| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥878.1B | ¥762.4B | +15.2% |
| Operating Income | ¥66.8B | ¥34.5B | +93.7% |
| Ordinary Income | ¥60.0B | ¥30.7B | +95.6% |
| Net Income | ¥12.8B | ¥12.0B | +6.6% |
| ROE | 1.8% | 1.7% | - |
For the fiscal year ended March 2026, revenue was ¥878.1B (YoY +¥115.6B, +15.2%), Operating Income was ¥66.8B (YoY +¥32.3B, +93.7%), Ordinary Income was ¥60.0B (YoY +¥29.3B, +95.6%), and Net Income attributable to owners of parent was ¥12.8B (YoY +¥0.8B, +6.6%), representing growth in both top and bottom lines. Revenue recorded high growth for the first time in three periods, Operating Income roughly doubled year-on-year and the operating margin improved by 3.1pt to 7.6% (prior year 4.5%). Gross margin rose 2.3pt to 16.0% (prior year 13.7%), and SG&A ratio declined 0.7pt to 8.4% (prior year 9.1%), resulting in positive operating leverage. Ordinary Income also doubled year-on-year, but Net Income growth was limited to +6.6% due to increased corporate tax expense (¥19.7B, prior year ¥10.2B). Progress against full-year guidance was ahead: Revenue 99.8%, Operating Income 111.3%, Ordinary Income 120.1%, exceeding the conservative second-half plan.
[Revenue] Revenue of ¥878.1B (YoY +15.2%) achieved year-on-year increases across all three segments: Real Estate Business, Construction Business, and Property Management Business. By segment: Real Estate Business ¥315.7B (+10.0%), Construction Business ¥393.8B (+3.8%), Property Management Business ¥170.8B (+56.7%), with high growth in Management (+56.7%) driving overall company growth. Management revenue expanded significantly due to an increase in entrusted properties and accumulation of recurring stock revenue. Construction benefited from higher completed contract value and progress in high-margin projects. Real Estate revenue was boosted by increased condominium deliveries and improved unit prices. Cost of sales totaled ¥737.9B (prior year ¥658.2B), limiting the increase to +12.1% and improving gross margin to 16.0% (prior year 13.7%). SG&A was contained at ¥73.5B (prior year ¥69.6B), up +5.5%, and SG&A ratio declined to 8.4% (prior year 9.1%), realizing economies of scale.
[Profitability] Operating Income of ¥66.8B (YoY +93.7%) increased substantially due to gross margin improvement and SG&A control. Segment Operating Income contributions: Construction Business ¥38.4B (+87.6%, margin 9.8%) was the largest contributor; Property Management Business ¥18.2B (+91.3%, margin 10.7%) followed; Real Estate Business ¥15.2B (+76.1%, margin 4.8%) also improved significantly. Non-operating income was ¥2.9B (including interest income ¥1.0B and dividend income ¥0.3B) and non-operating expenses were ¥9.7B (including interest expense ¥8.0B and commission expense ¥0.7B). Net financial result was an expense of ¥-6.8B, and Ordinary Income was ¥60.0B (YoY +95.6%). Extraordinary gains included ¥2.0B from sale of fixed assets, extraordinary losses included ¥0.0B from disposal of fixed assets, netting to +¥1.7B — a limited impact. Profit before tax was ¥61.7B (YoY +101.6%) and corporate taxes were ¥19.7B (effective tax rate 31.9%). After deducting Net Income attributable to non-controlling interests of ¥0.1B, Net Income attributable to owners of parent was ¥12.8B (YoY +6.6%). The restrained Net Income growth relative to large increases at the Operating and Ordinary Income stages is attributable to higher tax burden. In conclusion, the company achieved revenue and profit growth with notable structural improvement in operating margin.
The Real Estate Business reported Revenue ¥315.7B (YoY +10.0%), Operating Income ¥15.2B (YoY +76.1%), operating margin 4.8% (prior year 3.0%), delivering substantial profit growth driven by increased condominium deliveries and improved selling prices. The Construction Business reported Revenue ¥393.8B (YoY +3.8%), Operating Income ¥38.4B (YoY +87.6%), operating margin 9.8% (prior year 5.4%), with margin improvement of 4.4pt driven by higher completed contract value and progress of high-margin projects; as the core business it contributed more than half of company Operating Income. The Property Management Business posted Revenue ¥170.8B (YoY +56.7%), Operating Income ¥18.2B (YoY +91.3%), operating margin 10.7% (prior year 9.5%), achieving the highest growth rate and margin due to large expansion in entrusted management properties and accumulation of stock revenue. Segment composition by revenue: Construction 44.8%, Real Estate 35.9%, Management 19.4%. By Operating Income: Construction 53.5%, Management 25.3%, Real Estate 21.2%. The combination of Construction’s earnings base and Management’s stock characteristics contributes to company revenue stability.
