| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥171.5B | ¥154.6B | +10.9% |
| Operating Income | ¥21.4B | ¥17.1B | +25.4% |
| Ordinary Income | ¥22.1B | ¥17.7B | +25.4% |
| Net Income | ¥14.9B | ¥12.1B | +23.7% |
| ROE | 21.5% | 17.1% | - |
For the full year ended March 2026, revenue was ¥171.5B (¥+16.9B YoY +10.9%), Operating Income was ¥21.4B (¥+4.3B YoY +25.4%), Ordinary Income was ¥22.1B (¥+4.5B YoY +25.4%), and Net Income was ¥14.9B (¥+2.9B YoY +23.7%), achieving both top-line and bottom-line growth. Operating margin improved to 12.5% from 11.1% a year ago (+1.4pt), and gross margin rose to 29.0% (prior year 27.9%, +1.1pt), driven by improved pricing terms and an increase in higher-margin projects. By segment, the Social Infrastructure Business led with revenue of ¥111.8B (+14.9%) and Operating Income of ¥27.1B (margin 24.2%), while the Advanced Industry Business maintained high profitability with revenue of ¥59.7B (+4.1%) and Operating Income of ¥15.5B (margin 26.0%). Operating Cash Flow was ¥18.9B (YoY +84.0%), Free Cash Flow was ¥18.8B, and the company executed dividends of ¥6.2B and share buybacks of ¥12.0B. Full year guidance anticipates revenue of ¥182.0B (+6.1%), Operating Income of ¥24.0B (+11.9%), and an Operating margin of 13.2%, expecting further profitability improvement.
[Revenue] Revenue reached ¥171.5B (YoY +10.9%), achieving double-digit growth. By segment, the Social Infrastructure Business led with ¥111.8B (constituent ratio 65.2%, YoY +14.9%), supported by project expansion in energy, transportation, next-generation communications, and public disaster prevention. Sales to major customer Mitsubishi Electric amounted to ¥34.6B (YoY +24.6%), and to Tokyo Gas iNet were ¥19.1B (YoY -10.8%). The Advanced Industry Business reported ¥59.7B (constituent ratio 34.8%, YoY +4.1%), with steady DX/IoT projects for mobility, medical/healthcare, and industrial equipment. Geographically, domestic sales accounted for over 90%, making domestic demand the primary growth driver.
[Profitability] Gross profit was ¥49.7B (gross margin 29.0%), up ¥6.7B from ¥43.1B (gross margin 27.9%) a year earlier, improving gross margin by 1.1pt. The increase in high value-added projects and improved pricing terms contributed. SG&A was ¥28.3B (SG&A ratio 16.5%), up ¥2.3B from ¥25.9B (SG&A ratio 16.8%), but SG&A ratio improved by 0.3pt due to revenue growth, realizing operating leverage. Operating Income was ¥21.4B (Operating margin 12.5%), a large increase of +25.4% YoY, with operating margin improving by 1.4pt. By segment profit, Social Infrastructure posted ¥27.1B (margin 24.2%, YoY +26.6%) and Advanced Industry posted ¥15.5B (margin 26.0%, YoY +21.6%), both achieving double-digit profit growth. Non-operating income was ¥0.7B (mainly dividend income ¥0.6B), non-operating expenses were ¥0.0B, resulting in Ordinary Income of ¥22.1B (YoY +25.4%). Extraordinary gains included ¥0.1B gain on sale of investment securities, and extraordinary losses included ¥0.0B loss on disposal of fixed assets, so one-off factors were minimal. Income taxes were ¥7.0B (effective tax rate 31.8%), and Net Income was ¥14.9B (YoY +23.7%, net margin 8.7%), achieving revenue and profit growth.
The Social Infrastructure Business recorded revenue of ¥111.8B (YoY +14.9%), Operating Income of ¥27.1B (YoY +26.6%), and a margin of 24.2%. Revenue was driven by project expansion in energy, transportation, next-generation communications, and public disaster prevention, and margin improved slightly from 24.0% a year ago (+0.2pt) due to an increase in high-margin projects. Sales to major customer Mitsubishi Electric grew significantly, supporting segment growth. Segment assets were ¥29.3B (YoY +13.8%), reflecting increases in contract assets and accounts receivable. The Advanced Industry Business delivered revenue of ¥59.7B (YoY +4.1%), Operating Income of ¥15.5B (YoY +21.6%), and a margin of 26.0%. DX/IoT projects for mobility, medical/healthcare, and industrial equipment were steady, and margin substantially improved from 22.3% a year ago (+3.7pt). Improvements in project mix and pricing terms contributed to higher profitability. Segment assets were ¥11.1B (YoY -11.5%), reflecting more efficient asset utilization. Company-level expenses (mainly general & administrative) were ¥21.2B, up +24.1% YoY, reflecting fixed cost increases associated with headcount expansion and site development.
