| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1518.5 B | ¥1295.4 B | +17.2% |
| Operating Income | ¥182.8 B | ¥142.2 B | +28.5% |
| Ordinary Income | ¥178.1 B | ¥138.8 B | +28.3% |
| Net Income | ¥124.7 B | ¥95.5 B | +30.6% |
| ROE | 23.5% | 20.9% | - |
For the fiscal year ended March 2026, Revenue was ¥1518.5 B (YoY +¥223.1 B +17.2%), Operating Income was ¥182.8 B (YoY +¥40.6 B +28.5%), Ordinary Income was ¥178.1 B (YoY +¥39.3 B +28.3%), and Net Income was ¥124.7 B (YoY +¥29.2 B +30.6%), landing in a revenue- and profit-increasing result. Gross profit was ¥353.7 B (gross margin 23.3%); after subtracting SG&A of ¥170.9 B (SG&A ratio 11.3%, improved -1.4pt from 12.7% in the prior year), the operating margin was 12.0%, up +1.0pt from 11.0% in the prior year, reflecting realized operating leverage from both sales expansion and cost control. Operating Cash Flow turned negative to -¥52.0 B due to inventory build-up (Inventories +¥196.7 B), but ROE remained at a high level of 23.5% (prior year 22.2%), delivering a favorable result in terms of both profitability and growth.
[Revenue] Revenue of ¥1518.5 B (YoY +17.2%) achieved three consecutive periods of revenue growth, driven by simultaneous increases in selling price and volume in the used-housing renovation business. Inventory for sale was ¥483.9 B (YoY +23.6%), and work-in-progress inventory for sale was ¥328.1 B (YoY +46.5%), indicating a substantial increase in inventory levels and a clear stance to secure next-period sales through proactive acquisitions and renovation investment. Cost of goods sold was ¥1,164.8 B, yielding gross profit of ¥353.7 B and a gross margin of 23.3% (down -0.4pt from 23.7% prior year), remaining in a stable range. By region, over 90% of external customer sales were domestic, and growth continued concentrated in a single segment (Used Housing Renovation Business).
[Profitability] From gross profit of ¥353.7 B, after SG&A of ¥170.9 B (prior year ¥164.8 B, +3.7%), Operating Income was ¥182.8 B (YoY +28.5%). The SG&A ratio improved to 11.3% (down -1.4pt from 12.7%), and revenue growth (+17.2%) substantially outpaced SG&A growth (+3.7%), realizing operating leverage. Non-operating income amounted to ¥0.7 B (interest received and sundry income), and non-operating expenses were ¥5.3 B (mainly interest expense ¥4.5 B), both immaterial, resulting in Ordinary Income of ¥178.1 B (YoY +28.3%). Extraordinary items were limited (impairment loss ¥0.06 B), and income before income taxes was ¥178.0 B with income taxes of ¥53.3 B (effective tax rate 30.0%), bringing Net Income to ¥124.7 B (YoY +30.6%). In conclusion, stable gross margin and improved SG&A efficiency delivered revenue and profit growth.
[Profitability] Operating margin was 12.0% (improved +1.0pt from 11.0% last year), and Net Income margin was 8.2% (improved +0.8pt from 7.4%), continuing margin expansion. ROE of 23.5% (prior year 22.2%) was supported in a balanced manner by the three drivers: Net Income margin 8.2% × Total Asset Turnover 1.63x × Financial Leverage 1.76x, maintaining a level above the company’s historical performance. ROA (on an Ordinary Income basis) was 20.2% (improved +2.9pt from 17.3%), indicating improved returns on total assets. [Cash Quality] Operating CF / Net Income was -0.42x, and accrual ratio was 18.9%; with inventory buildup (Inventories +¥196.7 B), cash conversion weakened. The divergence between Operating CF -¥52.0 B and Net Income ¥124.7 B was mainly due to working capital deployment (inventory increase) and tax payments -¥47.9 B; while not structural, improving inventory turnover is a challenge. [Investment Efficiency] Capital expenditure was ¥0.7 B and depreciation ¥1.1 B, both minimal; asset efficiency is evaluated based on total asset turnover of 1.63x led by inventories (for sale and WIP). [Financial Soundness] Equity Ratio was 56.9% (improved +2.0pt from 54.9%), and current ratio was 282% (down from 735% prior year) — liquidity thickness declined year-on-year due to inventory build-up but remains at a healthy level. Interest-bearing debt comprised long-term borrowings ¥80.0 B (substantially reduced from ¥265.0 B prior year) and short-term equivalent borrowings included current portion of long-term debt of ¥185.0 B, indicating a shift of maturities toward the short term. Debt/EBITDA was 0.43x and Interest Coverage was approximately 40x (Operating Income ¥182.8 B ÷ Interest Expense ¥4.5 B), reflecting conservative leverage and light interest burden.
