TOKYOTOKEIBA (9672) FY2026 Q1 Earnings Report

Quick View

Executive Summary

The Company recorded higher revenue but lower earnings in Q1, as declining profitability in the public sports business put pressure on earnings. Revenue increased slightly to ¥93.7B (+1.1% YoY), while Operating Income declined to ¥32.4B (-1.1%), Ordinary Income to ¥32.5B (-0.6%), and Net Income to ¥21.8B (-5.3%). The primary factor was the increase in cost of sales (+3.1%), which exceeded the revenue growth rate and caused the gross margin to decline; this could not be fully offset by reductions in selling, general and administrative expenses.

Factors Affecting Performance

【Revenue】Revenue was ¥93.7B (+1.1% YoY). The public sports business, the largest segment, generated ¥71.0B (+1.1% YoY; 75.8% of total), with nearly flat growth and therefore largely determining overall performance. The warehouse leasing business expanded steadily to ¥15.4B (+2.3% YoY), and the amusement park also recorded higher revenue of ¥1.8B (+1.4% YoY), while Commercial Services declined to ¥5.8B (-2.4% YoY).

【Profit and Loss】Operating Income was ¥32.4B (-1.1% YoY), as the increase in the cost-of-sales ratio (costs +3.1%, exceeding revenue growth) reduced the gross margin. Profit from the public sports business declined to ¥27.6B (-2.7% YoY), with its margin falling to 38.8%. Meanwhile, the warehouse leasing business maintained high profitability, generating ¥10.3B (+2.4% YoY; 66.9% margin), while Commercial Services also increased profit by 5.9%. The amusement park posted a loss of ¥3.1B, with the deficit widening. Ordinary Income was ¥32.5B (-0.6% YoY), and Net Income was ¥21.8B (-5.3% YoY), resulting in higher revenue but lower earnings.

Segment Analysis

The public sports business generated revenue of ¥70.0B and Operating Income of ¥27.6B (38.8% margin), making it the core contributor to consolidated profit; however, profit declined despite higher revenue, making profitability a key area for monitoring. The warehouse leasing business generated revenue of ¥15.4B and Operating Income of ¥10.3B (66.9% margin), maintaining the highest profitability and partially offsetting the decline in profit from the public sports business. Commercial Services recorded lower revenue of ¥5.8B, but profit increased by 5.9%, confirming an improvement in profitability. The amusement park generated revenue of ¥1.8B against an Operating Loss of ¥3.1B; its deficit widened despite higher revenue, representing a structural business challenge.

Key Financial Metrics

【Profitability】The Operating Income margin was 34.6% (35.4% in the prior year), and the Net Income margin was 22.9% (24.5% in the prior year), with both declining slightly. The gross margin was 40.3%, down approximately 1.2pt from 41.5% in the prior year, with the increase in cost of sales being the primary cause of the decline in profitability.【Cash Quality】Non-operating income was ¥0.3B and extraordinary income was ¥0.2B, both limited in scale. Ordinary Income of ¥32.5B was therefore broadly in line with Operating Income, indicating high earnings quality. The effective tax rate of 33.5% was a factor weighing on Net Income.【Investment Efficiency】Annualized ROE was 9.1%. Given the asset-intensive structure, with fixed assets accounting for 80.0% of total assets, total asset turnover remained low.【Financial Soundness】The Equity Ratio was a robust 78.2%. Liquid assets, consisting of cash and deposits of ¥150.6B plus short-term securities of ¥54.0B, totaled ¥204.6B, a level sufficient to cover the ¥100.0B in bonds due for redemption within one year.

Cash Flow Analysis

Although the cash flow statement was not disclosed, an assessment of funding trends based on changes in the balance sheet indicates that cash and deposits declined from ¥174.7B in the same period of the prior year to ¥150.6B, while short-term investment securities increased from ¥44.0B to ¥54.0B, suggesting that some funds may have shifted toward securities investments. Total current assets declined from ¥271.6B to ¥243.8B, while current liabilities also contracted from ¥209.2B to ¥170.2B, indicating that working capital levels remained broadly stable. Although ¥100.0B in bonds due for redemption within one year is included in current liabilities, cash and deposits alone cover 1.5 times the redemption amount, providing substantial financial flexibility.

