| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥535.2B | ¥522.3B | +2.5% |
| Operating Income | ¥87.6B | ¥83.1B | +5.4% |
| Ordinary Income | ¥86.2B | ¥81.2B | +6.0% |
| Net Income | ¥38.3B | ¥28.4B | +34.9% |
| ROE | 8.9% | 7.7% | - |
For the fiscal year ended March 2026, Revenue was ¥535.2B (YoY +¥12.9B +2.5%), Operating Income was ¥87.6B (YoY +¥4.5B +5.4%), Ordinary Income was ¥86.2B (YoY +¥5.0B +6.0%), and Net Income attributable to owners of parent was ¥38.3B (YoY +¥9.9B +34.9%), delivering both revenue and profit growth. Operating margin improved to 16.4% (up +0.5pt from 15.9% a year earlier), and net margin improved to 7.2% (up +1.7pt from 5.4%). High-margin segments—Transportation Business delivered Operating Income of ¥50.5B (+7.6%) and Real Estate Business delivered ¥5.4B (+15.7%)—led the results, while Leisure & Services declined to ¥24.8B (-4.1%). Extraordinary items contributed net +¥0.6B (gain on sale of investment securities ¥4.0B, impairment losses ¥9.6B, etc.), uplifting Net Income by roughly 2% from one-off items. Operating Cash Flow was ¥117.3B (YoY +8.2%), about 2.0x Net Income, and Free Cash Flow was ¥35.9B, enabling both dividends (¥15.5B) and capital expenditures (¥90.6B).
[Revenue] Revenue was ¥535.2B (YoY +2.5%), a modest increase. Transportation Business was ¥204.2B (+4.0%), supported by recovery in passenger demand and improved fare mix. Real Estate Business was ¥21.6B (+6.4%), driven by higher rents and occupancy. Leisure & Services was ¥251.7B (+1.9%), largely stable with some pullback in inbound demand and uneven performance across facilities. Other segments declined slightly to ¥57.6B (-1.7%). Segment composition was Transportation 38.2%, Leisure 47.0%, Real Estate 4.0%, Other 10.8%; Leisure and Transportation accounted for 85% of revenue. Overall, increases in passenger and real estate revenues offset Leisure deceleration, yielding modest revenue growth.
[Profitability] Operating Income was ¥87.6B (+5.4%), outpacing top-line growth, and Operating margin improved to 16.4%. Selling, General & Administrative expenses were ¥14.5B (SG&A ratio 2.7%), restrained below the revenue growth rate, delivering operating leverage. By segment, Transportation Operating Income was ¥50.5B (margin 24.8%), maintaining high profitability; Real Estate was ¥5.4B (margin 25.1%), a high-margin expansion; Leisure & Services was ¥24.8B (margin 9.9%), down -4.1% YoY due to higher labor and maintenance costs. Non-operating items included dividend income ¥2.0B and interest expense ¥5.0B (interest coverage 17.6x), resulting in net non-operating loss of ¥1.4B. Ordinary Income was ¥86.2B (+6.0%), tracking Operating Income growth. Extraordinary items were net +¥0.6B (Extraordinary gains ¥21.3B, Extraordinary losses ¥20.7B), with gain on sale of investment securities ¥4.0B and impairment losses ¥9.6B among the components. Profit before tax was ¥86.8B (+14.2%); after income taxes ¥27.8B (effective tax rate 32.0%), Net Income attributable to owners of parent was ¥38.3B (+34.9%). Net Income growth was supported by improvement in net extraordinary items and a lower tax burden. In conclusion, high margins in Transportation and Real Estate combined with cost control produced revenue and profit growth.
Transportation Business: Revenue ¥204.2B (YoY +4.0%), Operating Income ¥50.5B (+7.6%), margin 24.8%, slightly up from 24.7% a year earlier due to passenger demand recovery and efficiency gains. Real Estate Business: Revenue ¥21.6B (+6.4%), Operating Income ¥5.4B (+15.7%), margin 25.1%, up +1.2pt from 23.9% driven by rent improvements and higher occupancy. Leisure & Services: Revenue ¥251.7B (+1.9%), Operating Income ¥24.8B (-4.1%), margin 9.9%, down -0.4pt from 10.3% due to higher labor and maintenance costs weighing on earnings. Other segments: Revenue ¥57.6B (-1.7%), Operating Income ¥7.2B (+19.5%), margin 12.4%, aided by cost efficiency measures. Contribution to consolidated Operating Income: Transportation 57.7%, Leisure 28.3%, Real Estate 6.2%, Other 8.2%; Transportation remains the earnings pillar.
