| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥10577.6B | ¥10142.4B | +4.3% |
| Operating Income / Operating Profit | ¥2991.6B | ¥2715.2B | +10.2% |
| Ordinary Income | ¥2892.3B | ¥2683.2B | +7.8% |
| Net Income / Net Profit | ¥2125.3B | ¥1916.8B | +10.9% |
| ROE | 8.6% | 8.8% | - |
For the fiscal year ended March 2026, the company achieved revenue of ¥1,0577.6B (YoY +¥435.3B +4.3%), Operating Income of ¥2,991.6B (YoY +¥276.4B +10.2%), Ordinary Income of ¥2,892.3B (YoY +¥209.1B +7.8%), and Net Income attributable to owners of the parent of ¥2,125.3B (YoY +¥208.6B +10.9%), realizing both revenue and profit growth. The core Real Estate Leasing (Rental) Business maintained high profitability with Operating Income of ¥2,101.8B (+11.4%), while the Real Estate Sales Business recovered with double-digit profit growth—Revenue ¥3,240.3B (+9.9%) and Operating Income ¥762.2B (+18.7%)—strengthening the earnings structure. Operating margin improved by +1.5pt to 28.3% (prior 26.8%), and net margin rose by +1.2pt to 20.1% (prior 18.9%), indicating an elevation in profitability. Meanwhile, Operating Cash Flow (OCF) was ¥1,272.9B (YoY -49.7%) and remained at 0.60x of Net Income, as increases in inventory for properties for sale (inventory increase -¥1,291.5B) and a decrease in advance receipts (-¥145.4B) tightened cash. Capital expenditures of ¥1,456.4B were made, resulting in Free Cash Flow of -¥271.0B, but Total Assets expanded to ¥7.19T, and Equity to ¥2.47T, while Investment Securities rose to ¥1.12T (+33.0%). The full-year dividend was ¥65 (interim ¥42, year-end ¥23), payout ratio 28.6%, and Total Return Ratio approximately 45%, continuing shareholder returns.
[Revenue] Revenue was ¥1,0577.6B (YoY +4.3%), securing top-line growth. By segment, Real Estate Leasing (Rental) expanded steadily to ¥4,606.4B (+6.2%), supported by improved occupancy and rent revisions for office buildings and condominiums. Real Estate Sales increased significantly to ¥3,240.3B (+9.9%), with inventory digestion of condominiums and detached houses progressing and profitability improving. Housing (Homebuilding) declined to ¥1,889.0B (-7.5%), reflecting an adjustment in renovation and new home demand. STEP (Brokerage) edged up to ¥753.6B (+3.0%) as transaction volumes rose against a firm real estate distribution market. Other revenue was ¥132.1B, small-scale but complemented by peripheral businesses such as fitness and food services. Gross profit was ¥3,841.0B, with gross margin improving +1.7pt to 36.3% (prior 34.6%), driven by higher margins in leasing and improved mix in sales.
[Profitability] Operating Income was ¥2,991.6B (+10.2%), achieving double-digit profit growth. Selling, General and Administrative Expenses were ¥849.4B (+6.5%), growing faster than revenue but absorbed by a large expansion in gross profit, improving Operating Margin by +1.5pt to 28.3%. Ordinary Income was ¥2,892.3B (+7.8%); in non-operating items, stable dividend income received totaled ¥196.5B, while interest expense was ¥272.2B, resulting in net non-operating expense of -¥99.2B, but operating profit growth underpinned the overall result. Extraordinary items recorded net +¥143.3B, mainly due to gains on sales of investment securities of ¥331.7B, offsetting impairment losses of ¥83.1B. Profit before tax was ¥3,035.7B; after income taxes of ¥910.3B (effective tax rate 30.0%), Net Income was ¥2,125.3B (+10.9%). In conclusion, enhanced rental profitability and improved margins in sales drove the revenue and profit growth.
Real Estate Leasing (Rental) achieved Operating Income of ¥2,101.8B (YoY +11.4%) with a margin of 45.6%, demonstrating overwhelming profitability and accounting for 70.3% of consolidated Operating Income—this is the core business. Real Estate Sales recorded Operating Income of ¥762.2B (+18.7%) with margin improving +1.7pt to 23.5% (prior 21.8%), as inventory turnover and price mix optimization were effective. Housing posted Operating Income of ¥134.2B (-37.8%) with margin declining to 7.1% (prior 10.6%), reflecting lowered revenue and deteriorating profitability. STEP recorded Operating Income of ¥236.0B (+21.0%) with margin improving +4.6pt to 31.3% (prior 26.7%), supported by higher brokerage fee rates and transaction expansion. The two pillars of leasing and sales drove profit growth, and STEP strengthened its presence with high margins, while Housing’s weakness partially offset overall performance.
