YAMAE GROUP HOLDINGS CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

Although the Company posted increases in both revenue and earnings, the substantial growth in net income was largely attributable to extraordinary gains, primarily gains on the sale of non-current assets. Accordingly, this result needs to be evaluated separately from the pace of earnings growth in the core business. Revenue was ¥3,011.9B (+17.5% YoY), Operating Income was ¥39.2B (+12.8%), and Ordinary Income was ¥42.5B (+21.0%), with all three metrics achieving increases in both revenue and earnings. Net income attributable to owners of the parent increased substantially to ¥51.9B (¥14.7B in the previous year, +254.2% YoY); however, this was primarily due to the recognition of ¥50.0B in extraordinary gains, including ¥46.4B in gains on the sale of non-current assets. Extraordinary gains accounted for 54.1% of Profit Before Tax of ¥92.5B. The Operating Income margin was 1.3%, nearly unchanged from the previous year, indicating that improvements in the profitability of the core business were limited.

Factors Affecting Performance

【Revenue】Revenue of ¥3,011.9B (+17.5% YoY) was driven by the expansion of the core Food-Related Business (77.7% of revenue composition, ¥2,340.5B, +18.6% YoY). Sugar, Flour, Feed and Livestock-Related Business revenue was ¥355.7B (+16.3%), while Housing and Real Estate-Related Business revenue was ¥286.9B (+22.1%); both recorded double-digit revenue growth, and all three segments continued to trend upward.

【Profit and Loss】Operating Income was ¥39.2B (+12.8% YoY). While the gross profit margin of 12.2% was nearly unchanged from the previous year (+0.03pt), SG&A expenses increased to ¥328.5B (¥277.1B in the previous year, +18.6%), roughly in line with the revenue growth rate (+17.5%). Consequently, the Operating Income margin declined slightly to 1.3% (from 1.36% in the previous year, -0.06pt). Ordinary Income of ¥42.5B (+21.0%) benefited from an increase in non-operating income (¥10.3B versus ¥6.3B in the previous year). Profit Before Tax rose to ¥92.5B (+162.7%), primarily due to the recognition of ¥50.0B in extraordinary gains, including ¥46.4B in gains on the sale of non-current assets and ¥3.7B in gains on the recognition of negative goodwill. After deducting income taxes and other taxes of ¥36.3B (effective tax rate of 39.3%), net income attributable to owners of the parent was ¥51.9B (+254.2% YoY). In conclusion, the Company achieved higher revenue and earnings at the Operating Income and Ordinary Income levels, while a one-time increase in net income resulting from extraordinary gains was also recorded.

Segment Analysis

The Food-Related Business recorded revenue of ¥2,340.5B (77.7% of total revenue, +18.6% YoY) and Operating Income of ¥25.7B (+9.2%), with its margin declining slightly to 1.1% from approximately 1.2% in the previous year, indicating that earnings growth lagged revenue growth. The Sugar, Flour, Feed and Livestock-Related Business recorded revenue of ¥355.7B (+16.3%) and Operating Income of ¥12.3B (+23.8%), achieving earnings growth above the rate of revenue growth. Its margin improved to 3.5% from 3.3% in the previous year. The Housing and Real Estate-Related Business recorded revenue of ¥286.9B (+22.1%) and Operating Income of ¥5.5B (+76.5%), representing substantial earnings growth. Its margin improved to 1.9% from 1.4% in the previous year, making a significant contribution to overall earnings growth. The Other category contracted, with revenue of ¥60.8B (-20.8%) and Operating Income of ¥1.7B (-38.8%). In addition, from the current period, the depreciation method for property, plant and equipment was changed from the declining-balance method to the straight-line method. This increased segment profit by approximately ¥0.9B for the Food-Related Business and ¥0.3B for the Sugar, Flour, Feed and Livestock-Related Business.

Key Financial Metrics

【Profitability】The Operating Income margin was 1.3%, a slight decline from 1.4% in the previous year. The Ordinary Income margin was 1.4% (1.4% in the previous year), remaining nearly unchanged. The net profit margin, based on income attributable to owners of the parent, improved substantially to 1.7% (up +1.1pt from 0.6% in the previous year), although the primary factor was the recognition of extraordinary gains. 【Cash Flow Quality】Extraordinary gains amounted to ¥50.0B, or 54.1% of Profit Before Tax of ¥92.5B, and the gap between Operating Income and Profit Before Tax expanded considerably from the previous year. 【Investment Efficiency】ROE was 4.7%, improving from the previous year in line with the increase in net income attributable to owners of the parent. 【Financial Soundness】The Equity Ratio was 24.1% (+0.4pt from 23.7% in the previous year), while the coverage ratio of interest expense by Operating Income (Operating Income/interest expense) was 9.0x.

