Daito Construction (1878) AI Stock Analysis

• Market Cap: ¥1.12T
• Dividend Yield: 5.16%
• Average Volume (3M): 1.10M
• Price to Earnings (P/E): 11.5
• Beta (1Y): 0.38
• Revenue Growth: 5.16%
• EPS Growth: 6.00%
• Country: JP
• Employees: 18,814
• Sector: Real Estate
• Sector Strength: 53
• Industry: Real Estate - Diversified
• EPS (TTM): 77.69
• Shares Outstanding: 344,594,900
• 10 Day Avg. Volume: 922,440
• 30 Day Avg. Volume: 1,101,263
• PEG Ratio: 0.38
• Price to Book (P/B): 2.16
• Price to Sales (P/S): 0.55
• P/FCF Ratio: 16.45
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: ¥3,511.00 ▲(15.68% Upside)

The score is driven most by mixed financial performance: strong revenue growth and steady profitability are tempered by weakened TTM cash generation (slightly negative free cash flow) and higher leverage. Technicals add support with a price above major moving averages and positive MACD, while valuation further improves the profile due to a moderate P/E and high dividend yield.

Positive Factors

Strong revenue growth and stable margins

Sustained top-line expansion alongside stable-to-improving gross and net margins indicates the firm is executing commercially and capturing pricing or efficiency gains. Over 2-6 months this supports durable earnings growth potential and operational leverage across projects, improving resilience to cyclical shifts.

High shareholder returns and scale

Consistently high ROE around 20% reflects effective capital allocation and profitable project mix, signaling a strong business model. Maintaining such ROE supports long-term shareholder value and suggests competitive advantages in bidding, project execution, or asset utilization versus peers.

Balance sheet supports scale

Growing asset and equity bases provide financial capacity to take on larger projects and expand operations. A generally healthy balance sheet underpins strategic flexibility for capital investments or cyclically timed opportunities, beneficial over multi-month horizons if cash generation stabilizes.

Negative Factors

Weakened cash generation

A slide to slightly negative free cash flow and weak cash conversion undermines the sustainability of returns and limits internal funding for new projects or dividends. Persisting weak cash generation over several quarters increases refinancing and liquidity risk and pressures operational flexibility.

Rising leverage

A marked increase in debt-to-equity reduces balance-sheet flexibility and raises interest and refinancing exposure. If cash generation remains constrained, higher leverage can amplify downside in cyclical downturns and limit the company's ability to bid competitively or invest in growth projects.

Moderate operating margins

Single-digit operating margins and modest net margins leave limited buffer against cost inflation or project overruns. Structurally modest profitability reduces shock absorption, making earnings and cash flow more sensitive to adverse contract mix or rising input costs over the medium term.

Daito Construction Business Overview & Revenue Model

Company Description

Daito Trust Construction Co.,Ltd. designs and constructs apartments, condominiums, rental office buildings, factories, and warehouses in Japan. It operates through Construction, Real Estate, and Other segments. The company also constructs mid- to high-rise rental condominiums in metropolitan area; produces and constructs steel frames and sells exterior products; manages rental buildings and provides customer services; and offers rental building brokerage and tenant recruitment services. In addition, it offers agency guarantee and rental building real estate agency services; constructs LP gas plants and supplies LP gas to rental buildings; supplies and sells energy, such as electric power to rental buildings; and operates elderly day care centers and nurseries. Further, the company provides home care, in-home support planning, home visit nursing care, support for people with disabilities, housekeeper referrals, and nursing care personnel introduction services; operates hotels in Malaysia; and handles financing, such as construction funds. Additionally, it sells insurance to rental housing owners and tenants; offers payment services for credit card settlements and other payment methods; provides consulting services for trust businesses centered on real estate management trusts, as well as asset succession and asset management; and offers document shipping and shredding, printing, and clerical work services. The company also engages in flexible workspace business; and management of facility reservation portal sites. The company was incorporated in 1974 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Daito Construction generates revenue through several key streams, primarily from contract work in the construction of residential buildings, commercial properties, and infrastructure projects. The company earns money by securing contracts through competitive bidding processes, often partnering with government agencies and private developers. Additional revenue comes from maintenance and renovation services offered to existing clients, as well as from real estate development projects where they manage the entire lifecycle from planning to execution. Strategic partnerships with suppliers and subcontractors also help optimize costs and improve profit margins. Furthermore, Daito Construction invests in technological advancements and sustainable building practices, which can lead to cost savings and enhanced project appeal, thereby contributing to its overall profitability.

