| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥295.1B | ¥281.0B | +5.0% |
| Operating Income / Operating Profit | ¥21.0B | ¥20.8B | +0.9% |
| Equity-Method Investment Gain/Loss | - | - | - |
| Ordinary Income | ¥24.1B | ¥20.0B | +20.1% |
| Net Income / Net Profit | ¥14.8B | ¥13.3B | +10.8% |
| ROE | 8.4% | 7.9% | - |
The fiscal year ended March 2026 closed with Revenue ¥295.1B (YoY +¥14.1B +5.0%), Operating Income ¥21.0B (YoY +¥0.2B +0.9%), Ordinary Income ¥24.1B (YoY +¥4.1B +20.1%), and Net Income ¥14.8B (YoY +¥1.4B +10.8%). The core Business Security segment led performance with Revenue ¥151.5B (+10.5%) and Operating Income ¥14.0B (+21.6%), delivering double-digit growth; company gross margin improved to 25.0% (prior year 24.6%, +0.4pt). SG&A increased to ¥52.9B (+9.4%), rising faster than sales growth at the operating stage, causing Operating Margin to decline to 7.1% from 7.4% a year earlier (-0.3pt). At the ordinary-income level, increases in non-operating income—foreign exchange gains ¥1.2B (prior year foreign exchange loss ¥0.8B), dividend income ¥0.8B (prior year ¥0.6B), and investment partnership gains ¥0.7B—boosted Ordinary Income margin to 8.2% from 7.1% (+1.1pt), resulting in top- and bottom-line growth. Special losses of ¥3.4B (impairment on available-for-sale securities) temporarily pressured Net Income, but the underlying strength at the ordinary-income level has been reinforced.
Revenue ¥295.1B (YoY +5.0%) was driven by double-digit growth in Business Security. Segment mix: Business Security expanded as the core to ¥151.5B (+10.5%, composition 51.3%), with solutions sales of security products and system equipment progressing smoothly. Electromechanics was flat at ¥143.6B (-0.2%, composition 48.7%) with a slight revenue decline due to adjustments in semiconductor and mechanical parts volumes and mix. By region, Japan was ¥211.3B (prior ¥206.6B) and Asia ¥79.4B (prior ¥70.6B), with Asia contributing alongside Japan. Cost of goods sold was ¥221.3B (prior ¥211.9B, +4.4%), rising with sales but increasing less than sales, yielding Gross Profit ¥73.8B (+6.9%) and Gross Margin 25.0% (prior 24.6%, +0.4pt), indicating improved profitability.
SG&A was ¥52.9B (prior ¥48.3B, +9.4%), rising substantially faster than sales growth of +5.0%, pushing SG&A ratio to 17.9% (prior 17.2%, +0.7pt). As a result, Operating Income was ¥21.0B (+0.9%) and Operating Margin 7.1% (prior 7.4%, -0.3pt), reflecting a contraction in operating profitability. By segment, Business Security posted Operating Income ¥14.0B (+21.6%, margin 9.3%) and high margins, while Electromechanics' Operating Income declined to ¥7.0B (-24.9%, margin 4.8%), markedly deteriorating profitability and limiting company-wide operating margin improvement. Non-operating income/expense turned into a surplus of ¥3.2B (prior year deficit ¥0.8B), aided by foreign exchange gains ¥1.2B (prior year foreign exchange loss ¥0.8B), dividend income ¥0.8B (prior ¥0.6B), and investment partnership operating gains ¥0.7B (prior year loss ¥1.0B). Ordinary Income rose to ¥24.1B (+20.1%), Ordinary Income margin improved to 8.2% (prior 7.1%, +1.1pt) as non-operating results improved. Extraordinary items included gain on sale of available-for-sale securities ¥0.6B (prior ¥1.6B) and impairment loss on available-for-sale securities ¥3.4B (none prior), netting to a loss of ¥2.7B (prior year profit ¥1.7B). Profit before tax was ¥21.3B (-1.7%), and after income taxes ¥7.2B (effective tax rate 33.7%), Net Income was ¥14.8B (+10.8%), concluding with higher revenues and profits.
Business Security: Revenue ¥151.5B (prior ¥137.1B, +10.5%), Operating Income ¥14.0B (prior ¥11.5B, +21.6%), Operating Margin 9.3% (prior 8.4%, +0.9pt). High-value security solution projects accumulated steadily, delivering double-digit growth in both sales and profits. Segment assets were ¥110.6B (prior ¥102.6B), with working capital rising alongside growth investments. Electromechanics: Revenue ¥143.6B (prior ¥143.9B, -0.2%) was flat, but Operating Income fell to ¥7.0B (prior ¥9.3B, -24.9%), with Operating Margin 4.8% (prior 6.4%, -1.6pt) adversely affected by demand adjustments and margin deterioration in semiconductors and mechanical parts. Segment assets were ¥64.6B (prior ¥73.6B); asset efficiency improved amid flat sales, but profit recovery remains a challenge. Company-wide assets (¥81.8B, prior ¥58.4B) expanded due to increases in cash and available-for-sale securities.
