Kin-Ei Operating Profit Falls 30% as the Cinema Laps Two Blockbusters and a Large Tenant Leaves

Two businesses went backwards at once, for unrelated reasons

Kin-Ei Corp. (TSE: 9636), the Osaka company that runs the Abeno Apollo Cinema multiplex and an amusement arcade beside it, and that leases the two Abeno-district buildings it owns, published non-consolidated first-half results for the six months from February 1 to July 31, 2026 on September 8, 2026 under Japanese GAAP. Revenue fell 3.8% to ¥1,805.9 million, operating profit 30.2% to ¥124.6 million, ordinary profit 26.7% to ¥132.8 million and net profit 35.6% to ¥82.9 million, for earnings per share of ¥29.74 against ¥46.20. Both of the company's two reporting segments went backwards, and the filing names a different and entirely unrelated cause for each.

The distance between a 3.8% revenue fall and a 30.2% operating profit fall is the cost base. Revenue less operating cost — what the company reports as gross operating profit — fell 13.0% to ¥307.6 million, because operating cost declined only 1.7%, to ¥1,498.3 million from ¥1,524.3 million. A cinema and two office buildings are close to fixed-cost businesses across a half-year, so a small revenue decline lands almost entirely on profit. General and administrative expenses then rose 4.4%, to ¥183.0 million. Those two figures reappear in the segment note as the segment-profit total and the unallocated corporate cost, so the whole ¥53.8 million of lost operating profit is accounted for by ¥46.1 million less gross profit and ¥7.7 million more overhead.

The cinema was lapping two of last year's biggest films

Cinema and Amusement revenue fell 6.8% to ¥783.9 million and segment profit 9.4% to ¥103.3 million. Within that, theatre revenue was ¥720.2 million against ¥759.7 million, while the arcade and other income inside the segment fell harder, to ¥63.7 million from ¥81.8 million. The company attributes the decline explicitly to a rebound effect from the prior-year half, which had carried two exceptional hits: the Japanese drama Kokuho (国宝) and the first chapter of the Demon Slayer: Kimetsu no Yaiba Infinity Castle trilogy. This year's programme at the Abeno Apollo Cinema — which the company describes as the only cinema in the Abeno and Tennoji district — included the latest Detective Conan film (『名探偵コナン ハイウェイの堕天使』), Toy Story 5, The Super Mario Galaxy Movie, The Devil Wears Prada 2, Michael, new Doraemon and Chiikawa titles, Kingdom and 『教場 Requiem』. Two things done in the half will not show in its revenue: the company completed an audio refit of Screen 1 and put the new system's name to a customer vote, which produced A-HIBIKI (え～ひびき), and it ran tie-up promotions with the neighbouring Abeno Harukas, Abeno Q's Mall and Tennoji Mio complexes.

A large tenant left the Apollo building; a replacement arrives in the second half

Real Estate revenue fell only 1.4%, to ¥1,022.0 million, but segment profit fell 14.8%, to ¥204.3 million, and the revenue split explains the divergence. Lease income, which the filing reports separately from revenue from contracts with customers, was ¥821.9 million against ¥821.0 million — flat to within ¥1.0 million. What fell was building common-service charges, down 8.4% to ¥185.6 million from ¥202.6 million. The stated cause of the segment's weakness is the departure of a large tenant from the Kin-Ei Apollo Building. The capital programme continued at both properties through the half: air conditioning, additional and replacement security cameras and the re-partitioning of leasable and common areas for a large tenant moving in during the second half at the Apollo building, and drainage, electrical-room, power-metering and central-monitoring upgrades at Abeno Lucias. Deposits received from tenants stood at ¥1,630.0 million at July 31, ¥61.8 million higher than six months earlier, though the filing does not link that movement to either tenant.

The balance sheet improved while every profit line fell

Total assets fell ¥174.0 million to ¥5,847.9 million, which the company attributes to a decrease in short-term loans receivable — that line went from ¥698.9 million to ¥569.8 million. Liabilities fell further, ¥234.2 million to ¥3,028.3 million, on lower accrued payables for equipment, and net assets rose ¥60.2 million to ¥2,819.7 million as retained earnings absorbed the half's profit. The equity ratio therefore improved to 48.2% from 45.8% even though every profit line fell. Cash and equivalents fell ¥48.2 million to ¥86.6 million: operating cash flow was ¥95.6 million, ¥134.6 million less than a year earlier, which the company attributes mainly to a decrease in other current liabilities, against ¥85.5 million spent on fixed assets and a ¥58.2 million financing outflow of which ¥27.9 million was the dividend.

Two items below the operating line pull net profit further down than the 26.7% fall in ordinary profit suggests. Non-operating income of ¥11.1 million included ¥5.3 million of contract-penalty income, a line that was nil a year earlier and that the filing does not explain. Against that, the loss on retirement of fixed assets rose to ¥12.4 million from ¥8.1 million, and the total tax charge of ¥37.5 million on pre-tax profit of ¥120.4 million is an effective rate of 31.1%, against 25.6% a year earlier. Pre-tax profit fell 30.4%; net profit fell 35.6%.

Guidance is unchanged, and the arithmetic implies a second half like the first

Full-year FY1/2027 guidance is unchanged: revenue of ¥3,770 million (−0.0%), operating profit of ¥265 million (−12.1%), ordinary profit of ¥275 million (−11.7%) and net profit of ¥180 million (−10.1%), for earnings per share of ¥64.57. One point deserves care, because the cover page's revision flag says no. These are not the company's original plan: the filing states that they stand ¥130 million of revenue, ¥35 million of operating and ordinary profit and ¥30 million of net profit above the forecast published on March 17, 2026 with the FY1/2026 results, so the year was raised at some point between March and this announcement and merely left alone at it. On the numbers as they now stand, the half already carries ¥124.6 million of the ¥265 million of full-year operating profit, leaving ¥140.4 million for the second half, and ¥1,805.9 million of the ¥3,770 million of revenue, leaving ¥1,964.1 million. That is a second half guided to be modestly better than the first rather than one that makes good the shortfall, and the filing forecasts no recovery beyond it. The dividend forecast is ¥10.00 for the year — nothing at the interim, ¥10.00 at the year-end — unchanged from FY1/2026 and likewise left alone.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.