Daito Construction Financial Statement Overview

Summary

Strong income-statement momentum (very strong TTM revenue growth with stable-to-improving margins) is offset by weaker financial quality: TTM cash flow has deteriorated with slightly negative free cash flow and low cash conversion, and leverage has risen meaningfully (debt-to-equity up to ~0.48 from ~0.27).

Income Statement

Results show solid profitability and a strong growth trajectory. TTM (Trailing-Twelve-Months) revenue growth is very strong, and margins have been stable-to-improving versus prior years (gross margin ~17% and net margin ~4.8% TTM). Net income has also stepped up versus earlier periods, indicating good operating leverage. The main weakness is that profitability remains moderate for the sector (single-digit operating margin and ~5% net margin), leaving less cushion if pricing or project economics soften.

Balance Sheet

The balance sheet is generally healthy with strong shareholder returns (around 20% return on equity in both TTM and the latest annual period). Leverage is manageable overall, but debt has increased meaningfully in TTM (debt-to-equity rising to ~0.48 from ~0.27 in the latest annual period), which reduces flexibility and raises risk if cash generation stays weak. Asset and equity levels have grown over time, supporting scale, but the recent uptick in leverage is a key watch item.

Cash Flow

Cash generation has weakened sharply in TTM (Trailing-Twelve-Months): operating cash flow is low relative to reported earnings and free cash flow turned slightly negative. This is a notable deterioration from the last few annual periods where free cash flow was consistently positive and a sizable portion of net income converted to cash. While the year-over-year free cash flow growth rate is shown as strong in TTM, the absolute level being negative and the low cash conversion are the bigger concerns and suggest working-capital or timing pressure.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.84T	1.73T	1.66T	1.58T	1.49T
Gross Profit	315.86B	284.78B	258.45B	260.14B	238.87B
EBITDA	149.00B	128.99B	119.68B	120.72B	107.22B
Net Income	93.86B	74.69B	70.36B	69.58B	62.28B
Balance Sheet
Total Assets	1.22T	1.08T	1.06T	1.01T	919.45B
Cash, Cash Equivalents and Short-Term Investments	238.90B	249.56B	271.13B	262.24B	200.50B
Total Debt	124.47B	80.02B	91.87B	95.28B	97.30B
Total Liabilities	755.35B	674.27B	656.98B	640.09B	611.25B
Stockholders Equity	466.44B	402.67B	401.53B	361.78B	304.12B
Cash Flow
Free Cash Flow	61.29B	71.27B	54.18B	95.13B	85.01B
Operating Cash Flow	85.61B	90.88B	82.10B	112.48B	98.46B
Investing Cash Flow	-46.51B	-13.11B	-57.09B	-19.51B	-24.74B
Financing Cash Flow	-45.84B	-96.79B	-40.06B	-34.09B	-34.31B

Daito Construction Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3035.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1878, the sentiment is Positive. The current price of 3035 is below the 20-day moving average (MA) of 3083.55, above the 50-day MA of 3011.67, and below the 200-day MA of 3068.03, indicating a bullish trend. The MACD of 48.97 indicates Negative momentum. The RSI at 72.04 is Negative, neither overbought nor oversold. The STOCH value of 89.71 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:1878.

