| Indicator | Current Period | YoY Same Period | YoY |
|---|---|---|---|
| Revenue | ¥237.1B | ¥234.6B | +1.0% |
| Operating Income | ¥6.3B | ¥6.7B | -4.6% |
| Ordinary Income | ¥7.2B | ¥7.5B | -3.4% |
| Net Income | ¥4.4B | ¥4.4B | +1.2% |
| ROE | 1.7% | 1.7% | - |
FY2026 Q1 results were Revenue of ¥237.1B (YoY +¥2.5B +1.0%), Operating Income of ¥6.3B (YoY -¥0.3B -4.6%), Ordinary Income of ¥7.2B (YoY -¥0.3B -3.4%), and Net Income of ¥4.4B (flat vs. ¥4.4B in the prior-year period). Revenue was maintained at roughly the prior-year level, centered on detached housing, but higher SG&A led to a decline in Operating Income. The gross margin remained solid at 15.7%, and at the ordinary level the company secured ¥7.2B of profit due to non-operating income. Despite a relatively high tax burden rate of 37.8%, Net Income held steady YoY, and EPS was ¥19.13. Full-year guidance calls for Revenue of ¥985.0B (YoY +6.7%), Operating Income of ¥21.0B (YoY -17.1%), and Net Income of ¥16.0B (YoY -8.8%), with Q1 tracking broadly in line with the full-year plan.
[Profitability] ROE 1.7% (DuPont decomposition: Net Margin 1.9% × Total Asset Turnover 0.488 × Financial Leverage 1.84x), Operating Margin 2.7%, Gross Margin 15.7%. Net Margin remains low due to SG&A burden and a high effective tax rate of 37.8%. EPS ¥19.13. [Cash Quality] Cash and deposits of ¥126.7B provide extremely high coverage of short-term liabilities at 19.05x, ensuring ample short-term payment capacity. Working capital stands at ¥145.6B, indicating ample headroom. [Investment Efficiency] Total Asset Turnover 0.488x. ROIC at 2.7% indicates low capital efficiency. Goodwill ¥3.73B (vs. prior period +80.2%), intangible fixed assets ¥6.43B (vs. prior period +32.2%), reflecting ongoing growth investments. [Financial Soundness] Equity Ratio 54.5%, Current Ratio 172.6%, Quick Ratio 165.6%, Debt-to-Equity Ratio 0.84x. Interest-bearing debt ¥8.5B and Debt-to-Capital Ratio 3.1% indicate a low overall debt level. Meanwhile, short-term borrowings of ¥6.65B (vs. prior period +209.3%) and a short-term debt ratio of 78.4% are high, pointing to greater reliance on short-term refinancing.
Cash and deposits were ¥126.7B, up +¥7.4B from ¥119.3B in the prior-year period, continuing capital accumulation. Total assets were ¥485.9B, up +¥11.1B from ¥474.8B in the prior-year period, mainly due to increases in goodwill and intangible assets. Short-term borrowings increased by ¥4.50B (+209.3%), indicating a change in the funding structure. Long-term borrowings also rose by ¥0.82B (+81.2%), with overall borrowings increasing, presumed to fund growth investments. In working capital, the Current Ratio of 172.6% remains healthy, with ample coverage of short-term liabilities by current assets. In construction contract-related areas, costs related to uncompleted contracts, etc., have arisen, and the seasonality of cash flows and project progress management in construction/engineering businesses affect funding trends. Cash coverage is extremely high, and short-term liquidity risk is limited.
Against Ordinary Income of ¥7.2B and Operating Income of ¥6.3B, the net non-operating gain was ¥0.9B. Non-operating income is presumed to be mainly equity in earnings of affiliates and financial income, confirming a positive contribution from non-core activities. Against Gross Profit of ¥37.3B and SG&A of ¥31.0B, the SG&A ratio is a relatively high 13.1%, leading to a low Operating Margin of 2.7%. YoY, Revenue was +1.0% while Operating Income was -4.6%, indicating that higher costs pressured profits. The effective tax rate of 37.8% imposes a heavy tax burden and creates a gap between Ordinary Income and Net Income. Continued accumulation of cash and deposits suggests that accounting profits are supported by cash to a certain extent. By segment, Detached Housing was ¥202.9B (Operating Income ¥8.6B, margin 4.2%), and Large-Scale Projects was ¥34.4B (Operating Income ¥3.3B, margin 9.6%), indicating a structure with higher profitability in large-scale projects.
Short-term debt concentration risk: Short-term borrowings surged +209.3% vs. the prior period, and the short-term debt ratio stands at a high 78.4%, posing refinancing risk in a rising interest rate environment or deteriorating funding conditions. While cash coverage is high, the change in funding structure warrants attention. Dividend sustainability risk: With an interim dividend of ¥12 and a year-end dividend of ¥14 for a total of ¥26 planned, against Q1 EPS of ¥19.13, the simple annualized payout ratio would exceed 100%. Verification of consistency with the full-year forecast dividend of ¥13 and the sustainability of dividends amid profit fluctuations will be key. Intangible asset impairment risk: Goodwill of ¥3.73B (+80.2%) and intangible fixed assets of ¥6.43B (+32.2%) indicate growth investments that increased intangible assets, creating impairment risk if monetization of the invested businesses does not progress as planned.
[Position within the industry] (Reference information, Our Research) An Operating Margin of 2.7% is a low level as a profitability indicator within the housing/construction industry, driven by a high SG&A ratio. ROE of 1.7% leaves substantial room for improvement in capital efficiency. Looking at the company’s historical trend, the Operating Margin of 2.7% (FY2026 Q1) shows profitability moving sideways, highlighting the challenge of structurally improving margins. Revenue growth of +1.0% indicates stable growth, but the gap with profit growth of -4.6% suggests the need for tighter cost control. In terms of financial soundness, the Equity Ratio of 54.5% is stable, but the increased dependence on short-term borrowings is a change that warrants monitoring even considering industry characteristics. The full-year forecast Operating Margin of 2.1% (Operating Income ¥21.0B / Revenue ¥985.0B) is also low, indicating that a focus on higher value-added products and cost efficiency is necessary to strengthen competitiveness within the industry. (Comparatives: Company’s historical results; Source: Our compilation)
Room to improve SG&A structure: While the Gross Margin is secured at 15.7%, the SG&A ratio of 13.1% is a pressure factor on the Operating Margin of 2.7%, making review and efficiency improvements in the cost structure key to profitability enhancement. Differences in segment profitability: Compared to a 4.2% margin in Detached Housing, Large-Scale Projects deliver a high 9.6% margin, suggesting that increasing the share of large-scale projects and enhancing the value-add of the detached housing business are directions for profit expansion. Progress of growth investments: Significant increases in goodwill and intangible assets indicate aggressive business investments, with subsequent monetization progress and cash flow generation capacity being points of focus.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings bulletin data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our company based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any investment decisions.