SEIBU HOLDINGS INC. FY2027 Q1 Earnings Report

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Executive Summary

In Q1, the Company reported increases in both revenue and profit margins, primarily due to increased sales and deliveries in the Real Estate Business and the expansion of the consolidated scope following the acquisition of E-Grande as a subsidiary. Revenue was ¥154.56B (¥132.40B in the same period last year, YoY +16.7%), Operating Income was ¥26.08B (¥18.44B, YoY +41.5%), Ordinary Income was ¥25.54B (¥17.26B, YoY +48.0%), and Net Income (consolidated, including the portion attributable to non-controlling interests) was ¥16.95B (¥13.61B, YoY +24.6%). The Operating Income margin improved to 16.9%, up +3.0pt from 13.9% in the same period last year, with profit growth outpacing revenue growth—a defining feature of the quarter.

Factors Affecting Business Performance

【Revenue】Revenue was ¥154.56B (YoY +16.7%), with all four business segments reporting higher revenue. The Real Estate Business recorded particularly strong growth, reaching ¥38.10B (YoY +50.1%), driven by increased property sales and deliveries, including the acquisition of E-Grande Co., Ltd. as a subsidiary through Seibu Real Estate. The Urban Transportation and Along-the-Line Business generated ¥41.70B (YoY +7.9%), the Hotel and Leisure Business ¥64.11B (YoY +8.2%), and the Other Businesses ¥19.31B (YoY +14.4%), each reflecting a recovery in demand. The Hotel and Leisure Business is the largest segment by revenue, while the Real Estate Business makes the largest contribution to profit.

【Profit and Loss】Operating Income was ¥26.08B (YoY +41.5%), and the Operating Income margin improved to 16.9% from 13.9% in the previous year, an improvement of +3.0pt. By segment, Operating Income from the Real Estate Business was ¥11.83B (YoY +92.4%, margin 31.0%), accounting for approximately 44% of total Company profit and serving as the primary growth driver. The Urban Transportation and Along-the-Line Business generated ¥6.71B (YoY +36.9%, margin 16.1%), the Hotel and Leisure Business ¥5.07B (YoY +10.4%, margin 7.9%), and the Other Businesses ¥3.24B (YoY +15.6%); all segments reported higher profit. Non-operating income and expenses included dividend income of ¥0.87B and foreign exchange gains of ¥0.67B, offset by interest expense of ¥2.04B, resulting in a slight net negative contribution. Extraordinary items were limited in scale, comprising extraordinary income of ¥0.16B and extraordinary losses of ¥0.38B, and the impact of one-time factors was small. After deducting income taxes and other taxes of ¥8.38B from Ordinary Income of ¥25.54B, consolidated Net Income was ¥16.95B. Overall, the quarter produced higher revenue and profit, with the profit growth rate exceeding the revenue growth rate.

Segment Analysis

The Real Estate Business recorded Operating Income of ¥11.83B (¥6.15B in the previous year, YoY +92.4%), accounting for approximately 44% of total Company profit and representing the largest contributor to the increase in profit. Revenue was ¥38.10B (YoY +50.1%), and the Operating Income margin was 31.0%, the highest level among the four segments. The consolidation of E-Grande as a subsidiary contributed to the increases in revenue and profit.

The Urban Transportation and Along-the-Line Business recorded Operating Income of ¥6.71B (¥4.90B in the previous year, YoY +36.9%), revenue of ¥41.70B (YoY +7.9%), and a profit margin of 16.1%.

The Hotel and Leisure Business recorded Operating Income of ¥5.07B (¥4.59B in the previous year, YoY +10.4%) and revenue of ¥64.11B (YoY +8.2%). It has the largest revenue scale among the four businesses, but its profit margin remained relatively low at 7.9%.

The Other Businesses (including Izu Hakone, Omi, sports, and new businesses) recorded Operating Income of ¥3.24B (YoY +15.6%) and revenue of ¥19.31B (YoY +14.4%).

