| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥353.9B | ¥352.9B | +0.3% |
| Operating Income / Operating Profit | ¥43.8B | ¥43.0B | +1.9% |
| Ordinary Income | ¥50.0B | ¥48.0B | +4.1% |
| Net Income / Net Profit | ¥44.4B | ¥42.1B | +5.3% |
| ROE | 6.4% | 6.8% | - |
For the fiscal year ended March 2026, Revenue was ¥353.9B (YoY +¥0.9B +0.3%), Operating Income was ¥43.8B (YoY +¥0.8B +1.9%), Ordinary Income was ¥50.0B (YoY +¥2.0B +4.1%), and Net Income was ¥44.4B (YoY +¥2.2B +5.3%). Revenue showed only a marginal increase, while operating margin improved to 12.4% (prior 12.2%, +20bp), reflecting higher profitability. Gains beyond Ordinary Income were amplified by stable non-operating income and a special gain (proceeds from sale of investment securities ¥21.3B).
[Revenue] Revenue of ¥353.9B (+0.3% YoY) was largely driven by the core Module Construction Business (Revenue ¥290.7B, share 82.1%) which was nearly flat YoY at -0.1%, and the Prefab & System Construction Business (Revenue ¥51.4B, -2.0%) which declined. The Construction Machinery Business (Revenue ¥11.8B, +23.7%) achieved double-digit growth, resulting in a slight overall increase. By segment, the Module Construction Business share edged down slightly from 82.4% to 82.1% but still exceeds 80%, indicating high business concentration. While top-line was flat, gross profit margin improved to 39.8% (prior 39.2%, +63bp), suggesting progress in price and product mix.
[Profitability] Operating Income of ¥43.8B (+1.9% YoY) reflected an increase in gross profit of ¥2.8B YoY due to margin improvement, partially offset by SG&A rising ¥1.9B YoY (+2.0%), pushing the SG&A ratio up to 27.5% (prior 27.0%, +48bp) and partially offsetting operating leverage. The main SG&A drivers were higher salaries and allowances (+¥1.1B) and a slight rise in rent (+¥0.1B), indicating personnel cost pressure. Non-operating income was ¥6.5B (prior ¥5.5B), with dividend income received ¥5.8B (prior ¥5.0B) contributing stably, lifting Ordinary Income to ¥50.0B (+4.1%). Special gains totaled ¥21.3B (prior ¥16.3B), primarily proceeds from sale of investment securities ¥21.3B; after offsetting special losses ¥4.8B (prior ¥1.9B), the net special items amounted to +¥16.6B, contributing to Pre-tax Income of ¥66.6B (+6.7%). After deducting income taxes of ¥22.2B (effective tax rate 33.4%), Net Income was ¥44.4B (+5.3%). Because this includes one-off special gains, evaluation on a normalized basis at the Ordinary Income stage is appropriate. In conclusion, the company posted revenue and profit growth, but revenue growth was limited; profitability improvement and a one-time sale of securities were the main drivers of profit increase.
The Prefab & System Construction Business recorded Revenue ¥51.4B (-2.0% YoY) and Operating Income ¥6.1B (-13.6% YoY, margin 12.0%), showing decline in both revenue and profit. The Construction Machinery Business posted Revenue ¥11.8B (+23.7% YoY) and Operating Income ¥1.5B (+270% YoY, margin 12.5%), delivering substantial profit growth. The Module Construction Business reported Revenue ¥290.7B (-0.1% YoY) and Operating Income ¥36.6B (+2.0% YoY, margin 12.6%), with slight revenue decline but profit growth. Segment margins are all in the 12% range, but the Prefab business is relatively lower and down on profit, Construction Machinery is rapidly expanding from a small base, and the core Module Construction Business consistently maintains high margins and drives overall profitability. Business concentration toward the Module Construction Business (Operating Income share 83.6%) presents correlated demand risk.
