| Indicator | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥170.0B | ¥152.6B | +11.4% |
| Operating Income / Operating Profit | ¥53.7B | ¥44.1B | +21.7% |
| Ordinary Income | ¥57.9B | ¥40.7B | +42.1% |
| Net Income / Net Profit | ¥23.8B | ¥3.7B | +542.1% |
| ROE | 9.3% | 1.8% | - |
FY2026 results: Revenue ¥170.0B (vs prior year +¥17.3B +11.4%), Operating Income ¥53.7B (vs prior year +¥9.6B +21.7%), Ordinary Income ¥57.9B (vs prior year +¥17.2B +42.1%), Net Income attributable to owners of the parent ¥23.8B (vs prior year +¥20.1B +542.1%). The company delivered revenue growth and substantial profit expansion. Operating margin improved to 31.6% (prior year 28.9%) up +2.7pt, reflecting operating leverage. Net income surged more than fivefold partly due to a low base last year driven by losses in Domestic Telecommunications. The core International Telecommunications Business grew revenue +15.0% while maintaining a high operating margin of 37.9%, leading consolidated results. Conversely, a build-up of Construction in Progress ¥110.7B and capital expenditure ¥63.7B (6.8x depreciation) caused Free Cash Flow to be deeply negative at -¥25.0B, reflecting a phase of front-loaded growth investment.
[Revenue] Revenue reached ¥170.0B (vs prior year +11.4%), achieving double-digit growth. By segment, International Telecommunications Business led with ¥129.5B (+15.0%), accounting for 76.1% of total revenue. Domestic Telecommunications Business declined to ¥24.1B (-3.3%), while Medical & Healthcare Business expanded to ¥16.6B (+6.2%). International Telecommunications growth was driven by expanded provision of international circuits to the Philippines, expansion of the customer base for remittance services, and favorable FX effects. Gross profit was ¥98.7B, with gross margin improving to 58.1% (prior year 54.2%) up +3.9pt, reflecting improved business mix and scale benefits.
[Profitability] Operating Income was ¥53.7B (vs prior year +21.7%), outpacing revenue growth; operating margin improved to 31.6% (prior year 28.9%) up +2.7pt. SG&A was ¥45.0B (+¥6.4B +16.6%), growing faster than revenue (+11.4%), but gross margin improvement absorbed this and operating leverage was positive. By segment, International Telecommunications posted Operating Income ¥49.0B (+8.9%), maintaining high profitability at 37.9% and accounting for over 91% of consolidated operating profit. Domestic Telecommunications improved sharply to Operating Income ¥4.0B (vs prior year +3709.1%), with margin rising to 16.5%. Medical & Healthcare turned profitable with Operating Income ¥0.8B (+195.2%), margin 4.8%, but remains small. Ordinary Income was ¥57.9B (+42.1%), outpacing operating income growth, aided by non-operating income ¥9.9B (including FX gains ¥5.2B and interest/dividend income ¥2.3B), while non-operating expenses were ¥5.7B (interest expense ¥3.0B, FX losses ¥2.8B), netting to +¥4.2B that boosted ordinary income. Extraordinary items were minor (extraordinary gains ¥0.2B, extraordinary losses ¥0.0B), yielding profit before income taxes ¥58.0B. Income taxes were ¥7.3B (effective tax rate 12.6%), low possibly due to geographic mix or tax incentives. After deducting Net Income attributable to non-controlling interests ¥8.7B, Net Income attributable to owners of the parent was ¥23.8B (vs prior year +542.1%). In conclusion, revenue and profit rose, with margin expansion across stages driven by gross margin improvement, operating leverage, and FX gains in non-operating items.
International Telecommunications Business: Revenue ¥129.5B (+15.0%), Operating Income ¥49.0B (+8.9%), margin 37.9%, remaining the core high-margin segment contributing 76.1% of revenue and over 91% of operating profit. Growth was driven by provision of international circuits to the Philippines and expansion of domestic telecommunications. Domestic Telecommunications Business: Revenue ¥24.1B (-3.3%), Operating Income ¥4.0B (vs prior year +3709.1%), margin 16.5%, showing significant improvement; mix shift toward telephone services and call-center software sales improved margins. Medical & Healthcare Business: Revenue ¥16.6B (+6.2%), Operating Income ¥0.8B (+195.2%), margin 4.8%—turned profitable but remains small and in a growth phase. Segment concentration is high in International Telecommunications, creating sensitivity to regional/customer trends and regulatory changes.
