| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥740.4B | ¥686.7B | +7.8% |
| Operating Income / Operating Profit | ¥71.1B | ¥52.0B | +36.8% |
| Ordinary Income | ¥78.2B | ¥59.5B | +31.3% |
| Net Income / Net Profit | ¥44.2B | ¥36.1B | +22.4% |
| ROE | 6.4% | 5.7% | - |
For the fiscal year ended March 2026, the company achieved higher revenue and substantially higher profits: Revenue ¥740.4B (vs prior year +¥53.7B, +7.8%), Operating Income ¥71.1B (vs prior year +¥19.1B, +36.8%), Ordinary Income ¥78.2B (vs prior year +¥18.6B, +31.3%), Net Income ¥44.2B (vs prior year +¥8.1B, +22.4%). The core Electrical Installation Construction business led results with Revenue ¥704.8B (+8.0%) and Segment Profit ¥101.5B (+23.1%), while the gross margin on completed contracts improved to 16.9% (from 15.1% prior year, +1.8pt), demonstrating improved project profitability. Operating margin expanded to 9.6% (from 7.6% prior year, +2.0pt) and Net Profit Margin to 6.0% (from 5.3% prior year, +0.7pt), indicating improved profitability across the board. ROE rose to 6.4% (approx. 5.7% prior year), reflecting enhanced capital efficiency. Total assets were ¥1,013.4B (+¥67.2B) and Net Assets were ¥692.7B (+¥55.4B), further strengthening the financial base; Equity Ratio stood at 68.4% (from 67.3% prior year, +1.1pt), maintaining a solid level.
【Revenue】 Revenue grew to ¥740.4B (+7.8% YoY), driven by the Electrical Installation Construction segment, which posted ¥704.8B (+8.0%) and accounted for 95.2% of total sales. Demand for works in railway electrical installations, road installations, indoor/outdoor electrical installations, and transmission line equipment remained firm. Ancillary operations (manufacture/sale of signs, etc.) recorded ¥55.5B (+6.5%) showing stable growth, and real estate leasing recorded ¥4.6B (+5.0%) with a slight increase. The primary driver of top-line growth was an 8.0% YoY increase in Completed Contract Revenue, reflecting steady progress on construction projects.
【Profitability】 Operating Income rose significantly to ¥71.1B (+36.8%). The main driver was a substantial improvement in gross margin on completed contracts to 16.9% (from 15.1% prior year, +1.8pt), indicating improved construction profitability. Gross profit on completed contracts amounted to ¥119.3B (¥98.2B prior year, +¥21.1B; +21.5% on a monetary basis). SG&A expense was controlled at ¥59.1B (vs ¥56.4B prior year, +¥2.7B, +4.8%), producing an SG&A ratio of 8.0% (from 8.2% prior year, -0.2pt). Operating margin expanded to 9.6% (from 7.6% prior year, +2.0pt). By segment, the Electrical Installation Construction segment’s operating margin improved to 14.4% (from approx. 12.6% prior year, roughly +1.8pt), lifting consolidated profitability. Ordinary Income was ¥78.2B (+31.3%). Non-operating income totaled ¥9.0B (¥8.8B prior year), mainly dividend income ¥2.1B and equity-method investment income ¥5.9B; non-operating expenses were ¥1.9B (including interest expense ¥1.1B) and were minor. Special items netted to -¥3.0B (Special gains ¥0.0B — including gain on sale of investment securities ¥5.5B, gain on sale of fixed assets ¥0.0B; Special losses ¥3.0B — including loss on disposal of fixed assets ¥2.3B etc.). Profit before income taxes was ¥75.1B (+15.9%), and after deducting income taxes of ¥19.6B (effective tax rate 26.1%), Net Income was ¥44.2B (+22.4%). Comprehensive income was ¥75.0B (vs ¥48.2B prior year, +55.6%), boosted by an increase in valuation difference on available-for-sale securities of ¥23.2B. In summary, the company posted higher revenue and substantially higher profits, driven by improved project profitability and cost control, representing a quality improvement in earnings.
