| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1423.7B | ¥1124.3B | +26.6% |
| Operating Income / Operating Profit | ¥144.0B | ¥94.9B | +51.8% |
| Ordinary Income | ¥143.6B | ¥94.6B | +51.8% |
| Net Income / Net Profit | ¥19.1B | ¥0.8B | -96.1% |
| ROE | 2.4% | 0.1% | - |
For the fiscal year ended March 2026, Revenue was ¥1,423.7B (YoY +¥299.5B, +26.6%), Operating Income was ¥144.0B (YoY +¥49.1B, +51.8%), Ordinary Income was ¥143.6B (YoY +¥49.0B, +51.8%), and Net Income was ¥19.1B (YoY +¥18.3B, +2,173.8%), achieving higher sales and significantly higher profits. The core Real Estate Development business drove double-digit growth with Revenue up +27.9%, and the Operating Margin expanded to 10.1% from 8.4% a year earlier (+1.7pt). Net Income recovered from ¥0.8B to ¥19.1B, and Comprehensive Income reached ¥100.8B (prior year ¥65.0B, +55.0%).
[Revenue] Revenue recorded strong growth at ¥1,423.7B (YoY +26.6%). By segment, the Real Estate Development business led with ¥1,277.5B (Revenue mix 89.7%, YoY +27.9%), of which Used Condominium sales were ¥831.7B (YoY +19.3%) and New Condominium sales were ¥374.0B (YoY +58.8%). The Construction Business grew to ¥92.8B (YoY +31.9%), Property Management business was ¥46.7B (YoY +1.9%) showing stable growth, and the Ryokan (Inn) Business was ¥13.5B (YoY +2.5%) with only marginal growth. Revenue from contracts with customers totaled ¥1,357.9B, representing 95.4% of Revenue, and other income such as rental income was ¥65.9B. Gross profit was ¥268.7B (gross margin 18.9%), an improvement of +0.5pt from ¥206.4B (gross margin 18.4%) in the prior year.
[Profit and Loss] SG&A expenses were ¥124.6B (SG&A ratio 8.8%), up +11.7% from ¥111.6B a year earlier, but increased at a lower rate than sales, resulting in operating leverage. Advertising and promotion expenses were ¥21.5B (prior year ¥17.5B, +22.9%), reflecting strengthened marketing; retirement benefit costs were ¥0.8B; other SG&A was ¥55.6B. Operating Income was ¥144.0B (Operating Margin 10.1%), up +51.8% from ¥94.9B a year earlier, a substantial operating profit increase. Non-operating items included interest income ¥0.5B and interest expense ¥1.5B, with non-operating income ¥1.1B and non-operating expenses ¥1.6B for a net ▲¥0.5B, which was immaterial, and Ordinary Income settled at ¥143.6B (YoY +51.8%), roughly in line with Operating Income. Corporate taxes were ¥43.5B (effective tax rate 30.3%), an appropriate level against pre-tax income of ¥143.6B. Net Income was ¥19.1B (Net Margin 1.3%), while Comprehensive Income reached ¥100.8B, with Other Comprehensive Income items including valuation differences on securities ¥0.2B and actuarial differences related to retirement benefits ¥0.4B. Overall, the company achieved higher revenue and substantially higher profits.
The Real Estate Development business delivered Revenue ¥1,277.5B (YoY +27.9%), Operating Income ¥124.5B (YoY +56.5%), and Operating Margin 9.7% (improved +1.7pt from 8.0%), driving profit growth as the core segment. Increased sales of new and used condominiums and improved gross margins contributed, and operating leverage emerged. The Construction business posted Revenue ¥92.8B (YoY +31.9%), Operating Income ¥8.3B (YoY +184.9%), and Operating Margin 8.9% (improved +4.7pt from 4.2%), realizing substantial margin improvement due to increased project volume and productivity gains. Property Management recorded Revenue ¥46.7B (YoY +1.9%), Operating Income ¥11.1B (YoY ▲7.7%), and Operating Margin 23.7% (down ▲2.5pt from 26.2%), maintaining high profitability but showing a decline in profit due to increased management costs. The Ryokan (Inn) business recorded Revenue ¥13.5B (YoY +2.5%), an Operating Loss of ¥0.0B (turning from prior-year Operating Income ¥0.0B to loss), and Operating Margin ▲0.1%, a small loss with fixed cost burden weighing on profitability.
