| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1205.3B | ¥1139.4B | +5.8% |
| Operating Income / Operating Profit | ¥119.3B | ¥90.0B | +32.7% |
| Equity-method Investment Income (Loss) | - | - | - |
| Ordinary Income | ¥123.7B | ¥93.5B | +32.3% |
| Net Income / Net Profit | ¥87.6B | ¥60.1B | +45.7% |
| ROE | 9.1% | 6.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1205.3B (YoY +¥65.9B +5.8%), Operating Income was ¥119.3B (YoY +¥29.3B +32.7%), Ordinary Income was ¥123.7B (YoY +¥30.2B +32.3%), and Net Income attributable to owners of the parent was ¥87.6B (YoY +¥27.5B +45.7%), delivering both revenue and profit growth. Operating margin improved to 9.9% (YoY +2.0pt), driven by a gross margin increase to 30.0% (+1.9pt) and a decline in SG&A ratio to 20.1% (-0.1pt). The core Development Business model recorded Operating Income +48.1% and was the primary driver of profit growth.
[Revenue] Revenue increased to ¥1205.3B (YoY +5.8%). By segment, the Development Business model maintained high growth at ¥698.1B (+9.6%), accounting for 57.9% of total and expanding as the core business. A higher proportion of in-house planned products and increased sales to a major customer (Daiso Sangyo) reaching ¥1,308.8 million contributed. The Wholesale Business model recorded ¥478.2B (+1.7%), a modest increase, while Other segments were ¥111.8B (-1.7%). Revenue from contracts with customers amounted to ¥1203.8B, representing 99.9% of Revenue, indicating a solid operating growth base. Regionally, domestic Japan sales exceed 90%, implying high dependence on the domestic market.
[Profitability] Cost of goods sold was ¥843.3B (cost ratio 69.9%), producing Gross Profit of ¥362.0B (Gross Margin 30.0%, YoY +1.9pt) as margin improvements and product mix optimization lifted gross margin substantially. SG&A was ¥242.7B (SG&A ratio 20.1%, YoY -0.1pt), growing at +5.6% below revenue growth (+5.8%), demonstrating cost discipline. As a result, Operating Income reached ¥119.3B (Operating Margin 9.9%, +2.0pt). Non-operating income of ¥4.6B (primarily dividend income ¥8.6B) less non-operating expenses of ¥0.3B expanded Ordinary Income to ¥123.7B (Ordinary Income Margin 10.3%). Extraordinary items included an impairment on investment securities of ¥1.0B, resulting in net Extraordinary Items of -¥1.0B (minor). After deducting income taxes of ¥36.6B (effective tax rate 29.6%), and excluding Net Income attributable to non-controlling interests of ¥0.7B, Net Income attributable to owners of the parent was ¥87.6B (Net Margin 7.3%, YoY +1.8pt). In conclusion, revenue and profit both increased, with operating leverage from margin expansion becoming evident.
The Development Business model generated Operating Income of ¥81.4B (+48.1%) with a margin of 11.7%, accounting for approximately 68% of consolidated Operating Income and serving as the core high-profit business. It functions as a manufacturer from in-house planning to sales and offers differentiated products across a wide range of categories including consumer electronics, daily sundries, storage, apparel, and food. Margin expansion was driven by improved markups and SKU rationalization. The Wholesale Business model posted Operating Income of ¥39.2B (+8.5%) with a margin of 8.2%, performing steadily with procurement and processing functions centered on well-known branded goods and NB processed products, though growth is modest. The Other segment (real estate, logistics, nursing care & welfare, PS business, etc.) recorded Operating Income of ¥6.6B (+39.4%) with a margin of 5.9%; although small, profitability improved. The structure shows clearly that the Development Business’s high growth and high margins are driving consolidated profitability.
