| Metric | Current Period | Prior-year Period | YoY |
|---|---|---|---|
| Revenue | ¥46.8B | ¥46.5B | +0.6% |
| Operating Income | ¥5.5B | ¥5.0B | +9.7% |
| Ordinary Income | ¥6.4B | ¥5.6B | +15.3% |
| Net Income | ¥4.3B | ¥3.9B | +12.0% |
| ROE | 2.7% | 2.4% | - |
For FY2026 Q3 (9-month cumulative), Nihon Decolux reported Revenue of ¥46.8B (YoY +¥0.3B +0.6%), Operating Income of ¥5.5B (YoY +¥0.5B +9.7%), Ordinary Income of ¥6.4B (YoY +¥0.9B +15.3%), and Net Income of ¥4.3B (YoY +¥0.5B +12.0%). While revenue was flat, operating leverage materialized through maintaining a 32.5% gross margin and controlling SG&A, resulting in profit growth. By segment, the Building Materials Business booked Revenue of ¥43.8B and Operating Income of ¥6.7B, while the Real Estate Business booked Revenue of ¥3.0B and Operating Income of ¥1.6B. On the non-operating side, financial income—dividend income of ¥0.5B and interest income of ¥0.4B—boosted Ordinary Income.
[Profitability] ROE 2.7% (composed of Net Profit Margin 9.2% × Total Asset Turnover 0.252 × Financial Leverage 1.15x), Operating Margin 11.8% (YoY +1.0pt improvement), Gross Margin 32.5%, ROIC 2.9%. Non-operating income of ¥0.98B (dividend income ¥0.54B, interest income ¥0.37B) underpins Ordinary Income; with Ordinary Income at ¥6.4B versus Operating Income at ¥5.5B, the net non-operating increase is approximately ¥0.9B. The effective tax rate against Profit Before Tax of ¥6.3B is approximately 30.8%. [Cash Quality] Cash and deposits of ¥31.6B and investment securities of ¥38.7B together total financial assets of ¥70.3B, accounting for 37.8% of total assets. Cash coverage of short-term liabilities of ¥14.9B is 2.1x, indicating ample liquidity. [Investment Efficiency] Total asset turnover 0.252x; Revenue of ¥46.8B against total assets of ¥185.8B indicates low asset efficiency. Non-current assets of ¥121.1B (including land ¥51.0B and investment securities ¥38.7B) suppress asset turnover. [Financial Soundness] Equity Ratio 87.1% (Net Assets ¥161.8B / Total Assets ¥185.8B), Current Ratio 434.3%, Quick Ratio 410.3%, Debt-to-Equity ratio 0.15x—an extremely conservative financial structure.
Cash and deposits remained flat YoY at ¥31.6B, with cash-like assets accounting for 17.0% of total assets of ¥185.8B. While higher operating profit is estimated to have contributed to cash accumulation, dividend payments (annual forecast ¥370/share, calculated Payout Ratio 76.7%) are a source of cash outflows. Regarding working capital efficiency, with current assets of ¥64.7B and current liabilities of ¥14.9B, working capital remains positive at ¥49.8B; accounts receivable of ¥8.7B and inventories of ¥3.6B are appropriately managed. Cash coverage of short-term liabilities is 2.1x, indicating low liquidity risk. Investment securities at ¥38.7B are in line with the prior-year period, with no significant trading observed; additions to non-current assets are also limited. Intangible assets decreased by 25.6% from ¥0.4B to ¥0.3B YoY, suggesting amortization or partial disposal. In financing activities, dividend payments driven by a high Payout Ratio appear to be the main cash outflow, while borrowings stand at ¥9.1B, flat YoY.
With Ordinary Income of ¥6.4B versus Operating Income of ¥5.5B, the net non-operating increase is approximately ¥0.9B. The breakdown is primarily financial income comprising dividend income of ¥0.54B and interest income of ¥0.37B; there is no disclosure of equity in earnings of affiliates or foreign exchange gains/losses. Non-operating income of ¥0.98B accounts for 2.1% of Revenue and is equivalent to 17.8% of Operating Income. Non-operating expenses of ¥0.1B consist of interest expense and other items, with financial costs being minor. There is no disclosure of extraordinary gains/losses, and the reduction from Ordinary Income to Profit Before Tax is limited to ¥0.1B. Net Income of ¥4.3B is equivalent to 67% of Ordinary Income of ¥6.4B, with an effective tax rate of approximately 30.8% compressing profits. As OCF is not disclosed, the cash conversion of earnings cannot be directly assessed; however, with Cash and deposits stable at ¥31.6B and a certain level of cash retained after dividend payments, it is inferred that the increase in operating profit is reasonably backed by cash. Given some dependence on financial income, fluctuations in dividends and interest income from investment securities pose a risk to Ordinary Income.
