| Indicator | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥16.2B | ¥13.9B | - |
| Operating Income | ¥2.3B | ¥1.1B | +121.5% |
| Ordinary Income | ¥2.8B | ¥1.3B | +109.0% |
| Net Income | ¥1.9B | ¥0.6B | +194.6% |
| ROE | 1.9% | 0.6% | - |
Hourai Co., Ltd.’s FY2026 Q1 results achieved significant profit growth with Revenue of ¥16.2B (YoY +¥2.3B, +16.5%), Operating Income of ¥2.3B (YoY +¥1.2B, +121.5%), Ordinary Income of ¥2.8B (YoY +¥1.5B, +109.0%), and Net Income of ¥1.9B (YoY +¥1.3B, +194.6%). All segments posted positive Operating Income, with the Insurance Business and Real Estate Business serving as the main earnings pillars. The Operating Margin rose to 14.3%, improving by +6.2pt from 8.1% in the same period last year. Progress toward full-year guidance stands at 26.2% for Revenue, 36.8% for Operating Income, 38.5% for Ordinary Income, and 38.0% for Net Income, indicating a solid start for Q1.
[Profitability] ROE 1.9% (reported basis, quarterly), Operating Margin 14.3% (improved by +6.2pt from 8.1% in the same period last year), Net Margin 11.7% (improved by +7.1pt from 4.6% in the same period last year). [Cash Quality] Cash and Deposits ¥16.9B, Cash Coverage of Short-term Liabilities 1.4x, Working Capital ¥12.2B. [Capital Efficiency] Total Asset Turnover 0.083x (annualized 0.33x), ROIC 1.4% (reported). [Financial Soundness] Equity Ratio 51.2%, Current Ratio 200.9%, Quick Ratio 188.4%, Debt-to-Equity Ratio 0.95x, Interest-bearing Debt ¥28.5B, Debt/Capital 22.2%, Interest Coverage 26.9x.
Cash and Deposits were flat at ¥16.9B versus ¥16.9B in the same period last year, maintaining short-term liquidity. Total Assets decreased to ¥194.9B from ¥197.1B last year (-¥2.2B), while Net Assets increased by +¥1.1B to ¥99.8B, with retained earnings contributing to capital enhancement. Working Capital stands at ¥12.2B, with management over Accounts Receivable ¥5.1B and Inventories ¥1.7B against Accounts Payable ¥0.8B and Current Liabilities ¥12.1B. Long-term guarantee deposits received of ¥50.9B account for a large balance, presumed to reflect business characteristics, making assessment of their effective liability nature important. Cash Coverage of Short-term Liabilities is 1.4x and the Current Ratio is 200.9%, indicating ample short-term payment capacity. The Fixed Asset Ratio of 87.6% reflects an asset-intensive business structure, with Land at ¥40.2B and Buildings and Structures at ¥50.9B comprising the majority of assets.
Against Ordinary Income of ¥2.8B, Operating Income was ¥2.3B, implying approximately ¥0.5B in net non-operating gains. This comprises Non-operating Income of ¥0.9B less Non-operating Expenses of ¥0.4B; key components of Non-operating Income include Dividend Income of ¥0.4B and Subsidy Income of ¥0.3B. Non-operating Income accounts for 5.5% of Revenue, indicating some dependence on non-core earnings. Non-operating Expenses are centered on Interest Expense of ¥0.1B and Bond Interest of ¥0.01B, with Interest Coverage at 26.9x signaling ample debt service capacity. The effective tax rate is 32.1%, a standard level of tax burden. The substantial improvement in Operating Margin is supported by both sales growth and profitability enhancement, with the Insurance Business maintaining a high Operating Margin of 38.5% and the Real Estate Business at 60.2% by segment. Meanwhile, ROIC at 1.4% indicates low capital efficiency, with the high Fixed Asset Ratio suppressing returns on invested capital.
Capital efficiency risk (low ROIC 1.4% and ROE 1.9%, with an asset-intensive structure—Fixed Asset Ratio 87.6%—including Land ¥40.2B and Buildings ¥50.9B constraining capital efficiency), business concentration risk (funding structure dependent on specific contractual relationships, including long-term guarantee deposits received of ¥50.9B; by segment, the Real Estate Business accounts for 47.9% of Operating Income, indicating concentration), and sustainability of profitability risk (Q1 Operating Margin of 14.3% is a sharp improvement from 8.1% in the same period last year and exceeds the full-year forecast Operating Margin of 10.2%, suggesting potential seasonality or one-off factors).
[Position within Industry] (Reference; in-house research) The company operates a multi-business portfolio, making single-industry comparison difficult; however, in terms of profitability, the Operating Margin of 14.3% shows a significant improvement versus its own historical performance. The Insurance Business Operating Margin of 38.5% and the Real Estate Business Operating Margin of 60.2% indicate high profitability within each domain. In contrast, the Total Asset Turnover of 0.083x (annualized 0.33x) reflects an asset-intensive structure and is low compared with general manufacturing and services. The Equity Ratio of 51.2% is stable, but ROE 1.9% and ROIC 1.4% suggest ample room for improvement in capital efficiency. On a full-year forecast basis, the Operating Margin is 10.2% and the Net Margin is 8.1%, making the sustainability of Q1’s high profitability over the full year a key focus. Note: comparisons versus the company’s own historical results; source: in-house aggregation of public financial statements.
First, a significant improvement in profitability stands out. The Operating Margin rose by +6.2pt from 8.1% to 14.3% YoY, and Net Income nearly tripled. By segment, the Insurance Business secured Operating Income of ¥1.2B (Operating Margin 38.5%), and the Real Estate Business secured Operating Income of ¥2.0B (Operating Margin 60.2%), enhancing the profitability of the business portfolio. Second, capital efficiency remains a challenge. With ROIC at 1.4% and ROE at 1.9%, the asset-intensive structure—Fixed Asset Ratio 87.6% (Land ¥40.2B, Buildings ¥50.9B)—is suppressing capital returns. The Total Asset Turnover of 0.083x (annualized 0.33x) is also low, making asset efficiency improvement a medium- to long-term issue. Third, financial soundness and liquidity are favorable. With an Equity Ratio of 51.2%, Current Ratio of 200.9%, and Cash and Deposits of ¥16.9B, the company maintains a stable financial base, and Interest Coverage of 26.9x indicates ample debt service capacity. While Q1 progress toward full-year guidance is solid at 36.8% for Operating Income, Q1’s Operating Margin of 14.3% is above the full-year forecast of 10.2%, warranting continued monitoring for seasonality and changes in the earnings structure.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by our firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed.