NAC (9788) FY2026 Q3 Earnings Report

Quick View

Executive Summary

For the cumulative Q3 period of the fiscal year ending March 2026, NAC reported lower revenue and earnings, with profit margins declining significantly due to weakness in its core Housing and Construction Consulting Businesses. Revenue was ¥42.23B (down 4.9% YoY), Operating Income was ¥1.28B (down 43.5%), Ordinary Income was ¥1.29B (down 43.2%), and Net Income attributable to owners of the parent was ¥0.82B (down 23.4%). Although the gross profit margin improved to 50.1% from the previous year, the increase in the SG&A expense ratio more than offset the improvement, causing the operating margin to decline to 3.0% (5.1% in the previous year). The fact that the rate of decline in net income was smaller than that of Operating Income was due to special gains and losses improving from a net loss in the previous year to a net gain, and does not indicate an improvement in the earnings power of the core business.

Factors Affecting Results

【Revenue】Revenue was ¥42.23B, down 4.9% YoY. The core CreCla Business (¥12.05B, +3.3%) and Rental Business (¥13.73B, +0.3%) remained solid. However, the Construction Consulting Business declined to ¥3.36B (▲15.5%) due to extended construction periods following revisions to the Building Standards Act. The Housing Business also posted a substantial revenue decline to ¥6.81B (▲26.6%) due to weak sales at KDI, J-WOOD, and Shuuwajuken amid sluggish housing market conditions. The decline in both businesses weighed on company-wide revenue.

【Profit and Loss】Operating Income was ¥1.28B (down 43.5%), while Ordinary Income was ¥1.29B (down 43.2%). The primary factors were the Construction Consulting Business turning to a segment loss of ¥0.19B (profit of ¥0.29B in the previous year) and the Housing Business reporting a loss of ¥0.15B (profit of ¥0.11B in the previous year). Special gains and losses improved from a net loss of ¥0.29B in the previous year to a net gain of ¥0.06B, mainly due to a gain on the sale of investment securities of ¥0.07B. However, this was a temporary factor and contributed to Profit Before Tax declining at a smaller rate (▲31.8%) than Operating Income (▲43.5%). While the gross profit margin improved, SG&A expenses increased 4.8% YoY, offsetting the potential for earnings growth. In conclusion, the company reported lower revenue and earnings.

Segment Analysis

Total segment profit of ¥2.24B (¥3.31B in the previous year) decreased 32.3% YoY. The CreCla Business, which has the largest share of revenue (28.5%), is the company’s core business. The CreCla Business generated segment profit of ¥1.39B (up 10.0% YoY) and the highest profit contribution, with a margin of 11.6%, driving overall earnings growth. Meanwhile, both the Construction Consulting Business (margin of ▲5.8%) and Housing Business (margin of ▲2.2%) became loss-making, weighing on company-wide profits. The Rental Business posted a margin of 8.3%, down YoY, while the Beauty and Health Business reported a margin of 4.9% and a 39.1% YoY decline in profit, resulting in a widening gap in profit margins among businesses.

Key Financial Indicators

Profitability: ROE of 4.9% (annualized), Operating margin of 3.0% (5.1% in the previous year)
Cash Quality: Cash and deposits of ¥7.00B, current ratio of 207.8%
Financial Soundness: Equity Ratio of 57.3% (58.6% in the previous year); interest-bearing debt of ¥5.62B is 0.25 times net assets
Per-Share Indicators: EPS of ¥19.58 (¥24.80 in the previous year), BPS of ¥533.64

Cash Flow Analysis

The disclosed data does not include details of cash flows, and therefore Operating Cash Flow (OCF), investing cash flow, and financing cash flow cannot be calculated. Cash and deposits stood at ¥7.00B, down 18.5% from ¥8.59B in the same period of the previous year, while remaining 1.71 times higher than short-term interest-bearing debt of ¥4.10B, comprising short-term borrowings of ¥2.70B and long-term borrowings due within one year of ¥1.40B.

Earnings Quality

Net Income attributable to owners of the parent was ¥0.82B, compared with Ordinary Income of ¥1.29B, representing a substantial divergence of approximately 36%. This difference was due to the corporate income tax burden, with an effective tax rate of 39.4%. Special gains of ¥0.17B, including a gain on the sale of investment securities of ¥0.07B, exceeded special losses of ¥0.11B, including an impairment loss on investment securities of ¥0.05B. As a result, Profit Before Tax was ¥1.35B, exceeding Ordinary Income. This improvement in special gains and losses was a temporary factor and must be evaluated together with the substantial declines in Operating Income and Ordinary Income, which reflect the earnings trends of the core business.

