Profitability gains accelerating on the rollout of high-gravity brewing and a rapid expansion in the licensing business; “Junglia” drives a 10% RevPAR uplift, bringing the company within reach of its mid-term plan targets

Summary

For 9M FY2026/3 (3Q cumulative), the company delivered higher sales and profits, with Revenue of JPY 23.5B (+4.6% YoY) and Operating Income of JPY 4.1B (+29.2% YoY). While the company revised down full-year Revenue guidance to JPY 29.6B to reflect an estimated ~JPY 500M impact from the Asahi GHD system disruption, it revised up profit at each level on the back of cost reductions, strong licensing performance, and contributions from the tourism/hotel business. On the call, management provided concrete detail on: (1) greater-than-expected cost savings from process improvements related to “high-gravity brewing”, (2) a sharp improvement in hotel occupancy and ADR driven by the opening of Junglia, and (3) the direction of its overseas profit structure transformation. .

Key Points (Results Takeaways And Growth Actions)

• Management Strategy And Market View
  • The Okinawa tourism market remains robust, with FY2025 visitor numbers expected to exceed a record high of 10.90 million. The Junglia opening effect is flowing through to both the company’s hotel operations and alcoholic beverage sales
  • Japan’s domestic beer market faced a post-price-hike payback, but growth drivers outside Okinawa—such as out-of-prefecture, overseas, and licensing—continue to execute steadily; the share of revenue outside Okinawa within the Alcoholic Beverages/Soft Drinks business is set to rise from 13% in FY19 to 28% in the FY25 plan
  • The Asahi GHD system disruption is expected to recover to near-normal conditions from April onward, and management indicated it sees no risk of major deviation from full-year guidance
  • Versus its medium/long-term targets (Revenue CAGR ~5%, EBITDA margin ~24%, ROE ~15%), this year’s plan is broadly within reach, and management is considering updating targets at the May full-year results
  • Overseas, the company is aiming to balance top-line growth with profitability improvement through a premium pricing strategy, a shift toward keg products, and expanded license production
• Recent Operating Progress And Key Drivers
  • EBITDA margin in the Alcoholic Beverages/Soft Drinks business improved by +1.8pt to 27.3% from 25.5% in the prior 9M period. The introduction of “high-gravity brewing” reduced the number of storage tanks and lowered utilities and labor costs more than initially expected
  • Energy-efficiency improvements from replacement capex for refrigeration equipment also contributed meaningfully to COGS reduction
  • Overseas revenue rose +29.9% YoY for 9M, with major markets posting strong growth: US +48%, Australia +18%, and Korea +26%
  • The licensing business expanded its licensee base from ~40 to over 60, with revenue up +150.8% YoY; collaboration requests from other companies are also increasing
  • RevPAR at Orion Hotel Motobu improved significantly to JPY 33,746 (+9.8% YoY). Junglia guests accounted for ~30% of total stays, with actual usage at 30 rooms per day versus the initial assumption of 10 rooms per day
• Key Strategic Initiatives And Changes
  • Launched new RTD “Shimachu” (7% ABV) in January 2026, tracking steadily. RTD listings at out-of-prefecture convenience stores shifted into 4Q, but the company expects to land in line with the full-year plan
  • Started license production in the UK through a partner company. The company is promoting a low-risk, high-margin European expansion via a licensing-income model based on outsourced manufacturing and sales
  • To execute a restaurant renewal at Orion Hotel Motobu in 4Q under the “RYUKYU CREOLE” concept. The Store & Journey is scheduled to open in March 2026, and The Orion Brasseries & Table in May 2026
  • Leveraging hotel operating know-how via a capital and business alliance with the Kintetsu Group, and strengthening customer acquisition by joining Miyako Hotels & Resorts
  • Plans to hold Orion Island Waves (a beachside music festival) on Senagajima in April, as part of an active push to enhance brand experience value

