Kyoritsu Maintenance FY3/2027 Q1 Earnings Deep Dive: Analyzing Growth Driven by High Dormitory Occupancy and Rising Hotel RevPAR

Kyoritsu Maintenance Co., Ltd. reported its financial results for the first quarter of the fiscal year ending March 31, 2027 (April 2026 – June 2026), marking a strong start with both sales and operating profit exceeding the same period last year. This achievement represents the sixth consecutive quarter of year-on-year growth in both revenue and profit , as well as the highest profit ever recorded for a first quarter .

This report provides a multi-faceted analysis based on the company's disclosures, moving beyond surface-level P&L figures to examine underlying growth excluding special factors, segment-specific trends, the medium-term growth narrative, and the company's financial foundation and shareholder returns.

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1. Q1 Consolidated Performance Highlights and Breakdown of Special Factors

In the first quarter, consolidated results reached ¥61.1 billion in net sales (+7.6% YoY) and ¥4.8 billion in operating profit (+8.2% YoY). Conversely, ordinary profit stood at ¥4.8 billion (-3.9% YoY) and net profit at ¥3.0 billion (-15.5% YoY), indicating a decline in these indicators. However, this decline does not stem from a fundamental deterioration of the business, but rather from specific, one-time factors .

【Why this slide is important】 The slide above clearly categorizes the superficial factors behind the Q1 profit decline (increased large-scale renovation costs, a decrease in equity-method investment gains, and tax effects) and presents the "underlying growth rate" excluding these items. This is the most critical data for evaluating the company's "true earning power."

Specifically, the following special factors occurred:

• Increase in large-scale renovation costs : A negative impact of ¥0.5 billion on operating and ordinary profit, and ¥0.3 billion on net profit.
• Decrease in equity-method investment gains : A negative impact of ¥0.5 billion on ordinary and net profit.
• Prior-year tax effect accounting, etc. : A negative impact of ¥0.3 billion on net profit.

When calculating the underlying growth excluding these one-time factors (total profit impact of approximately -¥0.8 billion), real net sales grew by +8.4% , real operating profit by +19.4% , real ordinary profit by +16.6% , and real net profit by +14.5% , confirming a very robust expansion in core business profitability.

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2. Dormitory Business: A Foundation for Stable Growth via High Occupancy and Price Optimization

The dormitory business (Dormy, student dorms, employee dorms, etc.), the company's core business, recorded significant growth with Q1 sales of ¥16.07 billion (+7.6% YoY) and operating profit of ¥2.26 billion (+29.6% YoY).

【Why this slide is important】 The dormitory business is the source of Kyoritsu Maintenance's stable, stock-type cash flow. This slide illustrates the historical trend of occupancy rates at the start of the term and the breakdown of occupied rooms by contract type , visually demonstrating the solidity of the company's revenue base.

Key factors supporting the strong performance of the dormitory business include:

• Maintenance of high occupancy rates : The occupancy rate at the start of the term reached an extremely high level of 98.5% , up 1.1 percentage points YoY.
• Expansion of contracted rooms : Out of a total capacity of 47,920 rooms, the number of occupied rooms grew to 47,225 (+2,143 rooms YoY). Specifically, student housing grew to 24,723 rooms (+1,691 YoY) and employee housing to 12,401 rooms (+247 YoY).
• Supply of new properties : The company opened 13 buildings with 2,401 rooms this term (including Hachioji, Tokai University, Ichigaya, and Nagasaki), successfully capturing demand.
• Progress in price pass-through : Optimization of sales prices (price hikes) and an increase in contract fees contributed to a ¥0.32 billion increase in sales and a ¥0.30 billion increase in operating profit .

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3. Dormy Inn Business (Business Hotels): Rising RevPAR and Promotion of Direct Sales

The flagship hotel brand, "Dormy Inn," recorded Q1 sales of ¥23.36 billion (+7.2% YoY) and operating profit of ¥4.51 billion (-0.2% YoY).

• Expansion of RevPAR (Revenue Per Available Room) : As a result of the Average Daily Rate (ADR) rising to ¥16,700 (+3.3% YoY) and the occupancy rate reaching 88.6% (+2.0pt YoY), RevPAR grew steadily to ¥14,822 (+5.1% YoY).
• Profit suppression factors : Despite the profit-boosting effect of higher RevPAR (+¥0.75 billion), operating profit remained flat YoY due to cost inflation in linen, cleaning, and rent (-¥0.32 billion), as well as an increase in large-scale renovation costs (-¥0.38 billion) aimed at maintaining and improving asset value.
• Strengthening customer engagement : The number of members in the official booking site "Dormy's" surged to 2.2 million (+55.3% YoY). Consequently, the direct booking ratio improved to 27.8% (+2.3pt YoY), creating a structure that reduces commission payments to external OTAs. The inbound ratio also remained strong at 28.2% (+1.1pt YoY).

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4. Resort Business: Capturing High-End Demand and Upfront Investment Phase

The resort hotel business recorded Q1 sales of ¥13.69 billion (+8.7% YoY) and an operating loss of -¥0.76 billion (compared to -¥0.44 billion in the same period last year).

• Higher unit prices and revenue growth : The ADR rose to ¥47,500 (+7.7% YoY), and RevPAR increased to ¥36,000 (+2.6% YoY). With the full-year contribution of "La Vista Atami Terrace" (239 rooms) opened in the previous term, sales showed growth.
• Temporary upfront costs : Profit for Q1 fell YoY due to upfront expenses, including increased large-scale renovation costs (-¥0.11 billion), preparation costs for new openings (-¥0.12 billion), and cost inflation (-¥0.15 billion).

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5. Full-Year Forecast and Medium-to-Long-Term Growth Story

The full-year consolidated earnings forecast for FY3/2027 projects sales of ¥277.0 billion (+0.6% YoY), operating profit of ¥26.0 billion (+4.6% YoY), ordinary profit of ¥26.0 billion (-0.8% YoY), and net profit of ¥18.0 billion (-3.8% YoY).

While the growth rates for sales and net profit may appear modest at first glance, this is due to the exclusion of one-time sales (¥21.9 billion) and profit (¥1.6 billion) from real estate liquidation conducted in the previous fiscal year (FY3/2026). Excluding the impact of real estate liquidation, the underlying full-year operating profit growth rate is expected to reach +12.7% .

【Why this slide is important】 This slide shows the full-year KPI plan (occupancy rate, ADR, RevPAR) for the Dormy Inn business. By comparing these with trends from the past few years, one can understand at a glance the pricing strategy and occupancy scenarios the company is using to drive profit growth.

Key KPI plans for Dormy Inn in the full-year forecast are as follows:

• Occupancy rate : 89.2% (+0.4pt YoY)
• ADR : ¥17,500 (+5.0% YoY)
• RevPAR : ¥15,600 (+5.5% YoY)

Through the thorough implementation of dynamic pricing and the utilization of its proprietary member base, the company has clearly outlined a strategy to continuously raise unit prices while maintaining high occupancy rates.

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6. New Opening Pipeline and Nationwide Dominant Strategy

The company continues to actively open new dormitories and hotels, further strengthening its nationwide dominant network.

1. Dormitory Business : Plans to open 15 buildings with 2,466 rooms annually. Strengthening expansion into 28 prefectures nationwide, including its first entry into Nagasaki Prefecture (2 buildings).
2. Dormy Inn Business : Plans to open 6 buildings with 1,039 rooms annually. Expanding into major cities nationwide, including its first entry into Okinawa Prefecture (Dormy Inn Naha <Kencho-mae>) , as well as Yokkaichi, Chitose, Komatsu, and Umeda-Higashi.
3. Resort Business : Plans to open 2 buildings with 157 rooms , such as "Omuromu Kadensho" in Kyoto and "La Vista Minami-Aso" in Kumamoto.

With numerous projects already decided for the medium-to-long-term pipeline (FY3/2028 and beyond), the structure ensures the continued accumulation of its stock-type business.

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7. Financial Soundness and Shareholder Return Policy

While accelerating growth investments, the company maintains an extremely high level of financial soundness.

• Financial Indicators (as of June 30, 2026) :
  • Total Assets: ¥320.8 billion (+¥4.1 billion from the end of the previous term)
  • Equity Ratio: 45.7% (remains stable from 46.0% at the end of the previous term, a robust level)
  • Net D/E Ratio: 0.73x (significantly improved from the 1.49x peak during the COVID-19 pandemic)
• Shareholder Returns :
  • Annual Dividend Forecast: ¥46.0 per share (interim ¥23.0, year-end ¥23.0). The projected dividend payout ratio is 23.2% (+2.5pt YoY).
  • Shareholder Benefit Program : In addition to "Shareholder Benefit Coupons" based on the record date (July/December), the company offers "Long-term Holding Shareholder Coupons" for those holding shares for three years or more, as well as "Resort Hotel Coupons," to encourage long-term ownership.

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8. Deep Dive Summary and Future Checkpoints

Although some profit indicators in Kyoritsu Maintenance's Q1 FY3/2027 results were superficially pressured by upfront investment costs such as large-scale renovations and prior-year special factors, it is clear that the earning power of the core dormitory and hotel businesses has reached record levels .

Investors and analysts should focus on the following four points moving forward:

1. Price control and RevPAR achievement : Whether the planned increase in Dormy Inn ADR to ¥17,500 proceeds smoothly.
2. Further expansion of Dormy's members : To what extent the profit margin improvement from higher direct sales can absorb cost inflation (labor, cleaning, utilities, etc.).
3. Early high occupancy of new properties : Progress in the initial occupancy of new hotels, including the first entry into Okinawa, and dormitories deployed nationwide.
4. Profit rebound after renovation completion : The speed of profit recovery in the second half of the year after the concentration of large-scale renovation costs in Q1 and Q2 concludes.