These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.
| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥342.5B | ¥326.4B | +4.9% |
| Operating Income | ¥37.3B | ¥31.6B | +18.3% |
| Ordinary Income | ¥55.8B | ¥45.3B | +23.2% |
| Net Income | ¥33.1B | ¥32.1B | +3.3% |
| ROE | 1.6% | 1.6% | - |
Despite higher revenue and profits, the quarter was characterized by only modest growth in net income due to the recognition of extraordinary losses. Revenue was ¥342.5B (+4.9% YoY), operating income was ¥37.3B (+18.3%), ordinary income was ¥55.8B (+23.2%), and net income attributable to owners of the parent was ¥32.8B (+2.0%). The operating margin improved to 10.9% from 9.7% in the same period last year, supported by an improved gross margin and control of selling, general and administrative expenses. However, at the ordinary income level, non-operating factors such as equity-method investment gains and losses, dividend income, and foreign exchange gains provided significant support, while the recognition of ¥6.9B in extraordinary losses, including ¥0.6B in impairment losses, restrained net income growth.
【Revenue】Revenue increased 4.9% YoY to ¥342.5B. By segment, Engineering recorded a substantial increase in revenue to ¥127.8B (+191.8%), primarily due to a sharp increase in intersegment internal transactions (¥19.6B in the previous year → ¥110.0B in the current period). Revenue from external customers, however, declined from ¥24.2B to ¥17.9B. Trading & Logistics increased to ¥142.6B (+7.6%), Agri to ¥86.3B (+22.3%), and Eco Solutions to ¥25.3B (+10.6%), indicating a recovery trend. Core Chemical Materials posted a slight decline in revenue to ¥135.0B (-2.9%), but remained the largest segment, accounting for 39.4% of total revenue.
【Profit and Loss】Operating income increased 18.3% to ¥37.3B, and the operating margin improved to 10.9% from 9.7% in the previous year. Chemical Materials led approximately 60% of total operating income with operating income of ¥22.2B and a margin of 16.5%, while the other segments also improved with high rates of profit growth. Ordinary income increased 23.2% to ¥55.8B, supported by ¥22.1B in non-operating income, including ¥12.9B in equity-method investment gains and losses, ¥3.6B in dividend income, and ¥1.9B in foreign exchange gains. Meanwhile, due to the recognition of ¥6.9B in extraordinary losses, net income increased only 2.0% to ¥32.8B, representing a narrower increase than that of ordinary income. Overall, the Company recorded higher revenue and higher profits.
Chemical Materials posted revenue of ¥135.0B (-2.9%) but operating income of ¥22.2B (+3.3%), maintaining a margin of 16.5% and serving as the earnings pillar, accounting for approximately 60% of total operating income. Trading & Logistics recorded revenue of ¥142.6B (+7.6%) and profit of ¥8.0B (+18.6%), with its margin improving to 5.6%. Agri reported revenue of ¥86.3B (+22.3%) and profit of ¥4.0B (+271.2%), representing substantial profit growth and a notable recovery from the low profitability recorded in the previous year. Engineering posted revenue of ¥127.8B (+191.8%) and profit of ¥7.0B (+31.3%); however, most of the revenue increase resulted from higher intersegment internal transactions, and external revenue declined YoY, which warrants attention. Eco Solutions remains a small segment but is showing an improving trend, with revenue of ¥25.3B (+10.6%) and profit of ¥1.1B (+296.4%).
【Profitability】The operating margin of 10.9% improved by +123bp from 9.7% in the previous year. The improvement in gross margin to 31.8% from 30.5%, combined with control of the SG&A expense ratio at 20.9%, translated reliably into higher profits.【Cash Flow Quality】Non-operating income—including equity-method investment gains and losses of ¥12.9B, dividend income of ¥3.6B, and foreign exchange gains of ¥1.9B—made a significant contribution to ordinary income, indicating a structure with somewhat high reliance on non-operating factors.【Investment Efficiency】ROE was 1.6% on a quarterly basis. Low total asset turnover and the expansion of the asset base, including investment securities of ¥906.0B, equivalent to 28.3% of total assets, are constraining capital efficiency.【Financial Soundness】The equity ratio of 66.4% remained approximately at the same level as 66.6% in the previous year. Leverage remains conservative even including long-term borrowings of ¥328.1B.
As this report does not include detailed cash flow statements, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥237.7B, slightly down from ¥246.3B in the previous year. Meanwhile, property, plant and equipment increased, with buildings up +27.4% and machinery and equipment up +34.1%, while construction in progress was substantially drawn down. This suggests that capital deployment associated with the completion and commencement of operations of investment projects progressed during the period. Short-term borrowings increased +23.8% YoY, indicating that part of investment funding and working capital was supplemented through flexible short-term financing. Working capital is substantial, with inventories of ¥577.4B and accounts receivable of ¥334.0B, leaving cash generation relatively sensitive to improvements in working capital efficiency.
