| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥250.9B | ¥222.9B | +12.5% |
| Operating Income / Operating Profit | ¥10.8B | ¥5.9B | +83.3% |
| Profit Before Tax | ¥27.8B | ¥24.3B | +14.5% |
| Net Income / Net Profit | ¥17.8B | ¥19.0B | -6.2% |
| ROE | 4.2% | 4.5% | - |
For the fiscal year ended March 2026, Revenue was ¥250.9B (YoY +¥28.0B, +12.5%), Operating Income was ¥10.8B (YoY +¥4.9B, +83.3%), Ordinary Income was ¥13.7B (YoY +¥11.7B, +576.3%), and Net Income was ¥17.8B (YoY -¥1.2B, -6.2%). Expansion of the residential finance business drove top-line and operating-level profit growth; however, an increase in financial expenses (¥61.4B, YoY +¥14.9B) and a higher effective tax rate (36.0%) led to a slight decline in bottom-line profit. The operating margin improved to 4.3% (prior year 2.7%), a 1.6pt improvement, with growth in recurring revenue and asset/other revenue contributing to a more stable revenue mix. Conversely, Operating Cash Flow was a large negative at -¥147.8B (prior year -¥53.7B), primarily due to an expansion of operating loans (¥+204.5B), making bond issuance of ¥87.8B and net borrowing increases necessary to cover funding needs.
[Revenue] Operating revenue was ¥250.9B (YoY +12.5%), marking the third consecutive period of revenue growth. By component: origination-related revenue ¥94.96B (-1.3%, 37.9% of mix), recurring revenue ¥89.00B (+17.8%, 35.5% of mix), and asset & other revenue ¥66.89B (+30.7%, 26.7% of mix). Origination declined slightly due to mortgage rate competition and the new lending environment, but recurring revenue increased by ¥13.5B, and the expansion of stock-type revenue led overall growth. Outstanding operating loans expanded to ¥1,324.9B (YoY +18.3%), supporting continued accrual of interest income. Asset & other revenue benefited from securitization-related and held-asset income, advancing revenue diversification.
[Profitability] Operating Income was ¥10.8B (YoY +83.3%). SG&A was ¥145.7B (+4.4%), growing below the revenue growth rate (+12.5%), so operating leverage worked positively. Operating margin improved 1.6pt to 4.3% from 2.7% a year earlier. Financial expenses increased to ¥61.4B (+32.1%), with higher funding costs due to expanded bonds and borrowings pressuring profits; however, interest and dividend income received of ¥40.2B (+33.3%) contributed to non-operating income, and Ordinary Income rose significantly to ¥13.7B (+576.3%). Profit Before Tax was ¥27.8B (+14.5%), but higher corporate tax and related expenses of ¥10.0B (effective tax rate 36.0%, prior 21.8%) reduced Net Income to ¥17.8B (-6.2%). Extraordinary items were immaterial (other gains/losses total ¥0.3B), so final profit variation was mainly driven by increased tax burdens and financial expenses. In conclusion, revenue and operating profit increased, but higher financing costs and taxes resulted in a decrease in Net Income.
[Profitability] ROE was 4.2%, composed of Net Profit Margin 7.1% × Total Asset Turnover 0.109 × Financial Leverage 5.43. ROE dipped slightly from 4.5% the prior year, mainly due to a decline in Net Profit Margin (from 8.5% to 7.1%) as higher financial expenses and tax burdens compressed profitability. Operating margin improved to 4.3% (prior year 2.7%), and SG&A ratio fell to 58.1% (prior year 62.6%), improving operating efficiency. EBIT margin remained low at 4.3%, and dependence on financial income continues to characterize the revenue structure.
[Cash Quality] The Operating Cash Flow / Net Income ratio was -8.20x, reflecting that the expansion of operating loans (working capital outflow of -¥235.3B) has materially weakened the cash backing of earnings. The accrual ratio was 7.2%, in a neutral range, but negative OCF — even if driven by growth investment — increases reliance on external funding. Free Cash Flow (FCF) was -¥160.5B, indicating insufficient internal funding coverage for dividends and growth investments.
[Investment Efficiency] Total asset turnover was flat at 0.109x (prior year 0.108x), indicating low asset efficiency. Goodwill of ¥244.6B accounts for 57.9% of shareholders’ equity of ¥422.4B, making M&A value retention directly tied to capital quality.
[Financial Soundness] Equity Ratio was 18.4% (prior year 20.4%), and debt-to-equity ratio rose to 4.43x (prior year 3.88x). Bond balance was ¥113.8B (+225%), and borrowings totaled ¥1,203.1B (+13.7%), indicating increased leverage. Interest coverage (EBIT / Financial Expenses) was approximately 0.18x, a warning level, limiting financial flexibility in a rising-rate environment.
Operating Cash Flow was -¥147.8B (prior year -¥53.7B), with OCF/NI at -8.20x versus Net Income of ¥17.8B, raising serious concerns about the cash realization of profits. The main cause was an increase in operating loans of -¥235.3B, a cash outflow driven by growth investment, which heightens dependence on external funding. Subtotal before working capital changes was -¥166.4B; after adding non-cash expenses including depreciation of ¥10.98B and amortization of deferred service assets of ¥6.86B, cash flow remained negative, indicating that business cash generation relies on non-operating income. Net of interest and dividend income received ¥40.2B and interest paid -¥13.5B produced a net positive ¥26.7B, but even combined with corporate tax payments of -¥8.1B, that did not cover the operating loan outflows. Investing Cash Flow was -¥12.7B, primarily for intangible asset acquisitions -¥7.29B and acquisition of subsidiary shares -¥5.69B. Financing Cash Flow was +¥198.1B (prior year +¥102.6B), financed by bond issuance ¥87.8B, long-term borrowings ¥178.0B, and net short-term borrowings increase ¥95.6B, while covering long-term borrowing repayments -¥132.9B and dividend payments -¥17.8B. FCF was -¥160.5B, yielding an insufficient coverage ratio of -8.97x for total dividends of ¥17.8B. Cash and cash equivalents increased to ¥239.1B (¥+37.6B), but this reflects replenishment through external funding; improving organic cash generation remains a future priority.
This period’s revenue structure shows operating-level improvements, while ordinary and pre-tax stages are significantly supported by financial income such as interest receipts. The interest burden multiplier (Profit Before Tax ¥27.8B / EBIT ¥10.8B) is 2.57x, with non-operating interest and dividend income ¥40.2B generating earnings exceeding EBIT. After accounting for financial expenses ¥61.4B, net financial income is a negative ¥21.2B, meaning the business model’s core is the spread between interest income from operating loans and funding costs. Extraordinary items were minor (other gains/losses total ¥0.3B) and thus persistence is high. However, OCF at -¥147.8B, which is materially below Net Income of ¥17.8B, is a warning signal on earnings quality. The accrual ratio of 7.2% is neutral, but the build-up of loan assets that drains working capital is impeding cash conversion. The divergence between Ordinary Income and Net Income is driven by corporate tax and related expenses ¥10.0B (effective tax rate 36.0%), and while accounting consistency is maintained, improving cash yields requires promotion of securitization of operating loans and shortening of the cash collection cycle.
Full-year guidance projects Revenue ¥280.0B (YoY +11.6%), Net Income ¥20.8B (YoY +15.4%), EPS ¥46.85, and dividend ¥20.00 per share. Compared with current results (Revenue ¥250.9B, Net Income ¥17.8B, EPS ¥40.59), management expects upside with revenue and profit increases. Progress rates stand at 89.6% for Revenue and 85.6% for Net Income, implying the need to add ¥29.1B in Revenue and ¥3.0B in Net Income over the remaining four months. Continued growth in recurring revenue and asset & other revenue, maintaining spreads in the interest-rate environment, and smooth securitization are key to achieving targets. With rising financial expenses, optimizing funding costs and efficiently building operating loans are prerequisites for meeting profit goals. The dividend forecast remains at ¥20 per year, keeping Payout Ratio at a high 93.1%. Guidance assumes continued year-on-year growth, while macro interest rate movements and intensified mortgage competition pose downside risks.