[Profitability] Operating margin 16.4% (up +0.5pt from 15.9%), Net margin 7.2% (up +1.7pt from 5.4%), reflecting maintained high margins in Transportation and Real Estate and SG&A control. ROE was 8.9%, above prior-year 8.7%, primarily driven by improved Net margin. [Cash Quality] Operating Cash Flow ¥117.3B is 3.1x Net Income ¥38.3B, accrual ratio -15.9%, indicating significant non-cash items (Depreciation ¥55.7B) and strong cash generation. OCF/EBITDA (Operating Cash Flow ÷ (Operating Income + Depreciation)) is 0.82x, a healthy level when accounting for tax payments and working capital changes. [Investment Efficiency] Total asset turnover was 0.52x (Revenue ¥535.2B ÷ Total assets ¥1,027.9B), unchanged from prior year, indicating stable asset efficiency. CapEx was approximately ¥90.6B versus Depreciation ¥55.7B, reflecting renewal and growth investments exceeding depreciation. [Financial Health] Equity Ratio 41.8% (up +5.4pt from 36.4%), Interest-bearing debt (Short-term borrowings ¥79.4B + Long-term borrowings ¥292.4B + Corporate bonds ¥50.0B = ¥421.8B) is 41.0% of total assets. Debt/EBITDA (Operating Income ¥87.6B + Depreciation ¥55.7B = ¥143.3B) is 2.94x, indicating neutral leverage. Interest coverage is 17.6x (Operating Income ¥87.6B ÷ Interest expense ¥5.0B), demonstrating strong tolerance for interest burden. Current ratio 159.9% (Current assets ¥290.7B ÷ Current liabilities ¥181.9B), and Cash ¥124.2B is 1.56x short-term borrowings ¥79.4B, indicating sufficient short-term liquidity.
Operating Cash Flow was ¥117.3B (YoY +8.2%). Profit before tax ¥86.8B plus Depreciation ¥55.7B yielded a subtotal Operating CF of ¥143.4B. Working capital changes were Accounts receivable increase -¥1.8B, Inventory increase -¥1.8B, Accounts payable increase +¥3.3B, net -¥0.3B, a minor cash outflow. Tax payments -¥24.0B, interest paid -¥5.0B, and other adjustments led to the reported Operating CF. Investing Cash Flow was -¥81.5B, primarily due to acquisition of tangible and intangible assets -¥90.6B, partially offset by subsidies received ¥6.3B and proceeds from sale of securities and fixed assets ¥4.6B. Free Cash Flow (Operating CF + Investing CF) was ¥35.9B, covering dividend payments ¥15.5B by 2.3x, supporting both growth investment and shareholder returns. Financing Cash Flow was -¥80.2B, with long-term borrowings received ¥59.2B against repayments -¥117.7B, short-term borrowings decrease -¥1.1B, dividends -¥15.5B, and share buybacks -¥0.0B, leading to reduction in interest-bearing debt. Ending cash balance was ¥124.2B (opening ¥167.0B, change -¥42.8B), a decline driven by CapEx and debt repayments but within a range manageable by operating cash generation.
Ordinary Income ¥86.2B reflects Operating Income ¥87.6B adjusted for net non-operating items—non-operating income ¥4.2B (including dividend income ¥2.0B) less non-operating expenses ¥5.7B (including interest expense ¥5.0B)—resulting in a small net non-operating loss of -¥1.4B, confirming core business profitability. Extraordinary items were net +¥0.6B (Extraordinary gains ¥21.3B, Extraordinary losses ¥20.7B), with gain on sale of investment securities ¥4.0B and gain on sale of fixed assets ¥0.0B contributing to gains, and impairment losses ¥9.6B, loss on retirement of fixed assets ¥3.8B, and valuation loss on investment securities ¥0.1B booked as losses. Of Net Income ¥38.3B, the net contribution of extraordinary items was about ¥0.6B (1.6%); year-on-year improvement in extraordinary items supported Net Income growth, but one-off impacts in the current period were limited. Operating CF ¥117.3B is 3.1x Net Income, accrual ratio -15.9%, with large non-cash items; Depreciation ¥55.7B aligns well with Operating CF generation. Comprehensive income was ¥77.6B, exceeding Net Income ¥38.3B by ¥39.3B, primarily due to other comprehensive income gain on valuation of securities ¥22.5B, indicating increased unrealized gains on investment securities. The recurring earnings base is stabilized by high margins in Transportation and Real Estate; the mixing of extraordinary items and valuation gains is limited, and overall earnings quality is sound.
