Sumitomo Realty & Development Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥532.24B
• Operating Income: ¥167.48B
• Net Income: ¥109.46B
• EPS: ¥253.74

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Sumitomo Realty & Development (8830) reported FY2026 Q2 consolidated results under JGAAP showing resilient profitability despite a slight top-line contraction. Revenue declined 1.4% YoY to ¥532.2bn, yet operating income rose 7.4% YoY to ¥167.5bn, indicating favorable mix and/or operating cost discipline. Net income increased 8.1% YoY to ¥118.3bn, outpacing revenue and underscoring margin expansion. Gross profit was ¥192.9bn, translating to a gross margin of 36.3%, while EBITDA reached ¥205.1bn with a robust 38.5% margin. The DuPont breakdown yields a net margin of 22.23%, asset turnover of 0.078, and financial leverage of 2.96, combining to an ROE of 5.12% for the period. Interest expense was ¥9.6bn, and interest coverage is strong at 17.5x (operating income/interest), reflecting healthy debt servicing capacity. Ordinary income stood at ¥163.9bn and income tax at ¥47.7bn; using ordinary income as a proxy for pre-tax income implies an approximate tax rate near 29%, consistent with Japan’s statutory range. On the balance sheet, total assets were ¥6.834tn and equity ¥2.311tn, implying an estimated equity ratio around 33.8% (equity/assets), notwithstanding the undisclosed equity ratio figure. Liquidity metrics appear adequate with a current ratio of 141.5% and positive working capital of ¥327.6bn. Operating cash flow was ¥181.8bn, 1.54x net income, signaling solid earnings quality and cash conversion. Investing cash flow and cash balance were not disclosed, limiting free cash flow assessment from reported figures. Leverage indicators suggest a capital-intensive, asset-heavy model consistent with large developers; the provided debt-to-equity ratio is 1.97x. Dividend data (DPS, payout) were not disclosed in this dataset; EPS was ¥253.74, but we cannot tie this to a payout figure. Overall, the company delivered higher profitability on a slightly lower revenue base, maintained strong interest coverage, and generated healthy operating cash, while leverage remains a key structural consideration. The outlook will hinge on leasing performance, development milestone timing, funding costs amid rate normalization, and construction cost pressures. Data gaps (notably investing cash flow, cash balance, and dividend details) constrain full-cycle cash and capital allocation analysis, and figures should be interpreted as half-year performance with typical seasonality for the sector.

Profitability Analysis

ROE_decomposition: ROE 5.12% = Net margin 22.23% × Asset turnover 0.078 × Financial leverage 2.96. This indicates profitability is driven primarily by high margins and leverage, with low asset turnover typical for an asset-heavy real estate portfolio. margin_quality: Gross margin of 36.3% and EBITDA margin of 38.5% are strong for a developer/landlord mix. Operating income grew 7.4% YoY against a 1.4% revenue decline, evidencing mix improvement and/or effective cost control. Net income rose 8.1% YoY, benefiting from operating leverage and contained interest burden (¥9.6bn). Implied tax rate ~29% (tax/ordinary income), consistent with normal taxation. operating_leverage: Positive operating leverage is evident with operating income up faster than revenue. Depreciation & amortization (¥37.6bn) supports high EBITDA conversion from revenue. Interest coverage at 17.5x suggests that incremental operating profit largely accrues to the bottom line under the current funding cost structure.

Growth Assessment

revenue_sustainability: Revenue decreased 1.4% YoY to ¥532.2bn, but the relatively modest decline suggests stable recurring streams offsetting softer segments. The company’s asset-heavy profile and recurring earnings base likely underpin revenue resilience, though detailed segment data are not provided. profit_quality: Operating income growth of 7.4% and net income growth of 8.1% YoY, alongside an OCF/NI ratio of 1.54, indicate improving profit quality and solid cash conversion. EBITDA increased to ¥205.1bn, with margins expanding despite lower sales, pointing to favorable mix and disciplined expenses. outlook: Near-term growth will depend on leasing occupancy/rents, condo/housing deliveries, and timing of development completions. Key external factors include interest rate normalization in Japan, construction cost inflation, and macro demand trends for office/residential. With strong coverage and liquidity, the company appears positioned to navigate these, but growth may be uneven due to project timing.