[Profitability] Operating margin improved +1.5pt to 28.3% (prior 26.8%), and net margin increased +1.2pt to 20.1% (prior 18.9%). ROE was 8.6% (prior 9.1%), slightly lower due to a significant increase in equity (+13.9%) used as the denominator, while Net Income itself grew +10.9%. Gross margin improved +1.7pt to 36.3% (prior 34.6%); by segment, leasing 45.6%, sales 23.5%, STEP 31.3% remained at high levels. [Cash Quality] OCF/Net Income was low at 0.60x, with inventory build-up of properties for sale (-¥1,291.5B) and decrease in advance receipts (-¥145.4B) reversing working capital. OCF/EBITDA remained at 0.34x, highlighting weak cash conversion. [Investment Efficiency] ROA (on Ordinary Income basis) slightly rose to 4.2% (prior 4.0%), and capital expenditures of ¥1,456.4B were 1.91x depreciation of ¥763.4B, indicating continued growth investment. [Financial Soundness] Equity Ratio improved +2.1pt to 34.4% (prior 32.3%), and current ratio was 131.3%, indicating acceptable short-term liquidity. Interest-bearing debt was ¥3.02T (D/E ratio 1.91x), a high level, but mainly long-term borrowings lengthen maturities; Interest Coverage on an EBIT basis is approximately 11x, suggesting interest resilience.
Operating Cash Flow was ¥1,272.9B, down -49.7% YoY. Despite an increase in Operating Income (+¥276.4B), increases in properties for sale (-¥1,291.5B) and a decrease in advance receipts (-¥145.4B) reversed working capital, leaving coverage of Net Income of ¥2,125.3B at only 0.60x. Subtotal (before working capital changes) was ¥2,360.1B, solid, but inventory increases, an increase in trade receivables (-¥14.9B), and corporate tax payments (-¥1,023.4B) absorbed cash. Investing Cash Flow was -¥1,543.9B, mainly capital expenditures of -¥1,456.4B (1.91x depreciation), partially offset by proceeds from sale of investment securities of ¥49.9B. Free Cash Flow was -¥271.0B, indicating OCF did not cover CAPEX. Financing Cash Flow was -¥127.6B; net increase in long-term borrowings secured +¥87.0B (borrowings ¥340.8B - repayments ¥253.86B), while dividend payments -¥361.0B and share buybacks -¥605.2B implemented total shareholder returns of approximately ¥96.6B, with bond redemptions -¥400B and net CP increase +¥149.0B adjusting cash management. Cash and cash equivalents decreased by -¥399.4B to ¥582.9B (prior ¥982.3B), with inventory investment and shareholder returns pressuring liquidity.
Earnings quality is high, centered on Operating Income of ¥2,991.6B indicating strong recurring earning power. In non-operating items, stable dividend income received of ¥196.5B exists, but interest expense of ¥272.2B results in net non-operating expense of -¥99.2B, and Ordinary Income of ¥2,892.3B was underpinned by operating profit growth. Extraordinary items recorded net +¥143.3B, mainly from gains on sales of investment securities of ¥331.7B, offsetting impairment losses of ¥83.1B and retirement losses on fixed assets of ¥31.9B. Approximately 6.7% of Net Income of ¥2,125.3B was attributable to one-off factors, so earnings on an Operating Income basis reflect the company’s core capability. Conversely, OCF/Net Income of 0.60x indicates high accruals; Comprehensive Income of ¥3,987.4B (¥1,862.1B more than Net Income) was driven by valuation gains on investment securities of ¥1,594.2B and deferred hedge gains of ¥272.0B, strengthening equity quality, although cash realization is limited. The gap between Operating Income and Ordinary Income was -¥99.2B or about 3.3%, small, indicating limited structural distortion in earnings.
Full-year plan for fiscal 2027 (ending March 2027) forecasts Revenue ¥1,700.0B (YoY +1.2%), Operating Income ¥3,200.0B (+7.0%), Ordinary Income ¥3,000.0B (+3.7%), and Net Income ¥2,230.0B (+4.9%). The plan assumes modest profit growth versus this fiscal year, premised on continued revenue growth in leasing and digestion of sales inventory. Revenue growth of +1.2% is conservative, but Operating Margin is assumed to further improve +1.6pt to 29.9%, relying on occupancy and rent revisions in leasing and optimization of sales mix. Ordinary Income growth of +3.7% lagging Operating Income growth (+7.0%) is presumed to reflect higher interest expense. Net Income growth of +4.9% reflects normalization of extraordinary gains, and dividend forecast is ¥26 with a payout ratio of about 17.3%, maintaining a conservative level. Progress rate is high—Operating Income of ¥2,991.6B ÷ full-year plan ¥3,200.0B = 93.5%—so achievement probability is relatively high, though inventory turnover normalization and interest rate trends are volatility factors.
