MIRARTH HOLDINGS,Inc. FY2027 Q1 Earnings Report

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Executive Summary

Q1 FY2027 delivered substantial increases in revenue and profit, with increased real estate deliveries and high profitability in the Energy Business driving performance. Revenue was ¥410.6B (¥263.3B in the same period of the previous year, +55.9% YoY), while Operating Income was ¥36.8B (¥-0.4B in the previous year), achieving a return to profitability. Ordinary Income was ¥30.3B (+471.6% YoY), and Net Income was ¥20.8B (+468.0% YoY), both representing significant improvements from losses recorded in the previous year. The main drivers of profit growth were volume expansion and gross margin improvement in the Real Estate segment, together with the continued high margins of the Energy Business.

Factors Affecting Performance

【Revenue】Revenue of ¥410.6B represented a +55.9% YoY increase. By segment, the Real Estate Business accounted for the largest share at ¥356.5B (86.8% of total, +65.2% YoY), followed by the Energy Business at ¥35.9B (+22.4%) and Asset Management at ¥1.8B (+64.2%). The revenue mix remains heavily weighted toward real estate, creating a structure in which performance is susceptible to the timing of project deliveries.

【Profit and Loss】Operating Income of ¥36.8B (¥-0.4B in the previous year) marked a return to profitability, and the operating margin improved significantly to 9.0% (−0.2% in the previous year). The gross margin rose by +2.1pt to 25.5% (23.4% in the previous year), while SG&A expenses of ¥68.0B were contained to approximately +9.7% growth against a +55.9% increase in revenue, resulting in positive operating leverage. Below operating income, equity-method investment income of ¥4.6B partially offset interest expenses of ¥12.4B, resulting in Ordinary Income of ¥30.3B (+471.6% YoY). Special items were limited, with a net gain of +¥0.3B, indicating that the impact of temporary factors on current-period profit was limited. Net Income of ¥20.8B increased +468.0% YoY. In conclusion, the Company achieved higher revenue and profit, with quantitative expansion in real estate and high profitability in energy contributing to structural earnings improvement.

Segment Analysis

The Real Estate Business posted revenue of ¥356.5B (+65.2% YoY), Operating Income of ¥27.9B (+481.7%), and a profit margin of 7.8%, showing the largest growth in both revenue and profit and driving overall Company performance. The Energy Business recorded revenue of ¥35.9B (+22.4%), Operating Income of ¥7.9B (+24.1%), and a profit margin of 22.1%, securing the highest profitability among all segments and contributing to the improvement in the Company-wide profit margin. The Asset Management Business generated revenue of ¥1.8B (+64.2%) but incurred an operating loss of ¥0.3B (profit margin of -16.8%), making profitability improvement a key issue. Other Businesses slightly declined, with revenue of ¥16.4B (-3.8%) and Operating Income of ¥1.2B (-7.7%). Real estate accounted for 86.8% of the revenue mix, highlighting the structurally high level of segment concentration.

Key Financial Indicators

【Profitability】The Operating Margin of 9.0% (−0.2% in the previous year) and Net Profit Margin of 5.1% (−2.1% in the previous year) both improved significantly from the previous year, while the gross margin also increased to 25.5% (23.4% in the previous year). 【Investment Efficiency】ROE was 2.3%, with a DuPont decomposition of a Net Profit Margin of 5.0%, total asset turnover of 0.10x, and financial leverage of approximately 4.6x. Improvement in the Net Profit Margin was the primary driver. 【Financial Soundness】The Equity Ratio was 21.7% (21.5% in the previous year), remaining broadly unchanged, while total assets of ¥4,109.3B and net assets of ¥891.5B represented a slight contraction in asset scale. With long-term borrowings of ¥1,761.3B and short-term borrowings of ¥580.5B, the Company remains highly dependent on interest-bearing debt. Compared with cash and deposits of ¥445.9B, this represents a level at which flexibility in cash management warrants attention.

Cash Flow Analysis

As cash flow statement data has not been disclosed, cash flow trends are analyzed based on changes in the balance sheet. Accounts receivable and notes receivable declined substantially to ¥36.5B (¥130.0B in the previous year), indicating progress in the collection of receivables. At the same time, accounts payable and notes payable also decreased to ¥66.3B (¥121.9B in the previous year), indicating progress in the settlement of trade liabilities. On the other hand, short-term borrowings increased to ¥580.5B (¥451.8B in the previous year), suggesting that funding requirements associated with the accumulation of real estate for sale and real estate under development were likely supplemented through bridge financing. Cash and deposits decreased to ¥445.9B (¥590.3B in the previous year), indicating that working capital was absorbed by inventory accumulation despite the expansion in profit. Going forward, improvement in inventory turnover will be a key focus from the perspective of capital efficiency.