[Profitability] Operating margin 31.6% (prior year 28.9%) up +2.7pt; ROE 9.3% indicating healthy returns on equity. Improvement in operating margin driven by gross margin expansion to 58.1% (prior year 54.2%) up +3.9pt and maintenance of high profitability in the International Telecommunications core. FX gains ¥5.2B and interest/dividend income ¥2.3B in non-operating income lifted ordinary income, improving ordinary income margin to 34.1% (prior year 26.7%) up +7.4pt. [Cash Quality] Operating Cash Flow (OCF) ¥45.9B; OCF/Net Income ratio 1.09x nominally favorable, but OCF/EBITDA ratio only 0.73x (EBITDA ¥63.1B), indicating room to improve cash conversion. Accrual ratio -0.8% low, so cash backing for accounting profits is generally good, but Receivables DSO 348 days and Cash Conversion Cycle (CCC) 322 days show notable working capital lock-up. [Investment Efficiency] CAPEX ¥63.7B equals 6.8x depreciation ¥9.4B, and Construction in Progress ¥110.7B (21.7% of total assets) build-up suggests future asset commissioning and monetization. Free Cash Flow -¥25.0B large negative, reflecting front-loaded growth investment. [Financial Soundness] Equity Ratio 50.3% (prior year 49.9%) shows solid capitalization; Current Ratio 137.5%, Quick Ratio 136.6% showing generally adequate short-term liquidity. Debt/Equity 0.99x, Debt/EBITDA 1.70x within investment-grade leverage, Interest Coverage 21.0x indicating strong ability to service interest. However, Short-term Debt Ratio 43.2% and Cash/Short-term Debt 0.77x imply refinancing management is needed; accelerating collection of Receivables ¥162.0B is key to liquidity improvement.
OCF was ¥45.9B (vs prior year +551.3%) significantly improved. OCF subtotal before working capital changes was ¥53.4B; increases in trade receivables -¥48.4B and decreases in trade payables -¥4.0B absorbed cash, while increases in advances received +¥15.9B partially offset, resulting in working capital change outflow of -¥7.5B. After corporate tax payments ¥6.8B, OCF was ¥45.9B. The increase in trade receivables -¥48.4B reflects revenue growth and collection terms, lengthening DSO to 348 days. Investing Cash Flow was -¥70.9B, largely due to CAPEX -¥63.7B. CAPEX/Depreciation 6.8x indicates sizable investments and the build-up of Construction in Progress ¥110.7B suggests assets will come into service in the future. Financing Cash Flow was +¥20.4B, reflecting long-term borrowings +¥38.4B, net increase in short-term borrowings +¥3.8B, dividend payments -¥5.2B, and long-term borrowings repayments -¥19.4B. Free Cash Flow was -¥25.0B, so current dividends were not covered by internal cash and relied on borrowing. Cash and cash equivalents at period-end were ¥35.3B (period-beginning ¥39.2B) down -¥3.8B; including FX effects +¥0.8B, net cash decrease was -¥4.6B. If Construction in Progress is commissioned and receivables collection accelerates, there is significant room to improve OCF/EBITDA and turn Free Cash Flow positive.
Distinguishing recurring earnings from one-offs: extraordinary items were minor (extraordinary gains ¥0.2B, gain on sale of fixed assets ¥0.3B, extraordinary losses ¥0.0B, net roughly zero), so one-offs are limited. Non-operating income ¥9.9B (5.8% of revenue) is relatively large, comprised of FX gains ¥5.2B, interest/dividend income ¥2.3B, and other ¥0.2B. FX gains are dependent on exchange rate movements and may reverse next year depending on FX environment. Non-operating expenses ¥5.7B (interest expense ¥3.0B, FX losses ¥2.8B) left a net +¥4.2B (≈2.5% of revenue) contribution to ordinary income. Effective tax rate 12.6% is low, possibly due to geographic mix or tax incentives; sustainability depends on future tax environment. Accrual ratio -0.8% is low, and OCF/Net Income 1.09x indicates cash backing of accounting profits is generally sound, but OCF/EBITDA 0.73x shows somewhat weak cash conversion, influenced by receivables growth and collection timing. The gap between ordinary income and net income stems from tax burden and deduction of Net Income attributable to non-controlling interests ¥8.7B, within reasonable bounds. Comprehensive income was ¥50.1B (including FX translation adjustments -¥0.7B, retirement benefit adjustments +¥0.1B); the difference with Net Income ¥23.8B is mainly attributable to non-controlling interest portion of comprehensive income ¥10.8B and parent company portion of comprehensive income ¥39.3B combined. Overall, operating income is backed by core business growth and gross margin improvement; ordinary income benefited from FX gains and interest/dividend income, but FX effects are volatile and sustainability depends on operating growth.
