| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥106.9B | ¥117.4B | -9.0% |
| Operating Income / Operating Profit | ¥6.8B | ¥6.7B | +1.6% |
| Ordinary Income | ¥7.0B | ¥6.0B | +16.4% |
| Net Income / Net Profit | ¥4.0B | ¥4.8B | -16.2% |
| ROE | 3.0% | 3.6% | - |
FY2026 Q1 results: Revenue ¥106.9B (YoY -¥10.5B -9.0%), Operating Income ¥6.8B (YoY +¥0.1B +1.6%), Ordinary Income ¥7.0B (YoY +¥1.0B +16.4%), Net Income ¥4.0B (YoY -¥0.8B -16.2%). Despite revenue decline, Selling, General & Administrative expense (SG&A) discipline enabled a slight increase in Operating Income, with an Operating Margin of 6.4% — approximately 70bp improvement vs. prior year period. Ordinary Income rose double digits due to lower non-operating expenses, but a persistently high effective tax rate of 49.9% pressured Net Income, resulting in a decline. Progress vs. full-year plan stands at Revenue 18.4%, Operating Income 16.4%, Net Income 15.5% — low even after accounting for seasonality, implying a down‑half weighted achievement scenario.
[Revenue] Revenue was ¥106.9B, down ¥10.5B YoY (-9.0%). Disclosure is presented as a single segment (Store/Facility Construction Business); segmental breakdown is not provided. Cost of Goods Sold was ¥87.3B, representing a COGS ratio of 81.6%, and a gross margin of 18.4%, an improvement of ~1.7pt from 16.7% in the prior year period but still below 20%. Work in progress (WIP) was ¥23.2B, up from ¥19.6B YoY (+18.3%), indicating accumulation of ongoing projects. Contract liabilities (advances received) were ¥28.1B, up from ¥20.8B (+34.6%), suggesting orders remain firm.
[Profitability] Operating Income was ¥6.8B (YoY +¥0.1B +1.6%), with an Operating Margin of 6.4%, up ~70bp from 5.7% in the prior year period. SG&A was ¥12.8B, slightly down from ¥12.9B, with an SG&A ratio of 12.0% (vs. 11.0% prior), and absolute SG&A control was effective. Non-operating income was ¥0.6B and non-operating expenses ¥0.5B, both small; financial expense burden was minimal (interest expense ¥0.1B, interest income ¥0.1B). Ordinary Income was ¥7.0B (YoY +¥1.0B +16.4%) driven by lower non-operating expenses. Extraordinary gains were ¥1.0B (mainly ¥0.98B gain on sale of subsidiary shares), extraordinary losses were ¥0.0B, resulting in profit before tax of ¥8.0B. Income taxes were ¥4.0B, yielding an effective tax rate of 49.9% and keeping Net Income at ¥4.0B (YoY -¥0.8B -16.2%). In conclusion, cost discipline secured a slight increase in Operating Income despite revenue decline, but high tax burden compressed Net Income, creating a revenue-decline yet profit-decline structure.
[Profitability] Operating Margin 6.4% improved ~70bp from 5.7% in the prior year period, reflecting effective cost control. Net Margin 3.7% declined from 4.0% due to the high effective tax rate of 49.9%. ROE stands at 3.0%, consistent with Net Margin 3.7% × Total Asset Turnover 0.42 × Financial Leverage 1.94. Interest Coverage is 75.9x (Operating Income ¥6.8B ÷ Interest Expense ¥0.1B), indicating minimal financial cost burden.
[Cash Quality] DSO 253 days, DIO 103 days, CCC 187 days — the working capital collection cycle has lengthened, indicating a delay risk in cash realization of revenues. Accounts payable decreased to ¥40.7B from ¥65.1B prior (-37.6%), while WIP increased to ¥23.2B from ¥19.6B (+18.3%), showing large working capital swings.
[Investment Efficiency] Total Asset Turnover is low at 0.42, indicating scope to improve asset efficiency. Goodwill and intangible assets are limited to 6.1% of total assets (Goodwill ¥5.3B + Intangibles ¥10.3B / Total Assets ¥256.9B), implying restrained impairment risk from M&A.
[Financial Soundness] Equity Ratio is 51.7% (up +7.6pt from 44.1% prior), Current Ratio 170%, Quick Ratio 166% — short-term payment capacity is healthy. Interest-bearing debt is ¥20.8B (Short-term borrowings ¥16.2B + Long-term borrowings ¥4.6B) with Debt/Capital 13.5%. Cash and deposits are ¥75.9B, giving a cash/short-term debt multiple of 4.69x, indicating strong repayment capacity. Short-term debt ratio is 78% (maturity profile skewed to short-term), but liquidity is ample.
Operating Cash Flow data not disclosed, but balance sheet movements are used to analyze cash trends. Cash and deposits decreased to ¥75.9B from ¥115.2B prior (-¥39.3B, -34.1%). The primary drivers appear to be paydown of accounts payable (-¥24.5B, -37.6%) and reduction of electronically recorded obligations (-¥7.4B, -42.7%), indicating prepayment of payables. Conversely, contract liabilities (advances received) increased to ¥28.1B from ¥20.8B (+¥7.2B, +34.6%), so some cash inflow from orders is secured. WIP increase of +¥3.6B suggests upfront input for project progress and cash tied up prior to inspection/acceptance. Accrued corporate tax payable decreased to ¥1.6B from ¥10.2B prior (-¥8.6B, -84.4%), reflecting tax payments of prior-period accruals. The structure — Net Income ¥4.0B vs. cash decrease ¥39.3B — is driven mainly by a reversal in working capital release (simultaneous paydown of payables and buildup of WIP) and tax outflows. CCC of 187 days remains elongated; project-based business concentrated inspection/acceptance timing increases cash flow volatility.