[Profitability] Operating Margin improved to 10.1% (prior year 8.4%, +1.7pt), Net Margin improved to 1.3% (prior year 0.1%, +1.2pt), and Gross Margin improved to 18.9% (prior year 18.4%, +0.5pt). The effective tax rate remained stable at 30.3%. ROE was 2.4% (prior year 9.2%, ▼6.8pt), reflecting relatively large year-end shareholders' equity of ¥811.3B against Net Income ¥19.1B, and even on an average-of-period-beg/end basis (starting equity ¥729.2B), returns were limited. [Cash Quality] Operating Cash Flow (OCF) was ¥71.0B, which is 0.70x relative to Comprehensive Income ¥100.8B and 3.7x relative to Net Income ¥19.1B; using Comprehensive Income as the benchmark, cash conversion efficiency is an issue. OCF subtotal reached ¥102.5B, but an increase in inventories of ▲¥71.0B pressured working capital and reduced final OCF. Decrease in trade receivables +¥3.9B and increase in trade payables +¥16.8B contributed to cash generation, but inventory build-up had the dominant negative effect. [Investment Efficiency] Total Asset Turnover was 1.25x (annualized, based on average total assets ¥1,098.3B), improved from 1.19x in the prior year. Capital expenditures were ¥2.8B, modest and below depreciation expense of ¥3.7B, indicating focus on efficient use of existing assets. [Financial Soundness] Equity Ratio was 71.2% (prior year 69.1%, +2.1pt), maintaining a high level; Current Ratio was 605.3% (Current Assets ¥985.0B ÷ Current Liabilities ¥162.7B), indicating very ample liquidity. Long-term borrowings were ¥114.0B, Cash and Deposits were ¥257.4B, yielding net cash of ¥143.4B and an effectively near-zero net debt position. Interest coverage was OCF ¥71.0B ÷ Interest Paid ¥1.5B ≈ 47x, indicating minimal interest burden.
OCF was ¥71.0B (improved ¥+209.8B from prior year ▲¥138.8B), reflecting OCF subtotal ¥102.5B less corporate tax payments of ¥30.6B. Non-cash additions included depreciation ¥3.7B and increases in retirement benefit reserves ¥0.4B, while inventory increase ▲¥71.0B was the main subtraction. Decrease in trade receivables +¥3.9B, increase in trade payables +¥16.8B, and increase in advance receipts +¥0.8B supported working capital, but inventory accumulation significantly pressured OCF. Investing Cash Flow was ▲¥34.5B, consisting of time deposit placements ▲¥30.0B, capital expenditures ▲¥2.8B, and acquisition of investment securities ▲¥1.7B, showing mainly off-core cash management and capital expenditures. Financing Cash Flow was ▲¥53.8B, with proceeds from long-term borrowings +¥40.2B, repayments of long-term borrowings ▲¥75.0B, and dividend payments ▲¥18.9B as main items, reflecting priority on debt repayment and shareholder returns. Free Cash Flow was positive ¥36.5B (OCF ¥71.0B + Investing CF ▲¥34.5B), sufficient to cover dividend payments ¥18.9B and capital expenditures ¥2.8B totaling ¥21.7B, indicating high financial sustainability. Cash and Deposits increased ¥12.7B from the opening balance of ¥244.7B to ending balance ¥257.4B.
The gap between Ordinary Income ¥143.6B and Net Income ¥19.1B is mainly due to corporate taxes ¥43.5B and the difference with Comprehensive Income ¥100.8B; no specific extraordinary gains or losses at the Net Income level are explicitly indicated, but divergence from Comprehensive Income is explained by Other Comprehensive Income of ¥0.2B (valuation differences on securities) and ¥0.4B (adjustments related to retirement benefits), totaling ¥0.68B. Non-operating items were minor: non-operating income ¥1.1B (interest income ¥0.5B, dividend income ¥0.1B, other ¥0.3B) and non-operating expenses ¥1.6B (interest expense ¥1.5B, other ¥0.1B), both less than 0.1% of Revenue and thus immaterial, indicating profit structure is primarily driven by operating activities. OCF was ¥71.0B, 3.7x Net Income ¥19.1B and 0.70x Comprehensive Income ¥100.8B; on a Comprehensive Income basis, cash conversion efficiency remains an issue. Inventory increase of ¥71.0B pressured OCF, and the temporary cash outflow from inventory buildup affects earnings quality. The divergence between Ordinary Income and OCF is mainly due to working capital changes and is judged to be transitory.
Full-year guidance is Revenue ¥1,520.0B (YoY +6.8%), Operating Income ¥150.0B (YoY +4.2%), Ordinary Income ¥150.0B (YoY +4.5%), EPS forecast ¥320.59, and Dividend forecast ¥40.00. Actuals correspond to Revenue ¥1,423.7B (achievement rate 93.7%), Operating Income ¥144.0B (96.0%), Ordinary Income ¥143.6B (95.7%), and EPS ¥305.73 (95.4%), all slightly below plan. Revenue shortfall is attributed to timing shifts in deliveries within Real Estate Development, and Operating Income shortfall is partly due to increased promotional expenses and cost increases associated with inventory buildup. The company paid interim dividend ¥28 and year-end dividend ¥38 for an annual dividend of ¥66 (an increase of ¥26 over the forecast ¥40), strengthening shareholder returns. The shortfall for the period was limited, and if inventory digestion and delivery smoothing proceed into the next fiscal year, the company has high potential to meet guidance.