Daito Construction Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3289	78 Outperform	$1.07T	9.95	12.53%	2.88%	11.00%	88.70%
8801	78 Outperform	$5.09T	15.89	9.59%	1.86%	18.31%	71.89%
1878	74 Outperform	¥1.12T	11.52	19.43%	5.16%	5.16%	6.00%
3288	72 Outperform	¥1.07T	10.30	19.60%	1.94%	3.13%	11.87%
8802	71 Outperform	¥4.97T	25.52	7.67%	1.18%	7.97%	13.59%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
8803	63 Neutral	¥180.38B	14.57	8.95%	3.39%	28.94%	109.35%

Daito Construction Corporate Events

Daito Trust Construction Launches ¥25 Billion Share Buyback to Boost Shareholder Returns

Daito Trust Construction has resolved to implement a new share buyback program under Japan’s Companies Act and its Articles of Incorporation, authorizing the repurchase of up to 9 million shares of common stock, equivalent to about 2.7% of its outstanding shares excluding treasury stock. The company plans to spend up to ¥25 billion on the buyback between January 31, 2026 and January 31, 2027, aiming to enhance capital efficiency and return profits to shareholders; the move signals continued focus on shareholder returns and balance sheet optimization, given its existing treasury share holdings of over 11.7 million shares against roughly 332.9 million shares outstanding.

The most recent analyst rating on (JP:1878) stock is a Hold with a Yen3130.00 price target. To see the full list of analyst forecasts on Daito Construction stock, see the JP:1878 Stock Forecast page.

Daito Trust Construction Lifts FY2025 Earnings and Dividend Forecasts on Strong Leasing and Cost Gains

Daito Trust Construction has raised its consolidated earnings forecast for the fiscal year ending March 31, 2026, citing sustained high occupancy in its real estate leasing business and steady progress in development projects. Net sales are now projected at ¥1.98 trillion, with operating profit increased to ¥135 billion and net income attributable to owners of the parent revised up to ¥95 billion, all above both the prior forecast and the previous year’s results. On a non‑consolidated basis, the company also expects higher net sales and a sharp increase in ordinary profit and net income, driven by improved margins on completed construction projects through cost reductions and a rise in dividend income from subsidiaries. Reflecting this stronger profit outlook and its policy of targeting a 50% consolidated payout ratio with stable and performance-linked dividends, Daito Trust has lifted its forecast year-end dividend for FY2025 (post stock split) from ¥68.6 to ¥74.6 per share, signaling enhanced shareholder returns alongside improved operating performance.

The most recent analyst rating on (JP:1878) stock is a Hold with a Yen3130.00 price target. To see the full list of analyst forecasts on Daito Construction stock, see the JP:1878 Stock Forecast page.

Daito Trust Construction Lifts Full-Year Outlook as Nine-Month Sales Rise 6%

Daito Trust Construction reported consolidated net sales of ¥1.44 trillion for the nine months to December 31, 2025, up 6.0% year on year, with operating profit rising 3.7% to ¥106.6 billion and ordinary profit edging up 0.4% to ¥109.2 billion, while profit attributable to owners of the parent slipped 0.9% to ¥76.2 billion as earnings per share declined slightly following a 5-for-1 stock split. The company’s balance sheet remained solid, with total assets increasing to ¥1.30 trillion and equity ratio at 38.1%, and it raised its full-year forecast to ¥1.98 trillion in sales and ¥135.0 billion in operating profit, alongside revising dividend projections to reflect the stock split, signaling steady but moderating profit growth and continued shareholder returns amid a stable financial position.

The most recent analyst rating on (JP:1878) stock is a Hold with a Yen3130.00 price target. To see the full list of analyst forecasts on Daito Construction stock, see the JP:1878 Stock Forecast page.

Daito Trust Expands into Dubai Real Estate Market

Daito Trust Construction Co., Ltd. announced a significant investment in KME PROP REAL ESTATE L.L.C, a newly established entity in Dubai, marking a strategic move to expand its real estate development business in the region. This investment, which has resulted in KME becoming a specified subsidiary, is expected to have minimal impact on the company’s consolidated results for the current fiscal year.

The most recent analyst rating on (JP:1878) stock is a Buy with a Yen3420.00 price target. To see the full list of analyst forecasts on Daito Construction stock, see the JP:1878 Stock Forecast page.