ANABUKI KOSAN (8928) FY2026 Q2 Earnings Report

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Executive Summary

In addition to higher revenue and earnings, Operating Income and Net Income have already exceeded the initial full-year plan during the first half, making the level of performance in the second half the key focus going forward. Revenue was ¥902.1B (+22.9% YoY), Operating Income was ¥81.8B (+44.5%), Ordinary Income was ¥85.4B (+45.2%), and Net Income attributable to owners of the parent was ¥52.6B (+46.4%). The primary factors were substantial revenue growth in the core real estate-related business and improved profitability resulting from a lower SG&A ratio.

Factors Affecting Performance

【Revenue】Revenue was ¥902.1B, up +22.9% YoY. By segment, the real estate-related business was the core contributor, generating ¥721.6B in revenue (80.0% of the total, +32.3% YoY) and serving as the primary driver of revenue growth. Energy-related businesses (¥52.0B, +29.3%), facility operations (¥46.3B, +22.2%), and nursing care and medical services (¥38.5B, +10.8%) also contributed to higher revenue. In addition, the retail and distribution-related business was excluded from consolidation in July 2025 (¥38.6B in the previous year), resulting in a partial change in the segment composition.

【Profit and Loss】Operating Income increased 44.5% YoY to ¥81.8B, exceeding the rate of revenue growth. The decline in gross profit margin to 19.8% from 21.3% in the previous year (▲1.5pt), caused by the increase in cost of sales (+25.3%), was more than offset by the decline in the SG&A ratio to 10.8% from 13.6% in the previous year (▲2.8pt). Non-operating income included a foreign exchange gain of ¥5.4B, which boosted Ordinary Income to ¥85.4B. Extraordinary income, including a gain on the sale of fixed assets of ¥1.8B, exceeded extraordinary losses of ¥0.6B, resulting in Profit Before Tax of ¥86.6B. The corporate income tax burden ratio was relatively high at 39.3%, limiting the conversion to Net Income. The Company is in a phase of higher revenue and earnings, with the rate of earnings growth exceeding the rate of revenue growth.

Segment Analysis

The real estate-related business generated revenue of ¥721.6B (80.0% of the total) and segment profit of ¥68.5B (segment profit margin of 9.5%), making it the core business and accounting for the majority of total segment profit. The energy-related business showed the highest profitability among all segments, with revenue of ¥52.0B and a profit margin of 10.4%. Facility operations (profit margin of 6.8%) and nursing care and medical services (6.1%) also recorded higher profit accompanying revenue growth. Human resources services generated revenue of ¥31.0B, with a relatively low profit margin of 5.2%. The retail and distribution-related business (profit margin of ▲2.0%; also loss-making in the previous year) has been excluded from consolidation since the current period due to the transfer of the business. The tourism business recovered to revenue of ¥12.3B (+24.4% YoY), but its profit margin remained at 0.3%, indicating that it has not yet converted the revenue growth sufficiently into profit.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 9.1% from 7.7% in the previous year, an improvement of +1.4pt, while the Net Income margin improved to 5.8% from 4.9%, an improvement of +0.9pt. Meanwhile, the gross profit margin declined to 19.8% from 21.3% in the previous year, down ▲1.5pt, indicating that rising costs remain a relatively weak point in profitability.【Cash Quality】Ordinary Income includes a foreign exchange gain of ¥5.4B (6.0% of revenue), while Profit Before Tax includes net extraordinary income of +¥1.2B, comprising extraordinary income including a ¥1.8B gain on the sale of fixed assets and extraordinary losses. Both items should be distinguished from the recurring earning power of the core business.【Investment Efficiency】Annualized ROE was high at 21.6%, achieved through a combination of a 5.8% Net Income margin, total asset turnover of 1.21x, and financial leverage of 3.06x. BPS was ¥4,547.78, increasing +11.4% from ¥4,084.11 in the previous year.【Financial Soundness】The Equity Ratio was 32.7%, broadly unchanged from 32.6% in the previous year. While the Current Ratio was high at approximately 239%, with current assets of ¥1181.5B against current liabilities of ¥493.5B, interest-bearing debt was substantial, including long-term borrowings of ¥374.7B and bonds of ¥110.3B, resulting in a highly debt-dependent financial structure characteristic of a development-oriented real estate business.

Cash Flow Analysis

Although the statement of cash flows has not been disclosed, cash trends can be inferred from changes in the balance sheet. Cash and deposits increased by +¥81.3B (+116.6%) to ¥151.1B from ¥69.7B in the previous year, while short-term borrowings declined from ¥123.1B in the previous year to ¥95.7B. Both real estate for sale (¥411.99B) and real estate for sale in progress (¥532.78B), which correspond to inventory, declined from the previous year, suggesting that the monetization of development projects progressed as sales advanced. Meanwhile, advances received, including deposits from customers, declined from ¥91.1B in the previous year to ¥55.6B, indicating that the Company’s reliance on internal funds and borrowings for future development financing may increase somewhat. Overall, inventory reduction and cash accumulation progressed simultaneously, indicating an improving direction for liquidity management.