[Profitability] Operating margin was 12.5%, up 1.4pt from 11.1% last year; gross margin was 29.0% (prior year 27.9%); SG&A ratio was 16.5% (prior year 16.8%), indicating an improved profit structure. ROE was 21.5%, with net margin 8.7% (prior year 7.8%, +0.9pt), total asset turnover 1.67x (prior year 1.56x), and financial leverage 1.48x (prior year 1.40x). ROA was 14.5% (prior year 12.2%), showing improved asset efficiency. [Cash Quality] Operating Cash Flow (OCF) was ¥18.9B, 1.27x Net Income of ¥14.9B, with an accrual ratio of -¥4.1B (sales ratio -2.4%), which is favorable. OCF/EBITDA ratio was 0.82x; increases in receivables (-¥3.1B) and buildup of contract assets (¥7.3B, prior year ¥4.6B) restrained cash conversion. Days Sales Outstanding (DSO) was 65 days, slightly above the appropriate level. [Investment Efficiency] Capital expenditures were ¥0.1B, only 0.04x depreciation of ¥1.5B, a low level suggesting that reinvestment to maintain medium-term supply capacity is a challenge. Intangible fixed assets were ¥2.0B (prior year ¥3.1B, -36.4%), showing notable amortization progress. [Financial Soundness] Equity Ratio was 67.6% (prior year 69.8%), remaining stable. Current Ratio was 254% (prior year 302%), Quick Ratio 254%, indicating sufficient short-term payment ability. Cash and deposits were ¥29.4B, investment securities ¥19.7B, providing a substantial liquidity buffer and effectively debt-free operations. Net cash was ¥29.4B (42.3% of net assets).
Operating Cash Flow was ¥18.9B (prior year ¥10.3B, +84.0%), a significant improvement, representing an 85.3% conversion rate versus pre-tax profit of ¥22.2B. Subtotal (before working capital changes) was ¥23.8B; main add-backs were depreciation ¥1.5B, increase in bonus accrual ¥1.1B, and decrease in retirement benefit liabilities -¥0.1B. In working capital, accounts receivable increased by ¥3.1B and contract assets rose from ¥4.6B last year to ¥7.3B (▲¥2.7B buildup), while inventories decreased ¥0.3B, accounts payable remained flat, and contract liabilities increased ¥0.2B. After adjusting for income tax payments ¥5.5B and interest/dividend receipts ¥0.6B, OCF was ¥18.9B. Investing Cash Flow was -¥0.1B, with capital expenditure ¥0.1B and intangible asset purchases ¥0.0B comprising nearly all outflows; a gain on sale of investment securities ¥0.1B was recorded but total investment was minor. Free Cash Flow was ¥18.8B (prior year ¥8.3B). Financing Cash Flow was -¥18.2B, reflecting dividend payments ¥6.2B, share buybacks ¥12.0B, and proceeds from disposal of treasury shares ¥0.1B. Cash increased ¥0.5B, ending the period at ¥29.4B. The OCF/EBITDA ratio of 0.82x was affected by lengthening receivable collection terms and rising contract assets; shortening DSO and managing acceptance timing offer room for future improvement.
Earnings quality is high, with an accrual ratio of -2.4% (OCF ¥18.9B − Net Income ¥14.9B = ¥4.0B, as a percentage of revenue) in a healthy range. The bulk of Operating Income ¥21.4B is recurring, non-operating income was ¥0.7B (mainly dividend income ¥0.6B), and extraordinary gains were ¥0.1B (gain on sale of investment securities), indicating minimal one-off factors. Comprehensive Income was ¥16.5B, ¥1.6B higher than Net Income ¥14.9B, driven by ¥1.4B of unrealized gains on other securities. The divergence between comprehensive income and net income is limited, reflecting a small increase in unrealized gains on held securities. Pre-tax profit was ¥22.2B with income taxes of ¥7.0B (effective tax rate 31.8%); reversals of deferred tax assets and temporary difference adjustments were minor, and there were no tax irregularities. Non-operating income comprised dividend income ¥0.6B, subsidy income ¥0.1B, and miscellaneous income ¥0.0B, indicating low dependence on non-core income. The main reasons OCF ¥18.9B exceeded Net Income ¥14.9B were modest working capital improvements (inventory decrease ¥0.3B, increase in bonus accrual ¥1.1B) and non-cash depreciation ¥1.5B, partly offset by receivables increase -¥3.1B. Overall, earnings are primarily generated from recurring operating activities, with no signs of one-off gains or accounting manipulation; earnings quality is high.