Quality of Earnings

The increase in current-period profit was primarily driven by improvement at the operating level. Special income of ¥0.5B and special losses of ¥0.2B, resulting in a net gain of +¥0.3B, had a limited impact on Net Income, and distortion from temporary factors was limited. Of operating non-income, equity-method investment income of ¥4.6B represented a structurally contributing factor, while dividend income of ¥0.8B and interest income of ¥0.2B made only limited contributions. Meanwhile, interest expenses of ¥12.4B accounted for the majority of non-operating expenses of ¥13.0B, requiring attention to the increased sensitivity of Ordinary Income to interest rates in a rising-rate environment. The difference between Ordinary Income and Net Income can be explained by income taxes of ¥8.4B and profit attributable to non-controlling interests of ¥0.2B, and the divergence is within a normal range. Comprehensive Income of ¥20.7B was approximately at the same level as Net Income of ¥20.8B, with no significant divergence attributable to valuation differences on securities or foreign currency translation adjustments.

Earnings Forecast and Guidance

The Q1 progress rate against the full-year plan was approximately 18.0% for Revenue (¥410.6B/¥2,287.0B), below the standard one-quarter progress benchmark of 25%. In contrast, Operating Income was approximately 24.5% (¥36.8B/¥150.0B), Ordinary Income was approximately 25.1% (¥30.3B/¥121.0B), and Net Income was approximately 26.0% (¥20.8B/¥80.0B), with progress on profit metrics either in line with or exceeding the standard benchmark. The delay in revenue progress is likely attributable primarily to the seasonal concentration of real estate deliveries in the second half of the fiscal year, while the contribution from the highly profitable Energy Business is supporting profit progress. There were no revisions to the earnings forecast or dividend forecast during the quarter.

Shareholder Returns

The full-year dividend forecast is ¥23.00 per share, representing a Payout Ratio of approximately 38.4% based on the Company’s forecast EPS of ¥59.87. The previous year’s dividend was ¥5, but this was the actual result as of Q1 and cannot be directly compared with the full-year figure on a like-for-like basis. Based on the weighted-average number of shares outstanding during the period of 133,809 thousand shares, the annual total dividend is calculated at approximately ¥3.08B, a level sufficiently covered by the full-year Net Income forecast of ¥80.0B. No disclosure regarding share repurchases has been identified.

Risk Factors

1. Interest-rate sensitivity due to high leverage: Interest-bearing debt remains high, with long-term borrowings of ¥1,761.3B and short-term borrowings of ¥580.5B, while interest expenses of ¥12.4B account for the majority of non-operating expenses. In a rising-rate environment, this may become a factor depressing Ordinary Income.

2. Segment concentration risk: The Real Estate Business accounts for 86.8% of revenue, indicating a high degree of dependence on a single segment. The timing of deliveries and changes in project mix can readily affect overall Company performance.

3. Working capital funding absorption: Short-term borrowings are increasing alongside the accumulation of real estate for sale and real estate under development. If the pace of inventory liquidation slows, this could affect cash management.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (real_estate)

Profitability and Returns

Both the Operating Margin and Net Profit Margin exceed the industry median, placing the Company’s profitability in a relatively favorable position within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate significantly exceeds both the industry median and the upper bound of the IQR, indicating that the Company is in a high-growth phase relative to its industry.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. Significant increases in revenue and profit and improved margins: The Operating Margin of 9.0% and gross margin of 25.5% both improved significantly from the previous year, resulting in positive operating leverage. The Energy Business’s 22.1% margin contributed to raising the Company-wide profit margin.

2. Gap between revenue progress and profit progress: Revenue progress of 18.0% against the full-year plan was below profit progress of 24.5%~26.0%, reflecting the concentration of real estate deliveries in the second half of the fiscal year. Execution of deliveries during the remaining quarters will be a prerequisite for achieving the plan.

3. Financial leverage and working capital trends: Short-term borrowings and the accumulation of real estate for sale and real estate under development are increasing concurrently. Inventory turnover and interest expense management will be key monitoring points going forward.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation to undertake any specific investment action.

Sensitivity: ¥644〜¥682 at ±1% for the cost of equity, and ¥663〜¥663 at ±0.1 for ω.

Notes:

• Net Income is substantially compressed relative to Operating Income due to tax expense, acquisition-related costs, and non-controlling interests (Net Income ÷ Operating Income 53%). This value reflects that compression at face value; if the factors are temporary, underlying earnings power may be higher.
• Because 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, resulting in a timing mismatch with the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher than otherwise.

(Calculation model: Residual Income Model / Interest rate reference month: 2026-07 / This value does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It is not a recommendation to invest 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, and you should consult a professional as necessary.

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