Q3 FY8/26 results update
Executing on growth; near-term profitability reflects investment cycle - Q1-3 FY8/26 revenue growth is strong, driven by the first full-year contribution from KIZUNA Holdings, though operating margins are impacted by goodwill amortization, new hall opening costs, and recruitment expenses. The acquisition of Cocolonet demonstrates that M&A remains central to SAN Holdings' growth strategy. Both the KIZUNA Holdings and the Cocolonet transactions are consistent with the company's long-term vision of building a national end-of-life services platform. Margins are expected to recover over the medium term as growth-related investment tapers and M&A synergies are realized.
Growth investments weigh on profits
M&A driven revenue growth normalizing while profitability pressured by growth investments - Q1-3 revenue grew +33.9% YoY to ¥27.8bn, reflecting the first full-year contribution from KIZUNA Holdings. On a standalone Q3 basis, revenue of ¥9.6bn was flat YoY (-0.2%) as the KIZUNA acquisition has fully normalized. Operating profit declined -1.8% YoY to ¥2.4bn (OPM 8.8%, -320bp YoY), with the primary drag being goodwill amortization of ¥0.5bn from the KIZUNA Holdings acquisition alongside new hall opening costs and recruitment expenses. However, Q3 OPM recovered to 9.3% from a 7.1% in Q2, suggesting near-term cost pressure is stabilizing.
Cocolonet acquisition closes, expanding SAN Holdings’ national footprint - On February 1, 2026, SAN Holdings completed the share exchange with Cocolonet CO., LTD., making it a wholly owned subsidiary. Cocolonet's 49 funeral halls across Fukushima, Ibaraki, Tochigi, and Yamanashi add coverage in Tohoku and northern Kanto where SAN Holdings had no prior presence, expanding the Company’s reach to 21 prefectures with minimal network overlap and accelerating growth towards 550 halls by FY8/31.
Valuations – The shares are trading on an estimated PER FY8/27 of 7.9x and a free cash flow yield of 7.2%.
Full report available here
Description: SAN HOLDINGS is the largest domestic pure-play End-of-Life service provider, with a network of 345 funeral halls spanning 21 prefectures in Japan.
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