KI Star Q1 FY2027: Operating profit jumps 85.7% on robust housing sales

For the first quarter of fiscal 2027 (April-June 2026), consolidated revenue was 102,715 million yen, up 21.5% year on year, and operating profit was 8,371 million yen, up 85.7%. Recurring profit rose 93.2% to 7,605 million yen, and net income attributable to owners of the parent climbed 100.5% to 4,809 million yen. Revenue marked a first-quarter record, and the operating margin improved to 8.1% from 5.3% a year earlier. Comprehensive income rose 97.6% to 5,240 million yen. The main drivers were expanded lot purchases and openings in metropolitan areas where housing demand remains solid, and measures to reduce material procurement risks.

Starting this quarter, KI Star reorganized its reporting segments into two main businesses: for-sale housing and apartments and income property. Custom home construction, existing home renovation and other operations are now grouped under 'Other.'

For-sale housing sold 2,251 units, including land sales, generating revenue of 93,521 million yen, up 17.0% year on year, and segment profit of 8,888 million yen, up 65.9%. Expanded market share in metropolitan areas and a reorganization that incorporates existing home renovation in suburban areas lifted profitability.

The apartment and income property business sold 24 units, with revenue surging 263.0% to 5,956 million yen and segment profit jumping 816.8% to 558 million yen, driven by growing asset management demand and an integrated model of developing and selling investment wooden apartments plus rental management.

Other revenue to external customers was 3,237 million yen, up 8.9%, while segment profit was 210 million yen, down 29.5% year on year.

Total assets at the end of the first quarter were 367,560 million yen, up 11,939 million yen from the prior fiscal year-end. Inventory increased by 38,132 million yen, while cash and deposits decreased by 32,657 million yen. Total liabilities were 283,072 million yen, with borrowings up 15,101 million yen. Net assets came to 84,488 million yen, up 1,505 million yen, reflecting net income attributable to owners of the parent and dividend payments.

For dividends, KI Star revised its fiscal 2027 annual dividend forecast to 150 yen per share, with an interim dividend of 75 yen and a year-end dividend of 75 yen. After adjusting for the 2-for-1 stock split effective April 1, 2026, this represents an effective dividend increase. Loan agreements include financial covenants requiring KI Star to maintain certain levels of net assets, recurring profit, LTV, inventory turnover months, and D/E ratio.

Risks cited in the earnings report include:
* prolonged geopolitical risks causing energy and resource price volatility
* exchange rate fluctuations and a transition to a higher domestic interest rate environment
* rising building material and labor costs, and supply instability for some components that may extend construction timelines
* more cautious buyer sentiment due to mortgage rate trends
* housing starts remaining at low levels
* a rapid increase in inventory and borrowings, which could worsen capital efficiency and interest burden
* the risk of breaching financial covenants
* seasonal revenue volatility, with deliveries concentrated in the fourth quarter

KI Star raised its full-year consolidated forecasts for fiscal 2027, citing solid for-sale housing sales. Revenue is now projected at 460,000 million yen, up 16.8% from the prior year; operating profit at 34,500 million yen, up 27.8%; recurring profit at 31,500 million yen, up 26.2%; and net income attributable to owners of the parent at 19,300 million yen, up 25.7%.