Earnings Quality

Against Operating Income of ¥32.4B, non-operating income was only ¥0.3B and non-operating expenses were ¥0.2B, meaning that Ordinary Income of ¥32.5B was primarily composed of Operating Income. The main component of non-operating income was interest income of ¥0.2B, equivalent to approximately 0.2% of revenue, and relatively small. Ordinary Income can therefore be considered high quality, with a strong dependence on core operating earnings. Extraordinary income of ¥0.2B also had only a limited impact on Profit Before Tax of ¥32.7B. Net Income of ¥21.8B was below Ordinary Income, primarily due to income taxes of ¥11.0B (effective tax rate: 33.5%), rather than a divergence caused by temporary or unusual factors.

Earnings Forecast and Guidance

The Q1 progress rates against the full-year forecasts were 22.0% for revenue (¥93.7B / ¥426.0B), 20.5% for Operating Income (¥32.4B / ¥158.3B), and 20.5% for Ordinary Income (¥32.5B / ¥158.6B). Although all were below the standard quarterly progress rate of 25%, the variance remained within 5pt, and the Company has not revised its earnings or dividend forecasts. The full-year plan anticipates higher revenue and higher earnings than the prior year (revenue +2.0%, Operating Income +2.7%); achieving the plan will depend on improving the cost-of-sales ratio from Q2 onward and restoring profitability in the public sports business.

Shareholder Returns

The full-year dividend forecast is ¥146.00 per share, and the total annual dividend based on the average number of shares outstanding during the period is estimated at approximately ¥38.0B. The Payout Ratio against the forecast Net Income attributable to owners of the parent for the full year (approximately ¥107.9B) is approximately 35.2%, and the dividend forecast has not been revised. The Company holds cash and deposits of ¥150.6B and short-term investment securities of ¥54.0B, securing sufficient financial capacity to maintain dividend payments.

Risk Factors

1. Dependence on a Revenue Source: The public sports business accounts for 75.8% of consolidated revenue and 76.4% of total segment profit, making it the largest source of profit. While revenue from the business increased only +1.1% YoY, segment profit declined by △2.7% YoY as profitability deteriorated, creating a significant impact on consolidated performance.

2. Widening Losses in the Amusement Park Business: Against revenue of ¥1.8B, the business recorded an Operating Loss of ¥3.1B, widening from the ¥3.0B loss in the same period of the prior year. Losses expanded despite higher revenue, creating earnings volatility risks related to fixed-cost burdens and visitor trends.

3. Short-Term Funding Requirements: ¥100.0B in bonds due for redemption within one year is recorded in current liabilities. Although the combined ¥204.6B of cash and deposits and short-term investment securities exceeds the redemption amount, the allocation of funds at the time of redemption or refinancing remains an area requiring continued monitoring.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The Company's profitability significantly exceeds the industry median, indicating a high level of profitability within the industry.

Growth and Capital Efficiency

The revenue growth rate is well below the industry median, indicating a slower growth pace relative to the Company's high profitability.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The Operating Income margin of 34.6% and Net Income margin of 22.9% remain high, but declined by approximately 0.8pt and approximately 1.6pt, respectively, from the same period of the prior year. A decline in profitability originating from the lower gross margin (the cost increase rate exceeding the revenue growth rate) was observed.

2. Within the business portfolio, the warehouse leasing business maintained high profitability, with a 66.9% margin, and offset the decline in profit from the public sports business to some extent. Meanwhile, the amusement park business saw losses widen despite higher revenue, resulting in a widening profitability gap among businesses.

3. Progress toward the full-year forecast was around 20% for the key metrics, slightly below the standard level of 25%. However, no forecast revision was made, and financial stability was maintained against the backdrop of a robust Equity Ratio of 78.2% and ample liquidity.

Theoretical Share Price (Reference Value)

Sensitivity: ¥3,774–¥3,994 at ±1% for the cost of equity, and ¥3,876–¥3,889 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data and is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee future share prices.)

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

---End of Report---