KYORITSU MAINTENANCE CO.,LTD. Q2 FY2026 earnings call

• Overall Market & Macro Context

  • The Japanese economy saw gradual recovery on improving employment and income, but continued uncertainty from rising inflation and U.S. trade policy concerns
  • Strong inbound tourism drove performance: foreign visitor arrivals hit a record 35 million visitors 21 months in a row through October, and Osaka-Kansai Expo lifted overall accommodation demand
  • The company achieved consecutive 2-quarter record net profit for the second straight period, with consolidated revenue of 119.5 billion yen (7.4% YoY increase), operating profit of 11.2 billion yen (6.1% YoY increase), and interim net profit of 8.7 billion yen (13.6% YoY increase)

• Operational Updates by Segment

  • Dormitory Business
  • Initial occupancy rate hit 97.4% (+0.4pp YoY), total contracted rooms grew 1,458 YoY to 45,082 rooms
  • Expanded geographic coverage to include national/public universities in regional core cities, opening 12 new buildings (1,364 rooms) in the period
  • Dormy Inn Business
  • Membership program "Dormy's" grew steadily: direct booking share rose 4.9pp YoY to 27.5%, inbound share rose 0.5pp YoY to 22.7%
  • Overall RevPAR increased 1,086 yen YoY to 14,477 yen; occupancy rose 2.3pp YoY despite temporary demand disruption from misinformation
  • Named FY2026 the "first year of development/opening" after restarting hotel development paused during COVID, opening 4 new properties (637 rooms)
  • Resort Business
  • Direct booking share rose 3.3pp YoY to 23.7%, inbound share rose 1.9pp YoY to 12.6%
  • RevPAR increased 1,179 yen YoY to 37,676 yen; occupancy rose 4.3pp YoY while average daily rate fell temporarily due to misinformation-driven demand shifts
  • The new flagship property Lavista Atami Terrace is on track to open in March 2026, with pre-bookings starting in September and off to a strong start
  • Senior Life Business
  • Paused new permit-based development temporarily to prioritize profitability, and has begun development of new multi-generational senior residences

• Financial & Shareholder Updates

  • As of end-September, total assets reached 317.3 billion yen (+15.8 billion yen YoY), net debt to equity ratio fell to 1.05x, equity capital ratio rose to 39.8% (+6.8pp YoY) after convertible bond conversion
  • The company maintains a target net D/E ratio below 1.0x, and will continue improving profitability and using real estate securitization to control debt
  • Plans a full-year dividend of 46 yen per share (+8 yen YoY), with a 21.2% payout ratio; expanded shareholder benefits since 2025, with effective total yield of 2.86% (3.53% for 3+ year holders) at current share prices

1. Dormitory Business: Revenue of 28.98 billion yen (5.6% YoY increase, 24.2% of total consolidated revenue), operating profit of 3.07 billion yen (130 million yen YoY decrease). 2. Dormy Inn Business: Revenue of 44.86 billion yen (8.4% YoY increase, 37.5% of total consolidated revenue), operating profit of 9.96 billion yen (14.8% YoY increase). 3. Resort Business: Revenue of 27.25 billion yen (2.8% YoY increase, 22.8% of total consolidated revenue), operating profit of 0.36 billion yen (410 million yen YoY decrease). 4. Development Business: Reported large YoY profit growth in H1 from completed real estate securitization, with additional transactions planned for H2.

• Full-year consolidated operating profit guidance is maintained at 25.0 billion yen, unchanged from the initial forecast. Management expects H1 underperformance from temporary misinformation impacts on the hotel segment to be fully recovered by stronger-than-planned H2 performance, as forward booking data for the next six months shows ADR and RevPAR have already recovered and are exceeding both prior year and initial plan levels.
  • Segment-level full-year guidance: Dormitory Business revenue of 58.0 billion yen (+5.6% YoY), operating profit of 6.32 billion yen (+4.1% YoY, 2% above initial plan); Dormy Inn Business revenue of 93.01 billion yen (+11.0% YoY), operating profit of 20.17 billion yen (+30.8% YoY); Resort Business revenue of 58.0 billion yen (+4.6% YoY), operating profit with a 620 million yen YoY decrease; Development Business is guided for 28.5 billion yen revenue growth and 1.5 billion yen profit growth from four real estate securitization transactions.
  • H2 recovery plan breakdown: Dormitory Business expects 1.5 billion yen revenue growth and 380 million yen profit growth; Hotel segment overall expects 3.24 billion yen total profit growth; Development Business expects 25.8 billion yen revenue growth and 1.41 billion yen profit growth from three planned H2 securitization transactions after one completed in H1.
  • KPI guidance revisions: For Dormy Inn, full-year RevPAR is guided to 14,800 yen (+300 yen above initial plan, +7.8% YoY); for Resort Business, full-year RevPAR is guided to 40,300 yen (-1,500 yen below initial plan, +5.3% YoY).
  • Mid-term plan progress: By capacity, dormitory business is at 49,200 rooms against a 50,000 room target, Dormy Inn is on track at 20,000 rooms, and Resort Business is at 4,800 rooms against a 5,500 room target.

• Misinformation spread in some Asian markets claiming a major disaster would hit Japan on July 5 caused flight cancellations and temporary inbound travel cancellations, leading to temporary market average rate declines and slower ADR growth in the Dormy Inn and Resort segments in H1.
• Sustained cost inflation for food, labor and construction materials puts pressure on operating margins across all segments.
• Recent political tensions between China and Japan have caused some booking cancellations, though the impact is currently assessed as minor.
• Persistently high construction costs create uncertainty for the company's new development pipeline.
• Continued macro uncertainty from global trade policy and uneven economic recovery creates uneven demand visibility.

The provided transcript cuts off before the question and answer section, so no exchanges are available to summarize.