| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥202.6B | ¥195.8B | +3.4% |
| Operating Income / Operating Profit | ¥56.5B | ¥49.8B | +13.3% |
| Ordinary Income | ¥56.0B | ¥48.3B | +16.0% |
| Net Income | ¥47.6B | ¥48.6B | -2.0% |
| ROE | 5.8% | 6.4% | - |
The consolidated results for the full year ended March 2026 were: Revenue ¥202.6B (¥+6.7B YoY +3.4%), Operating Income ¥56.5B (¥+6.6B YoY +13.3%), Ordinary Income ¥56.0B (¥+7.7B YoY +16.0%), and Net Income attributable to owners of the parent ¥47.6B (¥+2.9B YoY +6.5%). In addition to steady accumulation of rental income, gross profit margin improved to 37.6% (prior 35.3%), while SG&A ratio remained flat at 9.8%, resulting in an expansion of the operating margin to 27.9% (prior 25.4%). In non-operating items, dividend income of ¥4.2B and investment partnership gains of ¥3.7B were recorded; interest expense rose to ¥3.4B (prior ¥2.2B), but double-digit growth was achieved at the ordinary income level. Extraordinary gains included ¥7.0B on sale of investment securities and ¥4.5B on sale of fixed assets, expanding profit before tax to ¥67.5B. After tax expense of ¥20.8B, final profit increased YoY +6.5% including the uplift from extraordinary gains. Operating Cash Flow was ¥76.9B (YoY +5.5%), securing 1.6x of net income, and free cash flow after Investment Cash Flow of -¥20.5B was ¥56.4B, ample. Despite paying dividends of ¥20.2B and share buybacks of ¥17.2B, cash balance increased to ¥169.1B (prior ¥140.6B). Total assets were ¥1,856.0B, Equity Ratio 43.9%, interest-bearing debt ¥354.2B (Debt/EBITDA 3.8x), maintaining high financial soundness. Allocation expansion to investment securities ¥367.5B led to Comprehensive Income of ¥87.5B (≈1.8x Net Income).
[Revenue] Revenue was ¥202.6B, up ¥6.7B YoY (+3.4%). The Company operates a single segment of land and building leasing, with rental income comprising the bulk of revenue. Gross profit was ¥76.2B (prior ¥69.1B), up +10.2%, and gross profit margin improved 2.3pt to 37.6% (prior 35.3%). Progress in rent revisions and cost efficiency likely contributed to the margin improvement. Given the leasing business nature, rapid top-line expansion is unlikely, but stable occupancy and gradual improvement in rent rates drove revenue growth.
[Profitability] SG&A was ¥19.8B (prior ¥19.3B), up 2.3%, keeping the SG&A-to-revenue ratio at 9.8%. As a result, Operating Income was ¥56.5B (prior ¥49.8B), a double-digit increase of +13.3%, and operating margin improved 2.5pt to 27.9% (prior 25.4%). Non-operating income was ¥8.2B (dividend income ¥4.2B, investment partnership gains ¥3.7B, etc.), up from ¥6.1B, and non-operating expenses were ¥8.6B (interest expense ¥3.4B, others ¥0.7B), up from ¥7.6B. The increase in interest burden was largely offset by non-operating income, resulting in Ordinary Income of ¥56.0B (+16.0%), with an ordinary margin of 27.7%. Extraordinary gains of ¥11.6B (sale of investment securities ¥7.0B, sale of fixed assets ¥4.5B) and extraordinary losses of ¥0.1B (impairment of fixed assets) produced Profit Before Tax of ¥67.5B (prior ¥63.0B). After corporate tax expense of ¥20.8B (effective tax rate 30.8%), Net Income attributable to owners of the parent was ¥47.6B (+6.5%), with a net margin of 23.5% (prior 24.8%)—a slight decline, but core business profitability improved when excluding one-off items. Conclusion: the company achieved increases in revenue and profit across operating, ordinary, and net levels.
