Keiai Star Real Estate (3465) FY2027 Q1 Earnings Deep Dive: Record-Breaking First Quarter and Full-Year Guidance Upgrade

Keiai Star Real Estate Co., Ltd. delivered an exceptionally strong performance in the first quarter (Q1) of the fiscal year ending March 2027 , with both revenue and profit at every level reaching record highs for a first quarter . The results were driven by resilient demand for detached houses in major metropolitan areas, rising unit sales prices, and the expansion of new business segments.

This report extracts 10 key topics from the earnings presentation materials, providing a detailed analysis of the company's performance trends, business portfolio optimization, growth strategies, and shareholder return policies.

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1. Q1 Earnings Summary: Record Performance and Significant Profitability Improvement

Consolidated results for the first quarter of the fiscal year ending March 2027 were as follows: Revenue of 102.715 billion yen (up 21.5% YoY) , Operating Profit of 8.371 billion yen (up 85.7% YoY) , Ordinary Profit of 7.605 billion yen (up 93.2% YoY) , and Net Profit attributable to owners of the parent of 4.809 billion yen (up 100.5% YoY) . Surpassing the 100 billion yen revenue mark in a single first quarter represents a major milestone for the company.

The primary driver was the core detached housing business. As condominium prices continue to soar, demand from end-users has shifted toward detached houses, leading to higher unit sales prices and reduced discount rates , which combined to significantly improve the gross profit margin to 16.1% (compared to 14.2% in the same period last year) .

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2. Full-Year Guidance Upgrade: Upward Revision Across All Metrics

Following the strong progress in the first quarter, the company has upwardly revised its consolidated full-year earnings forecast for the fiscal year ending March 2027.

Slide (PAGE 3) Commentary: Impact and Background of the Full-Year Guidance Upgrade

The slide above summarizes the revisions to the full-year earnings forecast. Compared to the initial projections, revenue has been raised by 10 billion yen to 460 billion yen (+2.2% vs. initial) , operating profit by 3 billion yen to 34.5 billion yen (+9.5%) , ordinary profit by 3 billion yen to 31.5 billion yen (+10.5%) , and net profit by 1.8 billion yen to 19.3 billion yen (+10.3%) . While the real estate industry tends to be back-loaded in terms of earnings, the company achieved a progress rate of 22.3% for revenue and 24.1% for ordinary profit against the full-year forecast by the end of Q1, marking a strong start. The upgrade is supported not only by resilient demand for detached houses but also by the steady growth of the used home renovation business (the "Dual-Blade Strategy") and new business initiatives.

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3. Business Portfolio Optimization: Restructuring of Segment Reporting

Starting this fiscal year, the company has reorganized its business segments to reflect its evolving operations. The "Apartment and Income-Producing Real Estate Business," which continues to see expanding investment demand, has been established as an independently disclosed segment. Meanwhile, the "Custom Home Business," affected by external environmental changes such as inflation, has been consolidated into "Other Businesses" to optimize the reallocation of management resources.

Slide (PAGE 8) Commentary: Performance Comparison and Significance of New Segments

The slide above shows the year-on-year comparison based on the new segment structure. The core Detached Housing Business (including land) achieved dramatic profit growth, with 2,251 units sold (up 8.4% YoY), revenue of 93.521 billion yen (up 17.0% YoY), and operating profit of 8.888 billion yen (up 65.9% YoY) . The results clearly demonstrate the success of detailed supply-demand analysis by area, coupled with appropriate pricing and cost control. Even more noteworthy is the surge in the newly established Apartment and Income-Producing Real Estate Business . Revenue jumped from 1.641 billion yen in the same period last year to 5.956 billion yen (up 263.0% YoY) , and operating profit soared from 60 million yen to 558 million yen (up 816.8% YoY) . The independence of this segment clearly signals the company's successful diversification from a "mere detached home builder" to a "comprehensive real estate developer."

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4. Deep Dive into the Detached Housing Business: Price Pass-Through and Inventory Management

In the detached housing business, the company maintains a stable procurement, production, and supply system while monitoring external factors such as rising material costs and geopolitical tensions in the Middle East.

• Expansion of Area Share : The housing start share in the Kyushu area has risen to 26.4%, with steady growth also seen in Southern Kanto and the Kinki region. The national housing start share has reached 8.3% , with the company aiming to achieve a 10% national share in the near future.
• Maintaining Healthy Inventory Levels : Total inventory, including contracted units, has reached over 12,000 units , securing a solid foundation for future revenue. By leveraging the proprietary "KEIAI Platform," the company maintains a stable high turnover rate, with inventory turnover days at 27.3 days .

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5. Growth Engines Supporting Diversification: "Dual-Blade Strategy" and "Overseas Business"

The company is rapidly cultivating strategic new businesses as pillars to follow its new detached housing segment.

(1) Used Home Renovation Business (within Other Businesses)

Against the backdrop of inflation and concerns over future interest rate hikes, there is growing latent demand for affordable housing. Leveraging its in-house renovation and productization expertise, the company is aggressively promoting its used detached home renovation business, centered on an average sales price in the 17 million yen range , as part of its "Dual-Blade Strategy." Inventory levels are increasing steadily, and the company has successfully captured a new customer base.

(2) Overseas Business (Expansion in Australia)

Building a revenue model in overseas markets is also taking concrete shape. In addition to land development and sales through its equity-method affiliate MunCorp (49.9% stake) , the company has established a new local construction contractor, Kintegra Living (70% stake) .

Slide (PAGE 18) Commentary: Building a New Revenue Model in the Australian Market (Kintegra Living)

The slide above illustrates the overall business development in the Australian market. Beyond the traditional land development and detached home sales by MunCorp (which contributes to our earnings via equity-method investment profit), the company has established a system where Kintegra Living directly undertakes construction contracts (targeting up to 30%) for detached houses developed by MunCorp. This allows revenue and operating profit from construction contracts to be directly incorporated into our consolidated results , with contributions expected as early as this fiscal year. This represents a highly significant step in establishing an overseas growth model that involves operational control, rather than mere investment.

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6. Financial Soundness and Shareholder Returns (Dividend Increase)

Financial Position

Total assets stood at 367.56 billion yen (an increase of 11.939 billion yen from the end of the previous fiscal year), and net assets were 84.488 billion yen (up 1.505 billion yen). While inventories have expanded to 282.738 billion yen due to aggressive acquisition of land for detached homes and apartments, turnover days remain within an appropriate range, indicating healthy asset accumulation for growth.

Shareholder Return Policy

In line with the upward revision of the full-year earnings forecast, the dividend policy has also been increased.

• Annual Dividend Forecast : Increased from the initial 140 yen per share to 150 yen (75 yen interim, 75 yen year-end) , representing a substantial increase of 32.5 yen compared to the previous fiscal year.
• Dividend Payout Ratio : 24.1% based on the revised forecast.
• Return Policy : The company has set a minimum dividend of 65 yen per share , committing to flexible and stable shareholder returns based on performance and financial conditions.

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7. Summary and Future Outlook

Keiai Star Real Estate's Q1 results for the fiscal year ending March 2027 were exceptionally strong, with various pieces of its growth strategy— improved profitability in the core detached housing business, rapid expansion of the apartment and income-producing real estate business, promotion of used home renovation, and the launch of a new business model in Australia —all coming together.

Moving forward, the sustainability of the improved profit margins, the growth speed of the independently disclosed apartment business, and the realization of overseas consolidated contributions will be the key points to watch for achieving the full-year targets.