[Profitability] Operating margin 7.6% (prior year 4.5%) improved by 3.1pt, gross margin 16.0% (prior year 13.7%) rose 2.3pt, and SG&A ratio 8.4% (prior year 9.1%) declined by 0.7pt. ROE was 1.8% (prior year 3.0%) down, materially affected by an increase in shareholders’ equity (¥727.6B, prior year ¥693.8B) relative to Net Income attributable to owners of parent ¥12.8B. ROA (on an Ordinary Income basis) improved to 4.3% (prior year 2.4%), and total asset turnover was 0.60x (prior year 0.57x), remaining roughly stable. [Cash Quality] Operating Cash Flow (OCF) was ¥-64.2B (prior year ¥-55.2B) worsening, and OCF/Net Income was -5.01x, driven by inventory increase (¥-136.1B), collections of trade receivables (+¥50.5B), and decrease in trade payables (¥-40.3B) which absorbed cash. Free Cash Flow was ¥-81.3B (OCF -¥64.2B, Investing CF -¥17.1B), with cash outflows continuing due to inventory buildup and investment activities. [Investment Efficiency] Total assets ¥1,474.0B (YoY +10.6%) comprised current assets ¥1,287.3B (YoY +10.6%) and tangible fixed assets ¥115.4B (YoY +5.1%), with inventory for sale properties ¥178.1B (prior year ¥150.6B) accumulated as stock. EBITDA was ¥71.8B (Operating Income ¥66.8B + Depreciation ¥5.0B), and OCF/EBITDA was -0.89x, indicating weak cash conversion. [Financial Soundness] Equity Ratio was 49.4% (prior year 52.1%) remaining at a healthy level. Current Ratio was 347.3% (prior year 340.0%), indicating very strong short-term liquidity. Interest-bearing debt totaled ¥417.4B (Short-term borrowings ¥61.1B + Long-term borrowings ¥354.1B + Corporate bonds ¥2.2B; prior year ¥437.9B), with Debt/EBITDA 5.81x and Interest Coverage (EBIT / Interest Expense) 8.36x, indicating sufficient interest-bearing capacity. Cash and deposits ¥580.8B equate to 9.2x short-term interest-bearing debt (¥61.1B + corporate bonds ¥2.2B), indicating very high payment capacity.
OCF was ¥-64.2B (prior year ¥-55.2B), significantly below Net Income ¥12.8B, leaving questions on cash generation. OCF subtotal (before working capital changes) was ¥-45.8B, mainly driven by inventory increase ¥-136.1B (increase in inventory for sale and work in progress), decrease in trade receivables +¥50.5B, and decrease in trade payables ¥-40.3B. Corporate tax payments ¥-12.9B and interest payments ¥-7.9B also contributed to cash outflows. Investing CF was ¥-17.1B, with acquisitions of tangible and intangible fixed assets ¥-17.5B (land, buildings, lease assets, etc.) partially offset by proceeds from sale of fixed assets ¥11.8B. Free Cash Flow was ¥-81.3B, financed by Financing CF +¥117.1B (long-term borrowings executed ¥318.4B, long-term borrowings repayments ¥-194.9B, net short-term borrowings +¥0.93B, dividend payments ¥-10.8B). Cash and cash equivalents at period-end were ¥374.5B (period-beginning ¥340.0B), up ¥35.8B. OCF/EBITDA was -0.89x; therefore, timing of inventory deliveries and collections will be key to cash flow improvement in subsequent periods.
Against Ordinary Income of ¥60.0B, net extraordinary items were limited at +¥1.7B (Extraordinary gains ¥2.0B - Extraordinary losses ¥0.3B), indicating most profit is driven by core operations. Non-operating income ¥2.9B represented 0.3% of revenue, minor and including interest income ¥1.0B and dividend income ¥0.3B. Non-operating expenses ¥9.7B (including interest expense ¥8.0B) resulted in a net financial expense of ¥-6.8B; thus, profit increase can be attributed to operational improvements at the operating stage. The gap between Ordinary Income ¥60.0B and Net Income ¥12.8B is due to corporate taxes ¥19.7B (effective tax rate 31.9%) and Net Income attributable to non-controlling interests ¥0.1B, within an acceptable range. OCF ¥-64.2B being lower than Net Income ¥12.8B suggests deterioration in accrual quality, primarily from inventory buildup ¥-136.1B; attention to cash-based earnings quality is necessary. Comprehensive income was ¥45.7B, of which attributable to owners of parent was ¥45.6B (including unrealized gains on securities ¥3.8B and actuarial gains/losses on retirement benefits ¥-0.1B); most of the other comprehensive income +¥32.8B was due to increases in unrealized gains on securities and does not materially alter the composition of operating profits.
Full-year guidance was Revenue ¥880.0B (YoY +0.2%), Operating Income ¥60.0B (YoY -10.2%), Ordinary Income ¥50.0B (YoY -16.7%), and Net Income attributable to owners of parent ¥35.0B (YoY -17.0%). Progress vs guidance: Revenue 99.8%, Operating Income 111.3%, Ordinary Income 120.1%, Net Income 36.5% (actual ¥12.8B / forecast ¥35.0B). While Operating and Ordinary Income exceeded plan, Net Income fell substantially short due to higher tax burden. The company’s guidance may have assumed conservative second-half estimates; it is necessary to examine whether first-half momentum is sustainable and whether there are one-off factors in the second half. For next fiscal year, inventory liquidation/delivery progress and backlog accumulation will be key to sustaining growth.
