| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥2752.5B | ¥2289.3B | +20.2% |
| Operating Income | ¥248.4B | ¥204.9B | +21.2% |
| Ordinary Income | ¥262.0B | ¥214.2B | +22.3% |
| Net Income | ¥160.5B | ¥131.8B | +21.7% |
| ROE | 11.0% | 13.3% | - |
For the fiscal year ended March 2026, Revenue was ¥2,752.5B (YoY +¥463.1B +20.2%), Operating Income was ¥248.4B (YoY +¥43.5B +21.2%), Ordinary Income was ¥262.0B (YoY +¥47.9B +22.3%), and Net Income was ¥160.5B (YoY +¥28.6B +21.7%), delivering double-digit growth across all profit measures. Revenue was driven by robust hotel operations and a large recognition of projects in the Construction Business, while Operating Income margin was maintained at 9.0% (prior 9.0%). Ordinary Income was lifted by equity-method investment gains of ¥20.7B (prior ¥13.3B). Despite recording Extraordinary Losses of ¥15.0B (including impairment losses of ¥11.2B), Net Income increased by over 20%. Gross margin declined slightly to 23.6% (prior 24.4%, -0.8pt), but SG&A ratio improved to 14.5% (prior 15.5%, -1.0pt), reflecting fixed-cost efficiency that supported profitability. Operating Cash Flow (OCF) increased materially to ¥509.2B (prior ¥294.5B, +72.9%), and Free Cash Flow was positive at ¥64.4B, demonstrating cash generation sufficient to balance growth investment and financial strengthening.
[Revenue] Revenue of ¥2,752.5B was up +20.2% YoY. By segment, the core Hotel Business grew steadily to ¥1,492.6B (+7.2%), and the Dormitory Business amounted to ¥579.2B (+5.5%). The largest growth driver was the Construction Business, which surged to ¥431.1B (prior ¥99.5B, +333.2%) due to recognition of large projects, expanding to about 16% of consolidated Revenue. The Foods Business was ¥140.1B (+11.8%), while Contracted Services (Comprehensive Building Management) declined to ¥221.8B (-18.2%). Other Businesses grew to ¥197.0B (+10.6%), resulting in consolidated top-line growth. Revenue composition: Hotel 54.2%, Dormitory 21.0%, Construction 15.7%, Contracted Services 8.1%, Foods 5.1%, with Hotel and Dormitory together providing a stable base accounting for 75% of Revenue.
[Profitability] Cost of sales was ¥2,103.6B, with a cost-of-sales ratio of 76.4% (prior 75.6%, +0.8pt), compressing Gross Margin to 23.6% (prior 24.4%, -0.8pt). SG&A amounted to ¥400.4B (prior ¥354.3B, +13.0%), an increase below the revenue growth rate, improving SG&A ratio to 14.5% (prior 15.5%, -1.0pt). Major SG&A items: outsourcing fees ¥164.0B, marketing expenses ¥37.7B, depreciation ¥7.6B, lease fees ¥6.0B, reflecting scale economies. As a result, Operating Income was ¥248.4B (+21.2%), with an Operating Margin of 9.0% (same level as prior year). By segment Operating Income: Hotel ¥210.5B (+13.8%, margin 14.1%) generated about 85% of consolidated Operating Income; Dormitory ¥61.9B (+1.9%, margin 10.7%); Construction ¥30.5B (+353.6%, margin 7.1%). Contracted Services recorded Operating Income of ¥3.0B (-75.6%, margin 1.3%), showing significant deterioration in profitability. Non-operating items included equity-method investment gains ¥20.7B, dividend income ¥3.4B, interest income ¥2.3B, and interest expense ¥11.7B. Ordinary Income was ¥262.0B (+22.3%), outpacing operating income growth. Extraordinary Losses totaled ¥15.0B (prior ¥6.2B), including impairment losses ¥11.2B and disaster loss ¥2.3B, partially offset by gain on sale of investment securities ¥0.9B. Profit before tax was ¥248.0B; after income taxes of ¥60.9B (effective tax rate 24.6%), Net Income was ¥160.5B (+21.7%), achieving revenue and profit growth.
