KATITAS Co., Ltd.

Business Details

Targeting primarily low- and middle-income customers, the company purchases old detached houses that owners wish to sell due to inheritance, relocation, or other reasons, renovates them (including plumbing replacement, exterior wall painting, and floor plan changes), and sells them. It offers a "fourth option for choosing a home," as an alternative to "newly built," "as-is used," and "rental" housing. The company handles sourcing, renovation planning, and sales in an integrated manner, primarily targeting regional cities (with populations of approximately 50,000 to 300,000). Leveraging know-how accumulated from over 70,000 cumulative unit sales, it is responsible for the renovation and distribution of properties, with a focus on vacant homes.

Recent Overview

In FY2026 (ending March 2026), the first year of the Fourth Medium-Term Management Plan, results exceeded targets, with units sold at 8,380 (up 13.7% year on year), net sales up 17.2%, and operating profit up 28.5%

Units sold reached 8,380 (up 17.2% year on year), net sales reached ¥151,851 million (up 17.2%), and operating profit reached ¥18,279 million (up 28.5%), significantly exceeding the initial plan of ¥16,200 million. This achievement was reached even after paying a special year-end bonus of ¥513 million. Following the Supreme Court's decision not to accept the appeal regarding the consumption tax reassessment lawsuit (May 2025), the company changed its accounting treatment to deduct the consumption tax difference from net sales (with no impact on operating profit or below). The Fourth Medium-Term Management Plan's financial KGI (key goal indicator) for operating profit was revised upward from ¥20,000 million to ¥23,000 million (CAGR of 17.4%). For FY2027 (ending March 2027), the company forecasts net sales of ¥177,400 million and operating profit of ¥21,000 million. The annual dividend was increased to ¥80.0 (payout ratio of 50.2%) from the initially planned ¥70.0, with ¥90.0 planned for FY2027 (ending March 2027).

Key Products

Growth Drivers

• Rising relative price competitiveness of renovated resale homes due to soaring prices of newly built homes (driven by higher construction costs and environmental regulation compliance)
• Steady trend in inquiries driven by responses to diversifying household composition, including offering low-price housing to non-family customer segments and expanding the product lineup for customers considering new construction
• Expansion in units purchased (9,804 units in FY2026, up 17.8% year on year) driven by increased purchasing activity under the Fourth Medium-Term Management Plan (FY2026–FY2028, ending March 2028)
• Continued implementation of gross profit improvement measures (adjusted gross profit margin excluding the impact of the consumption tax difference at 24.4%, up 0.7 percentage points year on year)
• Structural expansion of the pool of properties available for purchase due to the increasing number of vacant homes (9 million units as of 2023, vacancy rate of 13.8%)
• Promotion of basic strategies including increasing and training sales personnel, improving productivity, and diversifying renovation planning and purchase sourcing channels
• Clear policy of accelerated growth reflected in the upward revision of the Fourth Medium-Term Management Plan's KGI (operating profit target of ¥23,000 million, ROE target of 25%)

Risks

• Potential for additional cost burden and changes in accounting treatment associated with the continuation of subsidiary Replace's consumption tax reassessment lawsuit (Nagoya District Court)
• Decline in home purchase intent due to rising interest rates and increased borrowing costs (total long-term borrowings of ¥26,500 million)
• Decline in consumers' disposable income and home purchase intent due to rising prices and living costs
• Constraints on construction capacity due to the aging of renovation partner companies and carpenters
• Risk of deteriorating capital efficiency due to increased inventory associated with the expansion in units purchased (real estate for sale and real estate for sale in process up 32.0% from the end of the prior fiscal year to ¥81,203 million)
• Operating cash flow turning negative (¥(5,197) million in FY2026, ending March 2026) and a significant decrease in cash balance (from ¥18,766 million to ¥8,228 million) associated with inventory buildup
• Refinancing risk related to ¥18,500 million in long-term borrowings due within one year, and rising fundraising costs due to changes in the financial environment
• Risk of economic downturn due to macroeconomic uncertainty, including the situation in the Middle East and volatility in financial and capital markets