Year-end dividend was ¥35, with a payout ratio of 38.9% (on EPS 89.84円). There was no prior-year dividend, so the dividend resumption reflects improved profits. Total dividends were ¥10.8B; with Free Cash Flow ¥-81.3B, FCF coverage is negative and dividends were not covered by cash generation in the period alone. However, cash and deposits of ¥580.8B are ample and short-term payment capacity is high; if inventory cycles normalize and OCF recovers, dividend sustainability can be restored. No share buybacks were confirmed; shareholder returns consist only of dividends. Total Return Ratio is equivalent to payout ratio at 38.9%, a level commensurate with profit scale, but future CF generation and leverage levels will determine sustainability of the return policy.
Inventory build-up and delayed cash collection risk: A significant inventory increase of ¥-136.1B worsened OCF to ¥-64.2B and Free Cash Flow to ¥-81.3B. Inventory for sale ¥178.1B (prior year ¥150.6B) and completed contract receivables ¥120.3B (prior year ¥151.8B) together bring inventory and receivable balances to ¥298.4B. Continued delays in delivery timing or slower sales could deteriorate liquidity and increase reliance on external financing. Monitoring inventory turnover and collection periods is essential.
Rising leverage and interest rate risk: Long-term borrowings increased to ¥354.1B (prior year ¥268.5B), up +31.9%, and Debt/EBITDA is elevated at 5.81x. Interest Coverage of 8.36x is currently within a safe zone, but in a rising rate environment interest expense (¥8.0B, prior year ¥5.4B) could increase further, compounding OCF deterioration and tightening financial constraints. Estimated incremental interest per 1% rate rise is approximately ¥4.2B; continuous monitoring of leverage and interest rate trends is required.
Upward pressure on construction costs and margin compression risk: Although gross margin improved to 16.0% (prior year 13.7%), it remains below the industry median of 17.9%, indicating a relatively low level. Continued rises in construction material prices and labor costs could compress gross margin again; if the mix of high-margin projects diminishes, maintaining operating margin of 7.6% may become difficult. SG&A increases (salaries and allowances ¥24.7B, prior year ¥25.4B) have been contained, but future payroll and marketing cost pressures are a risk to the cost structure.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.6% | 10.7% (6.8%–17.9%) | -3.0pt |
| Net Profit Margin | 1.5% | 5.8% (2.5%–11.9%) | -4.4pt |
Both operating margin and net profit margin are below industry medians, indicating profitability is below the industry average.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 15.2% | 12.8% (4.2%–29.2%) | +2.4pt |
Revenue growth exceeds the industry median, placing the company above average in growth.
※ Source: Company aggregation
Operating margin improved to 7.6% (prior year 4.5%), a 3.1pt improvement, driven by gross margin increase to 16.0% (prior year 13.7%) and SG&A ratio decline to 8.4% (prior year 9.1%), resulting in positive operating leverage. All three segments (Real Estate, Construction, Management) improved operating margins, notably Construction margin at 9.8% (prior year 5.4%) and Management margin at 10.7% (prior year 9.5%), which materially lifted company profitability. This improvement appears structural from project mix and economies of scale and is expected to have some sustainability next year, though a 3.0pt gap remains versus the industry median 10.7%, indicating room for further margin enhancement.
OCF was ¥-64.2B versus Net Income ¥12.8B, with inventory increase ¥-136.1B absorbing cash. Inventory for sale ¥178.1B (prior year ¥150.6B) and completed contract receivables ¥120.3B (prior year ¥151.8B) bring total inventory and receivables to ¥298.4B. Delays in delivery timing or prolonged collections were primary causes of cash flow deterioration. Free Cash Flow ¥-81.3B was funded by Financing CF +¥117.1B (long-term borrowings executed ¥318.4B, repayments ¥-194.9B), increasing external funding reliance and pushing Debt/EBITDA to 5.81x. Normalization of inventory turnover and delivery progress will be key for cash generation and financial health next fiscal year.
Progress against full-year guidance was ahead in Operating Income (111.3%) and Ordinary Income (120.1%), exceeding the conservative second-half plan. However, Net Income lagged far behind guidance (actual ¥12.8B vs forecast ¥35.0B, progress 36.5%) due to higher tax burden (effective tax rate 31.9%), indicating that strong performance at the Ordinary Income level did not fully translate to Net Income. Dividend was resumed at ¥35 with a payout ratio of 38.9%, appropriate relative to profit scale, but FCF coverage was negative and sustainability depends on next year’s cash generation. Disclosure of next year’s forecasts and inventory disposal plans will be important for investment decisions.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference data compiled by our firm based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as necessary.
--- End of Report ---