Profitability: Operating Margin 7.1% (prior 7.4%, -0.3pt), Ordinary Income Margin 8.2% (prior 7.1%, +1.1pt), Net Income Margin 5.0% (prior 4.8%, +0.2pt). Gross Margin 25.0% improved from 24.6% (+0.4pt), indicating higher added value, but SG&A ratio rose to 17.9% (prior 17.2%, +0.7pt), compressing operating profitability. Improvements in non-operating income sustained improvements in ordinary and net margins. Cash quality: Operating Cash Flow (OCF) ¥19.3B is 1.3x Net Income ¥14.8B, with accrual ratio -1.6%, indicating good cash backing of profits. Days Sales Outstanding (DSO) 85 days is relatively long, leaving room to improve cash conversion. Contract liabilities ¥17.0B (prior ¥12.0B, +41.2%) and increases in advance receipts bolster cash. Investment efficiency: ROE 8.4% (prior 8.7%), Total Asset Turnover 1.15x (prior 1.20x). Capital expenditures ¥0.5B (depreciation ¥1.8B, capex 0.3x depreciation) indicate restrained investment levels; scaling growth investments is a mid-term challenge. Financial soundness: Equity Ratio 68.5% (prior 71.8%), Current Ratio 290.1%, Cash & Cash Equivalents ¥73.5B are 9.2x short-term borrowings ¥7.99B, indicating very high refinancing resilience. Debt/EBITDA 0.35x, Interest Coverage 262x, reflecting a conservative capital structure.
OCF was ¥19.3B (prior ¥29.9B, -35.3%) but remained 1.3x Net Income ¥14.8B, maintaining high quality. Pre-working-capital OCF subtotal was ¥24.5B (prior ¥37.2B); major negatives included corporate tax payments ¥6.2B and increase in trade receivables ¥2.1B, while an increase in contract liabilities ¥4.9B (advance receipts) contributed positively. Investing Cash Flow was a ¥0.1B inflow (prior -¥4.7B), covering capex ¥0.5B (prior ¥0.6B) with sales of available-for-sale securities ¥2.7B (purchases ¥1.5B). Free Cash Flow was ¥19.4B, sufficiently covering dividend payments ¥16.0B (prior ¥15.0B). Financing Cash Flow was -¥8.3B (prior -¥15.1B), with net short-term borrowings increase ¥7.8B against dividend payments ¥16.0B. Cash & cash equivalents rose ¥13.2B from opening ¥60.3B to closing ¥73.5B, further strengthening liquidity. OCF/EBITDA 0.85x slightly below the 0.9x benchmark due to working capital increases, but accrual ratio -1.6% indicates good earnings quality; FCF coverage 1.26x supports sustainability of dividend payments.
Of Ordinary Income ¥24.1B, Non-operating income ¥3.2B (foreign exchange gains ¥1.2B, dividend income ¥0.8B, investment partnership gains ¥0.7B, etc.) depends on FX and financial market trends and thus has uncertain sustainability. The prior year included non-operating losses (foreign exchange loss ¥0.8B and investment partnership operating losses), so the income reversal partly reflects market improvement. Extraordinary items included impairment loss on available-for-sale securities ¥3.4B, and Profit Before Tax ¥21.3B fell below Ordinary Income. This special loss appears to be a one-off and is likely to reverse in subsequent periods. DSO lengthened to 85 days from the prior year, with some accruals arising from collection delays. The increase in contract liabilities ¥4.9B reflects timing differences in recognition of advance receipts, carrying future performance obligations but providing short-term cash support. OCF ¥19.3B exceeds Net Income ¥14.8B, indicating solid cash backing of profits and healthy recurring earning power.
For the fiscal year ending March 2027, company guidance is Revenue ¥320.0B (YoY +8.4%), Operating Income ¥23.5B (YoY +12.0%), Ordinary Income ¥23.0B (YoY -4.5%), Net Income ¥16.5B (YoY +10.8%), and EPS ¥88.33. Operating Margin is projected at 7.3%, a +0.2pt improvement from this period’s 7.1%, assuming continued high-margin projects in the core Business Security and recovery of Electromechanics profitability. Sales progress is 92.2% of the full-year forecast at the fiscal year-end and is on track; however, Ordinary Income this period ¥24.1B already exceeds the full-year forecast ¥23.0B, possibly reflecting conservative assumptions for non-operating items (foreign exchange gains and investment income). The removal of the special loss ¥3.4B could allow Net Income to recover, but volatility in non-operating income remains a risk. Dividend guidance is ¥34.0 per share (post-split equivalent annual dividend ¥68), with a Payout Ratio around 77%—a decline year-on-year—but the company has announced a policy shift to progressive dividends, supporting sustainable dividend growth.
