Rasa (3023) FY2026 Q3 Earnings Report

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Executive Summary

The cumulative results through Q3 were characterized by higher revenue and profit, driven not only by revenue growth but also by an improvement in the gross margin and operating leverage. Revenue was ¥203.1B (+9.4% YoY), Operating Income was ¥18.4B (+29.1%), Ordinary Income was ¥20.2B (+20.8%), and Net Income was ¥14.8B (+18.9%). The fact that the rate of profit growth significantly exceeded the rate of revenue growth was attributable to the gross margin improving from 24.9% to 25.9%, while the rate of increase in SG&A expenses (+7.1%) remained below the revenue growth rate.

Factors Affecting Performance

【Revenue】Revenue was ¥203.1B, up +9.4% YoY. By segment, environmental equipment-related business expanded sharply to ¥24.1B (+101.8%), followed by chemical products-related business at ¥49.4B (+8.8%) and industrial machinery and construction machinery-related business at ¥70.5B (+1.5%). Meanwhile, resources and metal materials-related business declined slightly to ¥40.5B (△0.6%). By region, domestic revenue was ¥178.5B and Asia revenue was ¥17.9B, up from ¥11.1B in the same period last year, with growth in Asia contributing to overall growth.

【Profit and Loss】Operating Income was ¥18.4B (+29.1%), and the Operating Margin was 9.1%, an improvement of +139bp from 7.7% in the previous year. Gross profit of ¥52.7B increased +13.9% YoY, exceeding the +7.1% increase in SG&A expenses of ¥34.3B, resulting in operating leverage. Ordinary Income of ¥20.2B included an equity-method investment gain of ¥1.7B. After deducting corporate income tax of ¥6.0B from Profit Before Tax of ¥20.8B, which included extraordinary income of ¥0.6B from gains on the sale of investment securities as a temporary factor, Net Income was ¥14.8B. These were results characterized by higher revenue and profit.

Segment Analysis

Industrial machinery and construction machinery-related business is a core business, accounting for more than half of total company profit, with revenue of ¥70.5B (34.6% of the total) and segment profit of ¥9.6B (13.5% margin). Environmental equipment-related business showed the highest growth rate and profitability, with revenue of ¥24.1B (+101.8% YoY), profit of ¥5.1B (+205.4%), and a 21.3% margin, making it the primary driver of profit growth. Real estate leasing-related business is small in scale, with revenue of ¥2.9B, but maintains high profitability with a 54.2% margin. In contrast, resources and metal materials-related business remained low-profitability at a 2.0% margin (profit △42.6% YoY), plant and equipment construction-related business at a 1.4% margin (profit △66.7%), and chemical products-related business at a 1.8% margin (profit △7.2%), resulting in a widening profitability gap among segments.

Key Financial Indicators

【Profitability】Both the Operating Margin of 9.1% (7.7% in the previous year) and the Net Profit Margin of 7.3% improved, supported by the increase in the gross margin to 25.9% and relative control of SG&A expenses. 【Cash Quality】DSO of 88 days, inventory days of 81 days, and CCC of 125 days all exceeded general warning levels of 60 days, 60 days, and 120 days, respectively, confirming a buildup of working capital during the revenue growth phase. 【Investment Efficiency】Annualized ROE of 8.7% can be decomposed into a Net Profit Margin of 7.3%, total asset turnover of 0.836x, and financial leverage of 1.43x; the low asset turnover is constraining improvement in capital efficiency. 【Financial Soundness】The Equity Ratio was 69.7%, up from 65.7% in the previous year, and the Current Ratio was 266.2%. Cash and deposits of ¥48.7B versus interest-bearing debt of ¥31.4B resulted in net cash of ¥17.3B, indicating a conservative capital structure.

Cash Flow Analysis

Although individual data from the statement of cash flows are not included in the disclosed information, fund movements can be reviewed based on changes in the balance sheet. Cash and deposits decreased to ¥48.7B from ¥57.3B in the same period last year, while investment securities increased from ¥42.2B to ¥47.9B, suggesting that some surplus funds may have been allocated to investment assets. Short-term borrowings decreased from ¥16.5B to ¥13.0B, while long-term borrowings also declined from ¥21.7B to ¥18.4B, indicating an overall trend of reducing interest-bearing debt. Although accounts receivable decreased from ¥72.2B to ¥65.0B, DSO of 88 days, inventory days of 81 days, and CCC of 125 days all exceeded warning levels, making management of cash efficiency associated with revenue growth a key focus going forward.

