| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥529.8B | ¥539.6B | -1.8% |
| Operating Income / Operating Profit | ¥18.9B | ¥12.1B | +56.1% |
| Ordinary Income | ¥14.8B | ¥9.2B | +61.7% |
| Net Income / Net Profit | ¥15.9B | ¥11.7B | +35.6% |
| ROE | 6.3% | 4.7% | - |
For the fiscal year ended March 2026, revenue was ¥529.8B (YoY -¥9.8B, -1.8%), Operating Income was ¥18.9B (YoY +¥6.8B, +56.1%), Ordinary Income was ¥14.8B (YoY +¥5.7B, +61.7%), and Net Income Attributable to Owners of Parent was ¥9.2B (YoY +¥4.3B, +88.6%). While top-line slightly declined, the company achieved a significant increase in profits. Gross profit margin improved to 14.8% (prior year 13.6%, +1.2pt), and operating margin improved to 3.6% (prior year 2.2%, +1.4pt), reflecting better profitability; SG&A expenses were reduced to ¥59.5B (prior year ¥61.3B, -¥1.8B), indicating efficiency gains. Non-operating expenses included interest expense of ¥4.2B, which weighed on results—approximately 28% of operating income was offset by interest at the ordinary level—but the recovery in profit levels versus the prior year absorbed this burden. Operating Cash Flow (OCF) declined sharply to ¥18.1B (prior year ¥86.4B, -79.0%), yet covered 1.98x of Net Income, preserving cash backing. Investing Cash Flow was -¥20.4B (¥10.1B in capital expenditures, ¥10.3B in acquisition of investment securities) reflecting continued active investment, resulting in Free Cash Flow of -¥2.3B.
[Revenue] Revenue was ¥529.8B (YoY -1.8%), a slight decline. By segment, Real Estate Sales was the core at ¥498.0B (-2.1%), representing 94.0% of total, with decreased new-home sales impacting the top line. Building Materials Sales was ¥59.6B (+0.3%) and essentially flat; Real Estate Leasing was ¥5.5B (+1.9%) showing modest growth but accounting for only 1.0% of the total. Despite reduced number of units sold pressuring Real Estate Sales revenue, gross margin improvement and SG&A efficiencies drove the profit increase.
[Profitability] Gross profit was ¥78.5B (prior year ¥73.4B, +¥5.1B), with gross margin improving to 14.8% (prior year 13.6%, +1.2pt). SG&A was ¥59.5B (prior year ¥61.3B, -¥1.8B), yielding an SG&A ratio of 11.2% (prior year 11.4%, -0.2pt); cost controls were effective and Operating Income increased to ¥18.9B (prior year ¥12.1B, +56.1%). Non-operating expenses were pressured by interest expense of ¥4.2B (prior year ¥3.8B), resulting in non-operating loss of -¥4.1B and Ordinary Income of ¥14.8B (+61.7%). Extraordinary items were minor at -¥0.2B (including ¥0.1B loss on disposal of fixed assets), producing Profit Before Tax of ¥14.7B; after income taxes of ¥5.5B (effective tax rate 37.6%), Net Income Attributable to Owners of Parent was ¥9.2B (+88.6%), nearly doubling year-on-year. In conclusion, despite slight revenue contraction, improved gross margin and reduced SG&A produced substantial profit growth.
Real Estate Sales recorded Revenue of ¥498.0B (prior year ¥507.6B, -1.9%) and segment profit (on an ordinary income basis) of ¥12.3B (prior year ¥5.8B, +112.1%), indicating revenue contraction with profit growth. Improved profitability offset weaker new-home sales. Building Materials Sales showed Revenue of ¥59.6B (prior year ¥59.5B, +0.2%) but fell into a loss with segment profit of -¥0.05B (prior year ¥0.6B), likely due to margin deterioration in precut lumber and building material sales. Real Estate Leasing generated Revenue of ¥5.5B (prior year ¥5.4B, +1.9%) and segment profit of ¥2.5B (prior year ¥2.4B, +4.2%), providing a stable income source. Overall, improvements in Real Estate Sales profitability drove results, while the deterioration in building materials represents a risk.
