ANABUKI KOSAN INC. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥45.52B
• Operating Income: ¥4.33B
• Net Income: ¥1.95B
• EPS: ¥257.03

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Anabuki Kosan Co., Ltd. (TSE: 8928) reported a strong FY2026 Q1 with revenue of ¥45.5bn, up 29.8% YoY, indicating robust topline momentum in its core real estate-related operations. Gross profit reached ¥7.78bn with a gross margin of 17.1%, consistent with a healthy project mix and pricing discipline. Operating income rose 46.3% YoY to ¥4.33bn, implying operating margin expansion to about 9.5% from roughly 8.4% in the prior-year quarter, evidencing operating leverage as volumes scale. Ordinary income was ¥4.39bn, only modestly above operating income, suggesting limited reliance on non-operating gains; net financial costs are manageable given interest expense of ¥180m. Net income was ¥2.74bn (+40.5% YoY), translating to a net margin of 6.0%, an improvement in profitability retention after operating level. The effective tax rate is approximately 24.2% (income tax ¥1.064bn on ordinary income ¥4.391bn), consistent with Japan’s statutory range despite a reported metric showing 0.0% (likely a placeholder). DuPont analysis yields an ROE of 5.96% = 6.02% net margin × 0.308 asset turnover × 3.21 financial leverage, indicating that leverage and improving margins are the principal ROE drivers while asset turnover remains modest, as typical for inventory-intensive developers. The balance sheet shows total assets of ¥147.8bn and total equity of ¥46.0bn, implying a computed equity ratio of about 31.2% despite the reported 0.0% placeholder figure. Liquidity appears ample with a current ratio of 225%, though the quick ratio is likely overstated because inventories are unreported this quarter and typically comprise a large share in this sector. Interest coverage is strong at ~24x (operating income/interest expense), pointing to comfortable debt service capacity in the current rate environment. Working capital is sizable at ¥64.5bn, supporting project execution and presales cycles. Cash flow statements were not disclosed (all zeros), limiting assessment of operating cash conversion and free cash flow for the quarter. Dividend data also appear undisclosed for the quarter (DPS shown as 0.00), so payout evaluation must lean on earnings power rather than cash distributions at this stage. Overall, Q1 shows solid growth with margin expansion and healthy financial flexibility, but the absence of cash flow and inventory disclosures constrains a full quality-of-earnings review. Key variables to monitor include inventory build and turnover, presales pace, and interest rate sensitivity given a leverage ratio of 2.27x (liabilities/equity). The quarterly ROE and turnover metrics should be interpreted carefully as point-in-time/quarterly constructs rather than full-year steady-state.

Profitability Analysis

ROE at 5.96% (DuPont: 6.02% net margin × 0.308 asset turnover × 3.21 leverage) reflects improving margins and moderate leverage as primary contributors, with asset turnover subdued given the asset-heavy model. Net margin improved to 6.02% alongside a gross margin of 17.1%, indicating reasonable pricing and cost control. Operating income of ¥4.33bn implies an operating margin of roughly 9.5% (¥4.328bn/¥45.521bn), up about 1.1pp from ~8.4% estimated in the prior-year quarter, suggesting operating leverage benefits as volumes expand. Ordinary income exceeded operating income by ¥63m, showing limited dependence on non-operating items and indicating earnings quality at the operating level. Interest expense of ¥180m is small relative to operating income, driving a strong interest coverage ratio of ~24x. The effective tax rate is approximately 24.2% (¥1,063.9m/¥4,391.0m), aligning with statutory expectations and supporting net profitability consistency. EBITDA is not disclosed (D&A reported as 0), so EBITDA-based margins are not meaningful this quarter. Overall, profitability trends are positive with clear evidence of margin expansion and controlled financing costs.

Growth Assessment

Revenue grew 29.8% YoY to ¥45.5bn, underscoring strong sales execution, likely supported by favorable delivery timing and presales conversion. Operating income growth of 46.3% outpaced revenue, indicating mix improvements and fixed-cost leverage. Net income rose 40.5% YoY, confirming that margin gains are translating to the bottom line despite a normalized tax charge. The small gap between operating and ordinary income suggests limited reliance on volatile non-operating gains, improving the quality of growth. Given the project-based nature of the business, quarterly revenue can be lumpy; sustainability should be assessed against the project pipeline and presales. Asset turnover at 0.308 is modest; improvements would hinge on faster inventory turnover and disciplined land procurement. Near-term outlook depends on condominium demand, construction cost inflation, and interest rate trends; current cost pass-through appears adequate given margin expansion. With cash flow data undisclosed, confirmation of growth quality via OCF/working capital dynamics is pending. Overall, growth appears healthy and primarily organic, but sustainability will depend on execution of the project schedule and demand resilience.

