| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥215.7B | ¥172.7B | +24.9% |
| Operating Income / Operating Profit | ¥36.2B | ¥31.0B | +16.8% |
| Ordinary Income | ¥35.9B | ¥31.0B | +15.9% |
| Net Income / Net Profit | ¥25.8B | ¥22.6B | +14.3% |
| ROE | 34.9% | 38.1% | - |
For the fiscal year ended March 2026, Revenue was ¥215.7B (YoY +¥43.0B +24.9%), Operating Income was ¥36.2B (YoY +¥5.2B +16.8%), Ordinary Income was ¥35.9B (YoY +¥4.9B +15.9%), and Net Income attributable to owners of the parent was ¥25.8B (YoY +¥3.2B +14.3%), achieving double-digit revenue and profit growth across all stages. Expansion of guarantee-related businesses and contributions from three newly consolidated subsidiaries drove Revenue, while increased goodwill amortization (¥2.2B, prior ¥0.6B) and higher SG&A (¥109.9B, prior ¥85.9B) reduced the Operating Margin to 16.8% (prior 18.0%, -120bp). Non-operating items were minor; although interest expense increased to ¥0.6B (prior ¥0.3B), Ordinary Income also recorded growth. Extraordinary items were slightly negative (including impairment losses ¥0.2B), and after income taxes of ¥11.2B (effective tax rate 31.1%), Net Income rose 14.3%, resulting in a solid finish.
[Revenue] Revenue of ¥215.7B (YoY +¥43.0B +24.9%) was driven by growth in the core guarantee-related business and expansion of the consolidated scope. By segment, the guarantee-related business recorded ¥193.2B (+26.7%), accounting for 89.6% of Revenue, with expansion of credit supplementation for real estate lease contracts and rent-guarantee services contributing. The Real Estate-related Business grew significantly to ¥6.9B (+130.4%) as outsourced rental management increased. The IT-related Business declined to ¥15.3B (-17.4%), with sales of environmental inspection systems and similar products below prior year. Other segments (soccer team operation, integrated advertising) recorded ¥3.2B due to new consolidation. Gross Profit was ¥146.1B (gross margin 67.7%, prior 67.7%), remaining almost flat.
[Profitability] Operating Income of ¥36.2B (+16.8%) increased with Revenue, but Operating Margin declined due to higher SG&A. SG&A of ¥109.9B (prior ¥85.9B, +28.0%) was driven by increased goodwill amortization of ¥2.2B (prior ¥0.6B, +247.2%), expanded personnel costs, and IT investment. Operating Margin was 16.8% (prior 18.0%, -120bp) as SG&A growth outpaced Revenue growth, compressing profitability. Ordinary Income was ¥35.9B (+15.9%) with minor non-operating income of ¥0.5B (interest income ¥0.1B, dividend income ¥0.0B, etc.) and non-operating expenses of ¥0.8B (interest expense ¥0.6B, etc.), resulting in a similar growth rate to the operating stage. Ordinary Income Margin was 16.6% (prior 17.9%, -130bp). Pre-tax Income was ¥35.9B (+17.1%); after corporate taxes of ¥11.2B (effective tax rate 31.1%, prior 31.8%), Net Income attributable to owners of the parent was ¥25.8B (+14.3%). Net Margin was 12.0% (prior 13.1%, -110bp) but in absolute terms profits increased. In conclusion, growth was driven by the guarantee-related business and expansion of the consolidated scope through M&A.
The core guarantee-related business posted Revenue of ¥193.2B (+26.7%), Operating Income of ¥35.4B (+7.9%), and Operating Margin of 18.3% (prior 21.5%, -320bp); while Revenue expanded, margins declined. Dependency is high with a Revenue mix of 89.6%, and growth was driven by capturing credit supplementation demand for real estate lease contracts. The IT-related business recorded Revenue of ¥15.3B (-17.4%) but turned profitable with Operating Income of ¥0.9B (+199.5%), improving Operating Margin to 6.1% (prior 1.7%, +440bp). The Real Estate-related business achieved Revenue of ¥6.9B (+130.4%), Operating Income ¥0.1B (+130.9%), and Operating Margin 1.7% (prior -13.1%, +1,480bp), becoming profitable due to expanded rental management outsourcing. Other segments recorded Revenue ¥3.2B (material increase from near-zero prior), Operating Loss ¥0.0B, reflecting new consolidation of soccer team operations and integrated advertising. Of consolidated Operating Income ¥36.2B after intersegment adjustments, the guarantee-related business accounted for 97.8%, indicating an extremely high concentration in the business portfolio.
