| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥137.6B | ¥110.2B | +24.8% |
| Operating Income | ¥92.7B | ¥69.8B | +32.9% |
| Ordinary Income | ¥86.9B | ¥59.3B | +46.5% |
| Net Income | ¥62.1B | ¥41.4B | +50.0% |
| ROE | 7.4% | 5.1% | - |
FY2026 Q1 results delivered significant top-line and bottom-line growth: Revenue ¥137.6B (vs. prior year +¥27.4B +24.8%), Operating Income ¥92.7B (vs. prior year +¥22.9B +32.9%), Ordinary Income ¥86.9B (vs. prior year +¥27.6B +46.5%), and Quarterly Net Income attributable to owners of the parent ¥62.1B (vs. prior year +¥20.7B +50.0%). Gross profit margin improved to 85.9% (up +3.7pt from 82.2% a year ago) and operating margin improved to 67.4% (up +4.1pt from 63.3%), reflecting a marked improvement in profitability driven by the composition of higher-margin transactions in the core operating lease business. Progress against the full-year plan stands at Revenue 28.1%, Operating Income 39.3%, Ordinary Income 44.2%, and Net Income 47.8%, substantially ahead of the standard progress rate (25%) on the profit side.
[Revenue] Revenue of ¥137.6B (YoY +24.8%) was driven by the operating lease business (segment disclosure omitted due to limited materiality). Cost of sales was contained at ¥19.4B (slightly down from ¥19.6B a year ago), resulting in gross profit of ¥118.1B (from ¥90.6B a year ago, +30.3%), outpacing revenue growth. Gross profit margin improved to 85.9% (up +3.7pt from 82.2%), reflecting clearer effects from improved deal composition quality and better procurement terms.
[Profitability] SG&A amounted to ¥25.4B (up +21.5% from ¥20.9B a year ago) as expenses rose with revenue, but the SG&A ratio improved to 18.5% (from 18.9%, -0.4pt), indicating revenue growth absorbed expense increases and positive operating leverage emerged. Operating Income was ¥92.7B (from ¥69.8B, +32.9%), and operating margin rose to 67.4% (from 63.3%, +4.1pt), showing significant profitability improvement. Non-operating items comprised non-operating income ¥8.9B (including interest income ¥1.1B and foreign exchange gains ¥2.4B) versus non-operating expenses ¥14.8B (including interest expense ¥6.7B, foreign exchange losses ¥4.5B, and fees paid ¥3.7B), resulting in net non-operating loss of -¥5.9B. Consequently, Ordinary Income was ¥86.9B (vs. ¥59.3B a year ago, +46.5%). Extraordinary losses were limited to valuation losses on investment securities of ¥0.7B. After corporate taxes of ¥24.8B (effective tax rate 28.5%) and ¥0.4B attributable to non-controlling interests, Quarterly Net Income attributable to owners of the parent was ¥62.1B (vs. ¥41.4B a year ago, +50.0%), achieving both revenue and profit growth.
[Profitability] Gross profit margin was 85.9% (up +3.7pt from 82.2% a year ago), operating margin 67.4% (up +4.1pt from 63.3%), and net margin 45.1% (up +7.5pt from 37.6%), showing notable margin expansion across all levels. ROE was 7.4% (up +2.3pt from 5.1%), indicating margin expansion boosted returns on equity. [Cash Quality] Days Sales Outstanding (DSO) was 258 days, Days Inventory Outstanding (DIO) was 1,154 days reflecting industry characteristics and elongated cycles, and Cash Conversion Cycle (CCC) was 1,403 days. Heavy working capital is constraining capital efficiency. [Investment Efficiency] Total asset turnover was 0.055x (annualized 0.22x), remaining low, and ROIC (Operating Income × (1 − effective tax rate) / Invested Capital) was 4.5%, not sufficiently above the cost of capital. [Balance Sheet Strength] Equity Ratio was 33.6% (up +6.2pt from 27.4% a year ago), Current Ratio 153.4% and Quick Ratio 149.3%, indicating healthy short-term liquidity. Interest-bearing debt totaled ¥1,364.7B (Short-term borrowings ¥1,220.9B, Long-term borrowings ¥56.3B, Bonds ¥46.6B, Bonds maturing within one year ¥41.0B), producing a Debt/Equity ratio of 177.1%. Interest coverage (Operating Income / Interest Paid) was 13.86x, evidencing capacity to bear interest costs, but short-term borrowings account for 89.5% of interest-bearing debt, short-term debt ratio is 95.6%, and Cash / Short-term Debt ratio is 0.52x, indicating high reliance on refinancing.
Non-operating income of ¥8.9B (interest income ¥1.1B, FX gains ¥2.4B, etc.) was outweighed by non-operating expenses of ¥14.8B (interest expense ¥6.7B, FX losses ¥4.5B, fees paid ¥3.7B, etc.), producing net non-operating -¥5.9B and reducing income from operating profit. DSO 258 days, DIO 1,154 days, and CCC 1,403 days indicate lengthening deal structuring and collection cycles, causing substantial working capital absorption. Short-term borrowings decreased 22.4% from ¥1,573.4B a year ago to ¥1,220.9B, partially compressing the short-term composition of interest-bearing debt and improving liquidity resilience. Contract liabilities (advance receipts) fell from ¥198.5B a year ago to ¥137.4B (-30.9%), as existing projects progressed; monitoring new order trends will be key to assessing future revenue sustainability.
