| Metric | Current | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥467.2B | ¥446.2B | +4.7% |
| Operating Income | ¥41.0B | ¥36.4B | +12.8% |
| Ordinary Income | ¥41.5B | ¥37.6B | +10.5% |
| Net Income | ¥30.5B | ¥26.5B | +15.0% |
| ROE | 7.8% | 7.0% | - |
For the fiscal year ended March 2025, the company achieved revenue of ¥467.2B (up ¥21.1B YoY +4.7%), Operating Income of ¥41.0B (up ¥4.6B YoY +12.8%), Ordinary Income of ¥41.5B (up ¥3.9B YoY +10.5%), and Net Income of ¥30.5B (up ¥4.0B YoY +15.0%), recording growth in both sales and profits. Operating margin improved to 8.8% (up 0.7pt from 8.1% prior year), and Net margin improved to 6.5% (up 0.6pt from 5.9% prior year), indicating enhanced profitability. Gross margin was 36.1% (up 0.8pt from 35.3% prior year), which absorbed a slight increase in SG&A ratio to 27.3% (up 0.1pt from 27.2% prior year), strengthening core earning power. Operating Cash Flow was a high ¥43.9B (up 31.8% YoY), 1.44x Net Income, while Investment Cash Flow was -¥60.9B due to capital expenditure of ¥69.3B, resulting in Free Cash Flow of -¥17.0B and indicating an investment acceleration phase.
[Revenue] Revenue reached ¥467.2B (up ¥21.1B YoY +4.7%). Segment disclosure is not provided, but solid domestic demand uptake underpinned the revenue increase. Sales are concentrated domestically with zero overseas sales, indicating a structure highly dependent on domestic construction and real estate demand. Gross margin improved to 36.1% (up 0.8pt from 35.3% prior year), reflecting product mix improvement, pass-through of price increases, and effective cost control.
[Profit & Loss] Cost of sales was ¥298.5B, yielding Gross Profit of ¥168.7B (Gross Margin 36.1%). SG&A was ¥127.7B (SG&A ratio 27.3%), up ¥6.5B YoY, but grew roughly in line with revenue growth of +4.7%. Operating Income was ¥41.0B (Operating margin 8.8%), up 12.8% YoY, demonstrating operating leverage. Non-operating income was ¥0.5B (interest income ¥0.1B, dividend income ¥0.1B, etc.), and non-operating expenses were immaterial, resulting in Ordinary Income of ¥41.5B (up 10.5% YoY). Extraordinary gains included gain on sale of investment securities ¥0.5B, totaling ¥0.0B, and extraordinary losses included loss on disposal of fixed assets ¥0.1B, totaling ¥0.2B, so one-time item impacts were limited. Pre-tax income of ¥41.3B less Income Taxes of ¥10.8B (effective tax rate 26.1%) produced Net Income of ¥30.5B (Net margin 6.5%, up 15.0% YoY). In conclusion, the company achieved higher sales and profits driven by improved core profitability.
[Profitability] Operating margin was 8.8% (up 0.7pt from 8.1% prior year), and Net margin was 6.5% (up 0.6pt from 5.9% prior year), indicating improved profitability. Improvement in Gross margin to 36.1% (up 0.8pt YoY) absorbed a slight rise in SG&A ratio to 27.3% (up 0.1pt YoY), strengthening core earning power. ROE was 7.8% (approx. 7.0% prior year), with Net margin improvement contributing to the increase. [Cash Quality] Operating Cash Flow of ¥43.9B was 1.44x Net Income of ¥30.5B, indicating good conversion of profits to cash. However, Depreciation was ¥12.0B versus Capital Expenditure of ¥69.3B (CapEx/Depreciation = 5.8x), resulting in sizable investments and Free Cash Flow of -¥17.0B. [Investment Efficiency] Total asset turnover was 0.96x, and asset efficiency was slightly diluted by an increase in Tangible Fixed Assets (¥122.6B prior year → ¥181.4B current). Construction in Progress rose to ¥56.1B (30.9% of Tangible Fixed Assets), and future capitalization and ramp-up will be key to monetization. [Financial Soundness] Equity Ratio remained high at 80.7% (80.8% prior year). Current Ratio was 405% and Quick Ratio 386%, indicating extremely high short-term liquidity. Debt-to-equity ratio was 0.24x, effectively near zero net debt, demonstrating solid financial safety. Cash and Deposits were ¥122.5B (down ¥44.7B YoY), mainly due to funding capital expenditures, and liquidity risk is limited.
Operating Cash Flow was ¥43.9B (up 31.8% YoY), derived from pre-tax income of ¥41.3B plus Depreciation ¥12.0B, modest working capital movements (Accounts Receivable -¥1.4B, Inventory -¥1.6B, Accounts Payable +¥1.0B), and payment of income taxes -¥12.2B. Operating CF before working capital changes was ¥55.8B, 1.83x Net Income of ¥30.5B, indicating strong cash generation from core operations. Investment Cash Flow was -¥60.9B, driven mainly by capital expenditures -¥69.3B (including Construction in Progress increase of ¥56.1B). Time deposits netted +¥10.0B (time deposit placements -¥42.0B, withdrawals +¥52.0B), partially offsetting investment outflows, but overall Investment CF was markedly negative due to large investments. Financing Cash Flow was -¥18.0B, with dividend payments -¥17.9B, treasury stock acquisitions -¥19.5B, and proceeds from treasury stock disposals +¥2.3B as major items. Free Cash Flow was Operating CF ¥43.9B + Investment CF -¥60.9B = -¥17.0B, which can be viewed as temporary cash outflow associated with the investment acceleration phase. Cash and cash equivalents decreased from ¥136.5B at the beginning of the period to ¥101.4B at the end of the period, down ¥35.0B, reflecting the impact of large capital expenditures.