[Profitability] ROE improved to 9.1% (prior year 7.5%), with Operating Margin 9.9% (prior year 7.9%) and Net Margin 7.3% (prior year 5.3%) all rising. Gross Margin improved to 30.0% (prior year 28.1%) and SG&A ratio slightly decreased to 20.1% (prior year 20.2%), producing operating leverage. Non-operating income of ¥4.6B, including dividend income ¥8.6B, expanded Ordinary Income Margin to 10.3% (prior year 8.2%). [Cash Quality] Operating Cash Flow (OCF) was ¥109.9B, 1.25x Net Income ¥87.6B, indicating strong cash backing of profit. OCF/EBITDA ratio was 0.88x (EBITDA ¥125.4B = Operating Income ¥119.3B + Depreciation ¥6.2B), near a healthy level, though inventory increase of -¥3.8B slightly depressed it. Accrual ratio was -2.1% (= (OCF ¥109.9B - Net Income ¥87.6B) / Total Assets ¥1,106.4B), negative, indicating high cash generation quality. [Investment Efficiency] Total asset turnover was 1.09x (Revenue ¥1205.3B / Total Assets ¥1,106.4B). Capital expenditure was ¥1.1B versus depreciation ¥6.2B, yielding a CapEx/Depreciation ratio of 0.18x, low and indicating restrained maintenance/replacement investment. Intangible assets increased to ¥4.3B (prior year ¥3.1B), reflecting ongoing DX investments such as software. [Financial Soundness] Equity Ratio was 87.3% (prior year 87.4%), extremely high. Cash and deposits were ¥634.7B versus current liabilities ¥131.2B, producing a current ratio of 679% and quick ratio of 611%, indicating extremely solid liquidity. Interest-bearing debt was limited to lease liabilities of ¥5.2B, resulting in net cash of ¥567.5B (Cash & deposits ¥634.7B - Interest-bearing debt ¥67.2B) and minimal borrowing dependence.
OCF increased significantly to ¥109.9B (YoY +47.1%). Starting from Profit before income taxes and adjustments ¥123.7B plus Depreciation ¥6.2B subtotaling ¥139.1B, cash generation was after income tax payments of -¥31.6B. Working capital contributed via a decrease in trade receivables +¥8.8B and an increase in trade payables +¥5.3B, while an increase in inventories -¥3.8B slightly offset flows. Investing Cash Flow was a large outflow of -¥183.6B, primarily driven by time deposits placement -¥180.0B and acquisition of tangible fixed assets -¥1.1B. Financing Cash Flow was -¥21.4B, with dividend payments -¥33.5B and repayment of long-term borrowings -¥66.0B as outflows, partially offset by proceeds from disposal of treasury shares +¥14.7B. Free Cash Flow (OCF + Investing CF) was -¥73.7B, negative due to the time deposit shift, but operating cash generation covers operational funding. Cash and deposits at period-end were ¥634.7B (prior year ¥548.2B), indicating extremely ample liquidity. OCF coverage of dividend + CapEx total ¥34.6B was 3.2x, sufficient.
Of Net Income ¥87.6B, Extraordinary Items were net -¥1.0B (investment securities valuation loss -¥1.0B), minor, so most profit is based on recurring earnings. Non-operating income ¥4.6B (0.4% of Revenue) is primarily dividend income ¥8.6B and can be considered sustainable financial asset income. Non-operating expenses ¥0.3B are small (e.g., fees ¥0.1B), and the transition from Operating Income ¥119.3B to Ordinary Income ¥123.7B is stable. OCF ¥109.9B exceeds Net Income ¥87.6B (1.25x), and an accrual ratio of -2.1% supports strong cash backing of earnings. Comprehensive Income ¥93.4B is ¥5.8B above Net Income ¥87.6B; the components of Other Comprehensive Income are Foreign Currency Translation Adjustments +¥2.4B, Valuation Differences on Securities +¥2.1B, Deferred Hedge Gains/Losses +¥1.3B, and Adjustments related to Retirement Benefits +¥0.5B, all minor valuation movements that do not materially distort earnings quality.
Full Year guidance plans Revenue ¥1290.0B (YoY +7.0%), Operating Income ¥122.0B (+2.2%), Ordinary Income ¥125.0B (+1.1%), and Net Income attributable to owners of the parent ¥79.5B (-9.2%). Actual results achieved Revenue ¥1205.3B (progress 93.4%), Operating Income ¥119.3B (97.8%), Ordinary Income ¥123.7B (99.0%), and Net Income ¥87.6B (110.2%). Operating and ordinary stages largely tracked plan, while final profit exceeded forecasts. Actual Operating Margin 9.9% surpassed forecasted Operating Margin 9.5%, supported by gross margin improvement and maintained cost discipline. Progress to full-year Net Income forecast ¥79.5B was 110.2% due to minor extraordinary items and stable tax burden, resulting in an upside to plan.
Annual dividend is ¥110 per share (interim ¥50 + year-end ¥60), a substantial increase of ¥70 (+175%) YoY. Payout Ratio is 45.9% (total dividends ¥39.3B / Net Income attributable to owners of the parent ¥87.6B), at an appropriate level. Against an average number of shares during the period of 35,443 thousand shares, proceeds from disposal of treasury shares of ¥14.7B were executed, reducing treasury stock from -¥23.8B to -¥16.3B (1,504 thousand shares). Retained earnings available for dividends were ¥839.5B (prior year ¥786.6B), and together with cash & deposits ¥634.7B, dividend sustainability is very high. OCF ¥109.9B covers dividend payments ¥33.5B at 3.3x, ample. Note: In this analysis, Payout Ratio uses only dividend cash as the numerator and does not include share buybacks.
Business portfolio concentration risk: The Development Business model accounts for 57.9% of Revenue and 68.2% of Operating Income, indicating high dependence on a specific segment. Sales to a major customer (Daiso Sangyo) of ¥1,308.8 million represent 10.9% of total sales, so demand fluctuations or changes in trading terms with this customer could materially impact performance. Without diversification of segments and customers, revenue volatility risk may rise.
Gross margin volatility risk: Gross Margin improved to 30.0% (YoY +1.9pt) due to markup improvements and product mix optimization; however, intensified competition causing margin pressure or adverse movements in raw materials or FX could reduce gross margin and compress Operating Margin. Inventory of ¥89.1B (7.4% of Revenue) requires careful management to mitigate obsolescence risk.
Competitive risk from restrained investment: CapEx ¥1.1B versus Depreciation ¥6.2B yields CapEx/Depreciation ratio 0.18x; continued low investment limits strategic spending on logistics, IT, and development capabilities. Intangible assets increased to ¥4.3B (prior year ¥3.1B), but absolute DX investment remains limited. Insufficient investment in functions that serve as long-term differentiation may affect future profitability and efficiency.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.9% | 3.4% (1.4%–5.0%) | +6.6pt |
| Net Margin | 7.3% | 2.3% (1.0%–4.6%) | +5.0pt |
Profitability metrics substantially exceed industry medians, confirming the advantage of high-value product offerings in the Development Business model and superior cost management.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.8% | 5.9% (0.4%–10.7%) | -0.1pt |
Revenue growth is roughly in line with the industry median, reflecting an industry-standard growth pace. High margins complement the growth profile.
※ Source: Company aggregation
Improvement to Operating Margin 9.9% (YoY +2.0pt) was achieved through Gross Margin +1.9pt and SG&A ratio -0.1pt, reflecting concurrent execution of pricing strategy, product mix, and cost management. The Development Business’s Operating Income +48.1% drove consolidated profit growth, and an increased share of in-house planned products served as a structural factor expanding profitability. Versus peers, Operating Margin 9.9% is +6.6pt above the median 3.4%, confirming a relatively high-margin business model within the wholesale industry.
Financial soundness is extremely high with Cash & deposits ¥634.7B, Equity Ratio 87.3%, and net cash ¥567.5B, maintaining a strong balance sheet. Stable OCF generation ¥109.9B (OCF/Net Income 1.25x) supports a sustainable Payout Ratio of 45.9%, and OCF coverage of dividend + CapEx (¥34.6B) is 3.2x, providing flexibility. Free Cash Flow was -¥73.7B due to a -¥180.0B shift into time deposits, so the negative Free Cash Flow is structural rather than operational, and liquidity remains ample. Strong cash on hand enhances optionality for strategic investment, increased dividends, and share buybacks.
Continued low CapEx/Depreciation ratio of 0.18x highlights restrained investment and limited strategic spending on logistics, IT, and product development—this is a key point regarding medium-to-long-term competitiveness. Intangible assets increased to ¥4.3B (prior year ¥3.1B) with ongoing software investments for DX, but absolute amounts are modest. To sustain the Development Business’s profitability advantage, selective investment in planning/development and supply chain capabilities will be crucial. Alongside managing segment and customer concentration, balancing portfolio diversification and strengthening in-house capabilities will be a focal area.
This report is an analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as appropriate.
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