[Profitability] Operating margin 27.9% (prior 25.4%), Ordinary margin 27.7% (prior 24.7%), Net margin 23.5% (prior 24.8%) remain at high levels. Improvement in gross margin to 37.6% (prior 35.3%) and controlled SG&A supported better operating profitability. ROE 5.8% (prior 5.8%) is flat and is explained by net margin × total asset turnover 0.109 × financial leverage 2.28, with margin improvement supporting capital efficiency. ROA (ordinary) 3.1% (prior 2.8%) improved, indicating better asset returns. [Cash Quality] Operating CF / Net Income ratio 1.6x and Operating CF / EBITDA ratio 0.82x indicate stable cash generation. Accrual ratio -1.6% (Operating CF before working capital changes ¥96.5B - Net Income ¥47.6B = cash surplus ¥48.9B) indicates high earnings quality. CapEx ¥7.3B versus depreciation ¥37.9B yields CapEx/Depreciation 0.19x, showing restrained capital spending that supports short-term FCF but requires monitoring to maintain mid-to-long-term asset competitiveness. [Investment Efficiency] EPS ¥96.86 (prior ¥89.90), BPS ¥1,706.00; on a PBR basis (assuming 1x) asset efficiency is within a reasonable range. [Financial Soundness] Equity Ratio 43.9% (prior 43.1%), Current Ratio 151.2% (prior 95.3%), Quick Ratio 151.2% (prior 95.3%) show greatly improved liquidity. Interest-bearing debt ¥354.2B (short-term borrowings ¥70.4B, bonds maturing within 1 year ¥50.0B, long-term borrowings ¥283.8B, bonds ¥500.0B) with cash ¥169.1B produces Net Interest-Bearing Debt ¥185.1B, Debt/Equity 0.44x, Debt/EBITDA 3.8x (EBITDA = Operating Income ¥56.5B + Depreciation ¥37.9B = ¥94.4B). Interest coverage 16.6x (EBIT ¥56.5B ÷ interest expense ¥3.4B) indicates ample capacity to service interest.
Operating CF was ¥76.9B (prior ¥72.9B, +5.5%), with subtotal Operating CF before working capital changes reaching ¥96.5B. Including reversal of non-cash expenses such as Depreciation ¥37.9B, corporate tax payments ¥20.1B, interest and dividend receipts ¥8.3B, and interest payments ¥7.8B, cash generated from operations was 1.6x Net Income ¥47.6B, demonstrating strong cash backing. Investing CF was -¥20.5B, with major items: CapEx -¥7.3B, purchase of investment securities -¥84.8B, proceeds from sale of investment securities +¥7.4B, proceeds from sale of tangible fixed assets +¥64.4B—net expansion of allocation to investment securities alongside cash recovery from fixed asset disposals. Free Cash Flow (Operating CF + Investing CF) was ¥56.4B (prior ¥64.8B), remaining ample. Financing CF was -¥26.8B (long-term borrowings drawn +¥110.0B, long-term borrowings repayments -¥49.4B, bond issuance +¥50.0B, bond redemption -¥50.0B, dividends paid -¥20.2B, share buybacks -¥17.2B), reflecting balanced financing and shareholder returns. Cash and cash equivalents increased by ¥28.5B from ¥140.6B at the beginning of the period to ¥169.1B at period-end (including foreign exchange effect -¥1.1B). FCF exceeded the total of dividends, share buybacks, and CapEx (approx. ¥44.7B), enhancing cash buffer and financial flexibility.
Of Ordinary Income ¥56.0B, Operating Income ¥56.5B forms the core, with non-operating income ¥8.2B (dividend income ¥4.2B, investment partnership gains ¥3.7B) and non-operating expenses ¥8.6B (interest expense ¥3.4B) nearly offsetting. Extraordinary gains ¥11.6B (sale of investment securities ¥7.0B, sale of fixed assets ¥4.5B) are non-recurring and boosted Profit Before Tax ¥67.5B, but reproducibility is limited. The +16.0% increase in ordinary income reflects core business strength, and high cash conversion is evidenced by Operating CF / Net Income 1.6x and accrual ratio -1.6%. Non-operating income accounted for 4.0% of revenue, below the 5% threshold, indicating no material distortion of recurring earnings structure. Comprehensive Income of ¥87.5B exceeds Net Income ¥47.6B substantially, mainly due to valuation gains on securities of ¥39.5B (OCI), driven by increased allocation to investment securities ¥367.5B (prior ¥223.9B). The rise in comprehensive income is valuation-driven and should be considered separate from ordinary operating performance. Off-balance liabilities such as retirement benefit obligations ¥0.7B and deferred tax liabilities ¥36.7B are limited, indicating sound balance sheet quality.
The Company’s plan for the fiscal year ending March 2027 (Full Year) forecasts Revenue ¥205.0B (YoY +1.2%), Operating Income ¥55.0B (YoY -2.6%), Ordinary Income ¥49.0B (YoY -12.6%), Net Income attributable to owners of the parent ¥49.0B (YoY +2.9%), EPS ¥51.36, and dividend ¥15.00 per share (post-split basis; pre-split equivalent ¥60). While projecting modest revenue growth, Operating and Ordinary income are expected to decline. This appears to incorporate normalization of current-period non-operating income (investment partnership gains, etc.) and extraordinary gains (total ¥11.6B), as well as an assumed further increase in interest expense (from ¥3.4B in the current period). As indicated by the -12.6% decline in Ordinary Income, the plan assumes higher interest burden and reduced non-operating income, while Net Income is projected to increase +2.9% assuming stable tax burden. Progress toward the full-year forecast stands at: Revenue 98.8%, Operating 103.0%, Ordinary 114.3%, Net 97.2%, indicating the current period outperformed plan at operating and ordinary levels. Next fiscal year’s plan is conservative, factoring moderate core growth and higher non-operating costs. The dividend forecast ¥15.00 (post-split) compares to current period actual ¥40.00 (post-split equivalent ¥20.00); pre-split equivalent is ¥60.00, implying a payout ratio of approx. 117% (based on EPS ¥51.36) which is high but may be sustainable given FCF capacity and cash balance.
