| Metric | Current | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥605.0B | ¥460.7B | +31.3% |
| Operating Income | ¥155.0B | ¥123.2B | +25.8% |
| Profit Before Tax | ¥148.8B | ¥118.3B | +25.8% |
| Net Income | ¥101.8B | ¥81.8B | +24.5% |
| ROE | 9.4% | 8.0% | - |
For the quarter ended November 2026 (Q1), revenue was ¥605.0B (YoY +¥144.3B +31.3%), operating income was ¥155.0B (YoY +¥31.8B +25.8%), Ordinary Income was ¥148.9B (YoY +¥37.0B +31.3%), and net income attributable to owners of parent for the quarter was ¥101.8B (YoY +¥20.1B +24.5%), representing year-on-year growth in both revenue and profit. Large deal closings in the Real Estate Regeneration Business accounted for 67.5% of revenue and drove top-line growth. Operating margin decreased to 25.6% (down 1.1pp from 26.7% in the prior-year quarter), and gross margin was 33.5% (down 2.5pp from 36.0%), indicating temporary margin compression due to changes in project mix. Selling, general and administrative expense ratio improved to 7.9% (from 9.3% a year ago), demonstrating effective operating leverage.
Revenue: The Real Estate Regeneration Business grew sharply to ¥408.5B (YoY +92.8%), representing 67.5% of total revenue, driven by concentration of large project closings. In contrast, the Real Estate Development Business declined to ¥112.3B (YoY -36.5%) as a pullback. Real Estate Fund & Consulting Business was ¥25.3B (YoY +51.1%) and Real Estate Leasing Business was ¥23.8B (YoY +12.2%), with these high-margin segments remaining robust. Hotel Business was ¥17.3B (YoY +3.1%) and Real Estate Management Business was ¥17.8B (YoY +2.7%)—both slight increases. Due to changes in segment composition, gross margin fell to 33.5% (down 2.5pp YoY), but SG&A was efficiently controlled at ¥48.0B (7.9% of revenue), improving SG&A ratio by 1.4pp from 9.3% a year ago.
Profitability: The increase in operating income to ¥155.0B reflects revenue growth more than offsetting the decline in gross margin. Financial costs rose slightly to ¥6.8B (prior year ¥5.3B), resulting in Ordinary Income of ¥148.9B. After corporate taxes of ¥46.9B, net income attributable to owners of parent was ¥101.8B (YoY +24.5%). One-off profit/loss effects were minor, with little divergence between Ordinary Income and Net Income, indicating a healthy profit structure. The growth was revenue-and-profit driven, supported by large Real Estate Regeneration deals and expansion of high-margin segments.
Operating income composition is led by the Regeneration Business, while high-margin Fund and Leasing segments underpin overall profitability.
Profitability: Operating margin of 25.6% is down 1.1pp from 26.7% a year ago. The decline in gross margin to 33.5% (from 36.0%) is due to project mix, but SG&A ratio improvement to 7.9% (from 9.3%) has allowed operating leverage to work. ROE of 9.4% is decomposed as net profit margin 16.8% × total asset turnover 0.201 × financial leverage 2.77x, with improved asset turnover contributing (revenue growth +31.3%, total assets -2.3% vs. prior fiscal year-end).
Cash quality: Operating Cash Flow (OCF) was ¥199.2B, 1.96x net income of ¥101.8B, and OCF-to-revenue ratio was 32.9%, indicating very strong cash backing of profits. Inventory decrease of ¥109.3B and reduction in accounts receivable (YoY -29.0%) improved working capital and boosted cash flows. Accrual ratio was -3.2%, in negative territory, indicating high quality of earnings.
Investment efficiency: Capital expenditures were ¥1.3B, 0.36x depreciation of ¥3.5B, reflecting modest investment. ROA was 4.6% and total asset turnover 0.201x, consistent with inventory-intensive business characteristics.
Financial soundness: Equity ratio improved to 36.0% (prior fiscal year-end 33.4%). Current ratio was 636%, and cash and cash equivalents were ¥462.2B, indicating solid liquidity. Interest-bearing debt totaled ¥1,717.96B (short-term ¥200.26B, long-term ¥1,517.70B), Debt/Equity ratio 1.59x, Net Debt/Equity ratio 1.16x. Interest coverage (Operating Income / Financial Costs) was 22.7x, showing sufficient resilience.
Operating Cash Flow was ¥199.2B (prior ¥159.0B, +25.3%), driven significantly by working capital improvements relative to profit before tax of ¥148.8B. Inventory decrease of ¥109.3B reflects cash realization from inventory compression; accounts receivable decreased by ¥3.6B, indicating collection progress. Accounts payable decreased by ¥21.4B, but overall working capital movements boosted OCF. After corporate tax payments of ¥35.4B, the flow from OCF subtotal ¥231.2B to final OCF ¥199.2B is sound. Investing Cash Flow was a net inflow of ¥30.9B, primarily due to loan recoveries of ¥37.0B. Other investment outflows included acquisition of other financial assets ¥5.3B, capital expenditures ¥1.3B, and acquisition of investment properties ¥0.1B—investment spending was limited. Free Cash Flow was ¥230.1B, very ample.
Financing Cash Flow was -¥163.9B: while long-term borrowings of ¥358.0B were procured, long-term borrowings repayments of ¥358.0B, net decrease in short-term borrowings ¥18.0B, bond redemptions ¥2.4B, and dividend payments ¥47.5B were major outflows. Cash and cash equivalents increased by ¥66.2B from ¥396.0B at fiscal year-end to ¥462.2B, further strengthening liquidity. OCF / Net Income was 1.96x and OCF / EBITDA was 1.26x, indicating excellent cash conversion of earnings.
Quarterly earnings were primarily from operating activities, with minor impact from non-recurring items. Against operating income of ¥155.0B, non-operating income was ¥6.9B (including interest and dividend income ¥0.6B) and non-operating expenses were ¥7.5B (primarily financial costs including interest ¥6.8B), resulting in a small net non-operating impact of -¥0.6B. Ordinary Income of ¥148.9B and Profit Before Tax of ¥148.8B are nearly identical, with no material special gains/losses observed. OCF of ¥199.2B is 1.96x net income of ¥101.8B and accrual ratio is -3.2%, indicating very strong cash backing and no signs of earnings management. Inventory and receivables declines improved working capital; there is no evidence of arbitrary expansion of receivables, supporting conservative revenue recognition.
Comprehensive income was ¥102.8B versus net income ¥101.8B, a difference of ¥1.0B. Other comprehensive income of ¥0.9B (cash flow hedges ¥0.2B, foreign currency translation adjustments ¥0.04B, remeasurements of defined benefit plans ¥0.07B, etc.) is minor and does not materially affect earnings quality.
Full Year (FY) forecast: Revenue ¥1,229.9B (YoY +29.9%), Operating Income ¥246.1B (YoY +10.2%), Net Income attributable to owners of parent ¥151.6B (YoY +2.7%). Q1 progress rates relative to the full year are Revenue 49.2%, Operating Income 63.0%, Net Income 67.2%—well above the typical quarterly run-rate of 25%. This concentration is primarily due to large Real Estate Regeneration project closings in Q1, suggesting upside potential to full-year results. However, the distribution of projects in H2 and timing of inventory replenishment could lead to substantial volatility, so smoothing of progress will be important. The company has not revised its guidance in this quarter; the full-year outlook is maintained at present.
Dividend payments in the quarter amounted to ¥47.5B, implying a payout ratio of 46.7% vs. quarterly net income of ¥101.8B. Free Cash Flow of ¥230.1B covers dividends 4.8x, indicating very high sustainability of dividends. The full-year dividend forecast is announced as ¥0 per share, but a 2-for-1 stock split was implemented on December 1, 2025, so the effective dividend policy is inferred to be ongoing. No share buybacks were confirmed this quarter; shareholder returns are dividend-centric. Given cash and deposits of ¥462.2B, OCF generation capability, and equity ratio of 36.0%, the company is well positioned to maintain stable dividends and has flexibility for additional discretionary returns.
Industry position (reference): TOSEI’s operating margin of 25.6% ranks at the higher end among domestic mid-sized real estate developers, driven by very high-margin Real Estate Fund & Consulting (71.9%) and Leasing (60.0%) businesses. Rental income proportion is low at 3.9% of revenue, reflecting a sale-oriented development/regeneration business model and implying less revenue stability than rent-focused REITs or major integrated developers. ROE 9.4% is in line with industry average (around 8–10%), and capital efficiency using financial leverage (2.77x) is standard. OCF-to-revenue 32.9% and OCF/Net Income 1.96x are excellent within the industry, indicating superior cash conversion. Equity ratio 36.0% is reasonable for a mid-sized developer, but reliance on interest-bearing debt is high and interest-rate sensitivity exceeds the industry average. Over the past five periods, revenue growth rate +31.3% (this period) indicates continued expansion, supported by favorable real estate market conditions and steady project closings.
Three key points from the results:
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on disclosed financial statements. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.