Operating CF was -¥52.0 B (turning negative from prior year +¥11.6 B). Before working capital changes, operating activities subtotal was ¥0.4 B; however, inventory increase -¥196.7 B, accounts payable increase +¥5.0 B, and corporate tax payments -¥47.9 B acted to substantially slow cash conversion of Net Income ¥124.7 B. Investing CF was -¥1.1 B (CapEx -¥0.7 B, intangible asset investments -¥0.4 B, etc.), minimal, leaving Free Cash Flow at -¥53.1 B. Financing CF was -¥52.3 B, primarily due to dividend payments -¥52.3 B (total return amount approx. ¥52.4 B), reducing cash balance at period end to ¥82.3 B (down ¥105.4 B from ¥187.7 B prior year). In this growth phase prioritizing inventory build-up, internal cash flow alone could not cover dividends and inventory investment, and the company supplemented with cash drawdown and borrowing capacity. The shift of long-term borrowings toward short-term (current portion ¥185.0 B) will be a focus for refinancing and maturity management. There is room for normalization of Operating CF next year as inventory turnover improves and tax payments cycle, but as long as aggressive inventory investment continues, FCF volatility is expected to remain elevated.
Net Income of ¥124.7 B results from Operating Income ¥182.8 B less non-operating expenses such as interest expense ¥4.5 B, and after deducting a limited one-off (impairment loss ¥0.06 B), indicating earnings are based on a recurring earnings base. Non-operating income was ¥0.7 B, less than 0.5% of Revenue, so profit composition is driven by core operations. The gap between Ordinary Income ¥178.1 B and Net Income ¥124.7 B is primarily due to tax burden (income taxes ¥53.3 B at an effective tax rate of 30.0%) and is not structural. On the other hand, Operating CF / Net Income of -0.42x and accrual ratio of 18.9% signal weakened cash backing. The main cause is inventory build-up (working capital absorption -¥196.7 B), expanding the divergence between accounting profit and cash generation. Comprehensive income equals Net Income at ¥124.7 B, with no other comprehensive income items, indicating no material unrealized gains or losses from FX or securities valuation. In conclusion, operating earnings quality is high, but sustainable performance depends on improvements in cash conversion tied to inventory turnover.
Full Year guidance forecasts Revenue ¥1,774.0 B (YoY +16.8%), Operating Income ¥210.0 B (YoY +14.9%), Ordinary Income ¥200.0 B (YoY +12.3%), and Net Income ¥140.0 B (YoY +12.3%), projecting continued revenue and profit growth. Progress against full-year guidance stands at Revenue 85.6%, Operating Income 87.0%, Ordinary Income 89.1%, and Net Income 89.1%, indicating some front-loading in the first half. Company-plan Operating margin is 11.8% (vs. 12.0% actual this period, -0.2pt) and Net Income margin is 7.9% (vs. 8.2% actual, -0.3pt), assuming margins remain around this period’s level. EPS forecast is ¥178.93 (actual this period ¥159.43), and dividend forecast is ¥45.00 (actual this period ¥80.00, comprised of interim ¥39 and year-end ¥41); note the basis for the dividend forecast should be reviewed, but payout ratio is expected around 45.8% (actual this period payout 80 yen ÷ EPS 159.43), near 50%. Achievement of the plan assumes securing inventory, maintaining prices, and continued renovation efficiency; normalization of cash flow through improved inventory turnover is a key point.