The Hotel Business recorded Revenue ¥1,492.6B (+7.2%), Operating Income ¥210.5B (+13.8%), and margin 14.1% (prior 15.1%), achieving both revenue and profit growth. As the main segment contributing roughly 85% of Operating Income, stable occupancy and maintained ADR supported earnings. The Dormitory Business recorded Revenue ¥579.2B (+5.5%), Operating Income ¥61.9B (+1.9%), margin 10.7% (prior 11.1%), showing slight margin compression but continued solid growth, supported by stable demand for student and employee dormitories. The Construction (Development) Business expanded rapidly to Revenue ¥431.1B (+333.2%) and Operating Income ¥30.5B (+353.6%), margin 7.1% (prior 6.7%), with large project recognition driving scale; although margins are low, scale effects absorbed fixed costs and contributed to consolidated profit. The Foods Business saw Revenue ¥140.1B (+11.8%) and Operating Income ¥5.9B (+141.8%), margin 4.2% (prior 2.4%), delivering both top-line and margin improvement. Contracted Services recorded Revenue ¥221.8B (-18.2%), Operating Income ¥3.0B (-75.6%), margin 1.3% (prior Operating Income ¥12.3B), with sharp deterioration in profitability; revising contract pricing and cost controls are urgent. Other Businesses (Senior Life, PKP, etc.) had Revenue ¥197.0B (+10.6%) and an Operating Loss of ¥1.8B (prior -¥4.3B, narrowing deficit), showing improvement. Overall, Hotels and Dormitories are earnings pillars, Construction is the growth driver, and Contracted Services is the main challenge.
[Profitability] Operating Margin was 9.0% (prior 9.0%), maintained at prior-year levels; Net Margin was 5.8% (prior 5.8%). ROE was 11.0% (down from 15.7%) primarily due to a large increase in equity (Net Assets ¥1,455.3B, prior ¥993.6B, +46.5%), resulting in a temporary decline in ROE despite absolute earnings increasing 21.7%. Revenue-to-Ordinary Income ratio was 9.5% (prior 9.4%, +0.1pt). EBITDA margin is approximately 12.3% (Operating Income ¥248.4B + Depreciation ¥90.4B ≒ ¥338.8B ÷ Revenue), indicating stable earnings power. Equity-method investment gains ¥20.7B account for about 7.9% of Ordinary Income, boosting non-core earnings. [Cash Quality] OCF of ¥509.2B is 3.2x Net Income ¥160.5B, indicating strong cash backing for profit. OCF/EBITDA ratio is roughly 1.5x (¥509.2B ÷ ¥338.8B), and subtotal OCF before working capital changes of ¥577.0B is high. Free Cash Flow was positive at ¥64.4B (OCF ¥509.2B - Investing CF ¥444.8B), showing the company can sustain growth investment while maintaining financial health. OCF margin was 18.5% (¥509.2B ÷ Revenue ¥2,752.5B), substantially higher than operating margin, demonstrating strong cash generation. [Investment Efficiency] Total asset turnover was 0.87x (Revenue ¥2,752.5B ÷ Total Assets ¥3,166.6B), and ROA was 5.1% (Ordinary Income ¥262.0B ÷ Total Assets), steady. Capital expenditure ¥430.6B is 4.8x depreciation ¥90.4B, indicating continued large-scale investment; Construction-in-progress ¥410.3B (25.3% of tangible fixed assets) reflects ongoing growth projects. [Financial Soundness] Equity Ratio improved to 46.0% (prior 33.0%, +13.0pt). Capital stock ¥229.7B (prior ¥79.6B, +188.5%), Capital Surplus ¥281.2B (prior ¥130.2B, +116.0%) show capital strengthening. Interest-bearing debt (short-term borrowings ¥297.9B + long-term borrowings ¥814.2B + corporate bonds ¥43.4B + bonds payable within one year ¥46.8B) totaled ¥1,202.3B; Debt/Equity ratio improved to 0.83x (prior 1.79x), and Debt/EBITDA is about 3.5x, indicating improved leverage resilience. Current ratio was 95.0% (Current Assets ¥750.3B ÷ Current Liabilities ¥789.6B), slightly below 1x, indicating somewhat tight short-term liquidity, but Cash and Deposits ¥299.6B mitigate funding risk.
OCF increased significantly to ¥509.2B (prior ¥294.5B, +72.9%). The OCF subtotal was ¥577.0B (Profit before tax ¥248.0B + Depreciation ¥90.4B + equity-method gains ▲¥20.7B + impairment losses ¥11.2B + interest expense ¥12.1B - interest income ¥2.3B and other adjustments), demonstrating strong operating earning power. Working capital contributed positively mainly from a decrease in inventories of ¥251.2B, reflecting the release of funds from inventories for real estate held for sale and partial consumption of construction-in-progress. Increases in trade receivables ▲¥17.0B and decreases in trade payables ▲¥2.6B were minor; overall working capital showed net inflow. After corporate tax payments of ¥64.1B, OCF was ¥509.2B, making the OCF/Net Income ratio 3.2x, very high. Investing CF was ▲¥444.8B (prior ▲¥436.8B), predominantly capital expenditure ▲¥430.6B. Development investment for new hotels and dormitories continued, and Construction-in-progress ¥410.3B is recorded on the balance sheet at period-end. Acquisition of intangible fixed assets ▲¥5.7B, loan recoveries ¥6.9B, and other investment outflows ▲¥2.4B indicate an active investment stance. Free Cash Flow was positive at ¥64.4B (OCF ¥509.2B - Investing CF ¥444.8B), providing funds to support both growth investments and financial strengthening. Financing CF was ▲¥21.7B (prior +¥81.9B), reflecting net new long-term borrowings ¥194.7B less repayments ▲¥145.2B, corporate bond redemptions ▲¥46.8B, and dividend payments ▲¥37.0B. Short-term borrowings increased net by ¥13.5B, and corporate bonds decreased net by ▲¥46.8B, reducing borrowing dependence. Cash and cash equivalents increased by ¥42.9B from ¥253.5B at the beginning of the period to ¥296.3B at the end, securing liquidity.
