Rasa Industries,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

Both revenue and profit posted double-digit growth, resulting in higher revenue and earnings as improved profitability in the Electronic Materials and Machinery businesses boosted the company-wide profit margin. Revenue was ¥137.1B (¥104.7B in the previous year, +30.9%), Operating Income was ¥18.1B (¥13.2B, +37.0%), Ordinary Income was ¥18.6B (¥14.5B, +28.1%), and Net Income was ¥13.1B (¥10.9B, +20.5%). The primary drivers of revenue growth were volume and price effects in Chemicals, in addition to expanding demand for Electronic Materials. As SG&A expenses grew by only +3.3%, substantially below revenue growth, the Operating Margin improved to 13.2% (12.6% in the previous year).

Factors Affecting Financial Performance

【Revenue】Revenue was ¥137.1B (+30.9% year on year), with all segments generally recording higher revenue. Chemicals led overall performance at ¥117.0B (+31.3%), accounting for 85.3% of revenue, while Electronic Materials achieved strong growth at ¥8.5B (+82.4%), followed by Machinery at ¥9.1B (+19.9%). Only Other Businesses recorded a decline, with revenue of ¥2.6B (-26.2%).

【Profit and Loss】Operating Income was ¥18.1B (+37.0%), with a Gross Margin of 22.5% (improving by approximately 2pt year on year) and positive operating leverage emerging. By segment, Electronic Materials saw a substantial improvement, with Operating Income of ¥2.9B (+186.4%) and a profit margin of 34.7%, while Machinery achieved a significant turnaround into profitability at ¥0.3B. Chemicals generated ¥16.6B (+22.2%), with a profit margin of 14.2%, indicating that profit growth somewhat lagged revenue growth. Ordinary Income was ¥18.6B (+28.1%) and Net Income was ¥13.1B (+20.5%). After reflecting income taxes and other taxes of ¥5.5B (effective tax rate of 29.6%), the Net Profit Margin declined slightly to 9.6% (approximately 10.4% in the previous year). The company posted higher revenue and earnings.

Segment Analysis

Segment profit consisted of Chemicals at ¥16.6B, Electronic Materials at ¥2.9B, Machinery at ¥0.3B, and Other Businesses at ¥1.8B, resulting in Operating Income of ¥18.1B after a company-wide expense adjustment of ▲¥3.6B. Chemicals has an advantage in terms of revenue scale, but its profit margin remained mid-range at 14.2%; maintaining a balance between pricing and raw material costs will be key to its profit margin. Electronic Materials generated revenue of ¥8.5B but had a high profit margin of 34.7%, making it the primary driver of the improvement in the company-wide profit margin. Machinery recovered from low profitability in the previous year to a profit margin of 3.2%, contributing to the improvement in earnings.

Key Financial Indicators

【Profitability】Profitability is trending upward, with an Operating Margin of 13.2% (12.6% in the previous year) and a Gross Margin of 22.5% (improving by approximately 2pt year on year). The Net Profit Margin of 9.6% was slightly lower than approximately 10.4% in the previous year.【Cash Flow Quality】Cash and deposits were ¥48.9B, almost flat year on year, while accounts receivable were ¥103.5B and inventories were ¥37.4B, indicating an expansion in working capital in line with revenue growth.【Investment Efficiency】ROE was 4.1% and the Equity Ratio was 62.5% (63.7% in the previous year). Asset efficiency remains low based on the ratio of revenue to total assets of ¥514.7B.【Financial Soundness】Liquidity is favorable, with current assets of ¥257.6B against current liabilities of ¥127.8B. Long-term borrowings declined to ¥33.1B (¥36.9B in the previous year), and the company continues to maintain a conservative financial structure.

Cash Flow Analysis

As this earnings release does not provide explicit cash flow statement data, fund movements are analyzed based on balance sheet trends. Cash and deposits were ¥48.9B, almost flat from ¥48.2B in the previous year, while accounts receivable increased to ¥103.5B (¥98.0B in the previous year), indicating an expansion in working capital accompanying revenue growth. Inventories also increased slightly to ¥37.4B from ¥36.7B in the previous year. Meanwhile, long-term borrowings declined to ¥33.1B from ¥36.9B in the previous year, indicating progress in reducing interest-bearing debt. Construction in progress related to capital expenditures increased to ¥39.8B from ¥34.2B in the previous year, suggesting more active investment activity. Overall, the accumulation of assets resulting from revenue growth appears to be the primary use of funds.

Quality of Earnings

Current-period profit was driven by the core business, while the impact of non-operating factors was limited, with non-operating income of ¥1.4B (1.0% of revenue) and non-operating expenses of ¥0.8B. Non-operating income primarily consisted of equity-method investment gains of ¥0.99B and dividend income of ¥0.1B, both of which have stable characteristics. The difference between Ordinary Income of ¥18.6B and Operating Income of ¥18.1B was small, indicating only a minor divergence in financial income and expenses. Interest expense was minimal at ¥0.3B, and earnings quality can also be considered sound from the perspective of interest burden. The effective tax rate was 29.6%, a reasonable level, while improved Gross Margin and control of SG&A expenses supported recurring profitability.

Earnings Forecast and Guidance

The full-year plan calls for revenue of ¥540.0B (YoY+13.1%), Operating Income of ¥62.0B (+3.1%), and Ordinary Income of ¥63.0B (+1.7%). There were no revisions to the earnings forecast or dividend forecast for the current quarter. Q1 progress rates were 25.4% for revenue, 29.1% for Operating Income, 29.6% for Ordinary Income, and 30.5% for Net Income, all slightly exceeding the simple progress benchmark of 25%. If the strong growth and high profitability of Electronic Materials continue, together with the improvement in Machinery’s earnings, progress toward achieving the full-year plan may remain relatively favorable in the second half.

Shareholder Returns

The company’s full-year dividend plan is ¥36 per share. The Payout Ratio against the company’s forecast EPS of ¥110.08 is approximately 32.7% (¥36 ÷ ¥110.08), a relatively conservative level. It should be noted that a 5-for-1 stock split of common shares was implemented effective April 1, 2026, and the previous year’s dividend of ¥64 is a pre-split figure. There was no revision to the dividend forecast for the current quarter.

Risk Factors

1. Concentration of the business portfolio: The Chemicals segment accounts for 85.3% of revenue, creating a structure in which market conditions in this field and fluctuations in raw material and energy costs can readily affect overall performance.

2. Expansion of working capital: Accounts receivable of ¥103.5B and inventories of ¥37.4B increased from the previous year in line with revenue growth, and the collection of receivables and inventory efficiency may affect capital efficiency going forward.

3. Capital efficiency: ROE of 4.1% has been generated under a conservative capital structure with an Equity Ratio of 62.5%. Returns on invested capital will require monitoring going forward.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

The company’s Operating Margin and Net Profit Margin both exceed the industry median, placing its profitability at a relatively high level within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate substantially exceeds the industry median, placing the company among the higher-growth companies within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Release

1. The Electronic Materials segment’s profit margin of 34.7% (substantially improved year on year) is observed as a primary factor supporting the company-wide improvement in Operating Margin (13.2%, compared with 12.6% in the previous year). A notable feature is that the change in business mix has contributed to a structural improvement in profitability.

2. Revenue growth of +30.9% and Operating Income growth of +37.0% both substantially exceed the industry median, indicating positive operating leverage. Meanwhile, ROE of 4.1% has been generated under a conservative capital structure with an Equity Ratio of 62.5%; capital efficiency is therefore worth monitoring going forward.

3. Q1 progress toward the full-year plan was 25.4% for revenue and 29.1% for Operating Income, exceeding the simple progress benchmark. As of the current quarter, no revisions have been made to the earnings forecast or dividend forecast.

Theoretical Share Price (Reference Value)

Sensitivity: ¥909–¥963 at Cost of Equity ±1%, and ¥933–¥939 at ω±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• As 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 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and 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 disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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