| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥884.0B | ¥916.0B | -3.5% |
| Operating Income | ¥15.8B | ¥12.5B | +26.5% |
| Ordinary Income | ¥26.0B | ¥19.1B | +36.3% |
| Net Income | ¥12.8B | ¥11.4B | +12.2% |
| ROE | 1.7% | 1.6% | - |
For the fiscal year ended March 2026, results were: Revenue ¥884.0B (YoY -¥32.0B -3.5%), Operating Income ¥15.8B (YoY +¥3.3B +26.5%), Ordinary Income ¥26.0B (YoY +¥6.9B +36.3%), and Net income attributable to owners of the parent ¥21.1B (YoY +¥4.2B +24.7%). The company delivered lower revenue but higher profits, with a gross profit margin of 29.8% (YoY +1.2pt) and gross margin improvement driving Operating Income expansion. Non-operating items supported Ordinary Income, including equity-method investment income ¥5.1B (YoY +¥2.5B), dividend income ¥2.4B, and rental income ¥2.1B. Extraordinary gains ¥1.3B (including gain on sale of investment securities ¥3.4B) lifted Net Income, but from pre-tax income ¥27.3B to Net Income ¥21.1B the attributable amount was reduced by income taxes ¥5.9B and non-controlling interests ¥0.4B. Operating Cash Flow was ¥116.7B (YoY +98.9%), 9.1x Net Income, indicating very strong cash generation; Free Cash Flow was ¥32.4B. EPS was ¥30.65 (YoY +24.5%), BPS ¥1,040.29, showing steady shareholder value accumulation.
[Revenue] Revenue was ¥884.0B, a decrease of ¥32.0B (−3.5%) YoY. By segment, the Gas Business recorded ¥688.8B (YoY −4.3%) and was the main driver of the revenue decline; the LPG Business recorded ¥181.0B (YoY −0.4%), slightly down. The Gas Business decline was driven by lower selling prices as fuel costs moderated and by reduced sales volumes due to energy conservation and structural demand changes. The LPG Business experienced largely flat selling prices and volumes, limiting its revenue decline. Gross profit was ¥263.6B (gross margin 29.8%), up ¥1.3B YoY and contributed positively. The gross margin improvement is attributed to a shortened lag in passing through fuel cost adjustments and cost efficiency gains in the Gas Business.
[Profitability] Operating Income was ¥15.8B (YoY +26.5%), a substantial increase. By segment, the Gas Business generated Operating Income ¥9.6B (YoY +74.7%, operating margin 1.4%), showing marked profitability improvement; the LPG Business produced ¥2.7B (YoY -35.3%, operating margin 1.5%), maintaining margin but with a lower absolute profit. The Gas Business operating margin improvement reflected both higher gross margin and SG&A containment, while LPG margins were compressed by soft market conditions. Ordinary Income was ¥26.0B (YoY +36.3%), supported by equity-method investment income ¥5.1B (YoY +97.0%), dividend income ¥2.4B (YoY +2.2%), and rental income ¥2.1B (YoY +20.0%), which boosted non-operating income. Non-operating expenses were low at ¥2.0B, and interest expense remained stable at ¥1.7B. Extraordinary gains were ¥1.3B (primarily gain on sale of investment securities ¥3.4B) against extraordinary losses ¥0.1B, producing pre-tax income ¥27.3B. After income taxes ¥5.9B and non-controlling interests ¥0.4B, Net income attributable to owners of the parent was ¥21.1B. Net margin was 2.4%, improved by 0.6pt YoY. In summary, the result was lower revenue but higher profit, driven by improved fuel-cost passthrough, increased non-operating income, and one-time gains.
The Gas Business reported Revenue ¥688.8B (YoY -4.3%) and Operating Income ¥9.6B (YoY +74.7%, operating margin 1.4%). Improvements in fuel-cost adjustments and cost efficiency delivered substantial profit growth despite revenue decline. The LPG Business reported Revenue ¥181.0B (YoY -0.4%) and Operating Income ¥2.7B (YoY -35.3%, operating margin 1.5%). Market softness compressed margins, resulting in revenue and profit declines. Other businesses (construction, senior services, etc.) recorded external revenue ¥29.2B, a small portion of total, but contributed Operating Income ¥2.1B. The Gas Business accounted for 60.8% of Operating Income, serving as the earnings core. Correcting LPG profitability will be key to future margin enhancement.
[Profitability] Operating margin was 1.8% (YoY +0.5pt) and Net margin was 2.4% (YoY +0.6pt). ROE was 1.7% (flat YoY), driven by the Net margin improvement, total asset turnover 0.671x (broadly unchanged), and financial leverage 1.76x (conservative level). ROA (on Ordinary Income basis) was 2.0% (YoY +0.5pt), indicating modest but improving capital efficiency.
