TAKACHIHO KOHEKI CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

In the April–June 2026 period (Q1), revenue and earnings increased, primarily due to the high growth and improved profitability of the BUSINESSSECURITY segment, with operating income, ordinary income, and net income all improving significantly year on year. Revenue was ¥6.99B (¥6.07B in the same period of the previous year, +15.2%), operating income was ¥0.35B (¥0.18B, +89.1%), ordinary income was ¥0.41B (¥0.17B, +143.8%), and net income was ¥0.21B (¥0.07B, +208.8%). Improvements in the gross profit margin and the favorable change in non-operating income and expenses driven by dividend income and foreign exchange gains contributed to higher operating and ordinary income margins.

Factors Affecting Earnings

【Revenue】Revenue was ¥6.99B, an increase of +15.2% year on year. By segment, BUSINESSSECURITY (53.3% composition ratio) grew substantially to ¥3.73B (+29.6%), while ELECTROMECHANICS (46.7% composition ratio) was nearly flat at ¥3.27B (+2.4%). The increase in revenue was driven by expanded demand for BUSINESSSECURITY.

【Profit and Loss】Gross profit was ¥1.82B (+25.4%), and the gross profit margin improved to 26.0% from 23.9% in the previous year, an improvement of +2.1pt. SG&A expenses were ¥1.47B, representing 21.0% of revenue, and were nearly flat versus 20.9% in the previous year (+0.2pt). Accordingly, the improvement in operating income was primarily attributable to the higher gross profit margin. Operating income was ¥0.35B (+89.1%), and the operating margin was 5.0% (3.0% in the previous year, +2.0pt). Ordinary income also benefited from an improvement in non-operating income and expenses (dividend income of ¥0.04B and a foreign exchange gain of ¥0.02B, compared with a foreign exchange loss in the previous year), reaching ¥0.41B (+143.8%), while the ordinary income margin expanded to 5.8% from 2.8% in the previous year. Net income was ¥0.21B (+208.8%) after an effective tax rate of 48.5% (down from 58.7% in the previous year). Revenue and earnings both increased.

Segment Analysis

BUSINESSSECURITY reported revenue of ¥3.73B (53.3% composition ratio, +29.6%), operating income of ¥0.28B (+142.7%), and a profit margin of 7.6% (4.1% in the previous year), representing a significant improvement and making it the key driver of company-wide earnings. ELECTROMECHANICS reported revenue of ¥3.27B (46.7% composition ratio, +2.4%), operating income of ¥0.06B (-6.1%), and a profit margin of 1.9% (2.1% in the previous year), reflecting a slight decline and continued low profitability. The disparity in profitability between the two segments is a source of volatility in the company-wide margin.

Key Financial Indicators

【Profitability】The operating margin improved to 5.0% (3.0% in the previous year), while the net profit margin improved to 3.0% (1.1% in the previous year). ROE was 1.3%, improving from approximately 0.4% in the same period of the previous year, although the absolute level remains low. The effective tax rate declined to 48.5% from 58.7% in the previous year but remains high. 【Cash Flow Quality】Cash and deposits were ¥6.62B, down -9.9% from ¥7.35B at the end of the same period of the previous year. Inventories increased to ¥4.38B (+21.8%), while accounts receivable declined to ¥5.49B (-19.8%) and contract liabilities increased to ¥2.01B (+18.6%). 【Investment Efficiency】EPS was ¥11.24 (¥3.69 in the previous year, +204.6%), and BPS was ¥898.74 (¥941.91 in the previous year, -4.6%). Total assets were ¥24.14B, down from ¥25.70B in the previous year. 【Financial Soundness】The equity ratio was 69.5% (68.5% in the previous year). Liquidity was ample, with current assets of ¥19.53B against current liabilities of ¥6.52B. Interest-bearing debt consisted primarily of ¥0.81B in short-term borrowings, and financial leverage remained conservative.

Cash Flow Analysis

Cash and deposits were ¥6.62B, a decrease of -¥0.73B (-9.9%) from the end of the same period of the previous year. In terms of working capital, inventories increased to ¥4.38B (+21.8%), while accounts receivable declined to ¥5.49B (-19.8%) and contract liabilities increased to ¥2.01B (+18.6%). Accounts payable declined to ¥2.58B from ¥3.15B in the previous year. Although net income of ¥0.21B was recorded, the buildup of inventories and reduction in accounts payable absorbed cash, resulting in a decline in the cash balance. The increase in contract liabilities represents advance-related funding and provides support for future revenue recognition; however, continued inventory accumulation could reduce capital efficiency and warrants monitoring.

