Nano Holdings (4571) FY2026 Q3 Earnings Report

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Executive Summary

While revenue expanded by 57.5% year on year, the burden of SG&A expenses remained heavy and the operating loss widened from the previous year, resulting in continued revenue growth accompanied by losses. Revenue was ¥1.3B (¥0.8B in the previous year, +57.5%), operating income was ¥-6.0B (¥-4.8B in the previous year), ordinary income was ¥-5.9B (¥-4.5B in the previous year), and net income was ¥-6.5B (¥-6.0B in the previous year). The primary cause of the revenue increase appears to have been business progress against a small revenue base. Although the gross profit margin improved to 89.9% (66.3% in the previous year), SG&A expenses of ¥7.2B (+33.1% year on year) substantially exceeded revenue, leading to an expansion of the operating loss.

Factors Affecting Performance

【Revenue】Revenue was ¥1.3B, maintaining high growth of +57.5% year on year. The Company operates as a single segment comprising the research and development, manufacturing, and sale of pharmaceuticals and other products, and does not disclose a breakdown by segment. Progress against the full-year forecast of ¥1.6B (+44.0% year on year) was 83.3%, exceeding the standard progress benchmark of approximately 75%.

【Profit and Loss】Cost of sales remained at ¥0.1B, and the gross profit margin improved substantially to 89.9% from 66.3% in the previous year. However, SG&A expenses reached ¥7.2B (¥5.4B in the previous year, +33.1%), with expenses increasing at a pace exceeding revenue growth; consequently, the operating loss widened to ¥6.0B (¥4.8B in the previous year). The ordinary loss was ¥5.9B, with non-operating income (interest income of ¥0.2B and foreign exchange gains of ¥0.2B) partially mitigating the loss. Following the recognition of ¥0.5B in extraordinary losses (including impairment losses), the loss before tax was ¥6.5B and the net loss was ¥6.5B (¥6.0B in the previous year). Despite higher revenue, fixed-cost absorption failed to keep pace, resulting in revenue growth accompanied by lower earnings (an expanded loss).

Segment Analysis

The Company operates as a single segment comprising the research and development, manufacturing, and sale of pharmaceuticals and other products, as well as related operations, and does not disclose performance by segment.

Key Financial Indicators

【Profitability】The operating margin was -463.1% and the net profit margin was -497.7%, both representing substantial losses. Meanwhile, the gross profit margin improved to 89.9% from 66.3% in the previous year, indicating that the burden of SG&A expenses, rather than the cost structure, was the primary cause of the deterioration in profitability.【Cash Flow Quality】Non-operating income (interest income of ¥0.2B and foreign exchange gains of ¥0.2B) exceeded non-operating expenses (interest expenses of ¥0.1B), partially mitigating the ordinary loss; however, this does not indicate the earnings power of the core business.【Investment Efficiency】ROE (annualized) was -32.3%, while the total asset turnover ratio also remained low. The still-small revenue scale relative to total assets is weighing on capital efficiency.【Financial Soundness】The equity ratio declined to 44.9% from 68.2% in the previous year. Although cash and deposits of ¥40.7B provide ample liquidity, retained earnings expanded to ¥-36.3B, with continued losses eroding shareholders’ equity.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is unavailable, an analysis of fund movements based on changes in the balance sheet indicates that cash and deposits increased by ¥23.6B, from ¥17.1B in the previous year to ¥40.7B. The Company appears to have raised funds primarily through the issuance of ¥23.0B in bonds. Non-current liabilities rose sharply from ¥0.5B in the previous year to ¥23.5B, indicating that long-term funding through bond issuance significantly reinforced liquidity. On the other hand, given the continued recording of net losses, cash generation from business operations remains limited, and the increase in cash and deposits is believed to have been driven largely by financing activities. Current assets of ¥54.8B substantially exceeded current liabilities of ¥9.2B, indicating limited concern regarding short-term liquidity.

Quality of Earnings

The current-period loss was centered on the ¥6.0B operating loss from the core business, while, as a temporary factor, extraordinary losses of ¥0.5B (including impairment losses) increased the loss before tax. Non-operating income consisted of interest income of ¥0.2B and foreign exchange gains of ¥0.2B, which exceeded interest expenses of ¥0.1B and slightly mitigated the ordinary loss. However, neither item indicates an improvement in the profitability of the core business, and both need to be evaluated separately from recurring operating earnings. Comprehensive income was ¥-5.4B, approximately in line with net loss attributable to owners of the parent. Although a valuation difference on securities of +¥0.9B provided some support, there was no significant divergence from net income.

Earnings Forecasts and Guidance

The full-year Company forecasts are revenue of ¥1.6B (+44.0% year on year), an operating loss of ¥10.6B, an ordinary loss of ¥10.0B, and forecast EPS of -¥14.72. No revisions were made to the earnings forecasts or dividend forecasts during the current quarter. The Q3 cumulative revenue progress rate was 83.3%, exceeding the pace implied by the full-year forecast, while the progress rate for the operating loss was limited to 56.8% (¥6.0B/¥10.6B), implying an operating loss of approximately ¥4.6B in Q4 alone. The gap between revenue progress and earnings progress means that the timing of expense recognition toward the fiscal year-end will determine full-year results.

Shareholder Returns

Both the Q2 dividend and the full-year dividend forecast were ¥0 per share, and the Company continues to pay no dividends. As net losses continue to be recorded, the payout ratio is effectively 0%, consistent with a policy of prioritizing cash and deposits of ¥40.7B for research and development and business operations. With cumulative losses (retained earnings of ¥-36.3B) continuing to expand, an improvement in core business profitability is a prerequisite for resuming dividends.

Risk Factors

1. Dependence on a Single Business: The Company operates as a single segment focused on the research and development, manufacturing, and sale of pharmaceuticals and other products, making development progress and sales trends directly linked to company-wide performance. SG&A expenses of ¥7.2B substantially exceeded revenue of ¥1.3B, meaning that development delays or failure to achieve sales targets would directly lead to prolonged losses.

2. Risk of Deteriorating Profitability and Financial Soundness: With an operating margin of -463.1% and EBIT in the red, the Company is unable to cover interest expenses through core business profits. Retained earnings have expanded to ¥-36.3B, and continued net losses will reduce shareholders’ equity’s capacity to absorb losses.

3. Risk in the Financing Structure: Bonds of ¥23.0B account for the majority of non-current liabilities of ¥23.5B. Although cash and deposits of ¥40.7B support repayment capacity, delays in monetization could affect future refinancing and financing terms.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (pharma)

Profitability and Returns

The deficit substantially exceeds the industry median, and the depth of the losses is particularly pronounced even among pharmaceutical development companies that are loss-making at an early stage.

Growth and Capital Efficiency

The revenue growth rate substantially exceeds the industry median, indicating a relatively high pace of revenue growth among biotechnology and pharmaceutical companies that are loss-making at an early stage.

※Source: Compiled by the Company

Key Points in the Earnings Results

1. Revenue expanded by +57.5% year on year, and the gross profit margin also improved to 89.9% (66.3% in the previous year), indicating enhanced gross profit generation capacity accompanying business expansion. However, the pace of SG&A expense growth (+33.1%) did not fall sufficiently below revenue growth, and the operating loss widened from the previous year.

2. Progress against the full-year forecast was 83.3% for revenue, compared with 56.8% for the operating loss and 61.0% for the net loss, indicating a plan in which losses are concentrated in Q4. Variations in quarterly expense and revenue recognition will determine future results.

3. Cash and deposits of ¥40.7B and a current ratio of 593.1% indicate short-term financial stability, while retained earnings have expanded to ¥-36.3B. The increase in non-current liabilities, including ¥23.0B in bonds, contributed to reinforcing liquidity; however, the pace of earnings improvement will determine the Company’s future financial sustainability.

Theoretical Share Price (Reference Value)

Sensitivity: ¥6–¥6 at cost of equity ±1%; ¥5–¥6 at ω±0.1.

Notes:

• As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end are used (there is a time lag relative to the full-year forecast).
• Because 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: 2026-08 / This is a mechanically calculated value based solely on publicly disclosed data; it 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. 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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