This period’s dividends totaled ¥76.0 (interim ¥34.5, year-end ¥41.5; pre 1:2 stock split basis as of 1 June 2025), resulting in a Payout Ratio of 100.2% (dividend ¥76 vs. BPS ¥941.91). The company adopted a 100% payout ratio this period and plans to transition to a progressive dividend policy thereafter. Total dividends amounted to approximately ¥14.2B (issued shares after treasury stock deduction 18,679 thousand × ¥76), and FCF ¥19.4B provided FCF coverage 1.37x, adequately funding dividends. Although the payout ratio is high, Cash & Cash Equivalents ¥73.5B and OCF ¥19.3B provide ample liquidity to support payments. For FY2027, dividend guidance is ¥34.0 (post-split) equivalent to annual ¥68, with a Payout Ratio of about 77%, slightly lower, and the company intends to maintain or increase dividends under a progressive dividend policy. No share buybacks were executed this period, so Total Return Ratio equals the Payout Ratio. Sustainability depends on continued profit growth in the core business and improvements in working capital efficiency (DSO reduction) to sustain and enhance cash generation.
Segment concentration risk: Business Security accounts for 51.3% of Revenue and 66.8% of Operating Income, so demand swings or intensified competition in that business would have a large impact on company performance. Electromechanics’ margin deteriorated sharply to 4.8% (prior 6.4%); delayed margin recovery would constrain company-wide margin improvement.
Working capital management risk: DSO at 85 days shows a trend toward elongation, and trade receivables ¥68.4B (prior ¥65.6B) continue to rise. Prolonged collection delays would strain OCF and, absent DSO improvement, reduce cash generation and impair earnings quality. The increase in contract liabilities ¥17.0B represents advance receipts and embeds risk of higher-than-expected future fulfillment costs.
Available-for-sale securities risk: The company holds available-for-sale securities ¥38.3B (14.9% of total assets) and recorded an impairment loss ¥3.4B this period. Market fluctuations in financial markets could make valuation gains/losses a source of Net Income volatility, and recurring non-operating losses could materialize. Foreign exchange gains ¥1.2B (prior foreign exchange loss ¥0.8B) boosted Ordinary Income, but FX volatility introduces uncertainty in non-operating income sustainability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.1% | 3.4% (1.4%–5.0%) | +3.8pt |
| Net Income Margin | 5.0% | 2.3% (1.0%–4.6%) | +2.7pt |
Profitability substantially exceeds the industry median, maintaining a high rank due to ability to propose high-value-added solutions.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.0% | 5.9% (0.4%–10.7%) | -0.9pt |
Revenue growth is around the industry median, but expansion of the core business and margin improvement potential provide upside for future acceleration.
※ Source: Company compilation
Structural growth in the core business: Business Security sustained double-digit growth (Revenue +10.5%, Operating Income +21.6%) and maintained high-margin performance at 9.3% (prior 8.4%, +0.9pt). Against a backdrop of structurally expanding security demand, continued growth in this business is key to company-wide margin improvement and enhanced cash generation. If Electromechanics returns to profitability (margin improvement from 4.8%), Operating Margin could improve into the mid-to-high 7% range.
Financial soundness and dividend policy sustainability: Equity Ratio 68.5% and Cash & Cash Equivalents ¥73.5B (9.2x short-term borrowings) with Current Ratio 290% support a very robust balance sheet and strong downside resilience. Although the current payout ratio of 100% is high, FCF coverage 1.37x sufficiently supports it, and the shift to a progressive dividend policy reduces the risk of dividend cuts. Improved working capital efficiency (DSO shortening) would further bolster cash generation and dividend sustainability.
Investment levels and mid-term growth strategy: Capex is restrained at 0.3x depreciation, implying a need to strengthen investment in intangibles and human capital for mid-term growth. The increase in contract liabilities (+41.2%) suggests expanding advance receivables and expected future revenue buildup. The rise in SG&A ratio (+0.7pt) may reflect upfront investments, and investors will monitor realization of operating leverage in subsequent periods. With the removal of the ¥3.4B special loss and stabilization of non-operating income, Net Income is expected to grow in the high single digits next fiscal year, although the recovery pace of Electromechanics and FX/financial market trends remain variables.
This report was auto-generated by AI analyzing XBRL financial statement data. It does not constitute investment advice for specific securities. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional if necessary.