MACNICA HOLDINGS,INC. FY2027 Q1 Earnings Report

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Executive Summary

The Company recorded increases in both revenue and profit for the quarter, driven by expanding demand in the semiconductor business and higher margins in the cybersecurity business. Revenue was ¥393.44B (+39.7% YoY), Operating Income was ¥16.51B (+101.4%), and Ordinary Income was ¥16.25B (+219.7%). Net Income attributable to owners of the parent was ¥10.93B (+114.6%), while consolidated Net Income including non-controlling interests was ¥11.58B (+166.8%). The Operating Margin improved to 4.2% from 2.9% in the previous year, supported by fixed-cost absorption accompanying revenue growth and disciplined SG&A expense management.

Factors Driving Performance Changes

【Revenue】Revenue was ¥393.44B, representing a 39.7% YoY increase. By segment, the Semiconductor Business accounted for 85.1% of revenue (¥334.89B, +40.3%) and led overall growth. The Cybersecurity Business maintained strong growth, accounting for 14.4% of revenue (¥56.74B, +36.1%), while the CPS Solutions Business recorded revenue of ¥1.81B (+32.3%); although small in scale, it achieved a similar rate of expansion.

【Profit and Loss】Operating Income was ¥16.51B (+101.4%), and the Operating Margin improved by +130bp to 4.2% from 2.9% in the previous year. Against a gross margin of 10.5%, the SG&A ratio was contained at 6.3%, with fixed-cost absorption accompanying revenue growth serving as the primary driver of margin improvement. Ordinary Income grew 219.7% to ¥16.25B, exceeding the growth in Operating Income, mainly because foreign exchange losses recorded in the previous year declined from ¥2.841B to ¥0.306B in the current period. Net Income attributable to owners of the parent was ¥10.93B (+114.6%); the difference from Ordinary Income reflects ¥4.66B in income taxes and other taxes (effective tax rate: 28.7%) and the deduction of ¥0.65B in Net Income attributable to non-controlling interests. Both revenue and profit increased.

Segment Analysis

Segment Operating Income was ¥13.68B for the Semiconductor Business (+133.0% YoY; margin 4.1%), accounting for the majority of total Company profit, primarily due to quantitative expansion. The Cybersecurity Business maintained the highest margin among the three businesses at ¥5.41B (+28.0%; margin 9.5%), contributing to the improvement in the Company-wide margin. The CPS Solutions Business reported an Operating Loss of ¥2.58B (loss expansion YoY; margin -142.6%). Its substantial upfront investment burden relative to the small scale of the business is a factor weighing on the Company-wide margin. Beginning in Q1 of the current fiscal year, the reported segments were reorganized from the previous two categories—“Integrated Circuits and Electronic Devices and Other Business” and “Cybersecurity and Other IT Solutions Business”—into three categories, with CPS-related businesses reported separately. Comparative figures for the same period of the previous year are presented under the revised classification.

Key Financial Indicators

【Profitability】The Operating Margin improved to 4.2% from 2.9% in the previous year, while the Net Profit Margin based on Net Income attributable to owners of the parent improved to 2.8% from 1.8%. 【Cash Flow Quality】Cash Flow from Operating Activities was -¥17.54B, representing a substantial divergence from consolidated Net Income of ¥11.58B; the increase in working capital has weighed on the conversion of earnings into cash. 【Investment Efficiency】ROE was 3.9%, calculated as Net Income attributable to owners of the parent of ¥10.93B divided by shareholders’ equity. Total Assets were ¥773.70B, an increase of +10.4% from the previous year. 【Financial Soundness】The Equity Ratio was 38.6%, the Current Ratio was 156.6%, and the Quick Ratio excluding inventories was 95.0%, slightly below 100% when inventories are excluded. Short-term borrowings increased +32.3% YoY to ¥100.24B, indicating that working capital requirements continue to be funded through short-term financing.

Cash Flow Analysis

Cash Flow from Operating Activities was -¥17.54B, a significant deterioration from +¥16.40B in the previous year. The primary factors were increases in trade receivables (-¥50.08B) and inventories (-¥24.98B) accompanying revenue growth, which could not be fully offset by the increase in trade payables (+¥12.96B). Cash Flow from Investing Activities was -¥0.73B and remained modest, primarily consisting of ¥0.26B in capital expenditures. Cash Flow from Financing Activities was +¥18.27B, mainly reflecting a net increase in short-term borrowings and offsetting the cash outflow from operating activities. Free Cash Flow (Operating CF + Investing CF) was -¥18.27B, indicating that financing during the period was primarily used to fund the accumulation of working capital.