Stagnant revenue growth risk: Revenue is flat YoY at +0.6%, with the full-year forecast at only +1.4%. Growth drivers are not clearly identified, and the momentum for business expansion is limited. Asset efficiency risk: Investment securities of ¥38.7B and land of ¥51.0B make up the majority of non-current assets; with total asset turnover at 0.252x and ROIC at 2.9%, capital efficiency is low. Improvement is difficult without revenue expansion or asset rationalization. Dividend sustainability risk: The calculated Payout Ratio is 76.7% (annual dividend forecast ¥370/share), and with no OCF disclosure, the cash backing of dividends is unverified. There are concerns about pressure on retained earnings and potential impact on the capacity for future growth investments. Investment securities valuation risk: Changes in the valuation difference of investment securities of ¥38.7B may affect net assets. Mark-to-market valuation introduces a mechanism whereby unrealized gains/losses increase or decrease net assets. Intangible asset decline factors: Intangible assets decreased 25.6% YoY (¥0.4B → ¥0.3B); it is necessary to confirm whether there were impairments or disposals and the impact on future earnings contributions.
(Reference information; our research) Comparing the company’s financial metrics with industry medians (2025-Q3, N=6 companies) confirms the following characteristics. Profitability: Operating Margin of 11.8% significantly exceeds the industry median of 4.5% (IQR 1.8% to 4.8%), ranking in the upper tier within the industry. Net Profit Margin of 9.2% also exceeds the industry median of 4.7% (IQR 3.6% to 12.0%), indicating solid profitability. ROE of 2.7% is well below the industry median of 10.4% (IQR 9.2% to 11.8%), with capital efficiency lagging within the industry. Soundness: Equity Ratio of 87.1% far exceeds the industry median of 52.3% (IQR 27.1% to 54.7%), representing top-tier financial soundness within the industry. The Current Ratio of 434.3% also far exceeds the industry median of 225% (IQR 195% to 305%), indicating extremely high liquidity. The Net debt/EBITDA multiple is negative (net cash position), similar to the industry median of -0.27 (IQR -2.51 to 26.20), and the company’s difference between Cash and deposits of ¥31.6B and interest-bearing debt of ¥9.1B is conservative even within the industry. Growth: Revenue growth of +0.6% is far below the industry median of 8.3% (IQR 2.1% to 14.0%), indicating low growth within the industry. Return on Assets (ROA) is approximately 2.3%, calculated as Net Income of ¥4.3B / Total Assets of ¥185.8B, below the industry median of 5.7% (IQR 1.8% to 8.9%). In summary, while the company boasts high profitability and strong financial soundness within the industry, capital efficiency (ROE/ROA) and growth are below industry averages, reflecting a structure in which a conservative financial strategy suppresses capital efficiency. (Industry: Building Materials and Supplies, comparison set: 2025-Q3, source: our compilation)
Key takeaways from the results are as follows. Margin improvement and realization of operating leverage: Despite flat revenue, Operating Income increased by +9.7%, and the Operating Margin remains high at 11.8% (industry median 4.5%), driven by sustained gross margin and SG&A control. In the near term, the trend of improving profitability may continue. Balance between capital efficiency and high Payout Ratio: ROE at 2.7% (industry median 10.4%) is low, and ROIC at 2.9% is below the cost of capital. The calculated Payout Ratio of 76.7% (annual forecast ¥370/share) pressures retained earnings and constrains the capacity for growth investments or capital efficiency improvements. As OCF is not disclosed, the cash backing of dividends is unverified, necessitating an assessment of dividend sustainability upon future disclosures. Conservative financial structure and low asset efficiency: With an Equity Ratio of 87.1%, Cash and deposits of ¥31.6B and investment securities of ¥38.7B bring financial assets to ¥70.3B, accounting for 37.8% of total assets. Total asset turnover is low at 0.252x, and without asset rationalization or revenue expansion through business investment, improving capital efficiency will be difficult.
This report is an earnings analysis automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as necessary before making any investment.