Intrance Co., Ltd. (3237): Q1 FY2027 Earnings Deep Dive Report

This report provides a detailed analysis of the Q1 financial results for the fiscal year ending March 31, 2027 (period from April 1, 2026, to June 30, 2026) for Intrance Co., Ltd. (Securities Code: 3237). The company operates primarily in the real estate and hotel management sectors, with a new AI data center business currently under development. This report comprehensively analyzes the Q1 performance trends, changes in the financial base, growth strategies aimed at achieving full-year profitability, and key performance indicators (KPIs).

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1. Q1 FY2027 Earnings Overview and Highlights

In the first quarter, Intrance reported consolidated net sales of 209 million yen (down 11.4% YoY) , an operating loss of 116 million yen (compared to an 87 million yen loss in the same period last year) , an ordinary loss of 77 million yen (compared to a 116 million yen loss in the same period last year) , and a net loss attributable to owners of the parent of 77 million yen (compared to a 116 million yen loss in the same period last year) .

The decline in sales and the widening of the operating loss were primarily driven by the absence of large-scale property sales or resale transactions in the core real estate business during Q1, as well as the reactionary decline in the hotel management business following the "Osaka Expo effect" seen in the previous fiscal year. Conversely, the ordinary loss and net loss narrowed significantly compared to the same period last year , bolstered by factors such as gains on the valuation of derivatives.

The following slide summarizes the Q1 consolidated results and key financial figures compared to the same period last year.

[Slide Commentary: Consolidated Results and Changes in Profit Structure]

The slide above outlines the consolidated profit and loss for Q1 and trends from previous years. Net sales decreased from 235 million yen in the same period last year to 209 million yen (down 11.4%), and the operating loss widened to 116 million yen. However, focusing on the bottom-line items, both ordinary loss and net loss improved by 39 million yen, moving from 116 million yen to 77 million yen . This was supported by non-operating gains from the valuation of financial derivatives. Q1 is characterized as a period for procurement and development preparation, with activities for closing deals accelerating from Q2 onwards.

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2. Segment Performance Analysis (Q1 Results)

① Real Estate Business: Profitable Despite No Major Closings

• Net Sales : 45 million yen (down 2.2% YoY)
• Operating Profit : 1 million yen (compared to a 1 million yen operating loss in the same period last year)

There were no closings for the resale of lodging facilities or sales of real estate for sale during the Q1 period. While revenue composition remained limited to property management (PM) fees, construction revenue, and rental income, strict cost management allowed the segment to turn a small profit, recovering from the operating loss recorded in the same period last year . Several real estate deals are currently under negotiation, with monetization targeted for Q2 and beyond.

② Hotel Management Business: Okinawa Recovers Amidst Expo Reactionary Decline

• Net Sales : 163 million yen (down 13.6% YoY)
• Operating Loss : 15 million yen (compared to a 9 million yen operating loss in the same period last year)

The business struggled in the Osaka and Kyoto areas, which drove performance last year, due to a cooling of inbound demand and the fading of the Osaka Expo special demand. Conversely, the Okinawa property (HOMM Stay Yumiha Okinawa) performed well. As the company was unable to secure new management contracts during Q1 and could not fully cover the increase in personnel and fixed property costs, the operating loss widened in line with the decrease in sales .

③ Other Businesses (AI Data Center Business, etc.): New Entry and Foundation Building

• Net Sales : 0 million yen (no sales in the same period last year)
• Operating Loss : 4 million yen (compared to a 6 million yen operating loss in the same period last year)

The "AI Data Center Division" was launched on June 23, 2026, and GPU server sales commenced in July 2026. As Q1 was in the pre-order sales development phase, there was no revenue contribution, but the company is actively pursuing sales as a new pillar of revenue for the coming periods.

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3. FY2027 Full-Year Forecast and the V-Shaped Recovery Story

Intrance has faced a challenging period with four consecutive years of operating losses up to the previous fiscal year (FY2026). The company has positioned the fiscal year ending March 2027 as a turning point to establish full-year profitability .

The full-year consolidated earnings forecast targets net sales of 3,344 million yen (up 211.5% YoY) , operating profit of 120 million yen , ordinary profit of 45 million yen , and net profit attributable to owners of the parent of 34 million yen .

The following slide illustrates the rapid recovery scenario for sales and profit stages in the full-year plan.

[Slide Commentary: Overview of FY2027 Full-Year Earnings Forecast]

This slide visualizes the aggressive turnaround plan from the previous year's results (net sales of 1,073 million yen, operating loss of 417 million yen). The company expects to expand net sales by approximately 3.1 times to 3,344 million yen (+2,271 million yen) and aims to achieve an operating profit of 120 million yen, representing a significant improvement of 537 million yen . This V-shaped recovery is supported by increased resales of lodging facilities and sales of detached inns in the real estate business, expansion of the number of managed properties in the hotel business, and contributions from the new AI data center business.

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4. Full-Year Segment Plans and Revenue Drivers

To achieve full-year profitability, clear numerical targets and strategies have been set for each segment.