Earnings Quality

In terms of earnings quality, Operating Income of ¥81.8B accounted for the majority of Profit Before Tax of ¥86.6B, indicating that recurring operating profit remains the core source of earnings. However, foreign exchange gains accounted for ¥5.4B of non-operating income of ¥8.9B, warranting attention because of their susceptibility to market fluctuations. Extraordinary income of ¥1.8B, consisting of a gain on the sale of fixed assets, and extraordinary losses of ¥0.6B resulted in a temporary net boost of +¥1.2B to Profit Before Tax. However, this amount is limited relative to Operating Income, and the core of earnings remains operating income from the primary business. Meanwhile, the fact that cost of sales increased at a faster pace than revenue, resulting in a decline in the gross profit margin, suggests that future profitability may fluctuate depending on the mix of development projects and the cost environment. Comprehensive income was ¥53.3B, nearly equivalent to Net Income of ¥52.6B, indicating that the impact of OCI items such as valuation differences on other securities and foreign currency translation adjustments was limited and that the divergence between Net Income and comprehensive income was small.

Earnings Forecast and Guidance

As of the first half, Operating Income and Net Income had already exceeded the full-year plan. Against the full-year plan of revenue of ¥1440.0B, Operating Income of ¥70.0B, Ordinary Income of ¥66.0B, and Net Income of ¥44.0B (on a disclosed basis), first-half results were revenue of ¥902.1B (progress rate of 62.6%), Operating Income of ¥81.8B (progress rate of 116.9%), Ordinary Income of ¥85.4B (progress rate of 129.4%), and Net Income of ¥52.6B (progress rate of 119.4%). Revenue is progressing at a pace above the 50% level implied by an even annual progression, while profit has already exceeded the full-year plan, suggesting that the plan may incorporate a considerable decline in earnings in the second half. No revisions were made to the earnings or dividend forecasts during the current quarter.

Shareholder Returns

The interim dividend was ¥32 per share, representing a provisional Payout Ratio of approximately 7.0% based on first-half Net Income. The full-year dividend forecast is ¥68, implying an expected final dividend of ¥36. Based on the full-year forecast EPS of ¥412.49, the full-year Payout Ratio is approximately 16.5%, which is relatively low compared with general benchmarks for shareholder returns. Retained earnings increased by +¥4.88B from the previous year to ¥47.58B, and the dividend policy can be considered consistent with the characteristics of a development-oriented real estate business that prioritizes securing development funds through retained earnings.

Risk Factors

1. Real Estate Inventory and Market Conditions Risk: Development-related inventory, comprising real estate for sale of ¥411.99B and real estate for sale in progress of ¥532.78B, reached ¥944.77B, accounting for approximately 63.5% of total assets of ¥1487.4B. Fluctuations in the residential and real estate markets or a slowdown in the pace of sales could affect the timing of cash conversion.

2. Financial Leverage and Financing Risk: Total liabilities were ¥1001.3B against net assets of ¥486.1B, resulting in a high debt-to-equity ratio of approximately 2.06x. The Company has long-term borrowings of ¥374.7B and bonds of ¥110.3B, including amounts due within one year, and changes in the interest rate environment or refinancing conditions could affect financial costs.

3. Earnings Mix and Profitability Volatility Risk: The gross profit margin declined to 19.8% from 21.3% in the previous year, confirming an increase in costs. In addition, a foreign exchange gain of ¥5.4B boosted Ordinary Income. The somewhat high reliance on this non-recurring and volatile item is also a point to consider when assessing earnings repeatability.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Comparative data for the Company’s Operating Income margin and Net Income margin within the same industry is not yet sufficiently available; therefore, no relative assessment of the levels can be presented at this time.

Growth and Capital Efficiency

As industry median data is also unavailable for the revenue growth rate, the figure is presented only as an indication of its absolute level.

※Source: Compiled by the Company

Key Points in the Earnings Results

1. First-half Operating Income of ¥81.8B and Net Income of ¥52.6B had both already exceeded the full-year company plan of Operating Income of ¥70.0B and Net Income of ¥44.0B, respectively. Accordingly, the progress of second-half earnings relative to the plan will be a key point in evaluating the earnings results.

2. While the gross profit margin declined to 19.8% from 21.3% in the previous year, the SG&A ratio also declined to 10.8% from 13.6%. The increase in Operating Income is therefore primarily supported by improved SG&A efficiency. The future balance between cost trends and SG&A levels will determine the trend in profit margins.

3. Development-related inventory (real estate for sale + real estate for sale in progress) was ¥944.77B, accounting for 63.5% of total assets, while the debt-to-equity ratio was also high at approximately 2.06x, reflecting the asset and liability structure characteristic of a development-oriented real estate business. Cash and deposits had accumulated to ¥151.1B, confirming an improvement in liquidity from the previous year.

Theoretical Share Price (Reference Value)

Sensitivity: ¥4,320–¥4,575 at ±1% for the cost of equity, and ¥4,441–¥4,447 at ω±0.1.

Notes:

• Since Net Income progress against the full-year forecast (119%) exceeds the standard level (50%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with performance ahead of schedule tend to exceed forecasts. For businesses with strong seasonality, the adjustment may be excessive).
• Since 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 (there is a time lag relative to the full-year forecast).

(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 through analysis of XBRL earnings summary data. It does not recommend investment in any specific stock. 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 professionals as necessary.

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