[Profitability] Operating margin was 3.6% (prior year 2.2%, +1.4pt) and gross margin 14.8% (prior year 13.6%, +1.2pt), indicating improved profitability. ROE is stated at 6.3%, but calculating Net Income Attributable to Owners of Parent ¥9.2B ÷ shareholders’ equity ¥248.1B (average of beginning and end) yields approximately 3.7%, indicating ROE remains low. Net profit margin was 3.0% (prior year 2.2%, +0.8pt); interest burden continues to compress ordinary income. EBITDA equals Operating Income ¥18.9B + depreciation ¥3.9B = ¥22.8B, giving an EBITDA margin of 4.3%. Interest expense of ¥4.2B results in an interest coverage ratio (Operating Income ÷ interest expense) of 4.48x, improved from 3.18x, but room to absorb further interest increases is limited.
[Cash Quality] Operating Cash Flow ¥18.1B is 1.97x Net Income Attributable to Owners of Parent ¥9.2B, indicating solid cash backing of earnings. OCF/EBITDA is 0.79x, somewhat low, impacted by inventory increase of ¥2.6B. Free Cash Flow was negative at -¥2.3B, mainly due to acquisition of investment securities ¥10.3B.
[Investment Efficiency] Total asset turnover was 0.77x (prior year 0.78x), showing stagnant asset efficiency. Inventory turnover days computed from inventories of ¥3.2B ÷ (Cost of Sales ¥451.3B ÷ 365) ≈ 2.6 days appears short, but total inventory including properties for sale is ¥412.6B, yielding a high inventory ratio of 59.9%.
[Financial Soundness] Equity Ratio is 36.5% (prior year 36.2%), broadly stable. Current Ratio is 219.6% (prior year 203.5%) and healthy, but interest-bearing debt is large at ¥225.8B (short-term borrowings ¥121.9B, long-term borrowings ¥103.9B, corporate bonds ¥95.0B), producing Debt/EBITDA of 9.89x and high leverage. Short-term borrowings ratio is 54%, indicating elevated refinancing risk. Cash and deposits were ¥99.4B, providing 41% liquidity against short-term liabilities of ¥241.6B.
Operating Cash Flow was ¥18.1B (prior year ¥86.4B, -¥68.3B, -79.0%). Profit before tax ¥14.7B plus depreciation ¥3.9B and goodwill amortization ¥1.4B yield operating cash flow subtotal of ¥24.9B, but increases in inventories ¥2.6B and decrease in trade payables ¥0.6B pressured working capital; after income tax payments ¥2.8B, OCF totaled ¥18.1B. Investing Cash Flow was -¥20.4B, driven by tangible fixed asset acquisitions ¥10.1B and acquisition of investment securities ¥10.3B, a significant expansion from prior year -¥3.2B. Free Cash Flow (OCF + Investing CF) was -¥2.3B, temporarily reducing cash generation capacity. Financing Cash Flow was -¥6.9B: proceeds from long-term borrowings ¥97.8B and bond issuance ¥15.0B were offset by repayments of long-term borrowings ¥93.6B, bond redemptions ¥8.0B, net decrease in short-term borrowings ¥9.9B, and dividend payments ¥9.3B. As a result, cash and deposits decreased by ¥9.2B from ¥108.6B to ¥99.4B at year-end. While OCF is 1.97x Net Income, and profit quality is good, inventory increases and active investment led to negative Free Cash Flow; improving inventory turnover and expanding OCF are key going forward.
Operating Income of ¥18.9B is the main earnings driver. Non-operating income was modest at ¥0.9B (including interest income ¥0.2B and dividend income ¥0.1B), representing 0.2% of revenue and indicating low dependence on non-operating items. Non-operating expenses were ¥4.9B, 86% of which was interest expense ¥4.2B, meaning financial costs continue to suppress Ordinary Income. Extraordinary items totaled -¥0.2B (extraordinary gains ¥0.01B, extraordinary losses ¥0.2B including ¥0.1B loss on disposal of fixed assets), so one-off effects were limited. Comprehensive income was ¥10.8B versus Net Income Attributable to Owners of Parent ¥9.2B; the ¥1.6B difference was due to an increase in valuation differences on available-for-sale securities, reflecting non-operating valuation gains. OCF ¥18.1B is 1.97x Net Income ¥9.2B, and the accrual ratio ((¥9.2B - ¥18.1B) ÷ Total Assets ¥689.4B) = -1.3%, indicating low accruals and good earnings quality. The gap from EBIT ¥18.9B to Net Income Attributable to Owners of Parent ¥9.2B is mainly due to interest expense ¥4.2B and a high effective tax rate of 37.6%, representing structural earnings drag.
