MIRAIT ONE Corporation FY2027 Q1 Earnings Report

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Executive Summary

This quarterly result showed a significant turnaround in earnings, with both revenue and profits increasing following the weak operating performance recorded in the same period of the previous fiscal year. Revenue was ¥130.03B (+7.1% YoY), operating income was ¥2.80B (+172.9%), ordinary income was ¥3.34B (+156.6%), and net income was ¥1.97B, representing a return to profitability from a loss of ¥1.26B in the same period of the previous fiscal year. Improved gross profit margins and a recovery in profitability in the core segments drove the earnings increase, while the 44.0% effective tax rate constrained growth in net income.

Factors Affecting Earnings

【Revenue】Revenue increased 7.1% YoY to ¥130.03B. The core MIRAITONE business led overall performance with revenue of ¥69.05B (+8.8%), while overseas-related Lantrovision posted strong growth of 39.7% to ¥11.53B. In contrast, SeibuConstruction (-4.1%) and MIRAITONESYSTEMS (-2.8%) recorded revenue declines, indicating uneven growth across businesses.

【Profit and Loss】Operating income increased substantially by 172.9% YoY to ¥2.80B. The gross profit margin improved to 14.2% from approximately 12.96% in the same period of the previous fiscal year, while the SG&A ratio remained at 12.0%, growing more slowly than revenue and resulting in operating leverage. Ordinary income increased 156.6% to ¥3.34B. In non-operating income and expenses, income of ¥0.85B exceeded expenses of ¥0.31B, primarily due to dividend income of ¥0.31B and foreign exchange gains of ¥0.16B. Extraordinary items were limited in scale, comprising gains of ¥0.22B and losses of ¥0.04B, resulting in a limited impact from one-time factors. Net income was ¥1.97B, representing a return to profitability from the loss recorded in the same period of the previous fiscal year; however, the high effective tax rate of 44.0% constrained the increase from ordinary income to net income. Revenue and profits both increased.

Segment Analysis

The core MIRAITONE business generated revenue of ¥69.05B (+8.8%) and operating income of ¥1.98B (+224.4%), serving as the central contributor to company-wide profits. Its profit margin also improved from the 1.0% range to 2.9%. Overseas-focused Lantrovision recorded revenue of ¥11.53B (+39.7%) and operating income of ¥0.89B (+161.4%), achieving the highest profitability among all segments with a 7.8% margin. Meanwhile, SeibuConstruction (operating loss of ¥0.28B), KokusaiKogyo (operating loss of ¥0.21B, significantly worse YoY), and Shikokutsuken (operating loss of ¥0.03B) continued to report or expand losses, and the disparity in profitability across businesses diluted the company-wide margin. In terms of revenue composition, MIRAITONE accounted for approximately 53% of total company revenue, indicating a somewhat high degree of dependence on a single segment.

Key Financial Indicators

【Profitability】The operating margin improved to 2.2% from 0.8% in the previous year, while the net margin improved to 1.4% from -1.0%. However, both remain low in absolute terms. 【Cash Flow Quality】Against accounts receivable from completed construction contracts of ¥156.21B, advances received on construction contracts in progress were ¥13.98B. Although the working capital burden characteristic of the construction and telecommunications infrastructure sectors remains, short-term borrowings decreased substantially from ¥49.52B to ¥5.02B. 【Investment Efficiency】ROE remained low at 0.7%, indicating room for improvement in capital efficiency. 【Financial Soundness】With an equity ratio of 56.1% and cash and deposits of ¥62.80B, the company has a financial profile close to a net cash position relative to interest-bearing debt, providing a stable financial foundation.

