SEIBU HOLDINGS (9024) FY2027 Q1 Earnings Report

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Executive Summary

The Company reported higher revenue and profits, with profit growth significantly outpacing revenue growth, primarily due to substantial profit growth in the Real Estate Business. Revenue was ¥154.56B (+16.7% YoY), Operating Income was ¥26.08B (+41.5%), Ordinary Income was ¥25.54B (+48.0%), and Net Income was ¥16.95B (+24.6%). The Operating Margin improved to 16.9% from 13.9% in the same period of the previous year, indicating operating leverage, with the rate of profit growth exceeding the rate of revenue growth.

Factors Driving Performance Changes

【Revenue】All four segments reported higher revenue, with the Real Estate Business leading company-wide growth by generating operating revenue of ¥38.10B (+50.1% YoY). The Urban Transportation and Regional Business generated ¥41.70B (+7.9%), the Hotel and Leisure Business generated ¥64.11B (+8.2%), and Other Businesses generated ¥19.31B (+14.4%), with each business performing steadily. The Real Estate Business accounted for 24.7% of the revenue mix, representing an increase from the previous year.

【Profit and Loss】Of the ¥26.08B in Operating Income, the Real Estate Business accounted for ¥11.83B (44.1% of the total), and its segment margin of 31.0% pushed up the consolidated margin. The Urban Transportation and Regional Business also improved its margin to 16.1% (+3.4pt YoY), contributing to profit growth. Meanwhile, while Profit Before Tax grew by +49.1%, Net Income growth was limited to +24.6%, as the effective tax rate normalized to 33.1% from the low level recorded in the previous year, restraining Net Income growth. In conclusion, the Company achieved higher revenue and profits, with the increased profitability of the Real Estate Business being the primary driver of profit growth.

Segment Analysis

The Real Estate Business demonstrated outstanding profitability, with segment profit of ¥11.83B (+92.4% YoY) and a margin of 31.0% (+6.8pt YoY), becoming the core business and accounting for 44.1% of consolidated Operating Income. The Urban Transportation and Regional Business is showing an improving trend, with profit of ¥6.71B (+36.9%) and a margin of 16.1% (+3.4pt). The Hotel and Leisure Business generated profit of ¥5.07B (+10.4%) and had a margin of 7.9%, the lowest among the four businesses, indicating a limited contribution to profit relative to its revenue growth. Other Businesses secured profit of ¥3.24B (+15.6%) and a margin of 16.8%. Attention should be paid to the increasing dependence on the Real Estate Business for profits, which entails the risk of quarterly fluctuations depending on the timing of project recognition.

Key Financial Indicators

【Profitability】The Operating Margin improved to 16.9% (13.9% in the previous year), while the Net Margin improved to 10.8% (10.2% in the previous year); both expanded from the previous year. 【Cash Flow Quality】Against Profit Before Tax of ¥25.33B, Net Income was ¥16.95B, with the difference primarily attributable to Income Taxes of ¥8.38B; the impact of non-operating and extraordinary gains and losses was limited. Comprehensive Income was ¥10.74B, ¥6.02B below Net Income, primarily due to the deterioration in valuation differences on available-for-sale securities. 【Investment Efficiency】Annualized ROE was 11.7%, reflecting an asset-intensive business structure with low total asset turnover, offset by leverage and profitability. 【Financial Soundness】The Equity Ratio was 33.3%. Interest-bearing debt consisted primarily of long-term borrowings of ¥490.64B and bonds of ¥60.00B. With Cash and Deposits of ¥53.69B against Current Liabilities of ¥343.36B, liquidity requires close monitoring.

Cash Flow Analysis

As no cash flow statement has been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and Deposits declined by ¥12.48B to ¥53.69B from ¥66.17B in the same period of the previous year, suggesting that funds may have been allocated to investments and inventory build-up, including a ¥16.29B increase in goodwill and a ¥26.92B increase in real estate for sale. Long-term borrowings increased to ¥490.64B (¥481.22B in the previous year), while short-term borrowings increased to ¥129.90B (¥106.57B in the previous year), indicating that financing was undertaken in connection with business expansion and the acquisition of e-Gland. Trade accounts payable decreased by ¥5.40B YoY to ¥12.84B, suggesting that payment terms and movements in construction-related liabilities affected working capital.

Quality of Earnings

Ordinary Income of ¥25.54B was below Operating Income of ¥26.08B because Non-operating Expenses of ¥2.67B, primarily interest expenses of ¥2.04B, exceeded Non-operating Income of ¥2.12B, including dividend income of ¥0.87B and foreign exchange gains of ¥0.67B. Non-operating income remained at 1.4% of revenue, indicating a high dependence on core operations. Extraordinary Income of ¥0.16B and Extraordinary Losses of ¥0.38B were limited in scale, and Profit Before Tax of ¥25.33B broadly reflects the earning power of the core business. The difference between Profit Before Tax and Net Income was attributable to Income Taxes of ¥8.38B. As the effective tax rate normalized from the low tax burden in the same period of the previous year, Net Income growth fell below Profit Before Tax growth.

Earnings Forecasts and Guidance

Progress against the full-year plan in Q1 was 27.6% for revenue, 49.2% for Operating Income, 54.3% for Ordinary Income, and 62.0% for Net Income, all substantially exceeding the 25% benchmark based on simple linear progress. The fact that progress in Operating Income, Ordinary Income, and Net Income exceeded revenue progress is likely attributable to the earlier-than-scheduled recognition of highly profitable projects in the Real Estate Business, which contributed during the first half. No revisions were made to the earnings forecasts or dividend forecasts.

Shareholder Returns

The full-year dividend forecast is ¥42.00, and the forecast Payout Ratio based on full-year forecast EPS of ¥106.22 is approximately 39.5%. Actual Q1 EPS of ¥65.90 had already reached 62.0% of the full-year forecast, indicating that earnings progress supports the dividend forecast. Retained earnings were substantial at ¥547.04B; however, given the low Current Ratio, dividend sustainability should be assessed with consideration not only of earnings levels but also of funding and cash management trends.

Risk Factors

1. Real Estate Business Dependence Risk: The Real Estate Business accounts for 44.1% of consolidated Operating Income, and its segment profit surged by +92.4% YoY. Quarterly profit fluctuations are likely to increase depending on the timing of project recognition and real estate market conditions.

2. Liquidity and Leverage Risk: Current Assets of ¥157.65B compare with Current Liabilities of ¥343.36B, resulting in negative working capital. Interest-bearing debt totaled ¥620.54B, and the Equity Ratio was 33.3%; changes in the interest rate environment could affect the financial burden.

3. M&A Integration Risk: Goodwill increased by +142.9% YoY (+¥17.06B) following the acquisition of e-Gland Co., Ltd. The purchase price allocation is provisional, and the valuation of goodwill after finalization and the earnings contribution following integration require monitoring.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (transport)

Profitability and Returns

The Company’s profitability is substantially above the industry median.

Growth and Capital Efficiency

The revenue growth rate also substantially exceeds the industry median, positioning the Company as a high-growth player within the industry.

※Source: Compiled by the Company

Key Earnings Highlights

1. The segment margin of the Real Estate Business rose to 31.0% (+6.8pt YoY), making it the central factor behind the improvement in the consolidated margin. The increasing dependence on this business for profits is accompanied by the risk of a margin reversal resulting from changes in the future project mix.

2. Full-year Operating Income progress was 49.2%, and Net Income progress was 62.0%, indicating high progress for Q1. The recognition of real estate projects during the first half contributed to this performance, and the degree to which earnings are smoothed over the full year will be a key focus.

3. Goodwill increased by +142.9% YoY, and the purchase price allocation for the e-Gland acquisition remains provisional. The goodwill amount after finalization and the earnings contribution to the Real Estate Business following the acquisition are matters requiring monitoring.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥1,964–¥2,078 at ±1% for the cost of equity, and ¥2,011–¥2,026 at ±0.1 for ω.

Notes:

• Because Net Income progress against the full-year forecast (62%) exceeds the standard benchmark (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies with leading progress tend to exceed forecasts. For businesses with strong seasonality, the adjustment may be excessive).
• Net Income is significantly compressed relative to Operating Income due to the tax burden, acquisition-related expenses, and non-controlling interests, among other factors (Net Income ÷ Operating Income 51%). This figure reflects that compression at face value; if the factors are temporary, underlying earnings power may be higher.
• Because forecast ROE is below the cost of equity, the theoretical value is below Book Value per Share.
• Net assets as of the quarter-end are used (there is a time lag relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanical calculation based solely on publicly disclosed data and is not a forecast of the market stock price or a recommendation of any specific investment action, nor does it predict or guarantee future stock 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 security. The 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 a professional as necessary.

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