WIN-Partners Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

Revenue increased but earnings declined. While demand remained firm, a decline in the gross margin and an increase in SG&A expenses pressured margins. Revenue increased to ¥239.7B (¥220.8B in the same period of the previous year, YoY +8.5%), while Operating Income declined to ¥6.0B (¥7.0B in the same period of the previous year, YoY -15.0%), Ordinary Income declined to ¥6.1B (¥7.1B in the same period of the previous year, YoY -13.4%), and Net Income declined to ¥4.0B (¥4.8B in the same period of the previous year, YoY -16.3%). The primary reasons for the earnings decline despite higher revenue were the decrease in the gross margin to 11.0% (11.7% in the same period of the previous year) and the increase in the SG&A ratio to 8.5%.

Factors Driving Changes in Performance

【Revenue】Revenue increased to ¥239.7B, representing a year-on-year increase of +8.5%. The Company operates in a single segment, the Medical Equipment Sales Business, and does not disclose results by segment. Progress against the full-year plan of ¥1000.0B was 24.0%, broadly close to the standard quarterly progress level (approximately 25%).

【Profit and Loss】Cost of sales increased at a faster pace than Revenue to ¥213.3B, and the gross margin declined by -0.7pt to 11.0% (11.7% in the same period of the previous year). SG&A expenses increased to ¥20.5B (¥18.8B in the same period of the previous year), while the SG&A ratio rose slightly to 8.5% (8.5% in the same period of the previous year), reflecting an increase in expenses exceeding revenue growth. As a result, Operating Income declined to ¥6.0B (YoY -15.0%), and the Operating Margin narrowed by -0.7pt to 2.5% (3.2% in the same period of the previous year). Ordinary Income was ¥6.1B (YoY -13.4%), and Net Income was ¥4.0B (YoY -16.3%), resulting in higher revenue but lower earnings.

Key Financial Metrics

【Profitability】The Operating Margin declined to 2.5% (3.2% in the same period of the previous year), the Net Profit Margin declined to 1.7% (2.2% in the same period of the previous year), and the gross margin declined to 11.0% (11.7% in the same period of the previous year), with all metrics decreasing year on year.【Cash Quality】Comprehensive Income was ¥4.0B, broadly in line with Net Income of ¥4.0B. The impact of valuation differences on other securities and adjustments related to retirement benefits remained limited, with no significant divergence attributable to accrual factors.【Investment Efficiency】ROE was 1.8%, consistent with the decomposition of Net Profit Margin of 1.7% × total asset turnover of 0.48 × financial leverage of 2.24. EPS was ¥14.64 (¥16.98 in the same period of the previous year), and BPS was ¥807.38 (¥846.95 in the same period of the previous year), with both below the previous year’s levels.【Financial Soundness】The Equity Ratio was 44.7% (46.0% in the same period of the previous year), the current ratio was 163.8%, and the quick ratio was 129.1%, indicating a certain degree of short-term financial flexibility. Net assets were ¥222.0B, down ¥10.9B from ¥232.9B at the end of the previous fiscal year, while retained earnings also declined to ¥213.0B (¥223.8B at the end of the previous fiscal year).

Cash Flow Analysis

As no cash flow statement has been disclosed, the trend in funds can be assessed based on changes in the balance sheet. Cash and deposits were ¥150.0B, down ¥9.3B from ¥159.3B at the end of the previous fiscal year. Accounts receivable were ¥178.9B, down ¥6.4B from ¥185.3B at the end of the previous fiscal year, while accounts payable were ¥198.1B, up ¥1.7B from ¥196.4B, both of which appear to have contributed positively to cash. On the other hand, inventories were ¥44.6B, up ¥5.4B from ¥39.2B at the end of the previous fiscal year, while income taxes payable were ¥23.4B, down ¥54.5B from ¥77.9B at the end of the previous fiscal year. The buildup of inventory and payment of income taxes may have put pressure on funds. Overall, the decrease in cash and deposits during the period is considered to have resulted from funding requirements, including increased inventories and tax payments, exceeding the ¥4.0B in Net Income recorded.