Cash Flow Analysis

As no cash flow statement has been disclosed, funding trends are assessed based on changes in the balance sheet. Cash and deposits remained nearly flat at ¥522.9B (¥514.7B in the previous year, +1.6%). Trade receivables declined slightly to ¥1,027.5B (¥1,072.3B in the previous year, -4.2%), while inventories decreased slightly to ¥313.2B (¥317.5B in the previous year, -1.3%), indicating that pressure on working capital was limited. On the other hand, trade payables also declined to ¥1,349.3B (¥1,405.8B in the previous year, -4.0%), indicating progress in reducing purchase-related liabilities. Short-term borrowings increased substantially to ¥406.1B (¥232.7B in the previous year, +74.5%). The increased use of short-term financing to fund the expansion of property, plant and equipment (¥1,304.5B versus ¥1,256.4B in the previous year) and working capital requirements should be noted as a change in the funding structure.

Quality of Earnings

The quality of earnings in the current period is characterized by a high degree of reliance on extraordinary gains. Of Profit Before Tax of ¥92.5B, extraordinary gains of ¥50.0B, primarily consisting of ¥46.4B in gains on the sale of non-current assets and ¥3.7B in gains on the recognition of negative goodwill, accounted for 54.1%. The gap with Ordinary Income of ¥42.5B, which represents recurring earnings power, is therefore substantial. Comprehensive income was ¥50.7B (including ¥46.7B attributable to owners of the parent), slightly below net income attributable to owners of the parent of ¥51.9B. This difference was primarily due to a negative ¥7.6B change in valuation difference on available-for-sale securities. Of non-operating income of ¥10.3B, the majority, ¥8.2B, consisted of other non-operating income. The fact that it was not concentrated in a single factor is supplementary material for evaluating the quality of Ordinary Income. Overall, while earnings at the Operating Income and Ordinary Income levels remained solid, the growth in net income was heavily dependent on non-recurring items. From a sustainability perspective, the focus will be on the accumulation of core business earnings from Q2 onward.

Earnings Forecast and Guidance

The Q1 progress rates against the Full-Year plan (Revenue of ¥1,200.0B, Operating Income of ¥220.0B, Ordinary Income of ¥230.0B, and net income attributable to owners of the parent of ¥125.0B) were 25.1% for Revenue, 17.8% for Operating Income, 18.5% for Ordinary Income, and 41.5% for net income. Revenue was in line with the standard quarterly progress rate of approximately 25%, while Operating Income and Ordinary Income were somewhat behind schedule. Net income was ahead of schedule due to the recognition of extraordinary gains. Based on the earnings data, it cannot be determined whether the Full-Year plan assumes the recognition of extraordinary gains at a similar level. Accordingly, the pace of accumulation of Operating Income and Ordinary Income from Q2 onward will be key to achieving the Full-Year plan. There has been no revision to the earnings forecast, and the initial plan remains unchanged.

Shareholder Returns

The annual dividend forecast is ¥80, unchanged from the previous year's actual dividend of ¥80, and there has been no revision to the dividend forecast. The Payout Ratio based on the Full-Year forecast EPS of ¥450.19 is approximately 17.8% (¥80/¥450.19), representing a conservative dividend plan relative to the earnings level. Given that a portion of net income increased on a one-time basis due to extraordinary gains, the current Payout Ratio is considered sufficiently covered even by the profit level of the core business.

Risk Factors

1. Reliance on extraordinary gains: Extraordinary gains accounted for ¥50.0B (54.1%) of Profit Before Tax of ¥92.5B, of which gains on the sale of non-current assets accounted for the majority at ¥46.4B. These gains have low recurrence potential and may affect net income levels in the next period and thereafter.

2. Weak operating leverage: SG&A expenses increased to ¥328.5B (+18.6% YoY), roughly in line with the revenue growth rate (+17.5%), while the Operating Income margin remained at 1.3%. The gross profit margin was also nearly flat at 12.2%; strengthening the earnings structure to absorb cost increases will be a key monitoring point.

3. Sharp increase in short-term borrowings: Short-term borrowings increased to ¥406.1B (¥232.7B in the previous year, +74.5%), resulting in a shorter-term funding structure. Sensitivity to changes in the interest rate environment may increase.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (trading)

Profitability and Returns

Both the Company's Operating Income margin and net profit margin are below the industry median, indicating that profitability is relatively low within the industry.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeded the industry median, indicating that top-line growth is notably strong within the industry.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The +254.2% increase in net income attributable to owners of the parent was primarily due to extraordinary gains, including gains on the sale of non-current assets. Its nature differs from the +12.8% growth in Operating Income, which should be noted when interpreting the earnings data.

2. Progress against the Full-Year plan was somewhat behind schedule, with Revenue at 25.1% versus 17.8% for Operating Income and 18.5% for Ordinary Income. Net income progress of 41.5% was front-loaded due to extraordinary gains; therefore, the accumulation of core business earnings from Q2 onward will be a key point of focus.

3. Changes in the earnings structure by segment were observed, including an improvement in the Housing and Real Estate-Related Business margin to 1.9% from 1.4% in the previous year.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson type with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation to take any particular investment action.

Sensitivity: ¥4,421–¥4,686 at ±1% for the cost of equity, and ¥4,546–¥4,558 at ±0.1 for ω.

Notes:

• Since progress in net income against the Full-Year forecast (42%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies running ahead of forecast progress tend to exceed their forecasts. The adjustment may be excessive for businesses with strong seasonality).
• Net assets as of the quarter-end are used (there is a timing difference versus the Full-Year forecast).
• Since net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not predict or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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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