Cash Flow Analysis

Although detailed disclosure of the statement of cash flows was not provided, balance sheet movements indicate that short-term borrowings declined substantially from ¥49.52B to ¥5.02B, suggesting that short-term tail risks in liquidity management have decreased. Accounts receivable from completed construction contracts remained large at ¥156.21B, indicating a business structure in which the lead time from progress billing to collection affects cash-generating capacity. Advances received on construction contracts in progress increased to ¥13.98B (+29.9% from ¥10.76B at the end of the previous fiscal year), with customer advances providing a certain degree of relief to the working capital burden. Given the recovery in operating income and the level of cash and deposits at ¥62.80B, liquidity during the current quarter appears to have remained generally stable.

Quality of Earnings

The increase in earnings during the current quarter was primarily driven by a recurring recovery in earnings power through improved gross profit margins and SG&A cost control. The impact of extraordinary income of ¥0.22B, including a gain of ¥0.15B on the sale of fixed assets, and extraordinary losses of ¥0.04B remained small on a net basis, limiting distortion to reported performance. Non-operating income of ¥0.85B was small at approximately 0.7% of revenue, with dividend income of ¥0.31B and foreign exchange gains of ¥0.16B as its primary components; neither was large enough to excessively supplement the earning power of the core business. The gap between ordinary income of ¥3.34B and net income of ¥1.97B was primarily attributable to the high tax burden, reflected in the 44.0% effective tax rate. Net income attributable to non-controlling interests of ¥0.11B also represented a certain degree of dilution. Overall, this earnings increase showed limited dependence on one-time factors, and earnings quality improved relatively compared with the same period of the previous fiscal year.

Earnings Forecast and Guidance

The full-year plan calls for revenue of ¥660.00B (+9.6%), operating income of ¥40.00B (+16.7%), and ordinary income of ¥40.00B (+9.5%). Q1 progress rates were 19.7% for revenue, 7.0% for operating income, and 8.4% for ordinary income, all below the simple quarterly benchmark of 25%. This low progress is likely attributable to the seasonality characteristic of the construction and telecommunications infrastructure businesses, namely low progress in the first half and a concentration of performance in the second half. Neither the earnings forecast nor the dividend forecast was revised. Progress on large-scale projects toward the latter half of the fiscal year and earnings improvements in loss-making segments will be important factors in achieving the full-year plan.

Shareholder Returns

The company’s annual dividend plan is ¥95, implying a payout ratio of approximately 32.7% based on forecast EPS of ¥290.79. Given cash and deposits of ¥62.80B and a financial profile effectively close to a net cash position, the stability of dividend funding is secured. Treasury shares have been increasing YoY, allowing the company to maintain flexibility in its capital policy. No revision was made to the dividend forecast during the current quarter.

Risk Factors

1. Profitability disparity across businesses: Losses continued in multiple segments, including SeibuConstruction (operating loss of ¥0.28B) and KokusaiKogyo (operating loss of ¥0.21B, significantly worse YoY), diluting the company-wide margin.

2. Working capital and collection risk: Accounts receivable from completed construction contracts is large at ¥156.21B, creating a structural risk whereby delays in acceptance inspections or collection could affect liquidity management.

3. Tax burden and progress pace: The high effective tax rate of 44.0% is constraining growth in net income, while full-year progress remains below the standard quarterly pace, with operating income at 7.0%.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Return

Profitability remains below the industry median, although it has improved significantly from the low level recorded in the previous year.

Growth and Capital Efficiency

Revenue growth exceeded the industry median, placing the company’s top-line expansion in a relatively favorable position within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The improvement in gross profit and operating margins led to increased earnings and a return to profitability from the loss recorded in the same period of the previous fiscal year, demonstrating the effects of project mix and cost management.

2. Short-term borrowings declined substantially from ¥49.52B to ¥5.02B, further strengthening financial soundness. However, the operating margin of 2.2% and ROE of 0.7% remain low within the industry, leaving room for improvement in capital efficiency.

3. Profitability disparities among segments persist, and progress in improving the earnings of loss-making segments is a structural point that should be monitored in future earnings results.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation to take any specific investment action.

Sensitivity: ¥3,217–¥3,406 at ±1% for the cost of equity, and ¥3,308–¥3,312 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used; there is a timing discrepancy with the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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