Of Ordinary Income ¥262.0B, Operating Income ¥248.4B is core operating earnings and accounts for 94.8%, indicating high quality of recurring earnings. Non-operating income ¥31.1B (1.1% of Revenue) was primarily equity-method investment gains ¥20.7B, dividend income ¥3.4B, and interest income ¥2.3B, all stable and recurring revenue sources. Non-operating expenses ¥17.5B were mainly interest expense ¥11.7B; interest burden relative to interest-bearing debt of ¥1,202.3B is roughly 1.0%, low. The decline from Ordinary Income ¥262.0B to Net Income ¥160.5B (a reduction of ¥101.5B, ▲38.7%) was driven by Extraordinary Losses ¥15.0B (impairments ¥11.2B, disaster loss ¥2.3B) and income taxes ¥60.9B. Impairments were distributed across hotels ¥10.0B, dormitories ¥0.9B, and other ¥2.9B, not concentrated in a specific business, and reflect one-off adjustments to profitability. Disaster loss ¥2.3B was non-recurring and had limited impact on underlying operating capability. Comprehensive Income was ¥197.2B (Net Income ¥160.5B + Other Comprehensive Income ¥10.2B). Components of Other Comprehensive Income: valuation difference on securities ¥5.7B, deferred hedge gains/losses ¥2.0B, actuarial differences on retirement benefits ¥1.4B, and OCI attributable to equity-method affiliates ¥0.9B, all modest revaluation movements. Accrual indicator ((OCF ¥509.2B - Net Income ¥160.5B) ÷ Total Assets ¥3,166.6B) ≒ 11.0%, indicating OCF substantially exceeds Net Income and conversion of earnings to cash is very strong. OCF/Net Income ratio 3.2x and OCF/EBITDA ratio 1.5x support a robust cash backing for earnings and high quality of recurring income.
Full-year guidance was Revenue ¥2,770.0B (+0.6%), Operating Income ¥260.0B (+4.6%), Ordinary Income ¥260.0B (▲0.8%), and Net Income ¥180.0B (EPS ¥197.98). Against guidance, Revenue achieved 99.4% of forecast (nearly met), Operating Income reached 95.6% (slightly below), Ordinary Income exceeded forecast at 100.8%, and Net Income was 89.2% of forecast (some downside). Reasons for Operating Income shortfall include larger-than-expected profit deterioration in Contracted Services and higher-than-anticipated promotional spending as upfront investment, and a shift in Construction project mix toward lower-margin projects. Conversely, Ordinary Income exceeded forecast because equity-method investment gains ¥20.7B outperformed expectations, resulting in a 0.8% exceedance of full-year Ordinary Income guidance. The shortfall in Net Income versus guidance was mainly due to Extraordinary Losses ¥15.0B (unexpected impairments ¥11.2B and disaster loss ¥2.3B), causing Profit before tax ¥248.0B to miss the forecast. Dividend guidance was an annual ¥23 per share (interpreted as ¥23 interim and ¥23 year-end), matching actual total annual dividend ¥46 (¥23 interim + ¥23 year-end). Payout Ratio was 20.4% (actual DPS ¥46 ÷ EPS ¥221.84), conservative, indicating a policy of prioritizing growth investment while maintaining stable dividends. For the next fiscal year, improving profitability in Contracted Services, upgrading Construction projects to higher value-added contracts, and maintaining occupancy in Hotel and Dormitory businesses are key to achieving earnings targets.