Adjustments for the elimination of intersegment transactions and other items increased to negative ¥0.76B on an Operating Income basis (negative ¥0.004B in the previous year), suggesting an increase in intra-group transactions associated with the change in the consolidated scope.

Key Financial Indicators

【Profitability】The Operating Income margin was 16.9%, improving by +3.0pt from 13.9% in the same period last year. The Net Income margin, based on income attributable to owners of the parent, rose to 10.8% (10.2% in the previous year). Basic EPS was ¥65.90 (¥51.35 in the previous year, YoY +28.3%). ROE was 2.9% (based on Net Income attributable to owners of the parent of ¥16.75B, before annualization of quarterly results), decomposed into a Net Income margin of 10.8% × total asset turnover of 8.9% × financial leverage of 3.0x. 【Cash Quality】Non-operating income (¥2.12B) accounted for only 1.4% of revenue, and the impact of extraordinary items was also small, indicating that profit was strongly driven by core operations. 【Investment Efficiency】Interest coverage (EBIT/interest expense) was 12.8x, indicating high resilience to interest payment burdens. Goodwill was ¥27.68B (4.8% of net assets), and intangible assets were ¥6.15B (0.4% of total assets). Both increased from the previous year due to the consolidation of E-Grande as a subsidiary, but remained limited relative to total assets. 【Financial Soundness】The Equity Ratio was 33.3%, maintaining approximately the same level as the previous year. The current ratio was 45.9%. Against cash of ¥53.69B, short-term borrowings were ¥129.90B, resulting in a cash/short-term borrowings ratio of only 0.41x. Total liabilities of ¥1,162.25B were equivalent to 2.0x net assets of ¥579.93B, indicating a relatively high degree of dependence on liabilities.

Cash Flow Analysis

As a standalone cash flow statement has not been disclosed, funding trends are assessed based on changes in the balance sheet. Cash and deposits were ¥53.69B, a decrease of ¥12.48B from ¥66.17B at the end of the same period last year. Meanwhile, short-term borrowings increased to ¥129.90B (¥106.57B in the previous year), and bonds increased to ¥60.00B (¥40.00B in the previous year). This suggests that the accumulation of real estate for sale in the Real Estate segment (from ¥14.74B to ¥41.66B), together with the acquisition of goodwill and intangible assets associated with the consolidation of E-Grande as a subsidiary, was financed through borrowings and bond issuance. Although accounts payable decreased to ¥12.84B (¥18.25B in the previous year), advances received increased to ¥114.19B (¥100.21B in the previous year), supporting working capital through the advance receipt of funds for future revenue recognition. Overall, the quarter exhibited a funding structure in which excess investment was covered by debt financing.

Earnings Quality

The quarter’s profit was strongly driven by operating activities, indicating good earnings quality. Non-operating income of ¥2.12B consisted primarily of dividend income of ¥0.87B and foreign exchange gains of ¥0.67B, while the majority of non-operating expenses of ¥2.67B comprised interest expense of ¥2.04B; the impact of non-recurring factors was limited. Extraordinary items were small, consisting of extraordinary income of ¥0.16B and extraordinary losses of ¥0.38B. Consolidated Net Income of ¥16.95B, after deducting income taxes and other taxes of ¥8.38B from Ordinary Income of ¥25.54B, can be viewed as substantially reflecting the underlying strength of the core business. On the other hand, comprehensive income was ¥10.74B (¥10.54B attributable to owners of the parent), resulting in a gap of approximately ¥6.2B from consolidated Net Income of ¥16.95B. The primary factor was an unrealized valuation difference on securities of negative ¥7.38B, reflecting declines in the market value of held securities, partially offset by foreign currency translation adjustments of +¥1.98B. Although this gap arose from other comprehensive income (OCI) items and does not impair the earnings power reported in the income statement, attention should be paid to the risk of fluctuations in the market value of held securities.