Annual dividend is ¥40.00 per share (interim ¥20.00, year-end ¥20.00), with payout ratio 44.5% (versus EPS ¥96.86 is 44.3%) at a reasonable level. Total dividend outlay is approx. ¥20.2B, well covered by Operating CF ¥76.9B and FCF ¥56.4B. Share buybacks of ¥17.2B were executed, bringing total return to shareholders to ¥37.4B and Total Return Ratio to 78.6% (Total returns ¥37.4B ÷ Net Income ¥47.6B). DOE (dividend on equity) is approx. 2.6%, demonstrating continued shareholder returns against equity of ¥814.0B. A 1-for-2 stock split (effective July 1, 2026; 1 share → 2 shares) is planned; the post-split dividend forecast is ¥15.00 annually, which is ¥60.00 on a pre-split basis. Compared to the current period actual ¥40.00 (pre-split equivalent a +50% increase to ¥60.00), the post-split payout implies a relatively high payout ratio against next-year EPS forecast (post-split EPS assumption) but is viewed as sustainable given FCF generation and cash balance ¥169.1B. Continued share buybacks and stable dividend growth reflect a clear shareholder return policy.
Interest Rate Risk: Interest expense increased to ¥3.4B (prior ¥2.2B), a +58.6% rise. With guidance assuming Ordinary Income -12.6%, further interest cost increases are already factored in. Variable-rate and short-term portions of interest-bearing debt ¥354.2B could increase burdens in a rising rate environment and press on Ordinary Income. Debt/EBITDA 3.8x is moderately elevated, and leverage sensitivity is material if EBITDA declines. Interest coverage 16.6x is comfortable, but monitoring interest rate trends is necessary.
Risk of Asset Competitiveness Decline Due to CapEx Restraint: CapEx ¥7.3B versus depreciation ¥37.9B yields CapEx/Depreciation 0.19x, indicating very low investment momentum. While this supports short-term FCF, prolonged underinvestment could increase average building age and equipment obsolescence, undermining future rent levels and occupancy. Most tangible fixed assets ¥1,283.4B are land and buildings, requiring periodic renewal investment to maintain competitiveness.
Valuation Volatility of Investment Securities: Increased allocation to investment securities ¥367.5B (19.8% of total assets) produced valuation gains of ¥39.5B (OCI), boosting Comprehensive Income. However, market downturns could produce valuation losses that erode equity. Of Comprehensive Income ¥87.5B, roughly ¥40B is valuation gain excluding Net Income ¥47.6B, raising equity sensitivity to market volatility. Deferred tax liabilities ¥36.7B are partly related to valuation differences; mark-to-market declines could lead to reclassification to deferred tax assets.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 27.9% | 10.7% (6.8%–17.9%) | +17.2pt |
| Net Margin | 23.5% | 5.8% (2.5%–11.9%) | +17.7pt |
The Company’s profitability is outstanding within the sector, with operating and net margins well above the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.4% | 12.8% (4.2%–29.2%) | -9.4pt |
Revenue growth lags the industry median; given the leasing business nature, rapid top-line expansion is unlikely, consistent with a management stance prioritizing stable income.
※Source: Company compilation
Stability of Profitability and Cash Generation: Operating margin 27.9% and EBITDA margin 46.6% (EBITDA ¥94.4B ÷ Revenue ¥202.6B) demonstrate outstanding profitability within the sector. Operating CF ¥76.9B (1.6x Net Income), Free CF ¥56.4B indicate robust cash generation. Cash increased to ¥169.1B after dividends ¥20.2B and buybacks ¥17.2B, supporting financial flexibility. CapEx restraint (CapEx/Depreciation 0.19x) aids short-term FCF but restoration of capital spending is key to maintain property competitiveness over the medium to long term.
Rising Interest Burden and Conservative Next-Year Guidance: Interest expense rose to ¥3.4B (prior ¥2.2B, +58.6%), and next-year guidance is conservative with Ordinary Income ¥49.0B (-12.6%). Assuming the one-off extraordinary gains ¥11.6B are not repeated, stable core growth and interest cost management will be crucial for next-year performance. Debt/EBITDA 3.8x and Interest Coverage 16.6x indicate sufficient financial capacity, but persistent interest rate rises could pressure Ordinary Income.
This report was automatically generated by AI analyzing XBRL earnings announcement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are the responsibility of the reader; consult a professional advisor as needed.