The Electrical Installation Construction segment reported Revenue ¥704.8B (+8.0% YoY), Operating Income ¥101.5B (+23.1%), and an Operating Margin of 14.4% (from approx. 12.6% prior year, roughly +1.8pt), highlighting notable profitability improvement in the core business. Sales and profits grew across railway electrical installations, road installations, indoor/outdoor electrical installations, and transmission line equipment, with the Completed Contract gross margin improvement to 16.9% (from 15.1% prior year, +1.8pt) directly contributing to profit expansion. Ancillary operations (manufacture/sale of signs, etc.) posted Revenue ¥55.5B (+6.5%), Operating Income ¥4.2B (+7.9%), and Operating Margin 7.5% (from approx. 7.4% prior year, roughly +0.1pt), maintaining stable growth. Real estate leasing recorded Revenue ¥4.6B (+5.0%), Operating Income ¥2.0B (+8.9%), and Operating Margin 44.6% (from approx. 43.0% prior year, roughly +1.6pt), retaining high profitability despite small scale. Corporate adjustments (eliminations) amounted to -¥36.6B (vs -¥36.3B prior year, slightly larger). By segment profit composition, the Electrical Installation Construction segment accounted for 94.2%, indicating a high concentration of business.
【Profitability】Operating Margin was 9.6% (from 7.6% prior year, +2.0pt) and Net Profit Margin was 6.0% (from 5.3% prior year, +0.7pt), showing improved profitability across layers. Completed Contract gross margin 16.9% (from 15.1% prior year, +1.8pt) was the primary driver of operating margin expansion. SG&A ratio was 8.0% (from 8.2% prior year, -0.2pt), indicating good cost control. ROE improved to 6.4% (approx. 5.7% prior year, +0.7pt), showing better capital efficiency. ROA (on Ordinary Income basis) was 8.0% (from 6.5% prior year, +1.5pt).
【Cash Quality】Operating Cash Flow / Net Income ratio was 1.07x (Operating Cash Flow ¥47.4B ÷ Net Income ¥44.2B), which is healthy. Accrual ratio was 0.8% (Operating CF − Net Income = ¥3.2B ÷ Total Assets ¥1,013.4B), low, indicating high earnings quality. Free Cash Flow was ¥31.4B (Operating CF ¥47.4B − Investing CF ¥16.1B), indicating ample cash generation.
【Investment Efficiency】Total Asset Turnover was 0.73x (Revenue ¥740.4B ÷ Total Assets ¥1,013.4B), roughly in line with prior year. Capital expenditures were ¥15.0B and depreciation was ¥15.3B, with a CapEx/Depreciation ratio of 0.98x, consistent with maintenance-level investment.
【Financial Soundness】Equity Ratio was 68.4% (from 67.3% prior year, +1.1pt), very robust. Current Ratio was 231.6% (Current Assets ¥587.3B ÷ Current Liabilities ¥253.6B), and Quick Ratio was 231.3%, indicating extremely high liquidity. Interest-bearing debt stood at ¥5.0B (only short-term borrowings ¥5.0B), Debt/Equity ratio was 0.7%, and Net Debt/EBITDA was -0.90x (effectively debt-free). Interest Coverage was 65.0x (EBIT ¥71.1B ÷ Interest Expense ¥1.1B), very high, placing financial safety at the top tier.