[Profitability] Operating Margin 16.8% (prior 18.0%, -120bp) and Net Margin 12.0% (prior 13.1%, -110bp) declined. EBITDA margin is 18.8% (Operating Income ¥36.2B + Depreciation ¥2.2B + Goodwill Amortization ¥2.2B = ¥40.6B / Revenue ¥215.7B), down -80bp from prior year 19.6%. ROE is 34.9% (prior 39.6%, -470bp) — very high but trending down due to lower Net Margin and increased equity. ROA is 19.0% (prior 22.8%, -380bp) also declined. [Cash Quality] Operating Cash Flow (OCF) was ¥9.4B, which is only 0.36x of Net Income ¥25.8B; increases in corporate tax payments (¥15.6B) and accounts receivable (¥7.1B) pressured cash. Free Cash Flow (FCF) was -¥6.4B (OCF ¥9.4B - Investing CF ¥15.8B), negative due to upfront capital expenditures ¥8.7B and M&A-related investments. OCF/EBITDA was 0.23x, indicating low cash conversion efficiency. [Investment Efficiency] Total Asset Turnover was 0.97x (prior 1.10x), impacted by asset expansion from M&A (Total Assets ¥221.4B, prior ¥156.4B). [Financial Soundness] Equity Ratio was 33.4% (prior 37.8%, -440bp) and has decreased, but Debt/EBITDA is 1.30x (Net interest-bearing debt ¥22.6B = short-term borrowings ¥26.6B + long-term borrowings ¥23.4B - cash ¥27.4B / EBITDA), and Interest Coverage is 57.5x (EBITDA ¥40.6B / interest expense ¥0.6B), indicating maintained soundness. Current Ratio 123.2% and Quick Ratio 122.5% secure minimum short-term liquidity, but increased short-term borrowings raise dependence on short-term liabilities.
OCF was ¥9.4B (prior ¥20.6B, -54.4%), a significant decline. From OCF subtotal ¥25.6B (prior ¥30.9B), increased corporate tax payments ¥15.6B (prior ¥10.0B), increase in accounts receivable ¥7.1B (prior ¥4.0B), and inventory increase ¥1.9B (prior ¥0.6B) pressured funds, while increases in advance receipts ¥5.4B (prior ¥3.0B) and allowance for doubtful accounts ¥10.1B (prior ¥4.3B) contributed positively. Investing CF was -¥15.8B (prior -¥12.8B), driven by capital expenditures ¥8.7B (prior ¥3.0B), acquisition of subsidiary shares ¥8.3B, and intangible asset acquisitions ¥1.4B (prior ¥2.1B). FCF was -¥6.4B (prior ¥7.7B), turning negative. Financing CF was ¥10.3B (prior ¥1.4B), funded by net increase in short-term borrowings ¥15.4B (prior -¥1.6B) and long-term borrowings procured ¥18.0B (prior ¥12.7B), while repaying long-term borrowings ¥12.4B (prior ¥1.2B), paying dividends ¥8.6B (prior ¥8.0B), and repurchasing treasury stock ¥1.4B (prior ¥0.0B). Cash and cash equivalents at period-end were ¥27.4B (period-begin ¥23.5B, +¥3.9B), indicating external funding secured during an investment-leading phase. The fact that OCF was far below Net Income is a note on earnings quality; normalization of working capital and transition to an investment recovery phase are future challenges.
Earnings quality is generally high; profits at the ordinary income stage account for the bulk of Net Income. Extraordinary items were negligible (impairment loss ¥0.2B, valuation losses on investment securities ¥0.1B, gains on sale of fixed assets ¥0.0B), indicating limited impact from one-off items. Non-operating income ¥0.5B (interest income ¥0.1B, other ¥0.2B) and non-operating expenses ¥0.8B (interest expense ¥0.6B, other ¥0.1B) are below 0.3% of Revenue, so operating results represent core earnings. Goodwill amortization under JGAAP of ¥2.2B (prior ¥0.6B) compresses Net Income; pre-goodwill-amortization EBITDA (Operating Income ¥36.2B + Goodwill Amortization ¥2.2B + Depreciation ¥2.2B = ¥40.6B) yields an EBITDA margin of 18.8%, indicating higher core earning power. However, OCF is only 0.36x of Net Income and the accrual ratio ((Net Income ¥25.8B - OCF ¥9.4B) / Total Assets ¥221.4B = 7.4%) is somewhat high, highlighting cash conversion issues. Comprehensive Income ¥24.7B approximates Net Income ¥25.8B, with minimal impact from Other Comprehensive Income such as valuation differences on securities. Profit sustainability is high, but weak OCF and continued goodwill amortization warrant attention regarding earnings quality.
Full year guidance is Revenue ¥248.6B (YoY +15.2%), Operating Income ¥38.6B (YoY +6.4%), Ordinary Income ¥38.2B (YoY +6.5%), Net Income attributable to owners of the parent ¥25.2B (YoY -0.1%), EPS ¥141.44, and dividend ¥30. Progress against year-end results: Revenue 86.8%, Operating Income 93.8%, Ordinary Income 94.0%, Net Income 102.2%, EPS 97.5%, indicating results largely in line with or slightly above plan on profit stages. Revenue progress is slightly lower, but SG&A control and low interest burden supported profit progress. Net Income slightly exceeded the full-year forecast; against a plan of marginal YoY decline, actuals rose +14.3%. In addition to the year-end dividend forecast of ¥30, an interim dividend of ¥25 was paid for an annual dividend of ¥55, maintaining a payout ratio of 38.4% (dividend ¥55 / EPS ¥137.93) and a stable return policy. Compared to the full-year forecast, the actual Operating Margin is 16.8% versus forecast 15.5% (forecast Operating Income ¥38.6B / forecast Revenue ¥248.6B), indicating current profitability is outpacing expectations.
Dividends are ¥55 per year (interim ¥25, year-end ¥30), with a payout ratio of 38.4% (dividend ¥55 / EPS ¥137.93), within a reasonable range. The dividend was doubled from prior year ¥22.5, highlighting a clear uptrend. Share buybacks of ¥1.4B were executed, making total return amount dividend ¥8.6B + buybacks ¥1.4B = ¥10.0B, resulting in a Total Return Ratio of 38.8% (total return ¥10.0B / Net Income ¥25.8B). While the payout ratio is at a sustainable level, FCF is -¥6.4B (negative), meaning dividends and buybacks were funded by external financing (net borrowings increase ¥10.3B). With cash and deposits ¥27.4B vs. short-term borrowings ¥26.6B, dependence on short-term liabilities is high; medium-term dividend sustainability depends on recovery of OCF and a slowdown in investment burden. Dividend policy appears to prioritize growth investment while aiming for stable dividends around a 40% payout ratio.
Business concentration risk: The guarantee-related business accounts for 89.6% of Revenue and 97.8% of Operating Income, indicating extremely high dependency on a single business. A downturn in the real estate market, a decrease in lease contract volumes, or an increase in rent delinquencies could raise guarantee fulfillment costs and reduce earnings. Allowance for doubtful accounts increased by ¥10.1B this period, suggesting that in a recessionary scenario credit costs could further increase and pressure profits.
Short-term liability dependence and refinancing risk: Short-term borrowings increased significantly to ¥26.6B (prior ¥11.0B, +141.8%), and short-term liabilities account for 53.0% of total liabilities, a high level. Although Current Ratio is 123.2% providing minimum safety, in a rising interest rate environment or widening credit spreads refinancing costs could rise, increasing financial expenses and pressuring liquidity. With OCF weak at ¥9.4B, maturity management of short-term debt is reliant on external funding.
Goodwill impairment risk: Goodwill balance is ¥21.1B (28.6% of equity), reflecting expanded M&A-related intangible assets. If future business conditions deteriorate or integration is delayed and expected returns are not achieved, impairment losses may occur, eroding equity and earnings. Annual goodwill amortization of ¥2.2B is a recurring profit-reducing factor, making monitoring the profitability of acquired businesses important.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 16.8% | 8.8% (4.0%–20.0%) | +8.0pt |
| Net Margin | 12.0% | 4.3% (0.6%–11.3%) | +7.6pt |
The company's profitability substantially exceeds the industry median, driven by high profitability in the guarantee-related business.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 24.9% | 2.1% (-4.5%–6.9%) | +22.9pt |
Revenue growth is outstanding within the industry, driven by M&A and expansion of the guarantee-related business.
※ Source: Company aggregation
While double-digit Revenue growth was achieved through expansion of the guarantee-related business and new consolidations, Operating Margin fell by 120bp due to goodwill amortization and higher SG&A. Going forward, realization of synergies and leveraging fixed costs will be key to margin recovery. On an EBITDA basis the margin remains high at 18.8%, indicating resilient core earnings excluding goodwill amortization.
OCF is only 0.36x of Net Income, with increased corporate tax payments and working capital movements weakening cash conversion efficiency. FCF was -¥6.4B, negative due to upfront capital expenditures and M&A investments. Short-term borrowings increased to ¥26.6B, raising short-term liability dependence; recovery of OCF and transition to long-term funding are prerequisites for sustainable growth and shareholder returns.
ROE remains very high at 34.9%, reflecting leverage-enhanced profitability, while Debt/EBITDA of 1.30x and Interest Coverage of 57.5x indicate sound financial health. With a payout ratio of 38.4% the company continues a dividend-uptrend, balancing growth investment and shareholder returns. Operating Income and Ordinary Income are at approximately 94% progress toward full-year forecasts, and growth scenarios going forward include deeper market penetration of the guarantee-related business and monetization of Real Estate and IT-related businesses.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by our firm based on public financial statements. Investment decisions are your responsibility; please consult a professional as necessary before making any investment choices.