Quick View
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥91.2B | - | +19.1% |
| Operating Income | ¥1.2B | - | +18.0% |
| Ordinary Income | ¥1.1B | - | +13.9% |
| Net Income | ¥0.6B | - | +16.6% |
| ROE | 0.5% | - | - |
Executive Summary
Although revenue growth has been confirmed, the low profit margins and the concentration of profit progress in the second half of the fiscal year will be key points of focus going forward. Revenue was ¥91.2B (+19.1% YoY), Operating Income was ¥1.2B (+18.0%), Ordinary Income was ¥1.1B (+13.9%), and Net Income attributable to owners of the parent was ¥0.6B (+16.6%). Revenue is progressing at a pace exceeding the full-year forecast growth rate of 9.2%; however, the full-year progress rates for Operating Income, Ordinary Income, and Net Income were 9.5%, 8.4%, and 6.0%, respectively, substantially below the standard quarterly progress rate of 25%, indicating a plan in which profit growth is concentrated in the second half of the fiscal year.
Factors Affecting Business Performance
【Revenue】Revenue increased to ¥91.2B, up +19.1% YoY. As the Company operates as a single segment—manufacturing and sales of office equipment and related products—factors behind changes by business are not disclosed; however, revenue is progressing at a pace exceeding the full-year forecast growth rate of 9.2%.
【Profit and Loss】Operating Income was ¥1.2B (+18.0% YoY), with an Operating Income margin remaining low at 1.4%. Selling, general and administrative expenses amounted to ¥18.9B, accounting for 93.8% of gross profit, compared with gross profit of ¥20.1B (gross margin of 22.1%); therefore, the effect of revenue growth has not been sufficiently converted into profit growth. Ordinary Income was ¥1.1B, ¥0.09B below Operating Income, as non-operating expenses, including a foreign exchange loss of ¥0.2B, served as a factor depressing earnings. Corporate income taxes and other taxes of ¥0.5B were imposed against Profit Before Tax of ¥1.1B, resulting in a high effective tax rate of approximately 47.4% and compressing Net Income to ¥0.6B. Although both revenue and profit increased, the profit growth rate was sluggish relative to the revenue growth rate, indicating room for improvement in the quality of revenue growth.
Segment Analysis
The Company Group operates as a single segment comprising the manufacture and sale of office equipment and related products, as well as associated services, and does not disclose information by segment.
Key Financial Metrics
【Profitability】The Operating Income margin of 1.4% and Net Income margin of 0.6% reflect the fact that SG&A expenses account for 93.8% of gross profit, despite a gross margin of 22.1%; revenue growth has not been sufficiently translated into profit. 【Cash Flow Quality】Although a statement of cash flows is not disclosed, inventories of ¥66.0B and accounts receivable of ¥55.9B account for approximately half of total assets, creating a structure in which an increase in working capital could constrain the conversion of profit into cash. 【Investment Efficiency】ROE was 0.5%, total asset turnover was 0.371x, and financial leverage was 1.94x. The low ROE is primarily attributable to the low Net Income margin. 【Financial Soundness】The Equity Ratio was 51.5% (improving from 48.8% in the previous year), while the current ratio was 189.5% and the quick ratio was 119.7%, indicating sound short-term liquidity. Cash and deposits of ¥54.7B were equivalent to 6.75x short-term liabilities.
Cash Flow Analysis
As the statement of cash flows is not disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥54.7B, down ¥4.8B from ¥59.5B in the previous year. Accounts receivable declined to ¥55.9B from ¥65.1B in the previous year, while inventories increased by ¥9.9B to ¥66.0B from ¥56.1B, resulting in an annualized inventory turnover period of 85 days. Accounts payable were ¥71.0B, slightly down from ¥72.8B in the previous year. The buildup of inventory during a period of revenue growth suggests expanding working capital requirements and requires close monitoring as a factor that could affect the Company’s ability to generate Operating Cash Flow.
Earnings Quality
Ordinary Income was ¥0.09B below Operating Income of ¥1.2B, primarily because non-operating expenses of ¥0.4B, including a foreign exchange loss of ¥0.2B, exceeded non-operating income of ¥0.3B. No extraordinary gains or losses were recorded, and the impact of temporary factors on earnings was limited. Corporate income taxes and other taxes of ¥0.5B were recorded against Profit Before Tax of ¥1.1B, resulting in a high effective tax rate of approximately 47.4%; the tax burden significantly compressed Net Income. Comprehensive Income was ¥0.8B, with the difference from Net Income of ¥0.6B attributable to foreign currency translation adjustments of ¥0.1B and valuation differences on securities of ¥0.2B, which are separate from the earning power of the core business. Accordingly, although current-period earnings did not depend on extraordinary gains or losses, they were depressed relative to the underlying earning power by non-operating and tax-related factors, namely foreign exchange losses and the high tax burden.
