Phil Company,Inc.

Business Details

Under the purpose of "Filling the gaps in the city with 'creation'", the company develops the elevated-space store "Phil Park" and the garage-equipped rental housing "Premium Garage House" as its core products. The business is structured around two axes: the "contract order scheme," which provides landowners with a one-stop service from planning and proposal through design and construction, and the "development-and-sale scheme," which involves the company acquiring land and developing and selling properties for real estate investors. The company operates exclusively within Japan.

Recent Overview

H1 saw net sales decline 17.5% and an operating loss of ¥120 million, a significant deterioration, with the full-year forecast also revised downward

In H1 FY2026 (ending November 2026) (December 2025 to May 2026), the number of new orders received under the contract order scheme fell to 17 (23 in the same period of the prior year) due to customers becoming more cautious in their investment stance amid rising interest rates. Combined with a revision of the delivery schedule for development-and-sale properties, net sales fell to ¥3,252 million (down 17.5% year on year). Gross profit margin also declined to 22.7% (23.9% in the same period of the prior year) due to rising construction costs driven by higher building material prices. Selling, general and administrative expenses expanded to ¥858 million (¥744 million in the same period of the prior year) due to increased personnel costs from strengthening the workforce, resulting in an operating loss of ¥120 million. Extraordinary income (gain on sale of fixed assets of ¥84 million, compensation received of ¥150 million) and extraordinary losses (loss on termination of stock benefit trust of ¥97 million) occurred, limiting the interim net loss to ¥19 million. The full-year earnings forecast was revised downward from the figures announced on January 14, 2026, to net sales of ¥8,800 million (up 6.9% year on year) and operating profit of ¥380 million (down 35.5% year on year). On the other hand, the future revenue stock indicator (order backlog of ¥5,059 million + development project balance of ¥7,790 million = ¥12,840 million) remains at a record high level, leaving room for revenue accumulation in the second half of the fiscal year.

Key Products

Growth Drivers

• The future revenue stock indicator (contract order backlog + development project balance) remains at a record high level of ¥12,840 million, providing significant room for revenue recognition from the second half of the fiscal year onward
• The development project balance under the development-and-sale scheme continues to expand to ¥7,790 million (¥6,497 million at the end of the prior fiscal year), and revenue contribution is expected from an increase in the number of deliveries
• Order value for Premium Garage House increased to ¥1,125 million (¥884 million in the same period of the prior year), partially offsetting the decline in Phil Park and diversifying the order base
• Expansion of the sales area through the Kansai Branch (opened October 2024) and Chubu Branch (opened March 2026) contributes to medium- to long-term order growth
• The number of consolidated employees increased to 123 (118 in the same period of the prior year), continuing to strengthen the organizational foundation

Risks

• Risk that has materialized whereby the number of new orders received under the contract order scheme declined significantly year on year (from 23 to 17) due to customers becoming more cautious about real estate investment amid rising interest rates
• Risk that elevated and sustained building material and labor cost prices continue to pressure gross profit margin through rising construction costs
• Risk that selling, general and administrative expenses expand due to increased personnel costs from strengthening the workforce, leading to expanded losses if the sales recovery is delayed
• Risk that the timing of revenue and profit recognition fluctuates significantly due to variations in the completion and delivery timing of properties under the development-and-sale scheme (only 1 delivery occurred in H1)
• Risk of rising financial leverage due to increased borrowings associated with the expansion of land acquisition under the development-and-sale scheme (as of the end of H1 FY2026, ending November 2026: short-term borrowings of ¥810 million, current portion of long-term borrowings of ¥1,384 million, long-term borrowings of ¥1,505 million)
• Liquidity risk stemming from cash flow from operating activities of -¥2,682 million, a significant negative figure, resulting in cash and cash equivalents declining to ¥2,829 million (from ¥4,934 million at the start of the period)
• Although the full-year earnings forecast has already been revised downward, net sales of ¥5,547 million and operating profit of ¥500 million must still be recorded in the second half (Q3 and Q4), which presents a high degree of difficulty in achievement