AMG HOLDINGS (8891) FY2026 Q3 Earnings Report

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Executive Summary

The Company achieved profit growth exceeding revenue growth, primarily due to improved profitability in the Real Estate Development Business. Revenue was ¥23.71B (¥21.81B in the previous year, YoY +8.7%), Operating Income was ¥1.63B (¥0.94B in the previous year, YoY +73.9%), Ordinary Income was ¥1.55B (¥0.86B in the previous year, YoY +80.5%), and Net Income attributable to owners of the parent was ¥0.97B (¥0.58B in the previous year, YoY +67.2%). Profit growth substantially exceeding revenue growth was attributable to an 86.3% increase in segment profit in the Real Estate Development Business.

Factors Affecting Results

【Revenue】Revenue was ¥23.71B, up +8.7% year on year. By segment, the Real Estate Development Business was the largest and fastest-growing segment, with revenue of ¥16.52B (69.7% composition ratio, +19.8% year on year), leading consolidated revenue growth. The Construction Business posted revenue of ¥6.53B (27.5% composition ratio, -12.0% year on year), representing a decline in revenue, while the Real Estate Management Business posted revenue of ¥0.66B (2.8% composition ratio, +10.6% year on year). The contribution to growth from businesses other than real estate development was limited.

【Profit and Loss】Gross profit was ¥3.89B (+27.8% year on year), and the gross margin was 16.4%, improving by 240bp from 14.0% in the previous year. SG&A expenses were ¥2.26B, up +7.2% year on year, below revenue growth of +8.7%, resulting in operating leverage. Consequently, the Operating Income margin increased by 260bp to 6.9% from 4.3% in the previous year. Non-operating expenses included ¥0.12B in interest expense, which was broadly in line with the previous year, while the Ordinary Income margin improved substantially, reflecting the principal drivers of revenue and profit growth. Even excluding ¥0.06B in extraordinary losses (¥0.01B in impairment losses and ¥0.04B in loss on disposal and sale of non-current assets) as temporary factors, the profit growth trend remains unchanged. The largest factor was the 9.3% increase in the segment profit margin of the Real Estate Development Business, bringing the period to a close with both revenue and profit growth.

Segment Analysis

The Real Estate Development Business posted revenue of ¥16.52B (+19.8% year on year) and segment profit of ¥1.53B (+86.3%), with a substantial increase in profitability, serving as the primary driver of consolidated earnings. The Construction Business recorded a decline in revenue to ¥6.53B (-12.0% year on year), but segment profit of ¥0.41B (+0.7% year on year) was broadly maintained, and its profit margin remained stable at 6.3%, equivalent to 6.3%. The Real Estate Management Business posted revenue of ¥0.66B (+10.6% year on year) and segment profit of ¥0.15B (-4.7% year on year), representing a slight decline in profit; however, its profit margin of 23.2% was the highest among the three businesses. The project mix and delivery timing of the Real Estate Development Business, which accounts for 69.7% of consolidated revenue, are the principal factors driving fluctuations in performance.

Key Financial Indicators

【Profitability】The Operating Income margin of 6.9% (4.3% in the previous year) and gross margin of 16.4% (14.0% in the previous year) both improved, with operating leverage absorbing the increase in SG&A expenses. The Net Income margin was 4.1%. 【Cash Flow Quality】Accounts receivable were ¥3.62B, up +90.6% year on year, substantially exceeding revenue growth of +8.7%; the impact of deliveries concentrated around the period-end and trends in collection periods on working capital should be monitored. Accounts payable also increased by +54.4% to ¥4.26B, suggesting an expansion in procurement and outsourced transactions. 【Capital Efficiency】Annualized ROE was 11.0%, decomposed into a Net Income margin of 4.1%, total asset turnover of approximately 1.0x, and financial leverage of 2.68x, indicating a structure in which leverage enhances returns on equity. 【Financial Soundness】The Equity Ratio of 37.3% and current ratio of 184.7% are sound; however, interest-bearing debt was ¥10.69B, with a Debt/Capital ratio of 47.6% and a short-term debt ratio of 62.7%, indicating a high dependence on short-term funding. Cash and deposits of ¥3.27B were only 0.49x short-term debt, and the speed at which inventories (total real estate for sale and real estate under development of ¥20.99B, equivalent to 66.5% of total assets) are converted into cash will determine future liquidity.

Cash Flow Analysis

Although the individual disclosures in the cash flow statement are limited, an analysis of funding trends based on changes in the balance sheet indicates that accounts receivable increased by ¥1.72B and accounts payable increased by ¥1.50B, suggesting that the expansion of working capital is increasing funding requirements. Interest-bearing debt increased by ¥1.38B from the previous year to ¥10.69B, and the combined total of short-term borrowings of ¥6.70B and long-term borrowings due within one year of ¥2.25B substantially exceeded cash and deposits of ¥3.27B. Real estate under development decreased by ¥1.05B from the previous year to ¥12.86B, while real estate for sale increased by ¥1.17B to ¥8.13B. This indicates that part of the inventory is moving toward sale and delivery, while development investment is continuing. Overall, the funding structure suggests that investment associated with business expansion and increased working capital are being financed by an increase in interest-bearing debt.

Earnings Quality

The current period’s profit growth was primarily driven by the recurring business factor of improved profitability in the Real Estate Development Business, while extraordinary losses of ¥0.06B (¥0.01B in impairment losses and ¥0.04B in loss on disposal and sale of non-current assets) remained a relatively small temporary factor. Non-operating income was small at ¥0.05B, indicating low dependence on non-core income such as dividend income. Meanwhile, the increase in accounts receivable (+90.6%), substantially exceeding revenue growth (+8.7%), warrants attention from an accrual perspective, as the timing of revenue recognition and concentration of deliveries could affect earnings quality. Comprehensive income was ¥0.99B, broadly in line with Net Income attributable to owners of the parent of ¥0.97B. The impact of valuation differences on other securities of ¥0.02B was small, and the divergence between Net Income and comprehensive income was limited.

Earnings Forecasts and Guidance

The full-year Company forecasts are revenue of ¥32.00B, Operating Income of ¥1.65B, Ordinary Income of ¥1.50B, and Net Income of ¥1.00B. The Q1–Q3 cumulative progress rate for revenue was 74.1%, close to the standard 75%, while Operating Income, Ordinary Income, and Net Income had reached 99.0%, 103.4%, and 97.1%, respectively, substantially exceeding the normally assumed progress rate. This is largely attributable to the impact of project profitability and delivery timing in the Real Estate Development Business. It should be noted that the plan does not assume substantial additional profit accumulation in Q4. Full-year results will depend on the profitability of projects delivered in Q4, as well as trends in selling expenses and finance costs.

Shareholder Returns

The Q2 dividend was ¥35.00 per share, and the full-year Company forecast for the annual dividend is ¥70.00. Based on Q1–Q3 cumulative Net Income of ¥0.97B, the Payout Ratio on a disclosed basis was 10.5%. Based on forecast EPS of ¥353.04 and an annual dividend of ¥70.00, the forecast Payout Ratio was 19.8%; both are below the general sustainability benchmark of approximately 60%. There were no additional disclosures regarding share repurchases, and the assessment is based solely on the dividend Payout Ratio. The dividend burden relative to earnings is currently low, and capital allocation appears to be focused on development investment and the conversion of inventory into cash.

Risk Factors

1. Real Estate Inventory and Project Dependence Risk: The combined total of real estate for sale of ¥8.13B and real estate under development of ¥12.86B, or ¥20.99B, accounts for 66.5% of total assets. The Real Estate Development Business accounts for 69.7% of revenue and 73.0% of segment profit, creating a structure in which fluctuations in property delivery timing and selling prices directly affect consolidated performance.

2. Short-Term Funding Dependence and Liquidity Risk: The short-term debt ratio is high at 62.7%, and the combined total of short-term borrowings of ¥6.70B and long-term borrowings due within one year of ¥2.25B substantially exceeds cash and deposits of ¥3.27B. The cash/short-term debt ratio is 0.49x, making the speed at which inventory is converted into cash a key variable in cash management.

3. Working Capital Expansion Risk: Accounts receivable increased +90.6% year on year (+¥1.72B), while accounts payable increased +54.4% (+¥1.50B); both substantially exceeded revenue growth of +8.7%. Changes in collection and payment periods could amplify fluctuations in cash management.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

The Company’s Operating Income margin and Net Income margin are both slightly below the industry median.

Growth and Capital Efficiency

The Revenue Growth Rate is below the industry median and is close to the lower bound of the IQR.

※Source: Compiled by the Company

Key Points from the Earnings

1. Profit growth substantially exceeding revenue growth—with revenue up +8.7%, Operating Income up +73.9%, and the Operating Income margin improving by 260bp—was primarily attributable to improved project profitability in the Real Estate Development Business. Whether this improvement is a temporary factor resulting from the project mix or a structural improvement in profitability will require monitoring from the next quarter onward.

2. Progress against the full-year forecast was 99.0% for Operating Income and 103.4% for Ordinary Income, substantially exceeding the 74.1% progress rate for revenue. The plan does not assume additional profit accumulation in Q4, and the profitability of delivered projects and the occurrence of extraordinary gains or losses will determine the full-year outcome.

3. The sharp increase in accounts receivable (+90.6%), the short-term debt ratio of 62.7%, and the cash/short-term debt ratio of 0.49x are useful facts to monitor from the perspectives of working capital and cash management even during a period of profit growth.

Theoretical Share Price (Reference Value)

Sensitivity: ¥3,914–¥4,143 at ±1% for the cost of equity, and ¥4,019–¥4,030 at ±0.1 for ω.

Notes:

• As progress in Net Income against the full-year forecast (97%) exceeds the standard level (75%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with progress ahead of forecast tend to exceed their forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a timing gap relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest Rate Reference Month: 2026-07 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. 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 with a professional as necessary.

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