Operating Income ¥6.8B is recurring income from the core Store/Facility Construction Business. Non-operating income ¥0.6B (including interest income ¥0.1B) is small and likely recurring. Extraordinary gains ¥1.0B are mainly ¥0.98B from sale of subsidiary shares — a one-off. Of Profit Before Tax ¥8.0B, Extraordinary Gains contribution is ¥1.0B (12.5%), limited, so earnings are driven by core operations. Comprehensive Income ¥3.9B is almost equal to Net Income ¥4.0B; FX translation adjustment -¥0.1B and valuation difference on securities -¥0.0B are minor. Small divergence between Net Income and Comprehensive Income indicates stability in valuation gains/losses and other comprehensive income. The gap between Ordinary Income ¥7.0B and Net Income ¥4.0B mainly stems from the high effective tax rate of 49.9%; extraordinary items were negligible (Extraordinary Losses ¥0.0B). On an accrual basis, WIP buildup and DSO elongation have widened the timing gap between profit recognition and cash collection, so revenue quality requires monitoring.
Full Year guidance is maintained: Revenue ¥580.0B (YoY +2.5%), Operating Income ¥41.8B (YoY +3.5%), Ordinary Income ¥42.6B (YoY +2.7%), Net Income ¥25.8B. As of Q1, progress rates are Revenue 18.4%, Operating Income 16.4%, Ordinary Income 16.4%, Net Income 15.5% — all below 20%. Given the project nature of the Store/Facility Construction Business, revenue tends to be skewed to the second half due to concentrated inspection/acceptance timing, but Q1 progress is low even relative to historical averages. Full-year achievement assumes revenue acceleration from Q2 onward (quarterly average pace of ¥157.7B), improvement in gross margin, and normalization of the effective tax rate. No earnings revisions have been made; management expects plan achievement supported by firm order environment (Contract liabilities +34.6%). However, Q1 shortfall increases second-half burden; focus will be on improving project mix and smoothing construction schedules.
Year-end dividend forecast is ¥20.0 (unchanged YoY). Based on full-year EPS forecast ¥226.91, the Payout Ratio is approximately 8.8%, a very conservative level. No dividend forecast revision this quarter; dividend policy is to maintain stability. No share buybacks disclosed; shareholder returns are dividend-only. Shares outstanding are 11,367k (Treasury shares 1k), unchanged, implying limited dilution risk. Cash and deposits ¥75.9B, interest-bearing debt ¥20.8B, net cash ¥55.1B, indicating substantial financial flexibility and high dividend sustainability. The low Payout Ratio likely reflects precaution against project-related working capital volatility and preserving room for growth investment; however, capital efficiency (ROE 3.0%) and shareholder return balance present room for improvement.
Working Capital Risk: DSO 253 days, CCC 187 days indicate lengthened collection cycle; simultaneous accounts payable -37.6% and WIP +18.3% increase volatility. Project-based concentrated inspection/acceptance timing elevates quarter-to-quarter cash flow volatility. Short-term debt ratio 78% implies a short-skewed maturity profile; precision in liquidity management is required.
Profitability Risk: Gross margin 18.4% improved but remains below 20%; delayed pass-through of rising material and labor costs may constrain margins. Persistently high effective tax rate 49.9% compresses Net Income and requires normalization for full-year targets. SG&A ratio 12.0% signals fixed cost burden; in a revenue downcycle operating leverage could work adversely.
Full-Year Target Achievement Risk: Q1 progress (Revenue 18.4%, Operating Income 16.4%) is low, relying on second-half concentration. Orders are firm (Contract liabilities +34.6%), but inspection delays, construction schedule slippage, or adverse project mix could jeopardize full-year targets. Achieving full-year Revenue ¥580.0B requires quarterly average ¥157.7B from Q2 onward — acceleration beyond seasonality is necessary.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.4% | 6.2% (4.2%–17.2%) | +0.2pt |
| Net Margin | 3.7% | 2.8% (0.6%–11.9%) | +0.9pt |
Both Operating Margin and Net Margin exceed industry median, placing profitability in the mid-to-upper range within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -9.0% | 20.9% (12.5%–25.8%) | -29.9pt |
Revenue growth rate is far below the industry median of +20.9%, indicating underperformance on growth.
※ Source: Company aggregation
Operating Margin improvement (~70bp) amid revenue decline demonstrates strict cost discipline and defensive earning capacity. However, gross margin remains at 18.4% below 20%, indicating structural delay in passing through higher material and labor costs. Recovery of gross margin and improvement in project mix in H2 are critical to meet full-year targets.
Large working capital swings — accounts payable -37.6% and WIP +18.3% simultaneously — resulted in cash decline of -34.1%. CCC 187 days and longer collection cycles expose a cash realization delay risk. Contract liabilities +34.6% suggest order firmness and may serve as a leading indicator for H2 revenue. Project progress management and review of credit terms will be key to improving capital efficiency.
High effective tax rate 49.9% pressured Net Income, contributing to EPS decline of -25.5%. Full-year tax normalization is assumed; if high tax burden persists, downside revision risk to Net Income exists. Financial soundness is strong (Equity Ratio 51.7%, Cash/Short-term Debt 4.69x) and short-term repayment resilience is solid, but low ROE 3.0% indicates scope to improve capital efficiency to enhance shareholder value.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.