Quality of Earnings

The increase in earnings this period was primarily attributable to improvements at the operating level. Of the ¥0.07B in non-operating income (1.0% of revenue), dividend income of ¥0.04B and a foreign exchange gain of ¥0.02B boosted ordinary income. Because a foreign exchange loss was recorded in the same period of the previous year, this reversal was one factor driving the +143.8% growth in ordinary income. Non-operating income remained limited at approximately 1% of revenue, indicating limited reliance on non-core activities. Meanwhile, the effective tax rate remained high at 48.5% (58.7% in the previous year), and the tax burden significantly compressed earnings, with net income of ¥0.21B against ordinary income of ¥0.41B. Comprehensive income attributable to owners of the parent was -¥0.03B, creating a divergence from net income of ¥0.21B. The primary factor was a deterioration of -¥0.28B in the valuation difference on investment securities, indicating that market fluctuations affected net assets.

Earnings Forecast and Guidance

Progress against the full-year plan was 21.9% for revenue (¥6.99B/¥32.00B), 14.8% for operating income (¥0.35B/¥2.35B), 17.7% for ordinary income (¥0.41B/¥2.30B), and 12.7% for net income (¥0.21B/¥1.65B), all below the simple one-quarter benchmark of 25%. The company made no revisions to either its earnings forecast or dividend forecast on this occasion. The full-year ordinary income forecast calls for a decline of -4.5% from the previous fiscal year, differing in direction from the substantial +143.8% increase in Q1. Whether BUSINESSSECURITY can maintain its high-margin order trend through the second half of the year will be a key point to monitor for progress against the full-year plan.

Shareholder Returns

The company’s annual dividend forecast is ¥76.00, representing an increase from the previous year’s interim dividend of ¥34.5. The payout ratio against the company’s forecast EPS of ¥88.33 is approximately 86.0% (¥76.00/¥88.33), a high level. No revision has been made to the dividend forecast. Treasury shares (1,664 thousand shares) were unchanged from the end of the previous fiscal year, and no share repurchase was confirmed. While the financial foundation of ¥6.62B in cash and deposits and an equity ratio of 69.5% supports dividends, the high payout ratio warrants monitoring with respect to the capacity to maintain shareholder returns when earnings fluctuate.

Risk Factors

1. Segment concentration: BUSINESSSECURITY accounts for 53.3% of revenue and the majority of operating income, creating a structure in which changes in demand trends and the competitive environment for this business can readily affect overall performance.

2. Working capital accumulation: While inventories increased to ¥4.38B (+21.8%), contract assets declined to ¥0.47B (-30.5%), and any mismatch between project progress and acceptance timing could affect capital efficiency.

3. Fluctuations in tax burden and valuation gains and losses: The effective tax rate is high relative to the earnings level at 48.5%. In addition, the valuation difference on investment securities deteriorated by -¥0.28B, weighing on comprehensive income and creating a structure in which market fluctuations affect net assets.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The operating margin exceeds the industry median, while the net profit margin is slightly below the median due to the impact of the tax burden and other factors.

Growth and Capital Efficiency

The revenue growth rate significantly exceeds the industry median, demonstrating a high growth rate within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The gross profit margin improved to 26.0% (23.9% in the previous year), and the operating margin improved to 5.0% (3.0% in the previous year), primarily due to the improved profitability of BUSINESSSECURITY.

2. Q1 progress against the full-year plan was 21.9% for revenue, 14.8% for operating income, and 12.7% for net income, all below 25%. Since the company has not revised its earnings or dividend forecasts, the plan assumes progress weighted toward the second half of the fiscal year.

3. Due to the effective tax rate of 48.5% and the deterioration of -¥0.28B in the valuation difference on investment securities, differences can be observed between the growth in ordinary income (+143.8%), the growth in net income (+208.8%), and comprehensive income (-¥0.03B). The tax burden and securities market conditions should be monitored as factors affecting earnings volatility.

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: ¥885–¥933 at ±1% for the cost of equity, and ¥908–¥909 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference relative to the full-year forecast).

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This figure 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 release 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, and after consulting a professional as necessary.

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