Significant profit growth in Q1, but profit progress toward FY2027-H1 is the focus

FY2027-Q1 revenue was ¥130.033 billion, up 7.1% year on year, while operating income was ¥2.804 billion, up 172.9%. Ordinary income was ¥3.344 billion, and net income attributable to owners of the parent was ¥1.857 billion, marking a return to profitability from the net loss recorded in the previous-year period. The simple operating margin was 2.16%, an improvement of approximately 1.31 percentage points from 0.85% in the previous-year period.

The full-year plan calls for revenue of ¥660.0 billion, operating income of ¥40.0 billion, ordinary income of ¥40.0 billion and net income attributable to owners of the parent of ¥25.5 billion. As of Q1, progress against these targets was 19.7%, 7.0%, 8.4% and 7.3%, respectively. Operating income is progressing well behind revenue, making the extent of profit accumulation from the second quarter onward important. The information disclosed so far remains insufficient to assess the likelihood of achieving the full-year target based solely on the Q1 increase in operating income.

The company has consistently explained that the completion and handover of construction projects are concentrated in the second half because of seasonality in the construction business. FY2026-H1 revenue was ¥258.836 billion and operating income was ¥7.851 billion, so it would not be appropriate simply to annualize FY2027-Q1 standalone operating income of ¥2.804 billion. At the next results announcement, it will be necessary to review cumulative revenue, operating income and orders for the first half, as well as the progress and profitability of carried-over construction projects as of the end of the first half.

In FY2027-H1, the comparison base will be revenue of ¥258.836 billion and operating income of ¥7.851 billion in the previous-year period. In particular, we will monitor whether operating income continues to increase year on year, whether the first-half operating margin exceeds approximately 3.0% in the previous-year period, and whether the full-year operating income plan of ¥40.0 billion remains unchanged. Even if the company attributes slow progress to first-half seasonality, it will need to disclose additional verifiable figures on orders, carried-over construction projects and the profitability of completed projects.