Verifying whether the plan to absorb the 1Q loss through a second-half-weighted earnings profile is on track is the focus for FY2027-H1

In FY2027-Q1, revenue was ¥7,377 million, down 26.7% year on year, while operating loss was ¥206 million, ordinary loss was ¥238 million and net loss attributable to owners of the parent was ¥179 million. In the same period of the prior year, the company recorded operating profit of ¥272 million, ordinary profit of ¥260 million and net profit of ¥187 million. The most significant change this time was not only the decline in revenue but the shift into losses from the operating level through to net profit.

The company attributed the deterioration to the time required to establish stable operations under the new fund management scheme, its prioritization of acquiring and forming large projects, the absence of property disposal and transaction revenue recognition at CREAL PRO, the second-half weighting of the budget, and higher selling, general and administrative expenses resulting from expanded staffing. In its earnings presentation, the company described the 1Q result as being “in line with the budget” and “in line with the plan,” and did not treat the loss itself as a deviation from the full-year plan. However, it has not disclosed the decline in profit by factor or the amount of CREAL PRO disposal revenue originally included in the plan.

The full-year forecasts are operating profit of ¥3,290 million, ordinary profit of ¥3,050 million and profit attributable to owners of the parent of ¥2,100 million, with all three still expected to increase year on year. Based on the 1Q operating loss of ¥206.786 million, the company will need to generate approximately ¥3,496.8 million in cumulative operating profit from Q2 onward to achieve the full-year operating profit forecast, and approximately ¥2,279.2 million in net profit. In addition, unless operating profit in Q2 alone exceeds ¥206.8 million, the cumulative interim period will not turn profitable at the operating level. These are checkpoints calculated from the 1Q results and full-year forecasts, not forecasts disclosed by the company.

At the next results release, it will be necessary to confirm not merely whether the full-year forecasts were maintained, but whether revenue recognition actually increased in Q2 alone. In particular, the key points are whether the formation and sale of large CREAL projects proceeded as planned, whether property disposal or transaction revenue resumed at CREAL PRO, and whether higher gross profit was sufficient to absorb the increase in costs from additional staffing. The full-year revenue forecast, operating cash flow and revenue and operating profit by service have not been disclosed at this point. Accordingly, in FY2027-H1, at minimum, the company will need to provide the interim cash flow and a quantitative explanation of the project revenue required to achieve the plan.