[Cash Quality] Operating Cash Flow ¥116.7B is 9.1x Net Income, and OCF/EBITDA (EBITDA ¥91.8B) is 1.27x, a very strong level. Operating Cash Flow/Revenue was 13.2% (YoY +6.8pt), showing significant improvement in operating cash generation. Free Cash Flow ¥32.4B covers capital expenditures ¥77.2B and dividends ¥8.2B, indicating high financial flexibility.
[Investment Efficiency] Total asset turnover was 0.671x (flat), tangible fixed asset turnover 1.27x (prior year 1.34x) showing slight decline. CAPEX/Depreciation was 1.02x, indicating maintenance-focused investment with limited growth capex. ROIC (NOPAT / invested capital) is estimated at 1.7%, remaining below estimated cost of capital.
[Financial Soundness] Equity Ratio was 56.7% (prior year 55.3%), improved. Current ratio 195.0%, quick ratio 190.4% indicate ample short-term liquidity. Debt/EBITDA was 1.95x, Debt/Capital 19.3%—both conservative. Interest coverage was 54.7x (EBIT ¥15.8B / interest expense ¥1.7B), showing very high interest-paying capacity. Cash and deposits ¥185.1B versus limited short-term interest-bearing debt indicate minimal maturity mismatch risk.
Operating Cash Flow was ¥116.7B (YoY +98.9%), 5.5x Net Income ¥21.1B, with operating cash subtotal ¥120.2B benefited from working capital improvements (decrease in trade receivables ¥7.2B, increase in accounts payable ¥16.1B, increase in inventories −¥3.6B). Income taxes paid ¥4.4B were modest, and interest/dividend received ¥2.6B and interest paid ¥1.7B were stable. Investing Cash Flow was −¥84.3B, led by capital expenditures ¥77.2B; proceeds from sale of tangible fixed assets were limited at ¥0.3B. Financing Cash Flow was −¥54.1B, driven by long-term borrowings repayment ¥59.2B, long-term borrowings raise ¥15.0B, and dividend payments ¥8.2B. Free Cash Flow was ¥32.4B, remaining positive after dividend payments and debt repayment, indicating high financial flexibility. Depreciation ¥76.0B was nearly offset by CAPEX ¥77.2B, reflecting maintenance-level capex. Operating Cash Flow/EBITDA was 1.27x, a strong level showing effective conversion of profits to cash. The working capital improvement appears to stem from better collection efficiency and negotiated payable terms, with limited signs of aggressive working capital manipulation.
Of Ordinary Income ¥26.0B, Operating Income was ¥15.8B (60.8% of Ordinary Income), while non-operating income was ¥12.2B (46.9% composition) boosting Ordinary Income. Major non-operating items were equity-method investment income ¥5.1B, dividend income ¥2.4B, and rental income ¥2.1B, with equity-method income up 97.0% YoY. The equity-method gains reflect affiliated companies’ performance improvements and can be seen as part of a structural earnings base rather than purely one-off. Dividend and rental income are also stable non-operating revenue sources. Extraordinary gains ¥1.3B were mainly from gain on sale of investment securities ¥3.4B, representing a limited contribution at 4.8% of Ordinary Income. Comprehensive income was ¥40.5B, 1.92x Net Income ¥21.1B; other comprehensive income ¥19.4B was mainly unrealized gains on securities ¥15.5B and actuarial adjustments related to retirement benefits ¥4.3B, reflecting increased hidden gains on held assets on the balance sheet. Operating Cash Flow ¥116.7B is 5.5x Net Income, indicating strong cash generation excluding one-offs and accounting adjustments; earnings quality is very high. Depreciation ¥76.0B added back to operating cash subtotal, reflecting a significant non-cash expense typical of infrastructure businesses.
Full-year guidance is Revenue ¥920.0B (YoY +4.1%), Operating Income ¥20.0B (YoY +26.2%), Ordinary Income ¥28.0B (YoY +7.6%), and Net income attributable to owners of the parent ¥17.0B (YoY −19.5%). Progress versus the full-year plan from the first half: Revenue 96.1%, Operating Income 79.0%, Ordinary Income 92.9%, Net income attributable to owners of the parent 124.1%, indicating Net Income is already 24.1pt ahead of the full-year plan. The company’s assumptions likely include stable fuel costs and flat demand, but first-half one-off gains (gain on sale of investment securities ¥3.4B, etc.) are not embedded in the full-year plan, so the Net Income plan can be considered conservative. Operating Income guidance implies ¥20.0B for the year versus ¥15.8B in H1, expecting an incremental ¥4.2B in H2; considering seasonality (winter demand), this appears achievable. Ordinary Income guidance of ¥28.0B versus ¥26.0B in H1 implies only a modest H2 increase, possibly incorporating an expectation of softer equity-method income and dividend receipts in H2. Revenue guidance targets ¥920.0B vs. ¥884.0B in H1, implying ¥36.0B in H2 growth, consistent with seasonality and fuel-cost adjustment considerations.