Annual dividend consisted of interim dividend ¥28 and year-end dividend ¥38, totaling ¥66 (prior year ¥24, +¥42, +175.0%). The year-end dividend comprised ordinary dividend ¥28 and special dividend ¥10, and the interim dividend level was also raised. Payout Ratio is annual ¥66 ÷ EPS ¥305.73 = 21.6%, and total dividends against Net Income ¥19.1B, based on 32,752 thousand shares outstanding, are estimated at approximately ¥21.6B; the payout ratio per XBRL disclosure is 27.3%, indicating a conservative approach. Free Cash Flow ¥36.5B covers dividends ¥18.9B and capital expenditures ¥2.8B totaling ¥21.7B, giving dividend coverage of 1.68x and indicating high sustainability. Net cash ¥143.4B and cash and deposits ¥257.4B provide ample buffer, suggesting low downside risk for dividend cuts. The dividend policy is basic stable dividends with scope for increases in line with performance. No share repurchases are reported.
Sales risk from inventory buildup: Inventories stand at ¥645.2B (prior year ¥597.4B, +8.0%, 56.7% of Total Assets), with For-Sale Real Estate ¥254.3B (+54.9%) and Real Estate for Sale in Process ¥392.8B (▲9.3%) as main components. Inventory increase that pressured OCF by ¥71.0B is a strategic buildup to secure future handover funding, but in a deteriorating market could lead to discount pressure or stagnation risk, resulting in lower gross margins (currently 18.9%) and potential valuation losses. Monitoring inventory turnover and effective sales promotion measures are important.
Performance volatility from reliance on core segment: The Real Estate Development business accounts for 89.7% of Revenue and 86.5% of Operating Income, making results highly sensitive to condominium market conditions, interest rates, and demand fluctuations. Construction cost inflation (materials and labor) could compress gross margins, and reduced promotional efficiency from elevated advertising spend ¥21.5B (YoY +22.9%) could erode margins. The Ryokan business turning to loss has also increased fixed cost burden, highlighting the need for portfolio diversification.
Risk of deteriorating cash conversion efficiency: OCF is ¥71.0B, 0.70x of Comprehensive Income ¥100.8B and 3.7x of Net Income ¥19.1B, with cash conversion efficiency on a Comprehensive Income basis below 0.8x. Continued inventory buildup could sustain pressure on OCF, leading to reduced Free Cash Flow and lower liquidity. Long-term borrowings of ¥114.0B are modest, but if borrowings expand for future growth investments, interest rate increases and funding risk may emerge.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.1% | 10.7% (6.8%–17.9%) | -0.5pt |
| Net Margin | 1.3% | 5.8% (2.5%–11.9%) | -4.5pt |
Operating Margin is 0.5pt below the industry median, positioning the company mid‑range in the industry; Net Margin is 4.5pt below the industry median, placing it in the lower ranks.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 26.6% | 12.8% (4.2%–29.2%) | +13.8pt |
Revenue Growth Rate outperforms the industry median by 13.8pt, indicating top-tier growth within the industry.
※ Source: Company compilation
High profitability and sustained growth of core business: The Real Estate Development business improved Operating Margin to 9.7% (prior year 8.0%, +1.7pt), and the Construction business to 8.9% (prior year 4.2%, +4.7pt), showing marked improvement in profitability. Revenue growth of +26.6% outperformed the industry median +12.8% by 13.8pt, and operating leverage drove Operating Margin to 10.1% (approaching the industry median of 10.7%). If inventory digestion proceeds, normalization of working capital and improvement in OCF are expected, creating scope to expand Free Cash Flow.
Strong financial resilience and capacity for shareholder returns: With Equity Ratio 71.2%, Net Cash ¥143.4B, and Interest Coverage ≈47x, financial health is very strong. Payout Ratio 21.6% and Free Cash Flow ¥36.5B cover dividend payments ¥18.9B, creating a sustainable return structure. Dividends were increased from ¥24 to ¥66 (+175.0%) through a combination of higher ordinary dividend and special dividend, strengthening shareholder returns. The dividend policy remains geared toward stable payments with room for increases linked to performance, and downside risk of dividend cuts is low.
Importance of inventory management and margin maintenance: Inventories at ¥645.2B (56.7% of Total Assets) remain high, and inventory buildup that pressured OCF by ¥71.0B is intended as future sales stock, but gross margin 18.9% (with Net Margin relatively low in industry comparisons) leaves limited margin buffer. In a market downturn, discounting and stagnation risk may materialize; therefore shortening inventory turnover and maintaining promotional efficiency will be key to securing margins going forward. Improving cash conversion efficiency (OCF 0.70x of Comprehensive Income ¥100.8B) is also necessary to sustain cash generation and investment capacity.
This report is an earnings analysis document automatically generated by AI based on 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 publicly disclosed financial reports. Investment decisions are your responsibility; please consult a professional advisor as needed before making any investment decisions.