Annual dividend totals ¥40 (interim ¥20, year-end ¥20), unchanged from the prior year dividend of ¥40 (¥20 × 2). Total dividends amount to ¥17.8B, with a Payout Ratio of 93.1%, effectively allocating most of Net Income to shareholder returns. Shares outstanding were 44,712 thousand (treasury stock 260 thousand), and the weighted average shares during the period were 44,399 thousand. With FCF at -¥160.5B, coverage of total dividends of ¥17.8B is -8.97x and inadequate, meaning dividends are financed by external funding (bonds and borrowings) rather than Operating CF. No share buyback disclosure was made; shareholder return is dividend-only. Next period’s forecasted dividend is ¥20, which would lower Payout Ratio to approximately 42.7% against projected Net Income of ¥20.8B, but maintaining the current dividend level requires strengthening cash generation through securitization and faster cash collection cycles. Retained earnings total ¥215.2B, accounting for 50.9% of shareholders’ equity, providing some dividend buffer; however, considering goodwill of ¥244.6B (57.9% of equity), effective capital headroom is limited. Ensuring dividend sustainability necessitates OCF turning positive and spread improvement to enhance cash generation.
Interest Rate Risk: Financial expenses increased to ¥61.4B (YoY +32.1%), and interest coverage vs EBIT is about 0.18x, a cautionary level. With bond balance ¥113.8B and borrowings ¥1,203.1B expanding, rate rises could compress spreads and increase funding costs, pressuring profitability. The long duration of operating loans at ¥1,324.9B versus shorter-term funding increases maturity mismatch and liquidity risk.
Funding & Liquidity Risk: Operating CF is a large negative at -¥147.8B, and the funding outflows from expanding operating loans continue to be met by bond issuance and borrowings. FCF is -¥160.5B and dividend coverage is an insufficient -8.97x for dividends of ¥17.8B; deterioration in the securitization market or borrowing conditions could tighten liquidity and threaten dividend sustainability. Equity Ratio of 18.4% and debt-to-equity ratio 4.43x reflect a highly leveraged structure that constrains financial flexibility.
Goodwill Impairment Risk: Goodwill of ¥244.6B equals 57.9% of shareholders’ equity of ¥422.4B, so impairment of acquired values would have a material capital impact. If the profitability of acquired businesses falls short of plans due to intensified residential finance competition or rapid interest rate changes, impairment losses could sharply reduce Equity Ratio and erode dividend capacity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.3% | 8.8% (4.0%–20.0%) | -4.5pt |
| Net Profit Margin | 7.1% | 4.3% (0.6%–11.3%) | +2.8pt |
Operating margin is 4.5pt below the industry median of 8.8%, reflecting the heavy burden of financial expenses on profitability. Conversely, Net Profit Margin is 2.8pt above the median of 4.3%, indicating non-operating financial income lifts final profits.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.5% | 2.1% (-4.5%–6.9%) | +10.4pt |
Revenue growth of 12.5% substantially exceeds the industry median of 2.1%, confirming high growth driven by expansion of operating loans and accumulation of recurring revenue.
※ Source: Company aggregation
Expansion of recurring revenue base: Recurring revenue grew to ¥89.00B (YoY +17.8%), advancing revenue structure stabilization. Outstanding operating loans of ¥1,324.9B (+18.3%) provide a base for future stock revenue accumulation, continuing a shift away from origination dependence. Diversification of revenue sources (asset & other revenue +30.7%) also progressed, improving resilience to interest-rate swings — a structurally positive factor.
Balance between cash generation and funding dependence: Operating CF is a large negative at -¥147.8B, and dividend coverage of ¥17.8B is -8.97x and inadequate. Although outflows are growth-investment-driven, reliance on external funding is increasing, and improving cash conversion through securitization and faster collection cycles is critical to sustainability. Expansion of bonds and borrowings (debt-to-equity 4.43x) and low interest coverage of 0.18x highlight refinancing risk and the importance of spread management in a rising rate environment.
Goodwill risk and capital quality: Goodwill of ¥244.6B (57.9% of equity) is an important warning on capital quality; maintaining the profitability of acquired businesses is a precondition for defending equity. Combined with a high Payout Ratio of 93.1%, impairment risk could materially affect shareholder value; monitoring goodwill impairment assumptions (discount rates, growth rates, market conditions) is a focal point for investment decisions.
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 specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.