First-half guidance was revised upward, but with full-year guidance unchanged, the focus is on the likelihood of achieving the second-half targets

In the first quarter of the fiscal year ending February 2027, revenue was ¥11.068 billion and operating profit was ¥1.03 billion, down 10.1% and 40.6%, respectively, from the same period a year earlier. However, progress against the initial full-year forecasts was 24.1% for revenue and 24.0% for operating profit, broadly in line with the full-year plan for a first quarter. At the next interim results announcement, it will be necessary to assess not only the simple year-on-year comparisons but also actual performance against the first-half forecasts revised upward on 24 September.

First-half forecasts now stand at ¥22.0 billion in revenue, ¥2.0 billion in operating profit, ¥1.35 billion in ordinary profit and ¥950 million in net profit. Full-year forecasts remain unchanged at ¥46.0 billion in revenue, ¥4.3 billion in operating profit, ¥3.0 billion in ordinary profit and ¥2.1 billion in net profit. Accordingly, subtracting the first-half forecasts from the full-year forecasts leaves ¥24.0 billion in revenue, ¥2.3 billion in operating profit, ¥1.65 billion in ordinary profit and ¥1.15 billion in net profit to be generated in the second half. On an operating profit basis, approximately 53.5% of the full-year requirement must be earned in the second half, so first-half outperformance will not necessarily translate directly into higher full-year profit.

The company explained that the main factors behind the first-half revision were improved profitability in areas such as other real estate sales and the earlier timing of property disposals. Full-year guidance, however, was left unchanged pending a cautious review of performance from the third quarter onward. In other words, the first-half profit outperformance may include a timing factor resulting from earlier sales, and it remains unclear whether the company is assuming that the same profit margin will continue in the second half.

At the next results announcement, the breakdown of the first-half upward revision should be reviewed across condominium sales, other real estate sales, detached-house sales and rental operations, rather than focusing only on the first-half results. In particular, it will be important to see whether the company discloses how much of the ¥2.0 billion in first-half operating profit was attributable to earlier property disposals and how much represented recurring improvement from higher selling prices and lower costs. Even if first-half results exceed plan, if the orders, contracted properties not yet delivered and scheduled deliveries supporting the ¥2.3 billion of operating profit required in the second half are weak, the unchanged full-year forecast should be viewed as a cautious decision.