FY2027 full-year guidance: Revenue ¥200.8B (vs prior year +18.1%), Operating Income ¥61.0B (vs prior year +13.6%), Ordinary Income ¥61.8B (vs prior year +6.7%), Net Income attributable to owners of the parent ¥42.0B, EPS forecast ¥321.04. Next fiscal year's revenue growth +18.1% exceeds this year's +11.4%, consistent with assumption that current large CAPEX ¥63.7B and Construction in Progress ¥110.7B come into operation and contribute to revenue and profits. Operating income growth +13.6% lags revenue growth, with operating margin expected to decline to 30.4% (-1.2pt), reflecting higher depreciation from newly commissioned assets and cost increases accompanying business expansion. Ordinary income growth +6.7% trails operating income growth, suggesting that non-operating gains such as FX benefits that aided this year may neutralize next year. Dividend forecast is ¥20, halving from ¥40 this year; payout ratio vs EPS forecast ¥321.04 is 6.2%, restrained. Next year is expected to realize revenue and profit growth on an operating basis as investment outcomes materialize, but margin pressure from FX neutralization and higher depreciation is incorporated, making the guidance realistic.
Year-end dividend this period is ¥40 (annual ¥40 including interim dividend ¥20), payout ratio 20.3%, a conservative level. Dividend ¥40 against EPS ¥322.41 aligns with a policy prioritizing reinvestment of retained earnings for growth. Free Cash Flow -¥25.0B means dividend payments ¥5.2B were not covered by internal cash and relied on borrowings. However, Debt/EBITDA 1.70x leaves leverage headroom, and a low payout in a short-term growth investment phase is consistent with policy. Total dividends ¥5.1B vs Net Income ¥23.8B and OCF ¥45.9B gives dividend coverage of 8.8x on an OCF basis, ample. Next year’s dividend forecast ¥20 (half of this year’s ¥40) implies a payout ratio of 6.2% vs EPS forecast ¥321.04, further prioritizing funds for growth. No share buyback disclosure was made; shareholder returns appear dividend-centric. If Construction in Progress is commissioned and OCF improves, dividend sustainability will strengthen.
Segment Concentration Risk: International Telecommunications accounts for 76.1% of revenue and over 91% of operating profit, relying on provision of circuits to the Philippines and remittance services. Regional economic conditions, regulatory changes, and customer concentration heighten earnings volatility risk. Delays in collection of trade receivables ¥162.0B (DSO 348 days) could also affect liquidity.
FX Sensitivity Risk: FX gains ¥5.2B lifted ordinary income this year, offset by FX losses ¥2.8B, net +¥2.4B. FX movement is non-recurring and depending on next year’s FX environment ordinary income could decrease. Sustained improvement in operating margins is key to reducing FX dependence.
Construction in Progress Commissioning Risk: Construction in Progress ¥110.7B (21.7% of total assets) delays or budget overruns could postpone monetization, increase depreciation and fix capital, pressuring profits and liquidity. Next year’s revenue and profit plans assume commissioning; progress management is critical. With Short-term Debt Ratio 43.2% and Cash/Short-term Debt 0.77x, refinancing management is important and liquidity may deteriorate if commissioning is delayed.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 31.6% | 8.1% (3.6%–16.0%) | +23.5pt |
| Net Profit Margin | 14.0% | 5.8% (1.2%–11.6%) | +8.1pt |
On profitability, operating margin 31.6% and net margin 14.0% both materially exceed industry medians, with high margins in International Telecommunications establishing a competitive position within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 11.4% | 10.1% (1.7%–20.2%) | +1.3pt |
Revenue growth 11.4% slightly exceeds the industry median 10.1%, indicating stable growth.
※Source: Company compilation
High-margin International Telecommunications drove consolidated results, achieving operating margin 31.6% well above industry median 8.1%. Improvement in gross margin to 58.1% and operating leverage produced operating income growth +21.7%, outpacing revenue growth +11.4%. Next year’s guidance assumes revenue +18.1% and operating income +13.6%, contingent on commissioning of this year’s large CAPEX ¥63.7B and Construction in Progress ¥110.7B, so progress management is important.
FX gains ¥5.2B and interest/dividend income ¥2.3B boosted ordinary income, but FX effects are volatile and may neutralize next year. Sustained operating growth is critical for earnings quality. Receivables ¥162.0B collection delays (DSO 348 days) and working capital lock-up (CCC 322 days) contributed to weak cash conversion OCF/EBITDA 0.73x; accelerating collections is an urgent task. Free Cash Flow -¥25.0B reflects front-loaded growth investment; commissioning of Construction in Progress and improved receivables collection could improve Free Cash Flow in subsequent periods.
This report is an AI-generated financial analysis document automatically produced by analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.