Financial Health

liquidity: Current assets ¥1.118tn vs current liabilities ¥0.790tn yields a current ratio of 141.5% and positive working capital of ¥327.6bn, indicating adequate short-term liquidity. Quick ratio mirrors the current ratio given undisclosed inventories. solvency: Interest coverage is strong at 17.5x, suggesting a comfortable buffer against funding cost increases. Using disclosed totals, equity is ¥2.311tn versus assets of ¥6.834tn, implying an equity ratio of roughly 33.8% and financial leverage (assets/equity) of 2.96x. capital_structure: Debt-to-equity is reported at 1.97x (interest-bearing debt not itemized). The structure is consistent with an asset-heavy real estate model; solvency appears sound given coverage, but the absolute debt load underscores sensitivity to refinancing conditions and interest rate trends.

Cash Flow Quality

earnings_quality: Operating cash flow of ¥181.8bn is 1.54x net income of ¥118.3bn, indicating strong cash conversion supported by non-cash expenses (D&A of ¥37.6bn) and likely favorable working capital effects. FCF_analysis: Investing cash flow was not disclosed, and free cash flow is thus not derivable from the dataset. Consequently, we cannot assess capex intensity or net development spend for the period. working_capital: Current assets of ¥1.118tn against current liabilities of ¥0.790tn produce positive working capital of ¥327.6bn. Without itemized receivables/payables/inventories, we cannot parse the underlying drivers; however, the OCF/NI ratio suggests working capital was not a material drag in the half.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed in this dataset (values shown as zero indicate non-disclosure). With EPS at ¥253.74, any assessment of payout must be deferred pending actual DPS. FCF_coverage: Free cash flow is not available due to missing investing cash flow. Consequently, dividend coverage by FCF cannot be evaluated from the provided data. policy_outlook: No dividend policy details are provided in the period data. Given strong OCF and manageable interest burden, capacity for shareholder returns exists in principle, but actual sustainability depends on investment needs and funding strategy, which require investing CF and guidance disclosures.

Risk Assessment

Business Risks:

• Leasing demand volatility for office/commercial assets affecting occupancy and rents
• Timing risk in condominium/development handovers leading to earnings lumpiness
• Construction cost inflation pressuring project margins
• Regulatory and tax changes impacting real estate transactions and valuations
• Natural disaster risk (earthquakes/typhoons) affecting assets and continuity
• Competitive pressure in major metropolitan development projects

Financial Risks:

• Interest rate normalization increasing funding costs and affecting valuations
• Refinancing and liquidity risk given sizable interest-bearing debt (D/E 1.97x)
• Potential covenant headroom tightening if earnings weaken
• Cash flow variability from development cycles without visibility on capex/investment CF
• Asset devaluation risk in a weaker property market impacting leverage metrics

Key Concerns:

• High capital intensity and leverage (financial leverage 2.96x) despite strong coverage
• Limited disclosure on investing cash flows and cash balance, constraining FCF and liquidity analysis
• Dependence on project timing to sustain operating income growth amid slightly declining revenue

Investment Implications

Key Takeaways:

• Profitability improved despite a modest revenue decline, with operating income up 7.4% YoY and strong margins.
• Earnings quality is solid: OCF/Net Income at 1.54 and EBITDA margin at 38.5%.
• Interest coverage of 17.5x indicates robust debt-servicing capacity even if rates rise.
• Balance sheet leverage is significant but supported by an estimated ~33.8% equity ratio.
• Data gaps (investing CF, cash, DPS) limit conclusions on FCF and capital return capacity.
• Near-term performance will hinge on leasing metrics, development deliveries, and funding costs.

Metrics to Watch:

• Leasing occupancy rates and rental reversion in core assets
• Condominium pre-sales, backlog, and scheduled handover volume
• Investing cash flow and capex/development spend versus plan
• Interest-bearing debt level, average funding cost, and maturity ladder
• Operating cash flow to net income ratio and working capital movements
• EBITDA-to-interest coverage and sensitivity to BOJ policy shifts
• Asset disposals/acquisitions and their impact on leverage and ROE

Relative Positioning: Versus major domestic developers, margins in the period are strong and interest coverage is robust; leverage is in line to slightly elevated for the peer set, with ROE in the mid-single digits reflecting low asset turnover typical of large leasing portfolios.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis