8881.T

• Corporate & Strategic Overview

  • Nisshin Group is a comprehensive real estate and construction group covering the full real estate value chain across three core segments. In 2025 full year, Construction and Real Estate segments combined accounted for ~86% of total revenue, with Real Estate Management accounting for ~13%.
  • The medium-term management plan sets targets of 100 billion yen group revenue and 6.5 billion yen operating profit by the 2030 March Fiscal year, with an intermediate target of 88 billion yen revenue and 5 billion yen operating profit by 2027 March Fiscal year.
  • Strategic priorities: Target high growth and high profitability for Real Estate Management; focus on improving sales growth and profit margin for Construction; expect no major changes in growth or profitability for Real Estate. Investors are advised to focus on Construction's profit improvement and Real Estate Management's growth to track plan progress.
  • Key KPIs for the plan: Special commissioned project ratio and segment margin improvement for Construction; managed units/properties and in-house apartment development for Real Estate Management; investment property ratio and securitization project development for Real Estate. Overall progress is on track, with minor policy adjustments made to account for external market changes.

• Interim Overall Performance

  • All three segments achieved year-over-year revenue growth, with all profit levels growing sharply year-over-year. The strong performance was driven by stronger-than-expected demand and margin improvement in Construction, plus the recognition of carry-over projects from the prior fiscal year in Real Estate. Total group interim revenue hit 35.985 billion yen, with operating profit of 3.081 billion yen, net profit of 2.069 billion yen, marking the highest interim revenue in the past 5 years.
  • Balance sheet status: Sales for development real estate and project development expenditures increased as the company pre-invests for future growth, funded by increased borrowing, but equity ratio remains at a healthy 49.9%.

• Segment Operational Highlights

  • Construction: The industry faces structural headwinds from labor shortages, aging workforce, and higher costs from new work-style regulations that extend project timelines and limit capacity industry-wide. Tada Construction, the group's construction subsidiary, has over 100 years of experience specializing in condominium construction, with a strong market position that lets it select high-margin projects, leading to structural margin improvement. Backlog increased 39.1% year-over-year due to longer project timelines and earlier ordering by clients, but near-term earnings impact is limited as annual capacity has not grown substantially. Progress on medium-term targets is mostly on track, with steady progress on talent development. The segment expects to maintain the current high margin level, with only incremental marginal improvement going forward.
  • Real Estate Management: Grows steady recurring stock revenue by adding new managed units from in-group real estate sales and third-party acquisitions, plus develops small-scale apartment buildings to drive both one-time sales revenue and future recurring management revenue. Total managed units reached 35,901, growing steadily. Progress on the 1,000-building / 40,000-unit target is behind schedule due to external market changes, so the segment shifted priority to overall profit growth over unit count targets.
  • Real Estate: Focuses on development and sales of residential property in the Tokyo greater metro area. Unsold under-construction inventory is growing because the company is accelerating pre-investment for future projects faster than completed inventory is sold off, partially due to longer project timelines. Medium-term plan progress is overall on track: the 30% target share for investment properties has not been met yet, with three projects currently under development, and the company is working to increase in-house project manager staffing to improve profitability.

• The company upwardly revised full-year 2026 March Fiscal year guidance following stronger-than-expected interim performance, particularly faster-than-expected margin improvement in the Construction segment. The new guidance calls for: 85 billion yen full-year revenue (11.5% year-over-year increase), 5.3 billion yen full-year operating profit (53.7% year-over-year increase), and 3.1 billion yen full-year net profit (50.7% year-over-year increase), targeting the highest full-year revenue in three years, with an expected full-year operating margin of 6.2%.
  • As of the interim period, progress against the revised full-year guidance is: 42.3% of revenue target achieved, 58.1% of operating profit target achieved, 59.9% of ordinary profit achieved, and 66.7% of net profit achieved. This higher-than-usual interim progress is driven by carry-over projects from the prior year, and does not indicate a weak full-year second half; the revision incorporates the large impact of individual project close timing in real estate development to deliver a high-certainty forecast.
  • The company maintains its shareholder return policy of targeting a 50% payout ratio. The full-year dividend per share is kept at the initially guided 23 yen at this time due to uncertainty over full-year net profit, but the company confirms it will follow the 50% payout target when finalizing the dividend.
  • The Construction segment expects the current 9.3% profit margin to be sustained into the second half, with limited room for further large margin improvements going forward.

For the 2026 March Fiscal Year first half (interim period):

1. Construction Segment: Revenue of 20.324 billion yen, segment profit of 1.893 billion yen. It represents ~56.5% of total group interim revenue, achieved a 14.3% year-over-year revenue increase, and segment profit doubled year-over-year. The segment profit margin improved to 9.3%, the highest level in the past 5 years. In 2025 March Fiscal year full year, it contributed 53% of total group profit.
2. Real Estate Management Segment: Revenue of 6.402 billion yen, segment profit of 0.783 billion yen. It represents ~17.8% of total group interim revenue, achieved 45.8% year-over-year revenue increase, and 85.1% year-over-year profit growth. The segment profit margin improved to 12.2%. In 2025 March Fiscal year full year, it contributed 24% of total group profit.
3. Real Estate Segment: Revenue of 9.248 billion yen, segment profit of 0.604 billion yen. It represents ~25.7% of total group interim revenue, achieved 94% year-over-year revenue increase, turning from a year-ago deficit to net profit. The segment profit margin reached 6.5%, the highest interim level in 5 years. In 2025 March Fiscal year full year, it contributed 22% of total group profit.

• Construction industry structural risks: Persistent labor shortages, aging workforce, and regulatory changes from work-style reform have lengthened project timelines, increased costs, and limited industry-wide capacity, which could constrain future volume growth.
  • Inflationary pressures: Rising material prices and labor costs continue to pressure margins, even after significant pricing and cost optimization improvements to date.
  • Real estate development timing risk: A small number of large projects can have an outsize impact on full-year earnings given the nature of real estate development, creating uncertainty around full-year results.
  • Medium-term target delays: The 1,000-building / 40,000-unit growth target for the Real Estate Management segment is behind schedule due to external market changes.
  • Unfinished under-construction inventory is growing as the company accelerates pre-investment for future growth, partially driven by longer project timelines, which creates increased balance sheet exposure to market downturns.
  • The Real Estate segment has not yet hit its 30% target for investment property share of sales, and faces ongoing challenges with increasing in-house project manager capacity to improve profitability.

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