Full Year guidance projects Revenue ¥565.0B (vs. actual +5.6%), Operating Income ¥89.5B (+2.1%), Ordinary Income ¥86.2B (flat), and Net Income attributable to owners of parent ¥57.5B (from actual ¥38.3B, +50.1%; note that the actual is calculated on parent company shareholder basis so guidance is year-over-year on that basis), with EPS ¥108.29 and Dividend ¥33. The full-year plan is conservative, assuming continued stable growth in Transportation and Real Estate and improved cost management in Leisure. Against the actual Operating margin 16.4%, the full-year assumed margin is about 15.8%, reflecting anticipated second-half cost increases and seasonality. Ordinary Income is flat as net non-operating items are expected to remain unchanged, reflecting a recurring-base profit plan with suppressed extraordinary contributions. Dividend is planned to increase to ¥33 (from ¥32, +¥1), supported by Free Cash Flow generation and assumed stable Operating CF.
Year-end dividend was ¥32, with payout ratio to current-period Net Income of 30.1% (total dividends ¥15.5B ÷ Net Income attributable to owners of parent ¥57.98B yields 26.7% if calculated on that basis; XBRL-reported payout ratio 30.1% is based on weighted average shares during the period), a conservative level. Share buybacks were effectively zero (CF -¥0.0B), so shareholder returns are dividend-centric. Free Cash Flow ¥35.9B covers dividends ¥15.5B by 2.3x, indicating high dividend sustainability. Next fiscal year guidance plans dividend of ¥33 (+¥1), supported by continued Operating CF generation and cash flows from Transportation and Real Estate. Assuming an ending share price of ¥2,500, dividend yield would be approximately 1.3%, and maintaining a payout ratio around 30% linked to profit growth appears realistic.
Deterioration in Leisure & Services profitability: Operating Income was ¥24.8B (-4.1%), with margin down to 9.9%. Rising labor and maintenance costs have outpaced revenue growth; rollover in inbound demand or adverse weather/seasonality pose downside risk. Given the segment accounts for 47% of revenue, impacts on consolidated profits could be significant. Progress on cost control and price pass-through will be closely watched.
Valuation risk on investment securities: Investment securities increased to ¥130.96B (YoY +50.2%), and unrealized gains on other securities valuation amounted to ¥22.5B. Market volatility could trigger valuation losses and increase volatility in comprehensive income, potentially affecting Equity Ratio and dividend capacity. A valuation loss of ¥0.1B was recorded this period, and further market deterioration could expand losses.
Interest rate increases and higher financing costs: Interest-bearing debt is ¥421.8B and Debt/EBITDA is 2.94x, a neutral range, while Interest coverage is healthy at 17.6x. However, in a rising rate environment interest expense ¥5.0B could rise and pressure Ordinary Income. Interest rate terms and refinancing timing on long-term borrowings ¥292.4B create risk of higher financing costs.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 16.4% | 6.3% (3.7%–8.5%) | +10.1pt |
| Net margin | 7.2% | 2.7% (1.6%–4.7%) | +4.4pt |
The company’s Operating and Net margins substantially exceed industry medians, driven by high margins in Transportation and Real Estate, placing the company among the top in the industry for profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth (YoY) | 2.5% | 5.0% (-0.4%–9.4%) | -2.5pt |
Revenue growth lags the industry median of 5.0%, impacted by Leisure & Services slowdown; within the industry the company’s growth is around median.
※ Source: Company aggregation
Sustained high margins in Transportation and Real Estate form the stable foundation of consolidated earnings. Transportation margin 24.8% and Real Estate 25.1% significantly exceed industry averages, and Operating CF generation (¥117.3B, 3.1x Net Income) supports both dividends and CapEx. Continued passenger demand recovery and rent improvements could sustain or improve ROE of 8.9%. Conversely, if cost inflation in Leisure & Services persists (Operating Income -4.1%), consolidated margins may be pressured, so effective price pass-through and cost control are critical.
Expansion of investment securities (¥130.96B, +50.2%) increased unrealized gains but raises valuation loss risk and volatility in comprehensive income. Other securities valuation gain +¥22.5B supported Equity Ratio this period, but market deterioration could crystallize losses, affecting Equity Ratio 41.8% and dividend capacity. Holding policy and timing of disposals will be key to profit stability.
Full-year guidance assumes modest Operating Income growth to ¥89.5B (+2.1%) with Ordinary Income flat and Net Income assumed to rise substantially—note the difference in bases. The plan appears to be a recurring-base projection with restrained extraordinary contributions; the planned dividend increase to ¥33 is covered by Free Cash Flow ¥35.9B (coverage 2.3x). Financial soundness (Debt/EBITDA 2.94x, Interest coverage 17.6x) is good, enabling a balance between growth investment and shareholder returns.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions should be made at your own risk and, if necessary, after consulting a professional advisor.