Full year guidance forecasts Revenue ¥182.0B (YoY +6.1%), Operating Income ¥24.0B (YoY +11.9%), Ordinary Income ¥24.7B (YoY +11.5%), and Net Income ¥16.1B. Operating margin is expected at 13.2%, up 0.7pt from the current period’s 12.5%, assuming deepening of high value-added projects and maintenance of pricing. EPS is forecast at ¥95.61 (current period ¥86.85), and dividends are forecast at annual ¥48 (including year-end ¥28 and interim ¥18, after share split). Progress rates are Revenue 94.2%, Operating Income 89.2%, Ordinary Income 89.5%, broadly on track. Downside in the second half from the first-half results is limited, but achievement of guidance depends on segment order environment and project mix. Assumptions include continuation of major customers’ investment plans, maintenance of project margins, and restraint in SG&A increases. Risk factors include sudden changes in order environment, delays in securing personnel, and further expansion of working capital that could pressure cash flow.
Annual dividend is ¥46 (interim ¥18, year-end ¥28), with a payout ratio of 45.6%. A 2-for-1 stock split was implemented on April 1, 2025, so pre-split equivalent is ¥92. The payout ratio of 45.6% is at a sustainable level and is well covered by cash and deposits ¥29.4B and OCF ¥18.9B. Share buybacks of ¥12.0B were executed; the company holds 451 thousand treasury shares against an average shares outstanding of 17,397 thousand during the period. Dividends ¥6.2B plus share buybacks ¥12.0B total ¥18.2B (total return amount), which exceeds Net Income ¥14.9B, resulting in a Total Return Ratio of 122.1%, but this is largely within self-funding at Free Cash Flow ¥18.8B. The dividend policy emphasizes stable dividends while balancing performance linkage and growth investment. Dividend guidance for the year ending March 2027 is ¥48 (post-split basis; pre-split equivalent ¥96), with a projected payout ratio of 50.2%. Continuation of share buybacks is not explicitly stated, but is expected to be flexibly determined depending on future performance and cash flow. Given the high Total Return Ratio, monitoring the balance between shareholder returns and medium-term growth investments (headcount, R&D, capex) will be important.
Working capital retention risk: DSO 65 days and contract assets ¥7.3B (prior year ¥4.6B) indicate progressing working capital retention. An OCF/EBITDA ratio of 0.82x is somewhat low within the industry, and lengthening receivable terms or delays in acceptance timing for percentage-of-completion projects could pressure cash flow. Strengthening credit management, accelerating billing, and revising acceptance conditions are necessary improvements.
Underinvestment and medium-term growth constraint: Capital expenditure ¥0.1B is only 0.04x depreciation ¥1.5B, and intangible fixed assets decreased by -36.4% YoY, indicating very low investment levels. Insufficient investment in headcount and development risks medium-term supply capacity and technological competitiveness. Given favorable order conditions, now is the time to reinstate growth investments.
Segment concentration and customer dependence risk: The Social Infrastructure Business accounts for 65.2% of revenue, with major customers Mitsubishi Electric representing 20.2% and Tokyo Gas iNet 11.1%, indicating high concentration. Changes in major customers’ investment policies, price negotiations, or sudden shifts in order environment would directly impact performance; diversifying customers and expanding the Advanced Industry Business are key to medium-term stable growth.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.5% | 8.1% (3.6%–16.0%) | +4.4pt |
| Net Margin | 8.7% | 5.8% (1.2%–11.6%) | +2.9pt |
Profitability significantly exceeds the industry median, reflecting success in capturing high value-added projects and cost management.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 10.9% | 10.1% (1.7%–20.2%) | +0.8pt |
Revenue growth is roughly in line with the industry median, maintaining a standard growth pace.
※Source: Company compilation
Trend improvement in profitability and sustainability of high ROE: Operating margin improved to 12.5% (prior year 11.1%, +1.4pt), and ROE was 21.5% (prior year 17.2%), indicating steady improvement in profitability. Growth in high-margin projects, improved pricing, and containment of SG&A relative to sales realized operating leverage. The next fiscal year guidance assumes Operating margin of 13.2% and further improvement; as long as order environment and project mix remain favorable, the profitability improvement trend is expected to continue. Versus industry benchmarks, Operating margin is +4.4pt and Net margin +2.9pt, underscoring a clear advantage.
Room to improve cash conversion and working capital management: Although OCF ¥18.9B (YoY +84.0%) and FCF ¥18.8B are ample, the OCF/EBITDA ratio of 0.82x is somewhat weak, with DSO 65 days and contract assets ¥7.3B restraining cash conversion. Improving working capital efficiency through accelerated billing and revised acceptance conditions would materially enhance cash flow quality. Compressing working capital during favorable order conditions to increase capacity for growth investment is a key focus.
Re-expansion of growth investment and balanced allocation: Capex/depreciation 0.04x and intangible fixed assets -36.4% indicate extremely low investment levels. While Total Return Ratio is 122.1% and shareholder returns are being prioritized, allocation toward headcount expansion, development investment, and site development will determine sustainable growth. In the medium term, re-accelerating investment to support backlog, maintain technological advantage, and expand supply capacity is essential to sustain high ROE and growth.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions should be made at your own responsibility, and consult a professional if necessary.