The full-year plan calls for Revenue ¥580.0B (YoY +¥50.2B, +9.5%), Operating Income ¥20.0B (YoY +¥1.1B, +5.7%), Ordinary Income ¥16.5B (YoY +¥1.7B, +11.1%), and Net Income Attributable to Owners of Parent ¥11.0B (YoY +¥1.8B, +19.6%). Compared to the current results, revenue is planned to increase by ¥50.2B while Operating Income is projected to rise only ¥1.1B, implying a conservative outlook. The modest operating profit growth of +5.7% appears cautious and assumes maintained gross margin and absorption of SG&A, while factoring in ongoing interest costs and upside construction cost risks. Management anticipates a recovery in new-home sales in the second half (from Q3 onward), but the degree of unit sales recovery will be critical. EPS is forecast at ¥37.88, and the dividend forecast is ¥0, meaning a shift from the current fiscal year-end dividend of ¥32 to no dividend, which likely reflects a decision based on projected profitability and financial discipline.
A year-end dividend of ¥32 was paid, with total dividends amounting to ¥9.34B (after treasury stock deduction). The payout ratio relative to Net Income Attributable to Owners of Parent ¥9.2B was approximately 102%, a high level effectively distributing nearly all earnings. With Free Cash Flow at -¥2.3B, dividends were not covered by internally generated cash and were met through cash reserves or borrowings. Next fiscal year's dividend forecast is ¥0, indicating a shift to no dividend prioritizing profit growth and restoring financial capacity. Share buybacks were effectively nil (cash flow -¥0.0B), so returns were solely via dividends, and Total Return Ratio is at the same level as the payout ratio, around 102%. A payout ratio exceeding 100% raises sustainability concerns; restoring a sustainable return base will require expanding OCF and improving inventory turnover.
High leverage and interest burden: Interest-bearing debt ¥225.8B and Debt/EBITDA 9.89x indicate high leverage; interest expense ¥4.2B accounts for 22% of Operating Income. Short-term borrowings ¥121.9B (short-term liabilities ratio 54%) create refinancing risk; in a rising interest rate environment, profit compression and CF deterioration are concerns. Although interest coverage improved to 4.48x, thin operating margin of 3.6% limits resilience to interest rate fluctuations.
High inventory ratio and turnover risk: Inventory including properties for sale is ¥412.6B with an inventory ratio of 59.9%, a high level. Inventory increase of ¥2.6B pressured OCF this period; in a market downturn, inventory write-downs or slower turnover could materially impair cash flows and profits. Heavy reliance on Real Estate Sales (94.0% dependency) means unit sales declines have direct impact on performance.
Dividend sustainability and low ROE: Payout ratio ~102% and Free Cash Flow -¥2.3B indicate dividends are being paid at nearly the full level of earnings, challenging sustainability. ROE is approximately 3.7%, low, and improving capital efficiency will require boosting operating margins and reducing debt costs. The move to no dividend next year prioritizes financial discipline but reduces predictability of shareholder returns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.6% | 10.7% (6.8%–17.9%) | -7.1pt |
| Net Profit Margin | 3.0% | 5.8% (2.5%–11.9%) | -2.8pt |
Operating margin is 7.1pt below the industry median, placing the company in the lower tier on profitability within the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -1.8% | 12.8% (4.2%–29.2%) | -14.6pt |
Revenue growth is 14.6pt below the industry median, indicating the company lags peers in top-line growth.
※ Source: Company compilation
Gross margin +1.2pt and Operating margin +1.4pt reflect improving profitability; Operating Income grew by +56.1% YoY. OCF ¥18.1B is 1.97x Net Income, indicating good earnings quality, but OCF/EBITDA 0.79x and inventory increases remain issues; improving inventory turnover and sustaining cash generation are important watch points.
Debt/EBITDA 9.89x and short-term liabilities ratio 54% show continued high leverage and refinancing concentration; interest expense ¥4.2B accounts for 22% of Operating Income. In a rising-rate environment, the company faces heightened profit and CF risks, so progress on lengthening debt maturities and interest hedging should be monitored.
Payout ratio ~102% and Free Cash Flow -¥2.3B indicate dividends have been paid at nearly full earnings, raising sustainability concerns. Management expects no dividend next year to prioritize financial discipline; medium-term stabilization of shareholder returns requires OCF expansion and improved inventory turnover. Versus industry benchmarks, Operating margin lags by 7.1pt and revenue growth by 14.6pt, so continuation of the profitability improvement trend and volume recovery are key inflection points for valuation.
This report was auto-generated by AI based on analysis of XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; please consult a professional as needed.