LUCKLAND CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥41.50B
• Operating Income: ¥3.54B
• Net Income: ¥-493M
• EPS: ¥224.47

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Luckland Co., Ltd. (9612) reported strong topline and operating performance for FY2025 Q3 under JGAAP on a consolidated basis, with revenue of ¥41.5bn (+20.2% YoY) and operating income of ¥3.54bn (+641.4% YoY). Gross profit reached ¥4.75bn, implying an 11.4% gross margin, while the operating margin expanded to 8.5%, a step-change from the prior-year level implied by the growth rates. The DuPont decomposition shows ROE of 19.85%, driven by a 5.56% net margin, an asset turnover of 1.407x, and financial leverage of 2.54x. This combination suggests healthy profitability and good utilization of the asset base, with moderate leverage amplifying returns. Notably, net income was flat YoY at ¥2.31bn despite the sharp rebound in operating income, indicating significant below-the-line drag (e.g., extraordinary losses, valuation effects, or minority interests) not visible in the disclosed line items. Interest expense was modest at ¥74m, yielding a strong interest coverage ratio of 47.8x, underscoring limited financial strain from debt costs. The balance sheet shows total assets of ¥29.5bn and total equity of ¥11.62bn; while the reported equity ratio is shown as 0.0% (undisclosed), a calculated equity ratio is approximately 39.4%, indicating a solid capital base. Liquidity appears adequate with a current ratio of 111.2% and positive working capital of ¥1.70bn, though the absence of inventory disclosure and cash flow data limits a full assessment. Operating leverage was a key earnings driver: revenue growth of ~20% translated into operating income growth of ~641%, implying substantial margin recovery and cost efficiency. The ordinary income line equals operating income, pointing to minimal non-operating gains/losses; however, the large gap between ordinary income and net income implies material extraordinary or tax/minority impacts. Effective tax rate shown as 0.0% reflects data limitations; simple reconstruction (NI plus tax) suggests a tax expense of ¥28m relative to pre-tax earnings near ¥2.33bn, but unreported items prevent a reliable tax rate. Cash flow metrics (OCF, FCF) are not disclosed in the XBRL, so OCF/NI and FCF coverage indicators cannot be interpreted as actual zeros. Dividend data likewise show zero due to non-disclosure; with EPS of ¥224.47, the implied share count is roughly 10.28 million, but the share data itself are not provided. Overall, the quarter demonstrates robust operating performance, strong ROE, and manageable leverage, with the main analytical gap being the lack of cash flow and detailed below-the-line disclosures. Sustainability hinges on order visibility, project mix, cost pass-through, and the nature of the extraordinary impacts that suppressed net income growth. We acknowledge data limitations and base conclusions only on reported non-zero data.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.56%
• asset_turnover: 1.407
• financial_leverage: 2.54
• calculated_ROE: 19.85%
• commentary: ROE near 20% is supported by a mid-single-digit net margin, solid asset turnover, and moderate leverage; the chief driver this quarter is margin expansion at the operating level. margin_quality:
• gross_margin: 11.4%
• operating_margin: 8.5%
• net_margin: 5.56%
• observations: Gross margin and operating margin both improved versus the implied prior-year levels, reflecting better pricing, mix, or cost control. The gap between operating and net margin widened due to below-the-line items not disclosed in detail. operating_leverage:
• revenue_growth_YoY: 20.2%
• operating_income_growth_YoY: 641.4%
• implication: High operating leverage and strong SG&A efficiency drove a step-up in operating margin. Prior-year implied OPM was ~1.4% vs ~8.5% this period.

Growth Assessment

revenue_sustainability: Revenue growth of +20.2% suggests strong order execution and/or backlog conversion. Sustainability will depend on repeat orders from key clients, project timing, and macro demand in retail/food-related fit-outs and cold-chain infrastructure. profit_quality: Operating income growth vastly outpaced revenue, indicating margin recovery. However, flat net income indicates one-off or below-the-line headwinds; profit quality at the net level requires clarification of extraordinary items and tax/minority impacts. outlook: If operating margins are structurally improving (pricing discipline, procurement efficiencies), earnings momentum can persist. Watch for normalization of extraordinary factors that compressed NI, and for mix shifts that could affect gross margin trajectory.