[Profitability] Operating margin 12.4% (prior 12.2%, +20bp), Net margin 12.5% (prior 11.9%, +60bp), ROE 6.4% (prior 6.9%, -50bp). Operating margin improved on stronger gross margin, but ROE declined as growth in shareholders’ equity (prior ¥61,670M → this period ¥69,250M, +12.3%) outpaced Net Income growth (+5.3%). [Cash Quality] Operating Cash Flow / Net Income is 0.60x, indicating weak conversion of profits to cash; inventory increase (-¥5.0B), accounts receivable increase (+¥5.1B), and higher tax payments (-¥23.0B) were headwinds. OCF/EBITDA (Operating Income + Depreciation) is 0.30x, low and indicative of cash quality issues. [Investment Efficiency] EPS ¥284.11 (prior ¥268.32, +5.9%), BPS ¥4,467.57 (prior ¥3,946.26, +13.2%). Total asset turnover 0.446x (prior 0.506x) declined, indicating weaker asset efficiency. [Financial Soundness] Equity Ratio 87.3% (prior 88.4%, -1.1pt), Current Ratio 435% (prior 368%), Quick Ratio 369% — liquidity and solvency are extremely strong. Cash & Deposits ¥14.88B, Investment Securities ¥22.76B, debt-to-equity ratio 0.15x reflecting effectively debt-free operations. Valuation differences on investment securities ¥8.69B (prior ¥3.88B) imply market value volatility risk.
Operating Cash Flow was ¥2.66B (prior ¥4.39B, -39.4%) and is 0.60x relative to Net Income ¥44.4B. Primary causes were inventory increase (-¥0.50B), accounts receivable increase (working capital subtotal decreased by -¥0.51B from prior subtotal ¥4.34B), and higher corporate tax payments (-¥2.30B, prior -¥1.42B), with buildup in working capital and tax burden pressuring cash inflows. Investing Cash Flow was +¥2.00B, driven by proceeds from sale of investment securities ¥4.17B exceeding investment purchases of investment securities -¥1.02B, so asset disposals produced net cash inflow. Financing Cash Flow was -¥1.71B, as dividend payments ¥0.94B and share buybacks ¥0.78B resulted in outflows, funding shareholder returns rather than strengthening the balance sheet. Free Cash Flow was ¥4.66B (Operating CF ¥2.66B + Investing CF ¥2.00B); since Investing CF was positively affected by asset sales, intrinsic FCF excluding disposal gains approximates Operating CF level of ¥2.66B. Sustainable cash generation depends on recovery of Operating CF through inventory turnover normalization and faster receivables collection.
Recurring earnings comprise Operating Income ¥43.8B and non-operating income ¥6.5B (dividend income received ¥5.8B). Non-operating income is 1.8% of Revenue and below the 5% threshold, although there is some reliance on dividend income. Special items include special gains ¥21.3B (mostly proceeds from sale of investment securities) and special losses ¥4.8B, netting +¥16.6B which significantly boosted Pre-tax Income. Normalized Net Income (excluding special items) is estimated around ¥33B, meaning reported Net Income ¥44.4B includes ~¥11.4B of one-off contributions. The gap between Ordinary Income ¥50.0B and Net Income ¥44.4B (-¥5.6B) reflects special items and tax effects; after the special gains normalize, profit levels would trend closer to Ordinary Income. The accrual ratio (Net Income - Operating CF)/Total Assets is 2.2% and acceptable, but Operating CF/Net Income 0.60x and OCF/EBITDA 0.30x are low, indicating room to improve cash-based earnings quality.
Company guidance assumes Revenue ¥380.0B (+7.4% YoY), Operating Income ¥45.0B (+2.7%), Ordinary Income ¥51.0B (+1.9%), Net Income ¥33.0B (-25.6%). The projected decline in Net Income reflects a conservative stance assuming no recurrence of this period’s special gain (proceeds from sale of investment securities ¥21.3B). On a progress-rate basis, current period results correspond to ~93% of annual Revenue target, ~97% of Operating Income, and ~98% of Ordinary Income — essentially within reach at operating and ordinary stages. Net Income shows an apparent 134% progress rate due to this period’s one-off gains, but on a normalized (Ordinary Income) basis next fiscal year’s targets are reasonable. Achieving Revenue growth of +7.4% depends on higher utilization and price maintenance in the core Module Construction Business and continued growth in the Construction Machinery Business.