Operating Cash Flow was ¥47.4B (+132.4% YoY), a substantial increase. Subtotal of operating CF before adjustments (taxes, etc.) was ¥66.6B, with adjustments including Depreciation ¥15.3B, Equity-method investment income -¥5.9B, Interest & Dividends received -¥3.7B, Interest paid ¥1.1B, Loss on disposal of fixed assets ¥2.3B, etc. An increase in trade receivables of -¥31.4B (increase in Completed Contract receivables, etc.) pressured working capital, while a decrease in accounts payable of -¥11.2B was also a cash outflow factor. Increase in advance receipts on uncompleted contracts +¥8.0B (YoY +174.7%) partially offset outflows, strengthening the advance-receipt structure. After tax payments of -¥21.8B, Operating CF was ¥47.4B. Investing CF was -¥16.1B, mainly CapEx -¥15.0B, acquisition of investment securities -¥0.3B, and proceeds from sales +¥6.9B, resulting in a small net. Financing CF was -¥29.4B, driven by dividend payments -¥19.2B, net repayment of short-term borrowings -¥5.0B, and lease liability repayments -¥5.2B. Free Cash Flow was ¥31.4B (Operating CF ¥47.4B − Investing CF ¥16.1B), ample and covering dividends of ¥19.1B (FCF/Dividend Coverage 1.64x). Cash and deposits were ¥83.9B (vs ¥83.1B prior year, +¥0.8B slight increase), maintaining stable liquidity. OCF/EBITDA ratio was 0.55x (Operating CF ¥47.4B ÷ EBITDA ¥86.4B), somewhat low, but within an acceptable range given the temporary impact of increased trade receivables.
Of Ordinary Income ¥78.2B, Operating Income accounted for ¥71.1B (90.9%), and Non-operating income ¥9.0B (dividend income ¥2.1B, equity-method income ¥5.9B, etc.) was limited to 1.2% of sales, so the bulk of earnings were from core operations. Special items netted to -¥3.0B (Special gains ¥0.0B, Special losses ¥3.0B); while gain on sale of investment securities ¥5.5B was recorded, it was offset by temporary losses such as loss on disposal of fixed assets ¥2.3B, slightly reducing pre-tax profit. The gap between Ordinary Income and Net Income (¥78.2B → ¥44.2B) is attributable to tax expense ¥19.6B (effective tax rate 26.1%) and special losses ¥3.0B, indicating no structural issues. Operating CF ¥47.4B exceeded Net Income ¥44.2B (Operating CF/Net Income 1.07x), and accrual ratio was low at 0.8%, indicating high quality of earnings. Comprehensive income ¥75.0B exceeded Net Income ¥44.2B, primarily due to Other Comprehensive Income of ¥19.5B driven by an increase in valuation difference on available-for-sale securities of ¥23.2B (unrealized gains from equity market rise), partially offset by retirement benefit adjustments -¥3.9B. Overall, earnings are generated from recurring operating activities, dependence on one-off items or non-cash items is low, and earnings quality is judged to be high.
For the fiscal year ending March 2027, the company forecasts Revenue ¥753.0B (vs prior year +1.7%), Operating Income ¥73.5B (vs prior year +3.3%), Ordinary Income ¥83.6B (vs prior year +6.9%), Net Income ¥50.0B (vs prior year +13.2%), and EPS 247.42円. The plan is conservative, assuming the sustained normalization of the Completed Contract gross margin that improved markedly in the prior period: Revenue is expected to be roughly flat and Operating Income to increase slightly. Given first-half results (Revenue ¥740.4B, Operating Income ¥71.1B), the full-year plan of Revenue ¥753.0B and Operating Income ¥73.5B suggests a nearly flat second half, reflecting a cautious stance. Progress rates are already high at Revenue 98.3%, Operating Income 96.7%, Ordinary Income 93.5%, Net Income 88.4%, indicating a high probability of achieving the plan despite conservative assumptions. Dividend forecast is ¥47 per year (lump-sum at year-end), and the company announced a policy to raise DOE (dividend on equity) from 3.2% to 3.6%, clarifying a progressive dividend policy. Operating margin is projected at 9.8% (from 9.6% prior year, +0.2pt) and Net Profit Margin at 6.6% (from 6.0% prior year, +0.6pt), incorporating modest margin improvements and assuming continued profitability enhancement.
Year-end dividend was ¥82, with Payout Ratio 40.3% (Total dividends ¥19.1B ÷ Net Income ¥44.2B + adjustment) at a stable level. Share buybacks were effectively zero (CF -¥0.0B), so shareholder returns are dividend-centric. With FCF ¥31.4B and dividends ¥19.1B, FCF dividend coverage is 1.64x, indicating dividends are sustainably covered by internal funds. DOE was 3.1% (Dividends ¥19.1B ÷ Net Assets ¥692.7B), and the company plans to raise the DOE target from 3.2% to 3.6% starting FY2027, pursuing progressive increases in dividends. Dividend forecast for FY2027 is ¥47 per year (lump-sum at year-end), reflecting an intent to increase dividends linked to net asset growth under the DOE policy. Share capital disposal reduced treasury stock by -¥2.99B, slightly improving capital flexibility. With cash and deposits ¥83.9B and interest-bearing debt ¥5.0B as a strong financial base, dividend sustainability and growth are assessed as high.
