Higher selling prices and an improved gross margin lifted the FY2026 earnings forecast, but the year-end results must confirm whether the improvement is sustainable

Cumulative 3Q FY2026 revenue was ¥60,021 million, up 41.1% year on year, while operating profit was ¥7,569 million, up 92.4%. The earnings presentation disclosed a gross margin of 21.0%, an operating margin of 12.6% and selling, general and administrative expenses of ¥5,048 million for the period. The improvement in gross margin, rather than revenue growth alone, was the factor that enabled operating profit to grow faster than revenue. The combination of property selling prices, project mix and selling costs has therefore become more important than a simple increase in the number of properties sold.

The company attributed the improvement in profitability to higher gross margins in IoT Residence, Refining and Asset Consulting, as well as lower selling commissions through direct sales to customers. While selling commissions as a percentage of revenue improved by 0.5 points year on year, personnel expenses increased by ¥367 million and other expenses by ¥66 million, reflecting higher headcount from new hiring and the consolidation of ZISEDAI. At the next earnings announcement, it will therefore be necessary to confirm whether the gross-margin improvement remains reflected in the operating margin after absorbing the increase in SG&A expenses.

On 21 October, the full-year revenue forecast was raised to ¥101.9 billion, the operating profit forecast to ¥13,650 million and the forecast net income attributable to owners of the parent to ¥7,550 million. The company explained that the main reason for the revision was that selling prices for projects sold during the fiscal year in the Life Platform business substantially exceeded the initial plan. The operating profit forecast was raised by ¥2,650 million, or approximately 24.1%, from the previous forecast of ¥11.0 billion. The next earnings announcement will therefore test whether this upwardly revised forecast is confirmed in the actual results.

However, the upward-revision materials and earnings presentation do not break down how much gross profit increased by project as a result of higher selling prices, or whether volume, unit prices or property mix was the primary driver. The gross margin on real estate sales was 19.9% in FY2025, above the company’s target of 18%, so the cumulative 3Q FY2026 margin of 21.0% represents a continuation of that improvement. Nevertheless, large Asset Consulting projects or sales of highly profitable properties may have been concentrated in the period. The next points to verify are full-year gross margins by segment, project-level selling prices and variances from plan, and the disclosure of the direct-sales ratio.