An annual dividend of ¥80 (interim ¥39, year-end ¥41) was paid, representing a payout ratio of 50.2% (dividend ¥80 ÷ EPS ¥159.43), a level balancing profit distribution and internal reserves. Total dividends amounted to approximately ¥62.5 B (average shares outstanding 78,220 thousand × ¥80), representing about a 50% return on Net Income ¥124.7 B. However, with Operating CF -¥52.0 B and Free CF -¥53.1 B, dividends were supplemented by cash drawdown and borrowing capacity, leaving FCF coverage at -0.84x and lacking cash backing. Share buybacks were minimal (treasury stock acquisition ¥0, gain on disposal ¥1.1 B), indicating a return policy focused on dividends. Cash and cash equivalents at period end were ¥82.3 B, below the scheduled short-term repayments of ¥185.0 B, but liquidity is considered preserved through inventory convertibility and bank credit lines given the current ratio of 282%. The stated dividend forecast of ¥45.00 may reflect year-end dividend only; confirmation of interim inclusion on an annual basis is necessary. Assuming continuation of a payout ratio near 50%, with forecast Net Income ¥140.0 B, annual dividends around ¥70.0 B are implied, making the balance between inventory investment and returns an ongoing management issue.
Risk of turnover slowdown due to inventory build-up: Substantial inventory increase to ¥812.0 B (Inventories for sale ¥483.9 B, Work-in-progress ¥328.1 B, YoY +¥196.7 B) secures the source for future sales but raises the risk of price adjustment pressure and impairment risk if market conditions reverse. Extended inventory days will increase working capital burden, and if Operating CF remains at -¥52.0 B, it would pressure liquidity. The structure where inventories account for 87.1% of total assets (¥812.0 B of ¥906.2 B current assets) heightens sensitivity to used-housing market fluctuations.
Refinancing risk due to maturity shift to short-term borrowings: Large reduction in long-term borrowings to ¥80.0 B (down -¥185.0 B from ¥265.0 B prior year) and recording of current portion ¥185.0 B shifts debt maturities to the short term. With cash balance ¥82.3 B falling below short-term repayment amounts, managing maturity mismatch depends on inventory convertibility and bank credit renewals. Rising interest rates could increase refinancing costs.
Demand decline risk from rising interest rates: Interest expense ¥4.5 B (up +¥1.4 B from ¥3.1 B prior year) is minor against Operating Income, but customers are sensitive to mortgage rates; in a continued tightening environment, demand could decline and selling prices could be pressured downward. Maintaining gross margin of 23.3% depends on price preservation, so continuous monitoring of interest rate trends and supply-demand balance is necessary.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.0% | 10.7% (6.8%–17.9%) | +1.4pt |
| Net Income Margin | 8.2% | 5.8% (2.5%–11.9%) | +2.4pt |
Profitability exceeds industry median and is positioned in the upper quartile.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 17.2% | 12.8% (4.2%–29.2%) | +4.4pt |
Growth rate exceeds the industry median and sits between median and upper quartile.
※Source: Company aggregation
Realization of operating leverage and maintenance of high ROE: With Revenue +17.2% and Operating Income +28.5%, and an SG&A ratio improvement of -1.4pt, operating leverage surfaced and ROE reached 23.5%. If gross margin of 23.3% remains stable and cost control continues, the likelihood of achieving next-year plan (Operating margin 11.8%) is moderate and the earnings base is robust. Within the industry, profitability sits in the upper quartile, confirming operational efficiency advantage.
Focus on inventory investment and cash flow trends: Aggressive purchases increasing inventories by ¥196.7 B resulted in Operating CF -¥52.0 B and FCF -¥53.1 B, turning cash flow negative and making inventory turnover improvement the top priority. Operating CF / Net Income -0.42x and accrual ratio 18.9% are warning signals on quality, and progress in inventory digestion and working capital improvement will be key to sustaining dividends and liquidity management. Combined with the maturity shift to short-term borrowings (current portion ¥185.0 B), monitoring refinancing and inventory convertibility is important.
Balance of growth sustainability and sensitivity to interest rates and market conditions: While Revenue growth +17.2% exceeds industry median, the inventory-heavy balance sheet (Inventories comprising 87.1% of current assets) increases sensitivity to used-housing market and interest rate trends. Debt/EBITDA 0.43x and Interest Coverage ~40x indicate high leverage tolerance, but if interest rate rises induce demand decline and price pressure, downside risk to gross margin and inventory valuation could materialize. Improvement in inventory turnover and maintaining pricing power are prerequisites for achieving next-year plans and sustaining shareholder returns.
This report is an earnings analysis document 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 information compiled by the company based on public financial statement data. Investment decisions are your own responsibility; consult a professional advisor as needed.