Year-end dividend ¥100 (ordinary dividend ¥60 + 60th anniversary commemorative dividend ¥40) yields a payout ratio of 36.9% (ordinary dividend only 22.4%). Dividend payments totaling ¥0.94B are well covered by Net Income ¥44.4B, but because current Net Income includes special gains, the payout ratio on a normalized profit base (estimated ¥33B) is ~28%, indicating sustainability. Share buybacks ¥0.78B bring total shareholder returns to ¥1.72B and a Total Return Ratio of 38.8% (on a normalized profit base approximately 52%). Coverage of total returns by FCF ¥4.66B is 2.71x, though FCF includes proceeds from investment securities sales; coverage on an Operating CF basis (¥2.66B) is 1.55x. Sustainability going forward depends on recovery of Operating CF. For next fiscal year guidance Net Income ¥33.0B, with commemorative dividend ending, maintaining ordinary dividend ¥60 (payout ratio ~18%) should be easily manageable.
Business Concentration Risk: The Module Construction Business accounts for 82.1% of Revenue and 83.6% of Operating Income, so demand swings, price competition, or utilization declines in this business directly affect consolidated performance. In downturns of construction investment cycles or shifts in capex sentiment, Revenue and profits could fluctuate materially.
Working Capital Burden Risk: Inventory increased ¥0.61B YoY (+17.1%) and inventory days worsened to 72 days (from 67), with receivables also slightly higher, causing working capital buildup that pressures Operating CF. In a demand slowdown, risks include inventory obsolescence, slower receivables collection, liquidity stress, and valuation losses.
Market Value Risk of Investment Securities: Investment securities of ¥22.76B (28.7% of total assets) are held, and valuation differences ¥8.69B (prior ¥3.88B) are sensitive to equity market fluctuations. Market value declines could reduce equity through valuation adjustments and may result in realized losses upon disposal.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.4% | 8.1% (3.6%–16.0%) | +4.3pt |
| Net Margin | 12.5% | 5.8% (1.2%–11.6%) | +6.7pt |
Profitability significantly exceeds industry median, placing the company among the upper ranks on margin metrics.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 0.3% | 10.1% (1.7%–20.2%) | -9.8pt |
Revenue growth lags the industry median, indicating weaker growth performance.
※Source: Company compilation based on public financial statements
Reported Net Income ¥44.4B includes substantial one-off contribution from sale of investment securities ¥21.3B; on a normalized basis evaluation at Ordinary Income ¥50.0B (+4.1%) or Operating Income ¥43.8B (+1.9%) is appropriate. Next fiscal year guidance Net Income ¥33.0B (-25.6%) is a conservative stance assuming normalization of special items; growth at the operating and ordinary stages is expected to continue.
Profitability improved with Operating Margin 12.4% (+20bp) and Gross Margin 39.8% (+63bp), but SG&A Ratio rose to 27.5% (+48bp). Operating leverage improvement depends on controlling personnel expenses and rent. Cash conversion is weak with Operating CF/Net Income 0.60x and OCF/EBITDA 0.30x; deterioration in inventory days (72 days vs. prior 67) and working capital buildup are key pressure points. Normalization of working capital (inventory and receivables turnover) is essential for Operating CF recovery and sustainable cash generation.
Financial position is very strong — Equity Ratio 87.3%, Cash ¥14.88B, Current Ratio 435% with effectively debt-free operations (debt-to-equity 0.15x). Investment Securities ¥22.76B (valuation difference ¥8.69B) carry market value risk, but dividends (year-end ¥100, ordinary ¥60 + commemorative ¥40) translate to a normalized payout ratio of 28% and appear sustainable. Inclusive of share buybacks (¥0.78B), Total Return Ratio is 38.8% (approx. 52% on normalized profit basis), reflecting a solid shareholder return stance; further returns depend on Operating CF recovery.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statement data. Investment decisions are your responsibility; please consult a professional advisor as necessary.