Financial Health

liquidity:

• current_ratio: 111.2%
• quick_ratio: 111.2% (inventories not disclosed)
• working_capital: ¥1,704m
• commentary: Short-term liquidity is adequate, but lack of inventory and cash disclosures limits depth of assessment. Receivables and unbilled WIP dynamics (common in project businesses) remain a key unknown. solvency:
• total_assets: ¥29,494m
• total_liabilities: ¥16,177m
• total_equity: ¥11,620m
• debt_to_equity: 1.39x (liabilities/equity)
• equity_ratio_calculated: ≈39.4% (equity/assets)
• interest_coverage: 47.8x
• commentary: Moderate leverage with strong interest coverage indicates manageable solvency risk. Calculated equity ratio near 40% supports balance-sheet resilience. capital_structure: Leverage is primarily from liabilities relative to equity (1.39x). Interest burden is low at ¥74m versus operating income of ¥3,537m.

Cash Flow Quality

earnings_quality: Net income is flat YoY despite a large operating rebound, suggesting material non-operating or extraordinary effects. Without OCF data, accrual intensity cannot be evaluated. free_cash_flow_analysis: OCF and investing CF are not disclosed; FCF therefore cannot be assessed. Project businesses often experience working capital swings around billing and completion milestones; data are insufficient to judge conversion. working_capital: Working capital stands at ¥1,704m; inventories not disclosed. Monitoring receivables days, unbilled construction WIP, and payables discipline will be important for cash conversion.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are not disclosed in the provided data (zeros indicate unreported). With EPS at ¥224.47, there is capacity for distributions in principle, but policy and actual payouts are unknown here. FCF_coverage: Not assessable given no OCF/FCF data. policy_outlook: Without historical dividend policy disclosure in this dataset, we cannot infer payout stability. Future dividends will hinge on sustained operating cash generation and capital needs.

Risk Assessment

Business Risks:

• Project timing risk and revenue lumpiness inherent to construction/fit-out cycles
• Cost inflation in materials and subcontracting potentially pressuring gross margins
• Labor availability and wage pressures in the construction/services ecosystem
• Client concentration risk with major retailers/food chains
• Change-order and scope risk affecting profitability on fixed-price contracts
• Backlog visibility and book-to-bill variability
• Execution risk on multiple concurrent projects impacting quality and rework costs

Financial Risks:

• Working capital swings affecting operating cash flow conversion
• Potential extraordinary losses impacting net income volatility
• Interest rate risk on variable-rate borrowings (though current interest burden is low)
• Credit risk from receivables collection in a project-based business

Key Concerns:

• Discrepancy between strong operating income and flat net income, implying significant below-the-line items
• Lack of cash flow disclosure impedes assessment of earnings quality and dividend capacity
• Limited visibility on inventories/WIP and cash balances, which are critical to liquidity in project businesses

Investment Implications

Key Takeaways:

• Strong operating recovery with OPM ~8.5% and ROE ~19.9%
• Operating leverage evident as OI growth greatly exceeded revenue growth
• Net income suppressed by undisclosed extraordinary/tax/minority effects
• Balance sheet appears solid with calculated equity ratio ~39%
• Liquidity adequate but cash flow conversion remains a key unknown

Metrics to Watch:

• Order backlog and book-to-bill
• Gross margin trajectory and SG&A ratio
• Operating cash flow and OCF/NI conversion
• Receivables days, unbilled WIP, and payables days
• Details of extraordinary items and tax/minority impacts
• Interest rate exposure and debt maturity profile

Relative Positioning: Within domestic interior construction/fit-out peers, the company demonstrates superior near-term operating margin expansion and robust ROE, supported by moderate leverage; however, relative cash flow visibility is weaker given the lack of disclosed OCF/FCF in this period.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis