FUJI CORPORATION (8860) FY2026 Q3 Earnings Report

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Executive Summary

The Company posted double-digit revenue and profit growth, with all segments contributing to higher revenue. Revenue was ¥1,052.8B (¥883.5B in the previous year, +19.2%), Operating Income was ¥67.7B (¥58.0B in the previous year, +16.8%), Ordinary Income was ¥59.6B (¥50.8B in the previous year, +17.3%), and Net Income was ¥39.9B (¥34.1B in the previous year, +17.1%). Completion and delivery of large-scale condominiums in the Residential Development segment and expanding demand for existing condominiums in the Housing Distribution segment drove revenue growth. As revenue growth outpaced the 7.5% increase in SG&A expenses, operating-level profitability was maintained. Meanwhile, the gross profit margin declined from the previous year to 15.3%, while the increase in interest payments placed pressure on ordinary income.

Factors Affecting Performance

【Revenue】Revenue was ¥1,052.8B, representing a year-on-year increase of +19.2%. Residential Development (¥314.9B, equivalent to +25.1%) was boosted by the completion and delivery of large-scale condominiums, while Housing Distribution (¥245.2B) benefited from increased activity in existing condominium transactions. Land Utilization (¥237.0B) and Leasing and Property Management (¥251.3B) also recorded steady revenue growth.

【Profit and Loss】Operating Income increased to ¥67.7B (+16.8%), Ordinary Income to ¥59.6B (+17.3%), and Net Income to ¥39.9B (+17.1%). Although cost of sales increased to ¥892.2B and the gross profit margin declined from the previous year to 15.3%, Operating Income was maintained as the SG&A expense ratio was contained at 8.8%. Among non-operating expenses, interest payments increased to ¥11.6B (¥8.7B in the previous year), placing some pressure on ordinary income, while the increase in non-operating income, including dividend income of ¥0.5B, also made a certain contribution. Extraordinary gains and losses were limited to a ¥0.1B loss on the disposal of fixed assets and were immaterial; the difference between Ordinary Income and Net Income remained within the amount of income taxes and other taxes (¥19.6B). In conclusion, the Company achieved higher revenue and profit.

Segment Analysis

By revenue composition, Residential Development (¥314.9B) was the largest segment, accounting for approximately 29.9% of total revenue and serving as the core business. However, Leasing and Property Management recorded the highest Operating Income at ¥34.1B, with a 13.6% profit margin, the highest among the four segments. The profit margins were 5.6% for Residential Development, 9.3% for Land Utilization, and 3.6% for Existing Housing, the lowest among the segments. The asset-based Leasing and Property Management business is the core profit contributor. While the increase in the number of managed units and the expansion of occupancy at senior housing facilities contributed to profit growth, Residential Development has a low profit margin relative to its revenue scale and appears to have a structure that is susceptible to cost increases.

Key Financial Indicators

Profitability: ROE was 9.3%, and the Operating Income margin was 6.4% (slightly lower than the approximately 6.6% recorded in the previous year).
Financial soundness: The Equity Ratio was 30.5% (improving from 29.8% in the previous year).
Per-share indicators: EPS was ¥110.74 (¥93.98 in the previous year, +17.8%).
The gross profit margin was 15.3%, down from the previous year, indicating that the trade-off between rising costs and profit margins continues.

Cash Flow Analysis

Real estate for sale increased to ¥333.2B (¥282.6B in the previous year), while contract assets expanded to ¥7.1B (¥3.0B in the previous year), suggesting that inventory accumulation and the recognition of assets prior to delivery may have absorbed working capital. Contract liabilities declined slightly to ¥24.4B (¥25.4B in the previous year), indicating that the incorporation of advance payments remained at approximately the previous year’s level. This change in the asset composition means that the timing of profit monetization is likely to be deferred, making it useful to monitor the progress of future deliveries.

Earnings Quality

The difference between Ordinary Income (¥59.6B) and Net Income (¥39.9B) was primarily attributable to income taxes and other taxes (¥19.6B). Extraordinary gains and losses were limited to a ¥0.1B loss and were immaterial, with no significant divergence caused by temporary factors. Non-operating expenses (¥11.8B) amounted to approximately 1.1% of revenue, but the increase in interest payments (from ¥8.7B in the previous year to ¥11.6B) indicates a higher financial burden. Comprehensive income was ¥42.1B, exceeding Net Income (¥39.9B), with an increase of ¥2.2B in valuation differences on securities contributing to the result. Factors impairing earnings quality are limited.