[Slide Commentary: Full-Year Segment Forecasts and Growth Pillars]

The slide above shows how each business segment will contribute to full-year performance.

• Real Estate Business (Planned Sales: 2,068 million yen, Operating Profit: 342 million yen) : This is the largest revenue driver. Centered on the "resale of lodging facilities (2 projects)" and the "development and sale of detached inns for inbound tourists (5 projects)," the company expects a significant increase of 446.0% from the previous year's sales of 378 million yen. In terms of profit, it is planned to lead the group with 342 million yen (+311 million yen YoY).

• Hotel Management Business (Planned Sales: 1,153 million yen, Operating Profit: 8 million yen) : In addition to improving the profitability of existing hotels, the company aims to pursue economies of scale by securing management rights for new inns and hotels (2 projects). Sales are planned to increase by 66.1% YoY to 1,153 million yen, with a goal to turn a profit from the previous year's 54 million yen loss.

• Other Businesses (Planned Sales: 123 million yen, Operating Profit: 88 million yen) : The company aims to establish high-margin new revenue sources by promoting GPU server sales and development in the newly launched AI data center business, as well as pursuing M&A with companies that offer high synergy.

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5. Business Pipeline and Progress

Although no sales were recorded in Q1, the pipeline is steadily building as follows:

Key Pipeline for Real Estate Business

• Nerima-ku and Kita-ku, Tokyo : Development and sale of detached inns for inbound tourists (expected contribution profit of 30 million yen each)
• Tohoku and Kanagawa Prefecture : Resale projects for lodging facility real estate (large-scale negotiation projects with expected contribution profit of 200 million yen each)
• Okinawa Prefecture and Naka-itabashi : Hotel development site brokerage and lodging facility brokerage

Ensuring the closing of these projects from Q2 onwards is the most critical condition for achieving the full-year budget.

Hotel Management Pipeline and Large-Scale Development Plans

In addition to the stable operation of the existing "HOMM Stay" brand (Okinawa, 3 facilities in Kyoto) and "FOLIO" (Osaka), the following large-scale projects are pending, which will determine long-term growth:

1. Hokkaido Kitahiroshima (Scheduled to open Summer–Autumn 2027) : Large hotel adjacent to ES CON FIELD (approx. 190 rooms, expected sales 2,000 million yen, operating profit 250 million yen)
2. Hokkaido Sapporo Susukino (Scheduled to open Summer–Autumn 2027) : Urban apartment hotel in the Susukino district (approx. 130 rooms, expected sales 1,500 million yen, operating profit 100 million yen)
3. Yamanashi Prefecture Kawaguchiko (Scheduled to open Summer–Autumn 2027) : Resort apartment hotel in Fujikawaguchiko Town (approx. 70 rooms, expected sales 900 million yen, operating profit 60 million yen)

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6. Financial Position (B/S) Trends and Financing

Total assets at the end of Q1 FY2027 were 1,714 million yen (a decrease of 433 million yen from the end of the previous fiscal year) .

• Current Assets : 1,549 million yen (down 224 million yen due to a decrease in cash and deposits, etc.)
• Non-Current Assets : 161 million yen (down 208 million yen due to a decrease in investments and other assets, etc.)
• Total Liabilities : 1,555 million yen (down 353 million yen due to the redemption of corporate bonds of 260 million yen and a decrease in provision for shareholder benefits, etc.)
• Total Net Assets : 159 million yen (down 79 million yen due to the recording of quarterly net loss, etc.)
• Equity Ratio : 7.1% (down 2.3 percentage points from 9.4% at the end of the previous fiscal year)

While financial restructuring is progressing, such as the completion of the redemption of corporate bonds due within one year , the equity ratio is on a downward trend due to the recording of a net loss. The company is pushing forward with corporate value enhancement through a return to profitability and environmental improvements to facilitate the smooth exercise and conversion of third-party allotment funds (CBs and stock acquisition rights) issued in February and July 2026.

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7. Summary and Investor Checkpoints

Intrance's Q1 FY2027 started with a loss, carrying over the difficulties from the previous fiscal year, but the groundwork for a structural transformation and full-year profitability is being steadily laid.

The following KPIs and factors are worth noting when evaluating the company's performance and growth story:

1. Timing of Real Estate Deal Closings : When will the resale projects in Kanagawa and Tohoku, and the detached inn projects in Tokyo, contribute to sales and profits?
2. Recovery of Occupancy Rates/Unit Prices at Existing Hotels and Securing New Management Rights : Bottom-line improvement in Osaka and Kyoto by capturing inbound demand, and progress in new M&A.
3. Order Track Record for the New AI Data Center Business : Progress in GPU server sales orders and their contribution to profit margins.
4. Exercise Status of CBs/Stock Acquisition Rights and Strengthening of Equity : Progress in fundraising to stabilize the financial base.

Whether the company can recover projects as planned from Q2 onwards, using the Q1 figures as a floor, is the key to achieving the full-year plan.