Aoyama Zaisan Networks Q2 FY2026 Earnings Analysis: Revenue Revision Due to Tax Reform and Robust Growth in Core Consulting

This report provides an objective and comprehensive analysis of the Q2 FY2026 earnings results for Aoyama Zaisan Networks Co., Ltd. (Securities Code: 8929), covering performance highlights, factors behind earnings forecast revisions, segment progress, mid-to-long-term growth strategies, and shareholder return policies.

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1. Overview and Background of Earnings Forecast Revisions

One of the most significant topics this quarter is the revision of the full-year earnings forecast . While revenue has been revised downward, the forecasts for all profit levels (gross profit, operating profit, ordinary profit, and net income attributable to owners of the parent) remain unchanged from the initial plan.

[Slide Commentary: Revision of Earnings Forecasts] The slide above compares the initial full-year FY2026 forecast with the revised figures. Revenue has been adjusted downward by 10,280 million yen (▲26.4%) , from the initial 39,000 million yen to 28,720 million yen. However, the operating profit of 4,000 million yen, ordinary profit of 3,850 million yen, and net income attributable to owners of the parent of 2,650 million yen remain unchanged . The ability to maintain profit targets despite a significant decline in revenue is due to shifts in the company's revenue structure, specifically the growth of high-margin businesses and a reduction in low-margin transactions.

Analysis of Key Factors for Revenue Revision

1. Decline in Real Estate Transaction Revenue (Postponement of Advantage Club Sales) The flagship fractional real estate product, "ADVANTAGE CLUB," has been impacted by upcoming tax reforms regarding the "review of valuation methods for real estate for leasing," scheduled to take effect on January 1, 2027. As the details of the tax reform (circulars) are expected to be clarified around the autumn of 2026, the explanation to clients and partners (financial institutions, etc.) and the full-scale sales launch have been pushed back to the second half of the year. Consequently, the full-year sales plan for Advantage Club has been revised downward from 19,400 million yen to 10,910 million yen (▲43.8%).

2. Steady Performance in Property Consulting Revenue Conversely, revenue from the core property consulting business has been revised upward from the initial 12,300 million yen to 12,660 million yen (+2.9%). This growth is driven by increasing demand for consulting on the purchase of single-building income properties and effective land utilization, higher transaction unit prices due to the expansion of client assets, and the solid performance of the newly acquired subsidiary, Chester Co., Ltd.

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2. Cumulative Q2 Performance and Analysis of Revenue Structure via "Actual PL"

For the first half of the fiscal year ending December 2026, the company reported revenue of 12,720 million yen (▲42.6% YoY) and an operating profit of 1,758 million yen (▲16.1% YoY). However, because the company uses gross reporting for real estate transactions, its top-line revenue is subject to significant volatility.

[Slide Commentary: Actual PL — Using Net Reporting] The slide above shows the company's "Actual PL," which restates real estate transactions using "net reporting" (offsetting real estate purchase costs against revenue). While the accounting PL shows revenue of 12,720 million yen, the revenue on an Actual PL basis is 6,808 million yen. The notable takeaway is the high profitability; the gross profit margin on an Actual PL basis is 82.7% , and the operating profit margin is 25.8% , maintaining very high levels. While accounting revenue fluctuates significantly depending on the timing of real estate purchases and sales associated with product structuring, the company's essential earning power as a consulting and fee-based business remains extremely stable.

Breakdown of Operating Profit Changes

The 337 million yen decrease in operating profit compared to the same period last year is broken down as follows:

• Property Consulting Gross Profit : +410 million yen (steady increase in consulting cases)
• Real Estate Transaction Gross Profit : ▲813 million yen (impact of suppressed Advantage Club sales)
• Personnel Expenses (SG&A) : ▲53 million yen (increase due to staff expansion)
• Non-personnel SG&A : +118 million yen (efficient control of various expenses)

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3. Segment Trends and Key KPI Progress

Below is a summary of the progress and KPI trends for each service category in the second quarter.

(1) Property Succession Consulting (for individual asset holders)

• Revenue : 3,609 million yen ( +14.6% YoY )
• Full-year Progress Rate : 46.5% (Full-year forecast revised upward from 7,200 million yen to 7,770 million yen )
• Collaboration with regional banks has expanded the acquisition of needs for purchasing and selling real estate in central Tokyo, with rising transaction unit prices contributing significantly to revenue growth.

(2) Business Succession Consulting (for business owners) and Business Succession Funds

• Business Succession Revenue : 829 million yen (▲21.7% YoY / Full-year forecast 2,700 million yen, 30.7% progress)
• Fund Revenue : 158 million yen ( +1,315.9% YoY / Full-year forecast 250 million yen, 63.2% progress)
• While family succession remained on par with the previous year, the first half fell short of the previous year due to the timing of large M&A deals shifting to the third quarter and beyond. However, multiple large M&A closures are expected in the second half.

(3) Product Structuring and Stock-type Revenue

• Revenue : 1,164 million yen (▲1.1% YoY / Full-year forecast 1,940 million yen, 60.0% progress)
• Although commission income from new Advantage Club structuring decreased, this was offset by dissolution fees from three properties that completed their 7–8 year operation period and management fees (stock revenue) accumulated from the increase in assets under management .

(4) Trends in Number of Consultants and Clients (Foundational KPIs)

The number of consultants and clients, which are the sources of the company's growth, are increasing steadily.

• Number of Clients : Expanded from 3,567 at the end of 2025 to 3,735 (approx. 5% increase) at the end of Q2 2026, showing progress in line with the 10% annual growth target.
• Number of Consultants : 287 (recruitment continues toward the year-end 2026 target of 322).

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4. Changes in External Environment and Mid-Term Management Strategy

There are several major changes and opportunities in the market environment surrounding the company.

1. Tax Reform and Changes in Asset Management In response to changes in client sentiment regarding valuation method reviews, the company plans to carefully explain its stable track record—an average operation period of 8 years and 11 months and an annualized average yield of 6.05% across 40 past properties (already dissolved)—once the circulars are officially published (after autumn).
2. Accelerating Inflation and Demand for Real Assets With concerns over the decline in the real value of cash due to the weak yen and rising raw material costs, demand for investment in physical real estate as a means of asset preservation and management is growing.
3. Expansion of the Business Succession and M&A Market Amidst the aging of business owners, labor shortages, and the consolidation of low-productivity companies, the need for one-stop business succession and M&A support is rising.

In its Mid-Term Management Plan (2025–2027), the company has set seven priority strategies: "Partner Strategy," "Service Strategy," "Human Resources Strategy," "Intellectual Property Strategy (DX/AI utilization)," "Marketing Strategy," "Sustainability Strategy," and "Financial Strategy," to improve PER and expand business scale.

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5. Shareholder Return Policy and Dividend Trends

The company positions the return of profits to shareholders as one of its most important management issues and maintains a very clear and proactive return policy.

[Slide Commentary: Dividend Trends] The slide above shows the graph of the company's dividends per share from the past to the present. The company achieved 15 consecutive years of dividend increases through FY2025, and for FY2026, it plans to continue this streak for the 16th consecutive year with an annual dividend of 58.0 yen (23.0 yen interim, 35.0 yen year-end) , as initially planned. With net income remaining unchanged despite the earnings forecast revision, the expected dividend payout ratio is 52.7% .

Shareholder Return Policy

• Maintain a dividend payout ratio of 50% .
• Continue progressive dividends (policy of not reducing dividends in principle).
• Maintain a DOE (Dividend on Equity) of 10% , which exceeds the cost of shareholders' equity (FY2025 result: 11.9%).
• Consider flexible share buybacks.
• Provide a shareholder benefit program (QUO cards, gifts, meal vouchers, etc.) based on record dates at the end of June and December.

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This report is based on factual information from disclosed materials and does not constitute a recommendation for the purchase or sale of specific securities or investment actions.