STARTS CORPORATION INC.

Business Details

Eight regional subsidiaries including STARTS CAM Co., Ltd. and STARTS HOME Co., Ltd. operate in the greater Tokyo metropolitan area and major cities. Starting from asset utilization consulting for owners of idle land, the segment provides an integrated service encompassing planning and proposals, construction order intake, and design and construction for rental housing, commercial buildings, hotels, elderly support facilities, logistics warehouses, etc. The cumulative number of orders received for Seismic Isolation Structure Buildings reached 656 buildings as of the end of March 2026. A competitive advantage lies in the ability to provide one-stop service, from post-construction management to tenant recruitment, through collaboration with the group's real estate management and brokerage businesses.

Recent Overview

Increase in large-scale wooden construction and large-scale corporate projects, plus sales price revisions, drove higher revenue and profit

In FY2026 (ending March 2026), the Construction Business achieved revenue of ¥76,168 million (up 6.7% year on year) and operating income of ¥7,746 million (up 26.7% year on year), a significant profit increase. In addition to an increase in large-scale wooden construction projects and increased orders for large-scale construction mainly from corporate clients, sales price revisions in response to fluctuations in material costs contributed to improved profit margins. The order backlog remained at a high level of ¥155,665 million (up 9.2% year on year), serving as a favorable leading indicator for the next fiscal year's performance. For FY2027 (ending March 2027), revenue of ¥85,200 million and operating income of ¥7,900 million are projected.

Key Products

Growth Drivers

• Improvement in the leading indicator for revenue recognition due to maintaining a high order backlog of ¥155,665 million (up 9.2% year on year)
• Revenue growth effect from an increase in large-scale wooden construction projects and expanded orders for large-scale construction from corporate clients
• Improved profit margins through sales price revisions in response to fluctuations in material prices
• Penetration of the differentiated Seismic Isolation Structure Buildings product through an expanded cumulative order count (656 buildings)
• Expansion of the order-taking area through strengthened personnel collaboration with major cities and deployment of greater Tokyo metropolitan area know-how to regional areas (e.g., receipt of the Toba City, Mie Prefecture aquarium expansion order)
• Improvement in per-order unit price through development of new products such as concept rental housing and the soundproof rental housing "Oto no Wa"

Risks

• Profit margin pressure from soaring construction material prices and persistently high labor costs
• Impact on the supply chain from instability in the Middle East (inventory shortages and delivery delays for housing equipment, etc.)
• Fluctuations in revenue recognition timing dependent on construction progress (risk of quarter-to-quarter performance volatility)
• Risk of declining construction investment appetite among real estate owners in a rising interest rate environment
• Risk of construction delays and rising construction costs due to labor and craftsman shortages
• Long lead time from order receipt to completed construction revenue recognition, causing order backlog fluctuations to affect performance in subsequent periods