Earnings Forecast and Guidance

Q1 progress against the full-year Company plan was 27.6% for revenue (¥154.56B/¥559.00B), 49.2% for Operating Income (¥26.08B/¥53.00B), 54.3% for Ordinary Income (¥25.54B/¥47.00B), and 62.1% for Net Income attributable to owners of the parent (¥16.75B/¥27.00B). Progress on profit items substantially exceeded that of revenue. As of the quarter-end, no revisions had been made to the earnings forecast or dividend forecast. Against the full-year Operating Income plan (YoY +16.4%), Q1 Operating Income growth of YoY +41.5% is progressing at a substantially faster pace, apparently reflecting the concentration of real estate deliveries in the first half and the impact of the expanded consolidated scope.

Shareholder Returns

The annual dividend forecast announced by the Company is ¥42.00 per share, with no revision as of the quarter-end. Based on the full-year Company EPS plan of ¥106.22, the Payout Ratio is approximately 39.5%. Q1 EPS was ¥65.90 (YoY +28.3%), representing 62.1% progress toward the full-year forecast, indicating that earnings supporting the dividend are accumulating ahead of schedule. Treasury shares totaled 51,487 thousand shares out of 305,776 thousand issued shares, representing an ownership ratio of approximately 16.8%; the weighted-average number of shares during the period was 254,223 thousand shares.

Risk Factors

1. Liquidity risk: The current ratio was 45.9% (current assets of ¥157.65B/current liabilities of ¥343.36B). Against cash of ¥53.69B, short-term borrowings were ¥129.90B, resulting in a cash/short-term borrowings ratio of only 0.41x. Short-term funding conditions are at a level that requires monitoring.

2. Risks associated with dependence on liabilities and the increase in goodwill: Total liabilities of ¥1,162.25B were equivalent to 2.0x net assets of ¥579.93B. Goodwill increased from ¥11.39B in the same period last year to ¥27.68B (+142.9%). The purchase price allocation associated with the consolidation of E-Grande as a subsidiary is described as provisional. Depending on the disclosure of the final amount and progress against the business plan, the valuation may be affected.

3. Working capital risk associated with the accumulation of inventory of real estate for sale: Real estate for sale increased from ¥14.74B in the same period last year to ¥41.66B (+182.6%). The concentration or delay of deliveries may cause quarterly revenue and profit recognition and the timing of cash collection to fluctuate.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (transport)

Profitability and Returns

Both the Operating Income margin and Net Income margin substantially exceeded the industry median, placing profitability among the highest in the industry.

Growth and Capital Efficiency

The Revenue growth rate also substantially exceeded the industry median, placing the pace of revenue growth among the highest in the industry.

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The Operating Income margin improved from 13.9% in the same period last year to 16.9%, an increase of +3.0pt, indicating an observed structural change in which the profit margin expanded more than revenue. The primary driver was the Real Estate Business, with an Operating Income margin of 31.0% and accounting for 44% of total Company profit; this segment mix shift is noteworthy.

2. Goodwill increased by +142.9% year on year to ¥27.68B, reflecting the expansion of the business scope through the consolidation of E-Grande as a subsidiary. The Company disclosed that the purchase price allocation remains provisional, making disclosure of the final amount a key point for future confirmation.

3. Progress against the full-year plan was 49.2% for Operating Income and 62.1% for Net Income, with profit items ahead of schedule, while revenue progress was only 27.6%. This suggests a concentration of profit in the first half, particularly from real estate deliveries, and trends through the second half will determine whether the full-year plan is achieved.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,971–¥2,085 at ±1% for the cost of equity, and ¥2,018–¥2,032 at ±0.1 for ω.

Notes:

• Because progress of Net Income against the full-year forecast (62%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies progressing ahead of schedule tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Net Income is substantially compressed relative to Operating Income due to the tax burden, acquisition-related expenses, and non-controlling interests (Net Income/Operating Income 51%). This figure reflects that compression at face value; if these factors are temporary, the 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, resulting in a timing mismatch with the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model: Residual Income Model / Interest rate reference month: 2026-06 / This value does not predict or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.