Segment Concentration Risk: The Electrical Installation Construction segment accounts for 95.2% of Revenue and 94.2% of Operating Income, indicating a highly concentrated structure. Heavy exposure to specific fields such as railway, road, and electrical installations means that cuts in public project budgets, stagnation in infrastructure investment, or delays/cancellations of large projects could directly impact performance. Seasonality in project progress and timing of contracts could cause significant quarterly volatility.
Labor & Material Cost Inflation Risk: Although Completed Contract gross margin improved to 16.9%, shortages of skilled labor, rising labor costs, and volatility in material prices (copper, steel, etc.) could pressure profitability. Under predominantly fixed-price contracts, cost overruns during execution could erode margins. While SG&A ratio is controlled at 8.0%, the need for increased personnel or investment in operational efficiency could raise expenses.
Cash Collection Risk: Completed Contract receivables increased by -¥31.4B YoY and uncompleted contract advances increased by +¥8.0B, indicating timing mismatches between progress recognition and collections that strain working capital. OCF/EBITDA ratio 0.55x indicates somewhat weak cash conversion, and delays in project acceptance or deterioration in payment terms for large projects could affect liquidity. A large decrease in electronic recorded payables (-¥189.1B) also suggests shifts in payment timing, requiring continued monitoring of working capital management.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.6% | 5.5% (3.5%–7.2%) | +4.1pt |
| Net Profit Margin | 6.0% | 3.5% (2.5%–4.4%) | +2.5pt |
Profitability metrics substantially exceed industry medians, with Operating Margin +4.1pt and Net Profit Margin +2.5pt, placing the company in the upper tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 7.8% | 9.8% (-2.1%–15.1%) | -2.1pt |
Revenue growth is slightly below the industry median but within the first quartile range, representing a steady growth pace.
※ Source: Company compilation
The core Electrical Installation Construction business saw Completed Contract gross margin improve to 16.9% (YoY +1.8pt) and Operating Margin expand to 9.6% (YoY +2.0pt), driving a significant Operating Income increase of +36.8%. Improvements in construction efficiency and progress on price pass-through have driven profitability enhancements, and with the company forecasting Operating Margin 9.8% for FY2027, the improvement trend is expected to continue. Versus industry medians, Operating Margin +4.1pt and Net Profit Margin +2.5pt show the company ranks in the upper tier for profitability.
With Equity Ratio 68.4%, Interest-bearing Debt ¥5.0B (Net Debt/EBITDA -0.90x), and Interest Coverage 65.0x, the financial position is extremely robust. Current Ratio 231.6% and FCF ¥31.4B indicate strong liquidity and cash generation, and the company has announced a progressive dividend policy raising DOE from 3.2% to 3.6%. The FY2027 dividend forecast ¥47 (lump-sum at year-end) is unchanged YoY, but under the DOE policy there is potential for dividend increases linked to net asset growth. With a Payout Ratio of 40.3% and FCF dividend coverage 1.64x, sustainability is high and there is scope to strengthen shareholder returns.
High segment concentration (Electrical Installation Construction 95.2%) makes results sensitive to public works cycles and progress on large projects. OCF/EBITDA ratio 0.55x indicates somewhat weak cash conversion, and increases in Completed Contract receivables (-¥31.4B) and decreases in accounts payable (-¥11.2B) have pressured working capital. Timing mismatches between progress recognition and cash collection can affect liquidity; therefore, monitoring order quality and collection terms will be critical going forward. Attention is also needed on labor and material cost inflation risks, as margin sustainability depends on external cost environment.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on publicly disclosed financial statements. Investment decisions should be made at your own responsibility; consult a professional advisor as necessary.