Quality of Earnings

Non-operating income was ¥0.2B, primarily attributable to interest income of ¥0.16B, and was almost offset by non-operating expenses of ¥0.0B, resulting in a limited impact on Ordinary Income. Extraordinary income was a modest ¥0.03B, consisting of a gain on the sale of fixed assets, and the impact of temporary factors on performance can therefore be considered limited. The ¥2.1B difference between Ordinary Income of ¥6.1B and Net Income of ¥4.0B was attributable to income taxes of ¥2.1B. The effective tax rate increased to 34.7% (32.3% in the same period of the previous year), and the higher tax burden contributed to the lack of growth in Net Income. Comprehensive Income of ¥4.0B was broadly in line with Net Income of ¥4.0B. Changes in valuation differences on other securities and adjustments related to retirement benefits remained limited, and no factor that significantly distorted earnings quality was identified.

Earnings Forecast and Guidance

Progress against the full-year plan (Revenue of ¥1000.0B, Operating Income of ¥33.5B, Ordinary Income of ¥33.8B, and Net Income of ¥22.1B) was 24.0% for Revenue, 17.9% for Operating Income, 18.1% for Ordinary Income, and 18.2% for Net Income. Revenue was close to the standard quarterly progress level (approximately 25%), but all profit metrics were below that level, reflecting the lack of operating leverage due to the lower gross margin and higher SG&A expenses. The full-year plan calls for higher revenue and higher earnings year on year (Operating Income YoY +10.9%), but earnings declined in the current period. Margin recovery toward the second half of the fiscal year will therefore be the key to achieving the plan. There were no revisions to the earnings or dividend forecasts during the quarter.

Shareholder Returns

The dividend forecast is ¥55.00 per share. Based on the weighted-average number of shares outstanding during the period of 27,498,171 shares, the total annual dividend is estimated at approximately ¥1.5B. The Payout Ratio against the full-year Net Income plan of ¥22.1B is approximately 68.4%, and would be even higher if based on current-period Net Income of ¥4.0B. Cash and deposits of ¥150.0B and an Equity Ratio of 44.7% provide support for continued dividend payments; however, the Payout Ratio itself is relatively high compared with the level of earnings, warranting monitoring in light of future earnings trends.

Risk Factors

1. Profitability Decline Risk: The gross margin declined to 11.0% (11.7% in the same period of the previous year), and the Operating Margin declined to 2.5% (3.2% in the same period of the previous year). If this trend continues, it may affect achievement of the full-year plan, equivalent to an Operating Margin of 3.35%.

2. Working Capital Expansion Risk: Inventories increased to ¥44.6B (+¥5.4B from ¥39.2B at the end of the previous fiscal year), and together with accounts receivable of ¥178.9B, may result in increased funds being tied up.

3. Tax Burden Volatility Risk: The effective tax rate increased to 34.7% in the current period (32.3% in the same period of the previous year), and fluctuations in the tax burden may become a factor weighing on Net Income.

Industry Benchmark (For Reference; Company Research)

Industry Benchmark (trading)

Profitability and Returns

The Company’s profitability metrics are below the industry median and are positioned within the lower range.

Growth and Capital Efficiency

The Revenue Growth Rate is significantly above the industry median and is positioned within the top range.

※Source: Company research

Key Points from the Earnings Results

1. Despite higher revenue (+8.5%), the Operating Margin declined to 2.5% (3.2% in the same period of the previous year), primarily due to deterioration in the gross margin (11.0%, compared with 11.7% in the same period of the previous year). Progress of Operating Income against the full-year plan was 17.9%, below the standard level (approximately 25%), making margin recovery in the second half of the fiscal year the key to achieving the plan.

2. Inventories increased by +¥5.4B from the end of the previous fiscal year, and together with accounts receivable of ¥178.9B, create a structure in which funds are likely to become tied up. Trends in inventory and accounts receivable management will be factors affecting future cash generation capacity.

3. The Payout Ratio is approximately 68% based on the full-year plan. Although it is supported by cash and deposits of ¥150.0B, the Company’s return stance is relatively high compared with the current period’s earnings level.

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 with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥800–¥845 at a ±1% change in the Cost of Equity, and ¥822–¥822 at a ±0.1 change in 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: 2026-06 / This value does not 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. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, and after consulting a professional as necessary.

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