Earnings Forecasts and Guidance

The Q3 cumulative progress rates against the full-year forecasts (Revenue of ¥62.00B, Operating Income of ¥2.90B, and Ordinary Income of ¥2.90B) were 68.1%, 44.2%, and 44.5%, respectively, all substantially below the standard progress rate of 75%. Operating Income progress in particular was 30.8pt below the standard rate, requiring Operating Income of ¥1.62B in Q4, equivalent to an operating margin of 8.2%. This represents a level requiring a sharp recovery from the Q3 cumulative operating margin of 3.0%, making improved profitability in the Housing and Construction Consulting Businesses a prerequisite for achieving the plan.

Shareholder Returns

The Q2 dividend was ¥5.00 per share, and the full-year dividend forecast is ¥22.00. Based on forecast full-year EPS of ¥44.27, the forecast Payout Ratio is approximately 49.7%. No disclosure regarding share buybacks has been made, and shareholder returns consist solely of dividends; accordingly, the company is evaluated based on its Payout Ratio. The forecast dividend of ¥22.00 exceeds Q3 cumulative EPS of ¥19.58, making achievement of the full-year earnings plan a prerequisite for maintaining the dividend level.

Catalysts

【Short Term】Whether profitability improves in the Housing Business and Construction Consulting Business in Q4, as well as progress toward achieving full-year Operating Income of ¥2.90B.

【Long Term】Maximization of LTV in the CreCla Business, expansion of Duskin With’s sales areas, and realization of the effects of M&A integration involving Combi Box, Shuuwajuken, and other businesses, toward Medium-Term Management Plan 2028 (Revenue of ¥68.5B and Operating Income of ¥3.3B) and Long-Term Vision 2035 (Revenue of ¥100.0B and operating margin of 8%).

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Profitability is substantially below the industry median, placing the company in the lower tier.

Growth and Capital Efficiency

The revenue growth rate is substantially below the industry median, positioning the company among those exhibiting a notable revenue decline within the industry.

※Source: Compiled by the Company

Risk Factors

1. Deterioration in the profitability of the Housing and Construction Consulting Businesses: Revenue in the Housing Business declined 26.6% YoY, resulting in a segment loss of ¥0.15B, while revenue in the Construction Consulting Business declined 15.5%, resulting in a segment loss of ¥0.19B. Extended construction periods resulting from revisions to the Building Standards Act are affecting the operations of the small and medium-sized construction companies that constitute the businesses’ primary customers, worsening the order environment for both businesses.

2. Deterioration in the cost structure: While the gross profit margin improved to 50.1%, the SG&A expense ratio rose to 47.1%, reducing the operating margin to 3.0%. SG&A expenses increased 4.8% YoY despite declining revenue, and if the decline in fixed-cost absorption continues, it could lead to a further decline in profit margins.

3. Uncertainty regarding achievement of the full-year plan: Against the full-year Operating Income forecast of ¥2.90B, the Q3 cumulative progress rate was only 44.2%, requiring a sharp recovery to an equivalent operating margin of 8.2% in Q4. If recovery in the Housing and Construction Consulting Businesses is delayed, the gap from the full-year plan may widen.

Key Takeaways from the Earnings Results

1. The CreCla Business achieved higher revenue and earnings, with its profit margin improving to 11.6% (10.9% in the previous year). As the core business accounting for more than 60% of total segment profit, it supports company-wide earnings.

2. The shift of the Housing and Construction Consulting Businesses into the red has widened the gap in profit margins among segments. The fact that the improvement in the gross profit margin was offset by higher SG&A expenses indicates the need to improve cost efficiency in rebuilding profitability.

3. Improvement in special gains and losses limited the decline in net income compared with Operating Income. When evaluating earnings trends in the core business, it is useful to focus on Ordinary Income and Operating Income.

Theoretical Share Price (For Reference)

Sensitivity: ¥504–¥533 at cost of equity ±1%; ¥517–¥518 at ω±0.1.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end were used (there is a timing difference from the full-year forecast).

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

---

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

---End of Report---