher revenue, indicating low dependence on any single business.

【Profit and Loss】Operating income was ¥0.88B (+117.5% YoY), while ordinary income was ¥0.87B (+120.0% YoY). Gross profit margin improved from 32.1% to 35.7%, with the improvement in cost ratio being the main driver of earnings growth. SG&A expenses were ¥5.27B, up +11.0% YoY, exceeding the rate of revenue growth; nevertheless, the Company absorbed increases in advertising and sales promotion expenses and secured higher earnings. By segment, the Amusement Business turned from a ¥0.009B loss in the same period last year to ¥0.44B in profit, while the Electricity Business maintained high profitability at ¥0.42B (profit margin: 53.9%). The Real Estate Business maintained a high profit margin (43.6%) but reported lower profit YoY, while the Food & E-Commerce Business remained at a low profit margin of 2.1%. A ¥0.39B gain on the sale of fixed assets was recorded as extraordinary income, meaning that a certain portion of the ¥1.26B pretax income was boosted by a temporary factor. Revenue and earnings both increased.

Segment Analysis

The Amusement Business reported revenue of ¥8.52B (49.5% of total, +8.9% YoY) and segment profit of ¥0.44B, turning profitable from a ¥0.01B loss in the same period last year and becoming the primary driver of company-wide earnings growth. The Food & E-Commerce Business generated revenue of ¥7.28B (42.3% of total, +5.9% YoY) and segment profit of ¥0.16B (profit margin: 2.1%); although large in scale, its profitability is low. The Electricity Business is small in scale, with revenue of ¥0.78B, but is highly profitable, posting a 53.9% profit margin and profit of ¥0.42B (+8.6% YoY). The Real Estate Business is highly profitable, with revenue of ¥0.65B and a 43.6% profit margin, but profit declined 8.8% YoY to ¥0.28B. Overall, the Company has coexisting segments with different earnings structures: the large-scale Amusement and Food Businesses, and the smaller but highly profitable Real Estate and Electricity Businesses.

Key Financial Indicators

【Profitability】The operating margin was 5.1%, improving by approximately 261bp from 2.5% in the same period last year. The net profit margin was 5.2%, an improvement of approximately 101bp YoY. Annualized ROE was 6.3%, decomposed into a 5.2% net profit margin × 0.55x total asset turnover × 2.19x financial leverage. This indicates that the ROE level is constrained not by insufficient leverage, but by low earnings generation relative to total assets.【Cash Flow Quality】Pretax income of ¥1.26B includes a ¥0.39B gain on the sale of fixed assets, equivalent to 43.0% of net income of ¥0.90B, indicating dependence on a temporary item.【Investment Efficiency】Annualized ROIC remained at 3.4%. The utilization and monetization of ¥19.42B in tangible fixed assets, mainly land (46.7% of total assets), is a medium-term issue.【Financial Soundness】The equity ratio was 45.7% (slightly down from 46.9% in the same period last year), while the current ratio was approximately 198.5%, indicating sound short-term liquidity. Interest-bearing debt was ¥14.30B, and the Debt/Capital ratio was approximately 43.0%; long-term borrowings increased +17.4% YoY.

Cash Flow Analysis

Although the cash flow statement was not disclosed, an analysis of funding trends based on changes in the balance sheet shows that cash and deposits were ¥8.29B, an increase of +18.9% from ¥6.97B in the previous year. Long-term borrowings increased +17.4% YoY to ¥11.35B, and total interest-bearing debt, including short-term borrowings and current maturities, also increased. This suggests that business investment and expanded working capital are being financed through borrowings. Construction in progress increased +72.7% YoY, indicating an expanding capital expenditure pipeline, while work in process also increased +31.9%, potentially affecting capital efficiency through inventory accumulation. Accounts payable increased +70.7% YoY, indicating growing supplementation of working capital through trade payables.