Quality of Earnings

Recurring earnings power is clearly reflected in the 29.1% increase in Operating Income. Structural factors, primarily the improvement in the gross profit margin and relative control of SG&A expenses, were the main drivers, indicating high earnings quality. However, Profit Before Tax of ¥20.8B included extraordinary income of ¥0.6B from gains on the sale of investment securities, which should be distinguished as a temporary factor. Of the ¥2.5B in non-operating income, the equity-method investment gain of ¥1.7B can be viewed as a recurring source of earnings, but it represented approximately 8.0% of Profit Before Tax and remained complementary in scale. Comprehensive Income of ¥17.8B exceeded Net Income of ¥14.8B by approximately ¥3.0B, primarily due to an increase in valuation differences on other securities. Therefore, the divergence between Net Income and Comprehensive Income was attributable to market fluctuations and should be assessed separately from the profitability of the core business.

Earnings Forecast and Guidance

The cumulative Q3 progress rates against the full-year company forecasts of Revenue of ¥280.0B, Operating Income of ¥25.0B, and Ordinary Income of ¥27.0B were 72.5% for Revenue, 73.6% for Operating Income, 74.8% for Ordinary Income, and 73.9% for Net Income. Although Revenue was slightly below the standard 75% progress level, profit progress was generally within the standard range. To achieve the full-year forecast, Q4 requires Revenue of ¥76.9B and Operating Income of ¥6.6B. The full-year forecast assumes a decline in Operating Income of △1.3% YoY and a decline in Ordinary Income of △5.0% YoY, making the anticipated slowdown from the profit growth pace through the first half a notable feature.

Shareholder Returns

The annual dividend forecast is ¥72.00 per share, consisting of an assumed interim dividend of ¥36.00 and year-end dividend of ¥36.00, representing a significant increase from the previous year's dividend of ¥34.00. Based on forecast EPS of ¥187.31, the Payout Ratio is approximately 38.4%. Supported by retained earnings of ¥188.8B and net cash of ¥17.3B, the company has sufficient capacity to pay dividends. Treasury stock increased by ¥2.5B from ¥6.4B in the same period last year to ¥8.9B, indicating that share repurchases are also being implemented as part of the capital policy. When evaluating the scale of total shareholder returns combining dividends and share repurchases, it is appropriate to assess the Total Return Ratio separately from the Payout Ratio.

Risk Factors

1. Working Capital Buildup: DSO of 88 days, inventory days of 81 days, and CCC of 125 days all exceed general warning levels of 60 days, 60 days, and 120 days, respectively. As revenue continues to grow, delays in collecting receivables and disposing of inventory could constrain cash efficiency.

2. Profitability Disparities Among Segments: Resources and metal materials-related business (segment profit △42.6%, 2.0% margin) and plant and equipment construction-related business (profit △66.7%, 1.4% margin) remain low-profitability, resulting in an uneven distribution of profitability within the business portfolio.

3. Short-Term Debt Composition: The short-term debt ratio of 41.4% is slightly above the general warning level of 40%. Although current concerns are limited due to the Current Ratio of 266.2% and the substantial cash balance, changes in refinancing terms should be closely monitored.

Industry Benchmark (For Reference; Company Analysis)

Key Takeaways from the Earnings Results

1. Operating Income increased +29.1% YoY, exceeding the Revenue growth rate of +9.4%, confirming operating leverage resulting from gross margin improvement and SG&A control. Whether this structure will continue will determine future Operating Margin trends.

2. Environmental equipment-related business (21.3% margin, profit +205.4%) and industrial machinery and construction machinery-related business (13.5% margin) drove profit growth, while deteriorating profitability in resources and metal materials-related business and plant and equipment construction-related business is limiting the upside of the overall company margin.

3. DSO, inventory days, and CCC all exceed warning levels. How the company converts revenue growth into cash efficiency will remain an ongoing point of focus in assessing the quality of the earnings results.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,033–¥2,150 at Cost of Equity ±1%, and ¥2,089–¥2,091 at ω±0.1.

Notes:

• As forecast ROE is below the Cost of Equity, the theoretical value will be below Book Value Per Share.
• Net assets as of the quarter-end are used; there is a timing difference relative to the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data and does not constitute a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee future share prices.)

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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. Industry benchmarks are reference information compiled by the company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting professionals as necessary.

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