Outlook And Strategy

• Revised full-year plan calls for Revenue of JPY 29.6B (+2.8% YoY), Operating Income of JPY 4.1B (+19.6% YoY), and EBITDA of JPY 5.7B (+10.1% YoY). 3Q progress versus full-year Operating Income guidance is 100.5%, effectively already achieving the full-year target
• In 4Q, in addition to seasonal revenue decline, consolidated Operating Income is expected to be negative JPY 20M due to timing shifts in advertising expenses for the beverages business and a concentration of hotel renovation costs
• Underlying revenue growth excluding disposed assets is +8.6% YoY. EBITDA margin improves by +1.3pt from 22.4% to 23.7%, approaching the ~24% mid-term plan target
• Management plans to update medium/long-term targets at the May full-year earnings announcement and suggested scope to raise targets based on the strong recent performance
• In response to higher raw material costs, the company will continue procurement management through measures such as long-term contracts in addition to price pass-through. It aims to expand revenue in higher-margin areas overseas and in licensing while keeping fixed costs broadly flat
• Dividend to be maintained at JPY 40 per year (interim JPY 20 / year-end JPY 20). The company intends to sustain a high level of shareholder returns, with a payout ratio of 50%+ and DOE of 7.5%+
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Positive Factors

• Structural COGS reduction from the rollout of “high-gravity brewing” is progressing faster than expected. Combined with the energy-saving benefits from refrigeration equipment replacement capex, further mid-to-long-term cost improvement is anticipated
• The licensing business delivered a FY19–25 CAGR of 24.7%. With an Operating Income margin in the 60% range, it represents a highly capital-light earnings driver with substantial runway
• As an official Junglia hotel, customer acquisition has materially exceeded initial expectations, with a longer booking lead time as well. This is supporting a steady improvement in ADR and OCC
• Overseas revenue posted a FY23–25 CAGR of 30.7%, led by a sharp ramp in the US (39.4%) and Korea (99.0%). The start of UK license production also opens the door to broader rollout across Europe
• Okinawa tourist arrivals are forecast to reach a record 10.90 million (2025), comparable to Hawaii, with meaningful upside from further inbound growth. Additional tourism demand uplift is also expected from the restoration of Shuri Castle’s main hall (scheduled for FY2026)
• Orion The Draft revenue reached JPY 9.5B in FY24, well above pre-COVID levels, and the brand remains resilient, including ranking No.1 in the beer category in Nikkei Cross Trend’s “Customer Happiness Survey”
• Equity Ratio improved from 37.3% to 41.6%. Net D/E is trending down on a gross basis as debt is reduced

Concerns And Risks

• Full-year revenue impact from the Asahi GHD system disruption is ~JPY 500M. Limited-edition products are scheduled to resume in May, and there is a limit to how much sales can be recovered by 4Q
• In 4Q, the beverages business will see a concentration of equipment maintenance costs and advertising expenses shifted from 3Q, with single-quarter Operating Income expected to be only JPY 151M
• The tourism/hotel business will incur restaurant renewal costs in 4Q and is expected to post a single-quarter Operating Loss of JPY 169M. Whether RevPAR improvement can be sustained is a key focus for next year
• In-prefecture sales are -1.7% versus plan, with the pullback from pre-price-hike demand acceleration larger than expected. Out-of-prefecture is also -2.6% versus plan, making it a challenge to sustain growth momentum in the domestic market
• With increases in raw materials, labor, and logistics costs continuing, the company’s ability to deliver sustained price pass-through after the initial price-hike effect fades will be tested

Key Financial Highlights

For 9M FY2026/3 (3Q cumulative), higher revenue in the Alcoholic Beverages/Soft Drinks business and cost reductions drove a sharp increase in consolidated Operating Income to JPY 4.1B (+29.2% YoY). The tourism/hotel business also saw Operating Income surge to JPY 700M (+137.5% YoY) on improved RevPAR and better cost efficiency. Supported by the impact of last year’s share buyback, EPS doubled from JPY 41 in the prior-year period to JPY 86.

• EBITDA: JPY 5,367M (+17.7% YoY)
• EBITDA Margin (Excl. Liquor Tax): 27.9% (+2.9pt YoY)
• Orion Hotel Motobu RevPAR: JPY 33,746 (+9.8% YoY)
• Overseas Revenue: JPY 1,975M (+29.9% YoY)
• License Revenue: JPY 256M (+150.8% YoY)
• EPS: JPY 86 (+106.9% YoY)
• Equity Ratio: 41.6% (+4.3pt versus FY-end)