Summary
1H revenue was -3.1% YoY and Recurring Profit was -63.7% YoY. Recurring Profit progress against the full-year plan was only 7.4% (our estimate). However, the company recognizes revenue on delivery. It kept its full-year plan unchanged, stating it has "secured sufficient inventory to achieve the full-year consolidated guidance." Inventory stood at JPY 74,191M at end-1H.
The key question for 3Q results is how much of the 2H-weighted delivery schedule shows up in 9M cumulative Recurring Profit. We also want to see whether profitability recovers in the DX New-Build Real Estate Business, where segment margin fell in 1H. A further focus is whether the DX Renovation Real Estate Business can sustain its momentum after revenue grew +52.4% in 1H. Finally, whether inventory turnover can absorb rising interest expense and growing interest-bearing debt will help gauge confidence in the full-year numbers.
Key Points for Next Quarter
| Key Points & Focus | Implications |
|---|---|
Full-Year Plan Progress9M cumulative Recurring Profit progress against the company's full-year plan | 1H Recurring Profit was JPY 1,239M, or 7.4% of the JPY 16,700M full-year plan (our estimate). The plan requires JPY 15,461M in 2H, roughly 2.8x the prior-year 2H actual of JPY 5,539M (our estimate). The first benchmark is whether 9M Recurring Profit exceeds the prior-year 9M figure of JPY 4,721M. |
DX New-Build Real Estate BusinessYoY trends in segment revenue and margin | 1H revenue was JPY 4,919M (-34.8%) and segment profit was JPY 883M (-74.5%). Segment margin fell to 17.9% from 45.9% a year earlier (our estimate). The extent of margin recovery on 3Q deliveries is key to the full-year profit plan. |
DX Renovation & Value EnhancementSustained revenue growth in the DX Renovation Real Estate Business and profit levels in the DX Real Estate Value Enhancement Business | DX Renovation revenue was JPY 8,744M (+52.4%). Value Enhancement segment profit was JPY 615M (+103.5%). With new-build deliveries weighted to 2H, we want to see whether these two businesses provide a profit base. |
ProfitabilityTrends in Gross Profit Margin and non-operating expenses | 1H Gross Profit Margin fell to 22.8% from 31.7% a year earlier (our estimate). Interest expense rose to JPY 655M (+48.4%). The focus is whether a gross margin recovery can absorb higher financing costs. |
Balance Sheet & Inventory TurnoverChanges in inventory and interest-bearing debt vs. end-1H | End-1H inventory was JPY 74,191M, up JPY 8,804M from the start of the fiscal year. Interest-bearing debt was JPY 74,041M and the Equity Ratio was 27.2%. We will check whether delivery progress translates into lower inventory. |
Key Issues from Previous Results (FY12/2026 2Q Results)
1H revenue came in at JPY 16,833M (-3.1%) and Recurring Profit at JPY 1,239M (-63.7%). The main drag was a tough comparison in the DX New-Build Real Estate Business, which booked large projects in the prior-year period. Citing the uneven quarterly timing of deliveries, the company maintained its full-year plan (Revenue JPY 61,000M, Recurring Profit JPY 16,700M). 3Q results will be the first opportunity to see whether the numbers begin to support the 2H-weighted plan.
1. 9M Cumulative Progress Against the Full-Year Plan
- Previous Period: 1H Recurring Profit was JPY 1,239M, a 7.4% progress rate against the full-year plan. Revenue progress was 27.6% (both our estimates).
- This Quarter's Check: The company says the plan is achievable if "projects scheduled for delivery from 3Q onward progress as planned." We will check actual 3Q deliveries.
- Key Metrics: 9M Recurring Profit vs. the prior-year 9M figure of JPY 4,721M, and whether the company revises its full-year guidance.
2. DX New-Build Real Estate Business: Deliveries and Margin Recovery
- Previous Period: The company sold "A*G Ropponmatsu" and "THE EDGE Tenjin." Even so, revenue was only JPY 4,919M (-34.8%) and segment profit JPY 883M (-74.5%).
- This Quarter's Check: We want to determine whether the margin decline reflects project mix, and whether 2H deliveries restore profitability to prior-year levels.
- Key Metrics: 9M segment revenue and segment profit vs. the prior-year period, and the level of segment margin.
3. DX Renovation and DX Real Estate Value Enhancement: Building a Profit Base
- Previous Period: DX Renovation posted revenue of JPY 8,744M (+52.4%) and segment profit of JPY 833M (+26.3%), driven by sales in its "Premium Renovation" series.
- This Quarter's Check: We will check whether DX Renovation revenue growth continues in 3Q and whether its 9.5% segment margin (11.5% a year earlier, our estimate) holds.
- Key Metrics: YoY change in DX Renovation segment revenue, and segment profit in the DX Real Estate Value Enhancement Business (JPY 615M in 1H, +103.5%).
4. Balancing Gross Profit Margin Against SG&A and Financing Costs
- Previous Period: Gross Profit Margin fell to 22.8% from 31.7% a year earlier, and was 20.7% on a standalone 2Q basis (both our estimates).
- This Quarter's Check: SG&A rose to JPY 1,812M (+19.9%) and non-operating expenses to JPY 849M (+27.9%). We will check whether revenue growth can absorb these increases.
- Key Metrics: 9M Gross Profit Margin and Operating Income Margin vs. the prior-year period, along with YoY change in interest expense.
5. Inventory Turnover and Interest-Bearing Debt
- Previous Period: End-1H inventory was JPY 74,191M (+JPY 8,804M vs. start of the fiscal year). Of this, real estate for sale in process rose to JPY 46,965M, up JPY 9,923M from the start of the year.
- This Quarter's Check: On the balance sheet, we will check whether 3Q deliveries reduce real estate for sale and whether transfers from work-in-process to real estate for sale are progressing.
- Key Metrics: Change in 3Q-end inventory and interest-bearing debt (JPY 74,041M at end-1H) vs. end-1H, and the Equity Ratio (27.2% at end-1H).
Key Timely Disclosures This Period
- 2026/09/30Notice Regarding Sale of Real Estate for Sale by Subsidiary (2 Disclosures) - Subsidiary La Atre disclosed the sales of "A*G Gakugei-daigaku" and "SWiTCH Higashi-Matsubara." Both are already factored into current-year guidance. Whether revenue is booked in 3Q or 4Q will be confirmed in the results.
- 2026/09/25Notice Regarding Completion of Land Development Work for a Subsidiary's Land Development Project - Land development work was completed on "La Atre Koga Industry III (tentative name)," the largest project in the group's history at approximately 270,000㎡. All lots are scheduled for delivery after the completion notice in October 2026. The P&L impact is therefore expected in 4Q (October–December) rather than 3Q, making this project a swing factor for confidence in the full-year plan.
- 2026/09/07Notice Regarding Sale of Real Estate for Sale by Subsidiary - Sale of a "THE DOORS" series newly built rental residence in Sarugakucho, Shibuya-ku, already factored into guidance. The disclosure indicates that 2H deliveries are progressing as planned. We want to confirm the revenue booking status in 3Q segment results.
- 2026/07/09Announcement of Long-Term Management Plan "LA Next Stage 2031" - Board resolution on a new long-term management plan (FY12/2026–FY12/2031). (
Previous Quarter Results (FY12/2026 2Q Actual)
The group is a real estate company operating four segments: the DX New-Build Real Estate Business, DX Renovation Real Estate Business, DX Real Estate Value Enhancement Business, and Real Estate Leasing Business. Because it recognizes revenue on project delivery, quarterly results are uneven. In 1H, revenue and profit declined, driven by a tough comparison in the DX New-Build Real Estate Business, where highly profitable projects were concentrated in the prior year. On the other hand, revenue growth in DX Renovation and profit growth in DX Real Estate Value Enhancement and Real Estate Leasing showed underlying resilience. Citing inventory of JPY 74,191M, the company maintained its full-year plan (Revenue JPY 61,000M, +31.1%).
| Item | Amount | YoY | vs. Company Plan | Notes |
|---|---|---|---|---|
| Revenue | JPY 16,833M | -3.1% | - | DX New-Build fell -34.8%, partly offset by +52.4% growth in DX Renovation. Full-year plan progress was 27.6% (our estimate). |
| Operating Income | JPY 2,033M | -49.1% | - | Gross Profit Margin fell to 22.8% and SG&A rose +19.9%. Full-year plan progress was 11.6% (our estimate). |
| Recurring Profit | JPY 1,239M | -63.7% | - | Non-operating expenses rose on interest expense of JPY 655M (+48.4%). |
| Interim Net Income Attributable to Owners of Parent Company | JPY 810M | -65.9% | - | Booked a JPY 17M directors' retirement benefit as an extraordinary loss. |
| EPS | JPY 35.38 | -71.5% | - | Retroactively adjusted to the start of the previous fiscal year for the 3-for-1 stock split effective July 1, 2026. |
Progress Against Full-Year Plan (Recurring Profit Basis): 7.4% (prior-year period: 38.2%). The prior-year figure is calculated against the FY12/2025 full-year actual of JPY 8,956M. Both figures are our estimates.
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