For FY March 2026, dividends were Interim ¥42 (pre-share-split basis), Year-end ¥23 (post-split basis), totaling ¥65 for the year, with a payout ratio of 28.6% (based on EPS ¥228.42), a sustainable level. Total dividends amounted to ¥361.0B, and share buybacks of ¥605.2B (book value of treasury stock increased from -¥202.3B to -¥458.1B) brought total shareholder returns to approximately ¥966B, representing a Total Return Ratio of about 45% relative to Net Income of ¥2,125.3B. Free Cash Flow was -¥271.0B, so dividend FCF coverage was not sufficient, and returns were financed by a mix of OCF and borrowings. Dividend forecast for FY March 2027 is ¥26 (post-split basis), a YoY +13.0% change (from ¥32.5 on a post-split comparable basis, effectively -20.0%), but a 1:2 stock split was executed in January, so the company intends to maintain an effective dividend-increasing stance. Continued combined dividends and share buybacks including dividends to share delivery trusts of ¥179M aim to improve capital efficiency and shareholder value, but future dividend capacity will be affected by inventory turnover, management of investment securities, and borrowing cost trends.
Inventory build-up and sales velocity risk: Properties for sale rose to ¥5,446.8B (YoY +35.5%), and inventory increase of -¥1,291.5B pressured OCF. If sales velocity slows due to rising interest rates or deteriorating income conditions, prolonged cash tie-up and impairment risk could materialize, affecting both profitability and liquidity. The ratio of properties for sale to annual revenue is high at 51.5%, and extended turnover days will lower capital efficiency.
High leverage and interest rate risk: Interest-bearing debt is ¥3.02T (D/E ratio 1.91x, Debt/EBITDA 8.05x), a high level, and interest expense of ¥272.2B was recorded. Although maturities are concentrated in long-term borrowings, in a rising rate environment refinancing costs and interest expense increases could compress Ordinary Income. Interest Coverage is about 11x, providing some cushion, but this slack narrows if EBITDA declines, reducing capital structure flexibility.
Weak OCF and cash conversion risk: OCF/Net Income 0.60x and OCF/EBITDA 0.34x indicate weak cash conversion; OCF did not cover CAPEX of ¥1,456.4B, leaving Free Cash Flow of -¥271.0B. The main drivers were decreased advance receipts (-¥145.4B) and inventory build-up. If working capital normalization is delayed, reliance on borrowings to fund dividends and investments may become entrenched, impacting financial flexibility and credit ratings.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 28.3% | 10.7% (6.8%–17.9%) | +17.6pt |
| Net Margin | 20.1% | 5.8% (2.5%–11.9%) | +14.3pt |
The company’s profitability is markedly higher within the industry, driven by the high-margin core Real Estate Leasing Business (45.6%).
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.3% | 12.8% (4.2%–29.2%) | -8.5pt |
Revenue growth lags the industry median, reflecting a stable-growth business model centered on large leasing stock.
※Source: Company aggregation
High profitability of the Real Estate Leasing Business and recovery in Sales Business acted as twin engines, lifting Operating Margin to 28.3% (+1.5pt) and Net Margin to 20.1% (+1.2pt). Core leasing generated Operating Income of ¥2,101.8B (margin 45.6%), Sales recovered to margin 23.5% (+1.7pt), and STEP improved to margin 31.3% (+4.6pt). Operating Margin exceeds the industry median of 10.7% by +17.6pt, highlighting structural earnings superiority. Conversely, Revenue growth of +4.3% is below the industry median of 12.8%, reflecting a stable-growth business model.
Cash flow quality and inventory turnover are primary focuses. OCF/Net Income 0.60x and OCF/EBITDA 0.34x reveal weak cash realization, with properties for sale totaling ¥5,446.8B (+35.5%) and a decrease in advance receipts of -¥145.4B reversing working capital. Free Cash Flow was -¥271.0B, and total shareholder returns of approximately ¥966B were funded by OCF and borrowings, so normalizing inventory turnover is key to improving capital efficiency. Interest-bearing debt of ¥3.02T (D/E ratio 1.91x) indicates high leverage, but long-term borrowings and Interest Coverage of about 11x provide some resilience to rate rises. Accumulation of investment securities to ¥1.12T (+33.0%) and valuation gains (+¥1,862.1B) have thickened equity and function as a financial cushion.
This report is an analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; please consult advisors as necessary before making such decisions.