Annual dividend is ¥12 (interim ¥6, year-end ¥6 forecast). Dividend payout ratio relative to Net income attributable to owners of the parent ¥21.1B is 39.2%. Total dividends ¥8.2B represent 25.3% of FCF ¥32.4B, giving an FCF coverage of 3.9x—ample headroom. Prior year dividend was maintained at ¥12, indicating a stable dividend policy. A payout ratio of 39.2% aligns with utilities’ guideline (30–50%), balancing retained earnings and shareholder returns appropriately. Under the full-year forecast (EPS ¥32.01, dividend ¥6 displayed only for year-end), if the annual dividend remains at ¥12 including interim, the payout ratio would fall to 37.5%, indicating a policy to allocate a portion of profit growth to retention rather than increasing payouts. No share buyback program has been disclosed; Total Return Ratio is synonymous with payout ratio. Given Debt/EBITDA 1.95x and strong liquidity metrics, continuation of stable dividends is highly likely. CAPEX ¥77.2B and depreciation ¥76.0B are roughly balanced, suggesting capital spending is within maintenance scope and supporting the view that dividend levels can be maintained even if growth capex increases.
Fuel Price Volatility Risk: With a gross margin of 29.8%, the business is sensitive to fuel cost fluctuation. Rapid spikes in LNG/crude prices can compress gross margin due to passthrough time lags. Although a fuel-cost adjustment mechanism exists, regulatory/approval timing gaps versus market volatility can increase earnings volatility. Given thin operating margin of 1.8%, margin erosion can occur quickly if fuel costs shift upward.
LPG Business Profitability Deterioration: LPG Operating Income declined 35.3% YoY and has a low operating margin of 1.5%. Continued market softness or customer attrition could push the segment into negative territory. LPG accounts for 20.5% of Revenue while Gas Business concentration is 79.2%; therefore LPG underperformance has a limited but non-negligible impact on consolidated profits. Continued contraction of the customer base could weigh on medium- to long-term earnings.
Persistently Low Capital Efficiency: ROIC at 1.7% is below estimated cost of capital (3–4%). If investment efficiency does not improve, shareholder value creation will be constrained. With Operating margin 1.8% and ROE 1.7% low, and CAPEX/Depreciation 1.02x indicating maintenance-focused spending, insufficient growth investment could erode competitiveness. Intangible fixed assets increased sharply YoY +297%; if amortization burdens or impairment risks materialize from systems investments, capital efficiency could deteriorate further.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.8% | 19.9% (6.5%–38.3%) | -18.1pt |
| Net Margin | 1.4% | 5.6% (3.8%–22.2%) | -4.2pt |
Profitability ranks low within the industry, with both operating and net margins well below the median. Constraints on fuel-cost passthrough and regulated pricing structures are structural margin headwinds.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -3.5% | -0.5% (-0.9%–13.1%) | -3.0pt |
Growth also ranks lower within the industry, underperforming the median. Changes in demand structure and price declines from fuel-cost adjustments are drag factors; new customer acquisition and expansion of adjacent services are key to restoring growth.
※ Source: Company aggregation
Strong Operating CF and FCF generation: Operating Cash Flow ¥116.7B (5.5x Net Income), Free Cash Flow ¥32.4B —cash conversion is very strong, remaining positive after CAPEX, dividends, and debt repayment. Debt/EBITDA 1.95x and Interest Coverage 54.7x indicate robust financial resilience, supporting continuation of stable dividends (payout ratio 39.2%, FCF coverage 3.9x). Current ratio 195.0% suggests ample short-term liquidity and limited funding concerns.
Margin improvement under revenue decline and contribution from non-operating income: Revenue fell YoY −3.5%, but gross margin improved +1.2pt and Operating Income rose +26.5%. Equity-method investment income ¥5.1B (YoY +97.0%), dividend income ¥2.4B, and rental income ¥2.1B supported Ordinary Income, with one-off gain on sale of investment securities ¥3.4B also contributing. The combination of operating and non-operating gains accounted for most Ordinary Income, indicating a diversification of earnings.
Low capital efficiency and industry positioning challenges: Operating margin 1.8% and Net margin 1.4% are well below industry medians (Operating 19.9%, Net 5.6%), and ROIC 1.7% lags estimated cost of capital. LPG Operating Income fell 35.3% YoY, and revenue concentration to the Gas Business is high at 79.2%. CAPEX/Depreciation 1.02x indicates maintenance-driven investment; lack of growth investment could impair competitiveness. Intangible fixed assets jumped YoY +297%, necessitating monitoring for amortization burdens and impairment risk. Fuel-cost passthrough improvements and growth in non-operating income lifted current profits, but sustainability of these factors, LPG margin recovery, and capital efficiency improvements are the next evaluation points.
This report is an AI-generated financial analysis document created by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by the company based on published financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed before making investment decisions.