Quality of Earnings

Of the current-period pretax income of ¥1.26B, a ¥0.39B gain on the sale of fixed assets was recorded as extraordinary income, equivalent to 43.0% of net income of ¥0.90B. Accordingly, the +33.0% YoY growth in net income does not directly reflect an improvement in recurring earnings power to the same extent as the +117.5% growth in operating income. Non-operating income was ¥0.13B, including ¥0.03B in dividend income, while non-operating expenses were ¥0.15B, including ¥0.11B in interest expense. Non-operating items therefore reduced earnings on a net basis, but the increase in operating income absorbed this impact, resulting in a +120.0% YoY increase in ordinary income. Comprehensive income was ¥0.94B, compared with net income attributable to owners of the parent of ¥0.90B. The difference was mainly ¥0.04B in valuation differences on securities, indicating a limited divergence between net income and comprehensive income.

Earnings Forecasts and Guidance

The progress rate through Q3 cumulative results against the full-year company forecast was 76.2% for revenue (forecast: ¥22.60B), compared with 136.2% for operating income (forecast: ¥0.65B), 138.4% for ordinary income (forecast: ¥0.63B), and 134.3% for net income (forecast: ¥0.67B). Each profit indicator is therefore substantially ahead of revenue progress. Revenue progress was close to a standard level after considering seasonality, while the substantial outperformance in profit progress was attributable to the Amusement Business returning to profitability beyond expectations and the recognition of a gain on the sale of fixed assets. The Company has not revised its earnings forecasts, which remain unchanged based on conservative assumptions. This may indicate that additional promotional investment and a reversal of temporary factors are expected in Q4.

Shareholder Returns

The full-year dividend forecast is ¥12.0 per share, unchanged from ¥12.0 per share in the same period last year, with no revision to the dividend forecast. Based on forecast full-year EPS of ¥29.78, the forecast payout ratio is approximately 40.3%, below the 60% level often regarded as a guideline for the sustainability of dividend-only shareholder returns. Q3 cumulative EPS was ¥40.05, exceeding the full-year forecast; however, this includes a temporary boost from the gain on the sale of fixed assets. Recurring earnings levels must therefore also be reviewed when assessing dividend capacity.

Risk Factors

1. Quality of net income: Of pretax income of ¥1.26B, the ¥0.39B gain on the sale of fixed assets accounted for 43.0% of net income of ¥0.90B. Caution is required before regarding reported net income growth of +33.0% as a permanent earnings improvement, given operating income growth of +117.5%.

2. Working capital efficiency: Inventory accumulation is evident, including a +31.9% YoY increase in work in process, raising concerns regarding its impact on capital efficiency. Accounts payable also increased +70.7% YoY, reinforcing the structure of supplementing part of working capital through trade payables.

3. Capital structure and capital efficiency: The Debt/Capital ratio was approximately 43.0%, and long-term borrowings increased +17.4% YoY. Annualized ROIC remained at 3.4%, making improved profitability against ¥14.30B of interest-bearing debt and substantial fixed assets (46.7% of total assets) a key issue.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the operating margin and net profit margin are below the industry median, indicating that profitability is relatively weak within the industry.

Growth and Capital Efficiency

The revenue growth rate exceeds the industry median, indicating that top-line growth is relatively strong within the industry.

※Source: Compiled by the Company

Key Takeaways from the Results

1. The operating margin improved from 2.5% in the same period last year to 5.1%, but remains below the industry median of 8.6%, indicating that profitability improvement is still in progress based on the reported financial data.

2. The return to profitability in the Amusement Business (from a ¥0.01B loss in the same period last year to ¥0.44B in profit) and the high profitability of the Electricity Business (53.9% profit margin) drove company-wide earnings growth. Meanwhile, despite being among the largest segments by revenue, the Food & E-Commerce Business remained at a 2.1% profit margin, clearly demonstrating differences in earnings structures across segments.

3. The ¥0.39B gain on the sale of fixed assets accounted for 43.0% of net income of ¥0.90B. In assessing the high progress rate against the full-year forecast (operating income: 136.2%, etc.), an important observation from the reported financial data is the need to confirm recurring earnings trends excluding the impact of this temporary factor.

Theoretical Share Price (Reference Value)

Sensitivity: ¥672–¥710 for a ±1% change in the cost of equity, and ¥686–¥693 for a ±0.1 change in ω.

Notes:

• Because net income progress against the full-year forecast (134%) exceeds the standard level (75%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies whose progress is ahead of schedule tend to exceed forecasts; adjustments may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated using only publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an automatically generated earnings analysis document produced by AI analysis of XBRL earnings release data. It does not recommend investment in any specific security. 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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