Earnings Forecasts and Guidance
The full-year forecasts are Revenue of ¥404.5B (YoY +9.2%), Operating Income of ¥13.1B (YoY +10.2%), Ordinary Income of ¥13.7B (YoY +7.1%), and Net Income of ¥9.8B. Q1 progress rates were 22.5% for Revenue, 9.5% for Operating Income, 8.4% for Ordinary Income, and 6.0% for Net Income. Compared with the standard quarterly progress rate of 25%, Revenue is broadly in line with the plan, while the profit items are substantially below plan. To achieve the full-year plan, the Company must accumulate Operating Income of ¥11.9B and Net Income of ¥9.2B from Q2 onward, making profitability improvement in the second half of the fiscal year a prerequisite for achieving the plan.
Shareholder Returns
The full-year dividend forecast is ¥15 per share, and the Payout Ratio based on the full-year forecast EPS of ¥30.32 is 49.5%. No share repurchases have been confirmed, meaning that this Payout Ratio is based solely on dividends. Against forecast Net Income of ¥9.8B, the annual total dividend, calculated using the average number of shares outstanding during the period, is estimated at approximately ¥4.7B, leaving approximately ¥5.1B as retained earnings. Interest-bearing debt of ¥11.5B is limited relative to cash and deposits of ¥54.7B, indicating dividend capacity from a balance sheet perspective. However, because Operating Cash Flow is not disclosed, dividend cash flow coverage cannot be assessed.
Risk Factors
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Refinancing risk: The short-term liabilities ratio is high at 70.6%, indicating that the liability structure is skewed toward current liabilities. As cash and deposits of ¥54.7B exceed short-term liabilities, near-term funding remains sound; however, financing terms could change if the refinancing environment deteriorates.
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Low capital efficiency: ROE was 0.5%, while annualized ROIC remained at 3.1%. With total assets of ¥245.4B, Revenue of ¥91.2B, and Net Income of ¥0.6B, both asset efficiency and earning power remain low.
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Inventory accumulation and high tax burden: Inventories were ¥66.0B, accounting for 26.9% of total assets, and the inventory turnover period was long at an annualized 85 days. In addition, the effective tax rate was high at approximately 47.4%; approximately half of Profit Before Tax was absorbed by corporate income taxes and other taxes, putting pressure on Net Income.
Industry Benchmark (Reference; Compiled by the Company)
Industry Benchmark (trading)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 1.4% | – | – |
| Net Income Margin | 0.6% | 7.4% (6.8%–7.9%) | −6.7pt |
The Company’s Net Income margin is substantially below the industry median, placing its profitability at a relatively low level within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 19.1% | 3.8% (0.9%–6.4%) | +15.3pt |
The Revenue growth rate is substantially above the industry median, indicating that top-line growth is at a strong level within the industry.
※Source: Compiled by the Company
Key Points from the Financial Results
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Revenue grew +19.1% YoY, exceeding the industry average, but the Operating Income margin remained low at 1.4%, indicating a structure in which revenue growth has not been sufficiently converted into profit growth.
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Progress rates against the full-year forecast were 9.5% for Operating Income and 6.0% for Net Income, below the Revenue progress rate of 22.5%; profitability improvement in the second half of the fiscal year is therefore a prerequisite for achieving the full-year plan.
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The inventory turnover period of 85 days, short-term liabilities ratio of 70.6%, and effective tax rate of 47.4% all require monitoring from the perspectives of profitability, cash efficiency, and tax burden. Meanwhile, the Equity Ratio of 51.5% (improving from 48.8% in the previous year) and limited interest-bearing debt support financial soundness.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary 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, where necessary, after consulting with a professional.
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AI Financial Analysis
Executive Summary
FY2026 Q1 was a solid top-line quarter, but profit conversion remained structurally thin and first-quarter progress against full-year operating-profit guidance was weak. Revenue rose 19.1% YoY to ¥9.12bn. Operating income increased 18.0% YoY to ¥0.12bn. Ordinary income rose 13.9% YoY to ¥0.12bn. Net income attributable to owners increased 16.6% YoY to ¥0.06bn. The operating margin was 1.4%, approximately 1bp lower YoY because operating-income growth marginally trailed revenue growth. The net margin was 0.6%, approximately 1bp lower YoY. Gross margin was 22.1%, while SG&A consumed 20.7% of revenue, leaving limited protection against input-cost, pricing, or volume volatility. The annualized DuPont ROE was 1.9%, driven by a 0.7% net-profit margin, 1.486x asset turnover, and 1.94x financial leverage. The principal constraint on returns is therefore profitability rather than sales velocity or balance-sheet leverage. The effective tax rate was high at 47.4%, and the tax burden factor was 0.518, reducing conversion of pre-tax profit into net income. Foreign-exchange losses of ¥0.16bn exceeded non-operating income of ¥0.29bn in significance and contributed to ordinary-income growth lagging operating-income growth. Liquidity was sound, with a 189.5% current ratio, a 119.7% quick ratio, and ¥5.47bn of cash and deposits. Interest-bearing debt was modest at ¥1.15bn, equivalent to 8.3% of capital, and interest coverage was strong at 62.0x. However, 70.6% of interest-bearing debt was short term, requiring continued access to short-term refinancing. Inventories rose 17.6% from the prior-year balance-sheet date to ¥6.60bn and inventory days were elevated at 85 days, making inventory discipline a key issue. Q1 revenue represented 22.5% of full-year guidance, close to the standard 25% run rate, whereas operating income represented only 9.5% and net income 6.0% of their respective full-year forecasts. The company consequently needs a substantial improvement in profit conversion over the remaining quarters to achieve its full-year operating-income target. The FY2026 forecast dividend of ¥15.00 per share implies a manageable 49.5% dividend payout ratio based on forecast EPS of ¥30.32.
Profitability Analysis
Annualized DuPont ROE was 1.9%, calculated from a 0.7% net-profit margin, 1.486x asset turnover, and 1.94x financial leverage. The net-profit margin is the binding constraint in the return profile: even relatively healthy sales turnover cannot generate an attractive return on equity at a sub-1% net margin. Financial leverage is moderate and does not indicate that reported ROE is being materially enhanced by debt. EBIT margin was 1.4%, below the 5% low-efficiency benchmark, reflecting a ¥2.02bn gross profit pool being reduced by ¥1.89bn of SG&A. Revenue grew 19.1% YoY while operating income grew 18.0%, producing an approximately 1bp YoY operating-margin compression. Ordinary-income growth of 13.9% was slower than operating-income growth, with ¥0.16bn of foreign-exchange losses contributing to the drag below operating profit. Net-income growth of 16.6% exceeded ordinary-income growth, but net margin nevertheless remained only 0.6%. The high effective tax rate of 47.4% and 0.518 tax-burden factor are material drags on earnings conversion. Interest burden was 0.919, indicating limited financing-cost pressure; interest expense was only ¥0.02bn and coverage was 62.0x. Annualized ROIC of 3.1% is below the 5% warning threshold, primarily because the low operating margin produces insufficient operating profit relative to the capital base. This low ROIC can be characteristic of a working-capital-intensive office-furniture and office-equipment distribution model, but it remains a material constraint on value creation unless margins or capital turnover improve.
Growth Assessment
Q1 revenue growth of 19.1% YoY was robust and exceeded the full-year revenue-growth assumption of 9.2% YoY. Revenue progress was 22.5% of the ¥40.45bn full-year forecast, only 2.5 percentage points below the standard Q1 run rate. Earnings growth was positive, with operating income up 18.0%, ordinary income up 13.9%, and net income up 16.6% YoY. Nevertheless, operating-income progress was only 9.5% of the ¥1.31bn full-year target, 15.5 percentage points below the standard Q1 progress rate. Ordinary-income progress was 8.4% of its ¥1.37bn forecast, while net-income progress was 6.0% of the ¥0.98bn forecast. The full-year plan therefore relies on a significantly stronger earnings contribution after Q1. The forecast implies full-year operating margin of approximately 3.2%, more than double the Q1 margin of 1.4%, underscoring the required margin recovery. The Q1 operating-income margin did not benefit from operating leverage because profit growth slightly lagged revenue growth. Inventory expansion to ¥6.60bn and 85 inventory days should be monitored to ensure sales growth is not being supported by excess stock accumulation. The group operates as a single segment focused on manufacturing and sales of office equipment and related services, so consolidated growth is concentrated in one business model rather than diversified across reporting segments.
Financial Health
Financial health is supported by substantial current-asset coverage. The current ratio was 189.5% and the quick ratio was 119.7%, both above healthy reference levels. Working capital was ¥8.46bn. Cash and deposits totaled ¥5.47bn, equal to 6.75x short-term debt. Interest-bearing debt was ¥1.15bn, comprising ¥0.81bn of short-term loans and ¥0.34bn of long-term loans. Debt/capital was conservative at 8.3%, while the reported debt-to-equity ratio was 0.94x and remained below the 2.0x aggressive-leverage threshold. Interest coverage of 62.0x indicates ample ability to service the current interest burden. The refinancing-risk alert arises because 70.6% of interest-bearing debt is short term; however, the ¥0.81bn short-term loan balance is substantially covered by cash and by current assets. Current liabilities of ¥9.45bn are also covered by current assets of ¥17.91bn, limiting maturity-mismatch risk. Accounts payable of ¥7.10bn remain the largest liability and are broadly aligned with inventories of ¥6.60bn. Net defined-benefit liability was ¥7.14bn and represents a material long-term obligation to monitor. Asset retirement obligations were ¥0.89bn. Equity increased to ¥12.65bn from ¥12.23bn at the prior-year balance-sheet date, lifting the capital adequacy ratio to 51.5% from 48.8%. Inventories increased by ¥0.99bn, or 17.6%, to ¥6.60bn, while trade receivables declined by ¥0.92bn, or 14.2%, to ¥5.59bn. The receivable reduction is favorable for collection exposure, but the higher inventory balance increases working-capital intensity. Intangible assets were only 1.7% of total assets, indicating that balance-sheet risk is not driven by acquired intangible assets.
Notable B/S Changes
Provision for bonuses: -¥0.28bn (-71.9%) to ¥1.08bn - reduced accrued bonus obligation lowered current liabilities. Advances received: -¥0.54bn (-51.1%) to ¥0.52bn - lower customer advances reduced a source of operating funding. Deferred tax assets: -¥0.06bn (-20.5%) to ¥0.21bn - modest reduction in future tax benefits.
Cash Flow Quality
Dividend Sustainability
The FY2026 dividend forecast is ¥15.00 per share. Based on forecast EPS of ¥30.32, the implied dividend payout ratio is 49.5%, below the 60% sustainability benchmark. Using 32.537 million issued shares, the indicated annual cash-dividend commitment is approximately ¥0.49bn. This is equivalent to about half of the ¥0.98bn forecast net income. The forecast payout ratio leaves a moderate earnings retention buffer, although the thin operating margin and low annualized ROIC make sustained earnings delivery important. Dividend sustainability will depend on achieving the significant profit acceleration embedded in the full-year forecast and maintaining control over inventory-related capital needs.
Risk Assessment
Business risks include Margin risk: EBIT margin was only 1.4%, so modest changes in procurement costs, selling prices, logistics costs, or SG&A can materially affect profit., Inventory risk: inventories reached ¥6.60bn and inventory days were 85, above the 60-day warning level; slower sell-through could increase markdown, obsolescence, and working-capital risk., Office-equipment industry demand risk: the single business model is exposed to corporate office investment, replacement demand, and shifts in workplace configurations., Foreign-exchange risk: ¥0.16bn of foreign-exchange losses affected Q1 ordinary income and can continue to create earnings volatility..
Financial risks include Refinancing risk: 70.6% of interest-bearing debt is short term, although cash of ¥5.47bn and a 6.75x cash/short-term-debt ratio provide substantial near-term coverage., Return risk: annualized ROIC of 3.1% is below the 5% warning threshold, suggesting capital is currently generating a low operating return., Tax-conversion risk: the 47.4% effective tax rate and 0.518 tax-burden factor materially reduce net-income conversion..
Key concerns include The highest-priority issue is the combination of strong revenue growth with essentially flat-to-lower operating margin, as operating-income growth of 18.0% lagged revenue growth of 19.1%., Full-year operating-income guidance requires a substantial improvement after Q1: progress was 9.5% versus a standard 25% Q1 run rate., High inventory days require monitoring alongside future sales growth, gross margin, and inventory valuation., Low operating efficiency and low ROIC are the principal strategic constraints despite sound liquidity and low absolute debt..
Investment Implications
Key takeaways include Revenue momentum was strong at +19.1% YoY, but earnings margins remain very low., The annualized 1.9% ROE and 3.1% ROIC are constrained mainly by weak operating profitability., Liquidity is strong and interest-bearing debt is modest, mitigating the practical impact of the short-term debt mix., Inventory days of 85 and a ¥0.99bn YoY inventory increase make working-capital execution central to the earnings outlook., Q1 operating-profit progress is well behind the full-year run rate required by guidance..
Metrics to watch include Operating margin versus the 1.4% Q1 level, Operating-income progress versus the ¥1.31bn full-year forecast, Inventory balance and inventory days, Gross margin and SG&A-to-sales ratio, Foreign-exchange gains or losses, Effective tax rate and tax-burden factor, Short-term debt refinancing and cash/short-term-debt coverage, Annualized ROIC.
Regarding relative positioning, The company presents a conservatively funded balance sheet with strong liquidity, but its profitability profile is weak relative to standard return and margin benchmarks. Its investment profile is therefore more sensitive to execution on margin recovery, inventory turnover, and full-year profit delivery than to balance-sheet solvency.