Earnings quality is high, with Operating Income of ¥41.0B being the primary profit source and non-operating income of ¥0.5B (0.1% of Revenue) being negligible. One-time items included Extraordinary Gain of ¥0.5B (gain on sale of investment securities) and Extraordinary Losses of ¥0.2B (including loss on disposal of fixed assets), netting +¥0.3B, which is about 1.0% of Net Income of ¥30.5B and thus limited in impact. The difference between Ordinary Income ¥41.5B and Net Income ¥30.5B is mainly attributable to Income Taxes of ¥10.8B (effective tax rate 26.1%), indicating high transparency in profit structure. Operating CF of ¥43.9B is 1.44x Net Income of ¥30.5B, and the accrual ratio is -2.8%, reflecting good alignment between accounting profit and cash profit and suggesting a sustainable earnings base.
Full Year guidance forecasts Revenue ¥486.0B (up 4.0% YoY), Operating Income ¥42.6B (up 3.9%), Ordinary Income ¥43.1B (up 3.8%), and Net Income ¥30.5B (flat YoY). Current results of ¥467.2B represent 96.1% progress toward the full-year Revenue plan, Operating Income ¥41.0B is 96.3%, and Net Income ¥30.5B is 99.9%, indicating performance generally on plan. These are within an acceptable ±10% deviation threshold, and execution is considered high even allowing for timing differences in project ramp-ups and expense allocations. Dividend guidance is ¥65 per year on an effective basis considering the stock split (1 share → 2 shares effective October 1, 2024). Assumptions underlying the outlook are based on information available and reasonable premises as noted in the forecast disclosures, but actual results may vary due to various factors.
Dividends are stated as an annual ¥130 (interim ¥65, year-end ¥65), reflecting pre-split amounts (stock split 1 share → 2 shares effective October 1, 2024). On a post-split basis, the effective annual dividend is ¥65. Payout Ratio is 44.6% (calculated on a post-split basis), reflecting a stable dividend policy consistent with prior levels. Regarding treasury stock, the company purchased -¥19.5B and disposed +¥2.3B during the period; these movements should be included when calculating Total Return Ratio. Free Cash Flow is -¥17.0B, and dividends of ¥17.9B can be fully covered by Operating Cash Flow of ¥43.9B, but are not covered on an FCF basis, indicating a phase where investment is prioritized. With cash and deposits at ¥122.5B and high Operating CF, there is no short-term concern over dividend sustainability; however, medium-term maintenance of dividends depends on revenue growth and FCF improvement from capitalization and operation of Construction in Progress.
High level of Construction in Progress: Construction in Progress has accumulated to ¥56.1B (30.9% of Tangible Fixed Assets). Project delays or cost overruns could lead to delayed ramp-up or impairment risk. Large ongoing investments of ¥69.3B (5.8x Depreciation) require timely capitalization and start of operations to be prerequisites for performance and Free Cash Flow improvement.
Dependence on domestic demand: Sales are entirely domestic with zero overseas sales, making results sensitive to the domestic construction and real estate market. While Revenue growth of +4.7% has been supported by solid domestic demand, macroeconomic deterioration or a slowdown in construction investment could reduce orders and utilization rates, increasing fixed cost burden and impairing profitability.
Increase in fixed costs and depreciation burden: Tangible Fixed Assets increased from ¥122.6B prior year to ¥181.4B current (+48.0%), and Depreciation is expected to rise significantly from ¥12.0B. As fixed-cost base increases, volatility of Operating margin will widen during demand fluctuations; if the trend of Gross margin improvement reverses, maintaining Operating margin of 8.8% could become difficult.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.8% | 7.8% (4.6%–12.3%) | +1.0pt |
| Net Margin | 6.5% | 5.2% (2.3%–8.2%) | +1.3pt |
Profitability metrics exceed industry medians, and improvements in Gross margin coupled with SG&A control place Operating and Net margins in favorable positions.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.7% | 3.7% (-0.4%–9.3%) | +1.0pt |
Revenue growth exceeds the industry median by +1.0pt, reflecting steady capture of domestic demand.
※ Source: Company compilation
Improvement in core profitability and strong cash generation: Operating margin 8.8% (up 0.7pt YoY) and Operating CF/Net Income 1.44x indicate high earning power and cash conversion efficiency. If the trend of Gross margin improvement to 36.1% (up 0.8pt YoY) continues, the revenue base is expected to strengthen. Industry benchmarks also show Operating margin +1.0pt and Net margin +1.3pt above medians, indicating relative competitiveness.
Progress of investment acceleration phase and financial soundness: With Capital Expenditure ¥69.3B and Construction in Progress ¥56.1B, large investments are underway. Although Free Cash Flow is -¥17.0B, Equity Ratio 80.7%, Cash and Deposits ¥122.5B, and Current Ratio 405% indicate very high financial safety and ample capacity to fund investments. Early capitalization and operational ramp-up of Construction in Progress are expected to boost next-period Revenue and EBITDA, and the ability to absorb increased depreciation through growth will be a key focus.
Domestic demand dependence and fixed-cost risk: Sales are entirely domestic with no overseas operations, making the company sensitive to the domestic construction and real estate cycle. Increased Tangible Fixed Assets and future higher Depreciation will raise fixed costs, so in demand downturns the volatility of Operating margin will widen. Monitoring order backlog and project pipeline is necessary to assess domestic demand sustainability.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.