Dividends were annual ¥46 (Year-end ¥23 + Interim ¥23), with a Payout Ratio of 20.4% (Total dividends ¥37.1B ÷ Net Income ¥160.5B; can be cross-checked with DPS ¥46 ÷ EPS ¥221.84), a conservative level. Prior year annual dividend was ¥16, so the current year dividend increased by ¥30 (+187.5%). Free Cash Flow ¥64.4B covers total dividends ¥37.1B by 1.7x, indicating ample coverage and high sustainability of dividends. Cash and deposits ¥299.6B correspond to roughly eight years of dividend payments, showing abundant liquidity. Dividend policy is “stable dividend + priority on growth investment,” balancing a Payout Ratio of 20.4% with growth investments (CapEx ¥430.6B, Construction-in-progress ¥410.3B). No share buybacks were conducted; Total Return Ratio equals the Payout Ratio at 20.4%. Shareholders’ equity increased to ¥1,430.3B (prior ¥978.8B, +46.1%), expanding dividend capacity. Retained earnings were ¥922.0B (prior ¥771.9B, +19.4%), providing scope for future dividend increases. Next fiscal year dividend guidance is annual ¥23 (interpreted as baseline), indicating expected continuation of stable returns at the same level.
Demand volatility risk in the Hotel Business: The Hotel Business accounts for 54.2% of Revenue and about 85% of Operating Income; fluctuations in occupancy and ADR materially affect consolidated results. While inbound demand recovery continues, economic downturns or renewed infectious disease outbreaks could sharply reduce demand, and high fixed costs could cause profits to deteriorate rapidly. This fiscal year Operating Margin was 14.1% (prior 15.1%), showing slight decline; maintaining occupancy and cost control will be critical.
Project concentration risk in the Construction Business: The Construction Business scaled rapidly to Revenue ¥431.1B (+333.2%) but has a low margin of 7.1%; timing shifts or changes in project mix can significantly affect Revenue and profit. Construction-in-progress of ¥410.3B (25.3% of tangible fixed assets) is high; delays in project progress or cost overruns could result in capital being tied up and increase impairment risk.
Short-term liquidity risk: Current ratio is 95.0% (Current Assets ¥750.3B ÷ Current Liabilities ¥789.6B), below 1x, indicating some short-term liquidity tightness. Cash and deposits ¥299.6B are nearly matched by short-term borrowings ¥297.9B; if working capital needs rise sharply, funding pressure could increase. Although OCF is ample (¥509.2B), a large part of this was driven by a one-time inventory reduction of ¥251.2B; if working capital reverses next fiscal year, liquidity could be constrained.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.0% | 8.1% (3.6%–16.0%) | +0.9pt |
| Net Margin | 5.8% | 5.8% (1.2%–11.6%) | -0.0pt |
The company’s Operating Margin is 0.9pt above the industry median, maintaining above-average profitability within the sector. Net Margin matches the industry median, indicating standard industry profit structure.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 20.2% | 10.1% (1.7%–20.2%) | +10.1pt |
Revenue growth of 20.2% substantially exceeds the industry median of 10.1%, placing the company among top growers in the sector, driven by stable demand in Hotels/Dormitories and large project recognition in Construction.
※ Source: Company compilation
Revenue and profit growth with strong cash generation: Revenue +20.2%, Operating Income +21.2% indicate strong quality and quantity growth; OCF ¥509.2B is 3.2x Net Income and OCF/EBITDA is 1.5x, demonstrating very strong cash backing for earnings. Free Cash Flow ¥64.4B supports a financial base that can sustain both growth investment and dividends. Continued occupancy maintenance in Hotel/Dormitory segments and upgrading Construction projects to higher value-added contracts are expected to sustain growth.
Capital strengthening and significant improvement in financial soundness: Equity Ratio improved to 46.0% (prior 33.0%, +13.0pt), and equity was greatly expanded to Net Assets ¥1,455.3B (+46.5%) through increases in capital stock and capital surplus. Debt/Equity improved to 0.83x (prior 1.79x), reducing financial leverage. Although current ratio is 95.0%, cash and deposits ¥299.6B and relatively low interest burden (interest expense ¥11.7B) support financial resilience. Sufficient capacity remains for future growth investments.
Segment portfolio issues and opportunities: The Hotel Business (Operating Income ¥210.5B, margin 14.1%) earns about 85% of consolidated Operating Income, and the Dormitory Business (Operating Income ¥61.9B, margin 10.7%) provides a stable base. Contracted Services, however, experienced sharp deterioration in profitability (Operating Income ¥3.0B, -75.6%, margin 1.3%) and requires urgent remediation. The Construction Business expanded rapidly to Revenue ¥431.1B (+333.2%) but retains a low margin of 7.1%; managing project mix and profitability will be key. Maintaining occupancy in Hotel/Dormitory operations, improving Contracted Services profitability, and increasing value-add in Construction projects are pivotal to improving consolidated margins.
This report is an earnings analysis document 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 based on public financial statements. Investment decisions are your own responsibility; please consult a professional if necessary before making investment decisions.