Financial Health

Total assets are ¥147.83bn against total liabilities of ¥104.49bn and equity of ¥46.03bn, implying a computed equity ratio of about 31.2% and a liabilities-to-equity ratio of 2.27x. Current assets are ¥116.05bn versus current liabilities of ¥51.54bn, yielding a current ratio of 2.25x and working capital of ¥64.50bn. The reported quick ratio equals the current ratio because inventories are undisclosed; in practice, true quick liquidity is lower given the sector’s inventory intensity. Interest coverage is strong at ~24x, suggesting solid capacity to service debt under current earnings. Financial leverage (assets/equity) stands at ~3.21x, consistent with the DuPont input and typical for developers managing sizable inventory and land banks. Solvency appears adequate with a mid-30% equity buffer by our computation, though refinancing and market liquidity remain relevant risks in a rising rate environment. Cash and cash equivalents were not disclosed, preventing a clear view of immediate liquidity buffers.

Cash Flow Quality

Operating, investing, and financing cash flows are undisclosed this quarter (zeros presented). As a result, OCF/Net Income and FCF metrics in the snapshot are not meaningful and should not be interpreted as actual zeros. Earnings quality appears supported by the limited gap between operating and ordinary income and strong interest coverage, but confirmation via cash conversion is not possible without OCF. Working capital stands at ¥64.50bn, consistent with an inventory-heavy model; the absence of inventory disclosure impedes analysis of turnover days and build/harvest cycles. Free cash flow cannot be assessed this quarter; typically, FCF will be volatile given project acquisition and completion timing. Key to earnings quality will be whether presales and deliveries convert to OCF in subsequent quarters and whether land acquisition remains disciplined.

Dividend Sustainability

Dividend per share is shown as 0.00 and payout ratio 0.0%, indicating no disclosure for the quarter rather than an explicit suspension. With net income of ¥2.74bn in Q1, earnings capacity appears sufficient to support distributions, but sustainability should be assessed against normalized annual earnings and cash generation. FCF coverage cannot be evaluated due to undisclosed cash flows. Given the project-based cash profile, a prudent dividend policy would typically balance shareholder returns with inventory and land funding needs. Outlook on dividends remains indeterminate this quarter pending guidance and full-year cash flow visibility.

Risk Assessment

Business Risks:

• Cyclical demand in condominium and real estate markets affecting presales and deliveries
• Construction cost inflation and subcontractor availability impacting margins
• Land acquisition timing and pricing risk affecting project IRRs
• Project concentration and delivery timing risk causing revenue lumpiness
• Regulatory and zoning changes influencing project approvals
• Regional concentration risk if exposure is skewed to specific prefectures/areas
• Sales pace risk amid mortgage rate fluctuations and consumer sentiment shifts

Financial Risks:

• Leverage and refinancing risk given liabilities/equity of ~2.27x
• Interest rate risk affecting borrowing costs and housing affordability
• Liquidity risk due to inventory-heavy balance sheet despite reported high current ratio
• Cash flow volatility tied to project cycles and land banking
• Potential covenant constraints if market conditions weaken

Key Concerns:

• Lack of cash flow and inventory disclosure this quarter limits earnings quality assessment
• Sustainability of margin expansion amid cost inflation and competitive pressures
• Asset turnover remains modest (0.308), requiring efficient inventory management to support ROE

Investment Implications

Key Takeaways:

• Strong Q1 momentum: revenue +29.8% YoY and operating income +46.3% YoY with margin expansion
• Net margin at 6.0% and interest coverage ~24x indicate solid operating resilience
• Computed equity ratio ~31.2% suggests a reasonably capitalized balance sheet despite reported placeholder
• DuPont ROE of 5.96% is driven by margins and leverage; asset turnover remains a constraint
• Data gaps (cash flow, inventories, DPS details) limit full quality and payout assessment

Metrics to Watch:

• Presales and contracted sales vs. completions and cancellations
• Inventory balance and turnover days; land bank size and acquisition spend
• Operating cash flow conversion and free cash flow after land capex
• Gross and operating margins vs. construction cost trends
• Interest rate sensitivity: average borrowing rate and coverage
• Equity ratio and net debt trajectory through the year

Relative Positioning: Within Japanese mid-cap real estate developers, the company demonstrates above-trend quarterly growth and robust coverage metrics, paired with a moderate equity buffer; however, limited disclosure on cash flows and inventories this quarter places it at an information disadvantage relative to peers with fuller reporting.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis