Kitahama Capital Partners Co., Ltd.

Business Details

The Investment Business engages in direct investment and investment activities utilizing SPCs/funds targeting real estate, operating companies, renewable energy and other assets, based on investment criteria of profitability, safety, and social contribution. Main revenue sources include solar power generation development, battery storage facility development, and golf course operations. It is the Group's sole operating segment generating all net sales, with the Asset Management Business and Other Businesses recording no sales. The battery storage facility development business is being strengthened through collaboration with Trust Corporation, which became a subsidiary in September 2025.

Recent Overview

Net sales increased 172.2% year on year to ¥1,910 million, but the operating loss widened to ¥989 million due to increased costs

In FY2026 (ending March 2026), net sales of ¥1,910 million (up 172.2% year on year) were achieved through solar power generation development, battery storage facility development, and golf course revenue, among others. Meanwhile, gross profit decreased due to increased purchases and a substantial rise in selling, general and administrative expenses (from ¥809 million to ¥1,663 million), and the operating loss widened to ¥989 million (from a loss of ¥579 million in the prior period). Corrections were made based on the audit firm's findings, including correction of overstated deferred tax assets (¥31,908 thousand) and additional recognition of valuation losses on investment securities (¥8,804 thousand). Material doubt about the going concern assumption continues, given significant operating losses and ordinary losses for 7 consecutive periods and net losses for 8 consecutive periods.

Key Products

Growth Drivers

• Medium- to long-term expansion of the renewable energy market driven by the Japanese government's declaration of carbon neutrality by 2050 and the target of a 46% reduction in greenhouse gas emissions by FY2030
• Expanding demand for grid-connected battery storage business driven by the enforcement of the GX Promotion Act and growing interest in corporate PPAs
• Building of the business foundation and creation of synergies in the battery storage facility development business through collaboration with Trust Corporation, which became a subsidiary in September 2025
• Continued robust real estate investment demand from domestic and overseas investors amid Japan's low interest rates and weak yen
• Strengthening of the financial base through an increase in capital of ¥2,261 million and capital reserves of ¥2,261 million (totaling ¥4,522 million) resulting from the exercise of the 14th series of stock acquisition rights
• Additional fundraising (up to ¥3,888 million) through the issuance of the 15th series of stock acquisition rights (third-party allotment to Orion SPV1 LLC)

Risks

• Material doubt about the going concern assumption exists, given significant operating losses and ordinary losses for 7 consecutive periods and net losses attributable to owners of the parent for 8 consecutive periods
• For the battery storage facility development projects, a key assumption underlying the FY2027 (ending March 2027) earnings forecast (net sales of ¥12,374 million), no formal sales contract has been executed as of now, and specific terms such as sale price, quantity, and delivery timing remain unagreed
• Selling, general and administrative expenses increased substantially to ¥1,663 million (from ¥809 million in the prior period), resulting in a significantly heavy cost structure relative to net sales of ¥1,910 million
• Accounting errors occurred, including correction of overstated deferred tax assets and non-recognition of valuation losses on investment securities, as pointed out by the audit firm, necessitating restatement of financial results
• Goodwill balance has expanded to ¥702 million (from ¥342 million in the prior period), and the risk of goodwill impairment continues due to delays in monetizing M&A transactions
• Operating cash flow was significantly negative at △¥1,293 million, and the funding structure continues to rely on financing activities (such as exercise of stock acquisition rights)
• Downside risks to the business environment from the impact of U.S. trade policy, instability in international affairs, and surging raw material and energy prices
• There is a high possibility that the development of the battery storage facility business will not proceed as planned due to changes in market conditions, progress in fundraising, competitive conditions, and other factors