Earnings Forecast and Guidance

The full-year forecast is a conservative plan premised on slower growth in the second half, with forecast revenue of ¥1,260.0B (YoY+1.7%), Operating Income of ¥72.0B (YoY-8.8%), and Ordinary Income of ¥57.0B (YoY-18.4%). The cumulative Q3 progress rates for revenue and Operating Income were 83.6% and 94.0%, respectively, substantially exceeding the standard progress rate of 75%. Ordinary Income and Net Income have already exceeded their respective full-year targets. The order backlog is reported at ¥629B; dividing this by the annual revenue forecast of ¥1,260B gives an order backlog-to-revenue ratio of approximately 49.9%, providing support for a certain portion of revenue from the second half onward.

Shareholder Returns

The interim dividend was ¥14, and the full-year forecast is ¥32 (including a forecast year-end dividend of ¥18). The Payout Ratio against forecast EPS of ¥103.37 is calculated at approximately 31.0%. Treasury shares increased year on year (1,055 thousand treasury shares, with purchases recorded), indicating an intention to balance shareholder returns and improved capital efficiency through capital policy in addition to dividends. The Payout Ratio is at a conservative level, and sustainability appears high given the progress of earnings.

Catalysts

【Short Term】Progress toward achieving the full-year plan through the delivery of contracted projects in Q4, including custom-designed homes, existing housing, and whole-building rental properties, as well as the accumulation of Leasing and Property Management revenue.

【Long Term】Strengthening the recurring revenue base through expansion of the number of managed rental units and senior housing facilities, along with potential for gross profit margin improvement in an environment of rising costs.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (real_estate)

Profitability and Returns

Compared with the industry median, both the Operating Income margin and Net Profit margin are below the median.

Growth and Capital Efficiency

The revenue growth rate is slightly above the industry median but is at a mid-range level within the industry range.

※Source: Compiled by the Company

Risk Factors

1. Declining gross profit margin due to rising costs: Cost of sales increased to ¥892.2B, and the gross profit margin was 15.3%. If construction costs and land acquisition prices continue to rise, profit margin compression may persist even during a period of revenue growth.

2. Increased interest burden: Interest payments increased to ¥11.6B (¥8.7B in the previous year), and the level of interest-bearing debt, including ¥713.8B in long-term borrowings, is high. Changes in the interest-rate environment could affect ordinary-level profitability going forward.

3. Inventory and working capital accumulation: Real estate for sale increased to ¥333.2B (¥282.6B in the previous year), and contract assets also expanded. The management of inventory turnover and delivery timing will affect future cash flows under this business structure.

Key Earnings Highlights

1. While higher revenue and profit continued, the gross profit margin declined from the previous year, indicating from the earnings data a continuing trade-off between rising costs and profit margins.

2. The Leasing and Property Management segment recorded the highest Operating Income and profit margin, with the recurring-revenue business playing a central role in the earnings structure.

3. Ordinary Income and Net Income had already exceeded their full-year plans as of Q3. Together with the ¥629B order backlog, this indicates visibility into revenue and profit from the second half onward.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥1,443–¥1,527 at ±1% for the cost of equity, and ¥1,480–¥1,487 at ±0.1 for ω.

Notes:

• As progress of Net Income against the full-year forecast is 108%, exceeding the standard level of 75%, forecast EPS has been adjusted upward within a maximum range of +10% (because companies with progress ahead of schedule tend to exceed their forecasts. The adjustment may be excessive for businesses with strong seasonality).
• Net Income is substantially compressed relative to Operating Income due to the tax burden, acquisition-related expenses, and non-controlling interests, among other factors (Net Income ÷ Operating Income 51%). This value reflects that compression as reported; if the factors are temporary, the underlying earnings power may be higher.
• Since forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Since net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model used: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market price or a recommendation of any specific investment action, and does not predict or guarantee future stock prices.)

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This report is an earnings analysis document automatically generated by AI through integrated analysis of XBRL earnings release data and PDF earnings presentation materials. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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