The improvement in operating income is attributable to structural factors, namely an improved gross margin and restraint in SG&A expenses, and is considered to have relatively high sustainability. Meanwhile, the increase in ordinary income (+23.2%) was supported by non-operating income such as equity-method investment gains and losses of ¥12.9B, dividend income of ¥3.6B, and foreign exchange gains of ¥1.9B. These items are susceptible to market conditions and foreign exchange fluctuations and are therefore more volatile than operating income. In addition, the recognition of ¥6.9B in extraordinary losses, including ¥0.6B in impairment losses, caused the net income growth rate to contract substantially from 23.2% at the ordinary income level to 2.0% at the net income level. The divergence between ordinary income and net income can therefore be viewed as resulting from temporary factors. Comprehensive income was ¥113.6B, substantially exceeding net income of ¥32.8B, primarily due to an increase of +¥50.0B in valuation differences on securities and +¥29.8B in other comprehensive income of equity-method affiliates. This divergence reflects fluctuations in asset valuations and does not represent the underlying business earning power for the current period, which warrants attention.
Progress against the full-year earnings forecast was 22.5% for revenue (¥1522.0B plan), 26.3% for operating income (¥142.0B plan), and 29.4% for ordinary income (¥190.0B plan). Compared with a simple proportional benchmark of 25%, operating income and ordinary income are progressing slightly ahead, while revenue is somewhat behind schedule. The full-year plan anticipates declines of -5.1% in operating income and -17.4% in ordinary income YoY, differing in direction from the growth trend in Q1. This may suggest that the full-year plan was set conservatively or assumes that the contribution from non-operating income will diminish toward the second half of the fiscal year. No revisions were made to the earnings forecast or dividend forecast during the current quarter.
The full-year dividend forecast is ¥160 per share, implying a payout ratio of approximately 54% based on the full-year EPS forecast of ¥294.77. The dividend in the previous year was ¥70; comparative information for the combined interim and year-end dividends is not provided in this report. Against the backdrop of a conservative financial structure, reflected in an equity ratio of 66.4%, the stability of dividend funding can be assessed as reasonably secure. No revision was made to the dividend forecast during the current quarter.
Segment Profit Concentration Risk: Chemical Materials accounted for ¥2,223 million, more than half of total operating income of ¥4,242 million before adjustments. As a result, fluctuations in market conditions and raw material spreads in this segment directly affect Company-wide earnings.
Reliance on Non-Operating Income: Non-operating income of ¥22.1B, including equity-method investment gains and losses of ¥12.9B, dividend income of ¥3.6B, and foreign exchange gains of ¥1.9B, contributed to ordinary income of ¥55.8B. Accordingly, ordinary income is susceptible to fluctuations in foreign exchange rates and the performance of affiliates.
Working Capital and Short-Term Debt Structure: Working capital is substantial, with inventories of ¥577.4B and accounts receivable of ¥334.0B. In addition, short-term borrowings increased +23.8% YoY, so changes in interest-rate and financing conditions could affect refinancing requirements.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.9% | 8.7% (4.2%–14.2%) | +2.2pt |
| Net Margin | 9.7% | 7.0% (3.2%–10.6%) | +2.6pt |
Both the operating margin and net margin exceed the industry median, placing the Company among the more profitable companies in the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.9% | 6.2% (-1.1%–14.6%) | -1.3pt |
The revenue growth rate is slightly below the industry median, placing the Company around the middle of the industry in terms of revenue growth.
※Source: Company research
The operating margin improved by +123bp to 10.9%, exceeding the industry median of 8.7%. The improvement is attributable to structural factors, namely an improved gross margin and SG&A expense control. Maintaining the high margin of the core Chemical Materials segment (16.5%) will determine the sustainability of this trend.
Net income growth was limited to +2.0%, compared with ordinary income growth of +23.2%, due to the recognition of ¥6.9B in extraordinary losses and the high degree of reliance on non-operating income. The fact that the upside at the ordinary income level was supported by highly volatile factors such as equity-method investment gains and losses, dividends, and foreign exchange is an important consideration when assessing earnings quality.
Increases in buildings and machinery (+27.4% and +34.1%, respectively) and the substantial drawdown of construction in progress suggest that investment projects have been completed and commenced operations. Whether higher utilization rates lead to improvements in total asset turnover and ROE is a key point of focus in terms of capital efficiency.
This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥3,698 |
| base | ¥3,773 |
| bull | ¥3,833 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥3,966 |
| Adjusted Forecast EPS | ¥316.9 |
| Cost of Equity r | 9.77% (10-year Japanese Government Bond 2.77% + Equity Risk Premium 6.00% + Size Premium 1.00%) |
| Residual Income Persistence Factor ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 54.3% |
| Forecast EPS Confidence Adjustment | ×1.075 (based on the historical guidance achievement rate of companies in the same industry) |
| Implied PBR / PER |
Sensitivity: ¥3,671–¥3,879 at ±1% for the cost of equity, and ¥3,766–¥3,777 at ±0.1 for ω.
Notes:
(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not predict or guarantee the future share price)
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 with a professional as necessary.
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| 0.95x / 11.9x |