Operating Income ¥92.7B less net non-operating -¥5.9B yields Ordinary Income ¥86.9B. Non-operating income ¥8.9B represents 6.5% of revenue, but non-operating expenses ¥14.8B (10.8% of revenue) outweigh it, indicating core operating activities are the primary profit source. Extraordinary loss ¥0.7B (valuation loss on investment securities) is minor and earnings derive from recurring business activities. The gap from Ordinary Income ¥86.9B to Quarterly Net Income attributable to owners of the parent ¥62.1B (a -28.5% divergence) is mainly due to corporate taxes ¥24.8B (effective tax rate 28.5%) and ¥0.4B attributable to non-controlling interests; non-recurring factors are limited. Comprehensive income ¥64.0B exceeded net income ¥62.1B by ¥1.9B, reflecting foreign currency translation adjustments of ¥3.3B offset by valuation differences on securities of -¥1.4B. The small difference between net income and comprehensive income indicates limited distortion in earnings quality from valuation gains/losses.
Full-year plan forecasts Revenue ¥489.6B (YoY +26.4%), Operating Income ¥235.8B (YoY +24.9%), Ordinary Income ¥196.7B (YoY +18.3%), Net Income attributable to owners of the parent ¥130.0B, and EPS ¥214.72. Q1 progress rates versus the full year are Revenue 28.1% (standard 25% +3.1pt), Operating Income 39.3% (+14.3pt), Ordinary Income 44.2% (+19.2pt), and Net Income 47.8% (+22.8pt), substantially ahead of standard progress on profitability. The front-loaded profit progress may indicate concentration of higher-margin deals in Q1 or expense timing differences, suggesting upside to the full-year plan; however, the build-up of projects in H2 and working capital trends (re-expansion of contract liabilities) are key to sustainability. No revisions to earnings or dividend forecasts were made in Q1.
Q1 EPS was ¥101.86 (vs. ¥66.59 a year ago, +53.0%). Full-year dividend forecast is ¥54.00 (prior year actual ¥43.00), implying a payout ratio of approximately 25.1% against full-year EPS forecast ¥214.72, a sustainable level. Retained earnings at Q1-end were ¥412.6B (up +9.3% from ¥377.6B a year ago), and cash and deposits were ¥638.4B, indicating sufficient dividend funding. With interest coverage 13.86x and net margin 45.1%, the high profitability supports dividend stability. No share buyback disclosure; shareholder returns are via dividends only.
Refinancing risk: Short-term borrowings ¥1,220.9B account for 89.5% of interest-bearing debt, short-term debt ratio 95.6%, and Cash / Short-term Debt ratio 0.52x, indicating high short-term funding dependence. Deterioration in financial conditions or credit tightening could make refinancing difficult and impact liquidity.
Interest rate risk: Interest-bearing debt ¥1,364.7B has interest payments of ¥6.7B (annualized 1.96%), currently modest, but high reliance on short-term borrowings means rising rates could increase interest expense and compress Ordinary Income via higher non-operating expenses. Interest coverage 13.86x indicates current resilience, but if margin improvements stall, interest burden would become relatively heavier.
Working capital efficiency and new order risk: DSO 258 days, DIO 1,154 days, CCC 1,403 days signal significant working capital absorption, constraining cash generation. Contract liabilities decreased -30.9% YoY; while existing projects have progressed, if replenishment of new orders slows, future revenue sustainability could be impacted. Intensifying competition in deal structuring or changes to tax/accounting rules could reduce the attractiveness of lease schemes.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 67.4% | – | – |
| Net Margin | 45.1% | – | – |
Industry median data are limited, so relative comparison is difficult, but operating margin 67.4% and net margin 45.1% are high on an absolute basis.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 24.8% | – | – |
Revenue growth 24.8% is high on an absolute basis; lack of industry median data limits relative comparison.
※ Source: Company compilation
Achieved significant revenue and profit growth: Revenue +24.8%, Operating Income +32.9%, Net Income +50.0%, with gross profit margin +3.7pt, operating margin +4.1pt, and net margin +7.5pt, demonstrating marked improvement in profitability at all stages. Full-year profit progress of 39–48% significantly exceeds standard, indicating upside potential to the full-year plan. High-margin deal composition in the operating lease business drove profitability improvement; if deal quality improvement continues, structural margin gains may be expected.
High refinancing dependence: Short-term borrowings ¥1,220.9B (89.5% of interest-bearing debt), short-term debt ratio 95.6%, and Cash / Short-term Debt ratio 0.52x indicate high refinancing reliance; rising rates could increase interest expense and pressure non-operating results. Contract liabilities fell -30.9% YoY, so monitoring new order replenishment is necessary as a leading indicator of revenue sustainability. DSO 258 days, DIO 1,154 days, and CCC 1,403 days mean improving working capital efficiency is a key challenge for raising capital returns (ROIC 4.5%) and strengthening financial health.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as necessary.