JALCO Holdings Inc.

Business Details

This segment leases and sells land and buildings to pachinko hall operators and other business companies. It captures off-balance-sheet needs unique to the amusement industry, with the basic growth strategy policy being the accumulation of leasing properties (stock revenue). In FY2026 (ending March 2026), in addition to the 5 properties acquired in the previous consolidated fiscal year, 4 new properties were acquired during the period, and the sale of real estate for sale also contributed to sales growth. Segment profit is calculated on an ordinary income basis.

Recent Overview

Real estate sales expanded rapidly, with sales increasing 124.5% year on year, while segment profit rose only slightly

Real estate business sales for FY2026 (ending March 2026) were ¥14,700 million (up 124.5% year on year). In addition to the new acquisition of 4 amusement facility properties, the sale of 2 amusement facility properties and 1 commercial facility property drove the increase in sales. Segment profit was ¥1,060 million (up 0.5% year on year), a slight increase, as rising financial costs such as interest expenses suppressed profit growth. Property, plant and equipment increased by ¥9,436 million from the end of the prior period to reach ¥60,327 million.

Key Products

Growth Drivers

• Rental income from the 4 amusement facility properties acquired in FY2026 (ending March 2026) is expected to contribute for a full year from the next period onward
• For FY2027 (ending March 2027) as well, the acquisition of high-quality leasing properties is positioned as a growth driver, with selective acquisition of high-profitability properties in regional cities and highly liquid properties in urban centers
• Continued expansion of property acquisition opportunities driven by off-balance-sheet and M&A needs in the amusement industry
• Exploration of new utilization possibilities for owned real estate, including site selection and utilization for grid-connected storage battery business
• Strengthening of real estate asset management functions through the new consolidation of Jalco Asset Management Co., Ltd.

Risks

• Increased interest expenses and loan arrangement fees associated with the rise in borrowings are pressuring ordinary income (in FY2026 (ending March 2026), interest expenses were ¥1,956 million and loan arrangement fees were ¥449 million)
• Risk that the sale of real estate for sale may not proceed as planned (performance fluctuations depending on sale timing)
• Profit pressure from increased depreciation and amortization of goodwill associated with large-scale real estate acquisitions
• Risk of tightening regulations and market contraction in the amusement industry (structural changes in the pachinko industry)
• Risk of increased funding costs in a rising interest rate environment (long-term borrowings of ¥52,787 million, corporate bonds of ¥2,310 million)
• Concerns over financial soundness due to a decline in the equity ratio (from 24.5% at the end of the prior period to 20.6% at the end of the current period)
• Real estate business sales are expected to decrease significantly in the FY2027 (ending March 2027) earnings forecast (due to the absence of M&A consulting success fees, etc.)