Earnings Quality

Special gains and losses were immaterial: special gains were ¥0, while special losses were limited to ¥0.01B, primarily impairment losses on investment securities and other items. Recurring business earnings therefore accounted for the core of performance. Non-operating income of ¥1.08B, including ¥0.14B in dividend income, was outweighed by non-operating expenses of ¥1.35B, including ¥0.87B in interest expense and ¥0.31B in foreign exchange losses, resulting in a net burden of ¥0.27B; however, the burden was lower than the ¥2.841B foreign exchange loss recorded in the previous year. The difference between Ordinary Income of ¥16.25B and Net Income attributable to owners of the parent of ¥10.93B was attributable to ¥4.66B in income taxes and other taxes (effective tax rate: 28.7%) and the deduction of ¥0.65B in Net Income attributable to non-controlling interests. No unusual items were identified. Comprehensive Income was ¥14.94B, exceeding consolidated Net Income of ¥11.58B, mainly due to a +¥2.53B foreign currency translation adjustment reflecting the yen-based valuation of overseas operations. Meanwhile, Cash Flow from Operating Activities of -¥17.54B was substantially below Net Income, requiring continued monitoring of working capital trends and the Company’s cash-generation capacity supporting earnings.

Earnings Forecast and Guidance

Against the full-year Company forecasts of Revenue of ¥130.00B, Operating Income of ¥5.20B, Ordinary Income of ¥4.70B, EPS of ¥179.21, and annual dividends of ¥40, Q1 progress was 30.3% for Revenue, 31.8% for Operating Income, 34.6% for Ordinary Income, and 34.1% for Net Income attributable to owners of the parent against the full-year forecast of ¥3.20B. All indicators exceeded the 25% benchmark for even quarterly progress, with the upside supported by expanding demand in the Semiconductor Business and the sustained high margins of the Cybersecurity Business. No revisions were made to the earnings or dividend forecasts during the quarter.

Shareholder Returns

The Company’s annual dividend forecast is ¥40, representing a planned increase from the previous year’s actual dividend of ¥35. Based on forecast EPS of ¥179.21, the Payout Ratio is approximately 22.3% (¥40 ÷ ¥179.21), remaining at a conservative level. No share repurchases were identified, and shareholder returns consist solely of dividends; accordingly, the Total Return Ratio is approximately equal to the Payout Ratio. No revision was made to the dividend forecast during the quarter.

Risk Factors

1. Segment concentration risk: The Semiconductor Business accounts for 85.1% of revenue and more than 80% of Operating Income, meaning that demand trends and pricing conditions in this business have a substantial impact on overall Company performance.

2. Cash flow risk from increased working capital: Trade receivables increased by +¥50.08B and inventories by +¥24.98B, resulting in Operating CF of -¥17.54B. Revenue growth has been accompanied by an increase in working capital, requiring monitoring of future funding conditions.

3. Dependence on short-term financing: Short-term borrowings increased +32.3% YoY to ¥100.24B, indicating that working capital requirements are being funded through short-term financing. Changes in interest-rate and financing conditions could affect financial costs.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (trading)

Profitability and Returns

Profitability is slightly below the industry median, with the Net Profit Margin particularly close to the lower bound of the median range.

Growth and Capital Efficiency

The Revenue Growth Rate substantially exceeded the industry median, representing exceptional growth within the industry.

※Source: Compiled by the Company

Key Points from the Financial Results

1. Progress against the full-year plan was 30.3% for Revenue, 31.8% for Operating Income, and 34.6% for Ordinary Income, all exceeding the 25% benchmark for even quarterly progress, indicating that the business environment in the first half is tracking ahead of plan.

2. The Operating Margin improved to 4.2% from 2.9% in the previous year, supported by the Cybersecurity Business maintaining its high margin of 9.5%. Meanwhile, the CPS Solutions Business reported an Operating Loss of ¥2.58B, with its deficit expanding, highlighting divergent earnings structures among the segments.

3. Operating CF of -¥17.54B was substantially below consolidated Net Income of ¥11.58B. The increase in trade receivables and inventories accompanying revenue growth has affected cash-generation capacity and will be a key area for monitoring future cash flow trends.

Theoretical Share Price (Reference Value)

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

Sensitivity: ¥1,718–¥1,822 at Cost of Equity ±1%; ¥1,766–¥1,772 at ω ±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference from 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: 2026-06 / This value does not predict 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 available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting professionals as necessary.

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