Operating profit reached 42.5% of the full-year forecast in the first quarter, but sales repeatability needs to be confirmed in the first half.

Revenue in the first quarter of the fiscal year ending February 2027 was ¥4,426 million, up 101.1% year on year, while operating profit was ¥530 million, up 175.7%. Ordinary profit was ¥414 million, up 272.9%, and net profit attributable to owners of the parent was ¥284 million, up 352.6%, with all stages of the income statement exceeding the year-earlier quarter. The operating margin was approximately 12.0% in the first quarter alone, improving by approximately 3.2 percentage points from approximately 8.7% in the year-earlier quarter.

Progress against the full-year forecasts was 28.6% for revenue, 42.5% for operating profit, 48.8% for ordinary profit and 53.6% for net profit attributable to owners of the parent. Profit progress substantially exceeded revenue progress, compared with 25% of the fiscal year having elapsed. However, the full-year forecasts are revenue of ¥15,500 million, operating profit of ¥1,250 million, ordinary profit of ¥850 million and net profit of ¥530 million. It is therefore necessary to avoid valuing the company on the assumption that the first quarter’s high margins will be maintained throughout the full year.

The company explained that the increase in profit was driven by the sale in the first quarter, at high margins, of properties held for sale that had been strategically carried over from the previous fiscal year. In fact, the real estate sales business sold 2 buildings, 2 sectional office units and 1 residential building, and the execution of these sales drove the reported figures higher. However, the breakdown of gross profit, gains on sale, purchase prices and renovation costs by property has not been disclosed, so the contribution of the carried-over properties to the ¥530 million in first-quarter operating profit cannot be confirmed.

At the next interim results announcement, it will be important to confirm not only whether revenue and operating profit exceeded the year-earlier period, but also the number of properties sold following the first quarter, property types, average selling prices and margins on properties held for sale. If the 42.5% operating profit progress rate is broadly maintained in the first half and the sale of large properties incorporated into the full-year forecast is proceeding as scheduled, confidence in the ¥1,250 million full-year forecast will increase. Conversely, if the number of sales fails to grow and margins return to normal levels, it will be necessary to consider whether the first quarter’s strong performance was temporary.