Quick View
| Metric | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | ¥49.93B | ¥47.28B | +5.6% |
| Operating Income | ¥3.78B | ¥2.11B | +79.0% |
| Ordinary Income | ¥4.78B | ¥3.07B | +55.6% |
| Net Income | ¥2.90B | ¥1.89B | +53.5% |
| ROE (Annualized) | 7.4% | 4.8% | - |
Executive Summary
In addition to higher revenue, profitability improved in both the Direct Sales and Food Groups, resulting in a substantial increase in operating income that significantly outpaced revenue growth. Revenue was ¥49.93B (+5.6% YoY), operating income was ¥3.78B (+79.0%), ordinary income was ¥4.78B (+55.6%), and quarterly net income attributable to owners of the parent was ¥2.90B (+53.5%). The operating margin improved to 7.6% from 4.5% in the same period last year, with simultaneous gross profit improvement and SG&A expense control serving as the primary drivers of earnings growth.
Factors Affecting Performance
【Revenue】Revenue was ¥49.93B, up +5.6% YoY. The Food Group secured double-digit revenue growth centered on the Mister Donut Business, reaching ¥17.94B (+11.3%), while the Direct Sales Group remained at ¥28.35B (+2.4%). Within the Direct Sales Group, the Clean Service Business was nearly flat and the Care Service Business recorded a decline in revenue, indicating uneven growth among the businesses.
【Profit and Loss】Operating income increased substantially to ¥3.78B, up +79.0% YoY. The gross margin improved to 45.0% (44.2% in the same period last year), while SG&A expenses decreased YoY to ¥18.67B, resulting in a decline in the SG&A ratio to 37.4% (39.7% in the same period last year). Ordinary income reached ¥4.78B, supported by non-operating income, including dividend income of ¥0.21B and equity in earnings of affiliates of ¥0.30B; however, net income was limited to ¥2.90B due to an effective tax rate of 39.3%. The company achieved both revenue and profit growth, with profit growth exceeding revenue growth primarily due to improvements in the cost structure.
Segment Analysis
The Food Group accounted for approximately 61% of total segment profit, with segment profit of ¥3.47B and the highest profit margin at 19.4%. The Direct Sales Group reported profit of ¥1.98B (+146.8% YoY) and a profit margin of 7.0%, a significant improvement from 2.9% in the same period last year. Other Businesses were broadly flat, with profit of ¥0.21B and a profit margin of 5.6%. While the Food Group remains the main pillar of earnings, the improvement in the Direct Sales Group’s profit margin was the key change driving profit growth this quarter.
Key Financial Metrics
【Profitability】The operating margin of 7.6% and net profit margin of 5.8% both improved from the same period last year (4.5% and 4.0%, respectively). 【Cash Flow Quality】Comprehensive income was ¥1.53B, below net income of ¥2.90B, primarily due to a ¥1.07B decrease in valuation difference on available-for-sale securities. 【Investment Efficiency】Annualized ROE was 7.4%, comprising a net profit margin of 5.8%, total asset turnover of 0.97x, and financial leverage of 1.31x, reflecting a low-leverage capital structure. 【Financial Soundness】The equity ratio was 76.1%, interest-bearing debt was negligible, and current assets of ¥62.67B exceeded current liabilities of ¥39.71B, indicating ample liquidity.
Cash Flow Analysis
Although individual disclosures for the cash flow statement are not available, funding trends can be confirmed from changes in the balance sheet. Cash and deposits were ¥19.50B, remaining approximately at the same level as ¥19.50B in the same period last year. Meanwhile, investment securities declined to ¥65.93B from ¥67.73B in the previous year, suggesting changes in the asset composition involving the sale of securities and valuation movements. Interest-bearing debt remains negligible, and the company continues to maintain a structure that does not rely on borrowing for funding.
Earnings Quality
Against pretax income of ¥4.79B, extraordinary items consisted of extraordinary income of ¥0.01B and extraordinary losses of ¥0.01B, which were almost entirely offset on a net basis, indicating limited impact from temporary factors. Non-operating income of ¥1.04B included equity in earnings of affiliates of ¥0.30B and dividend income of ¥0.21B, representing 2.1% of revenue and indicating a limited degree of reliance. Goodwill was small at ¥0.28B, and amortization was also negligible; therefore, earnings distortion attributable to goodwill is limited. The effective tax rate was high at 39.3%, suppressing the conversion rate from pretax income to net income, which is an important consideration when assessing earnings quality.
Earnings Forecast and Guidance
The full-year forecast calls for revenue of ¥202.90B (+4.3% YoY), operating income of ¥10.10B (+15.5%), and ordinary income of ¥14.00B (+8.0%). Q1 progress rates were 24.6% for revenue, 37.4% for operating income, 34.1% for ordinary income, and 27.3% for net income, with operating income progress significantly exceeding the standard 25%. The operating margin assumed in the full-year plan is approximately 5.0%, and the gap from the Q1 actual result of 7.6% suggests that expense increases and seasonality through the full year have been incorporated into the plan. The earnings forecast and dividend forecast were revised on the same date.
Shareholder Returns
The full-year forecast dividend per share is ¥135, revised from the previous year’s actual ¥50 (the actual amount combining interim and year-end dividends, etc.), and the dividend forecast has been revised. Based on the full-year forecast EPS of ¥225.15, the payout ratio is approximately 60.0%, calculated solely with respect to dividend payments. Supported by a financial base consisting of an equity ratio of 76.1% and negligible interest-bearing debt, the company is considered to have secured the resources necessary for dividend payments.
Risk Factors
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Concentration of profit in core businesses: The Food Group accounts for approximately 61% of segment profit, creating a structure in which demand trends for the Mister Donut Business and fluctuations in raw material and labor costs have a significant impact on consolidated earnings.
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Sustainability of profit improvement in the Direct Sales Group: While revenue increased only +2.4% YoY, segment profit grew substantially by +146.8%. If the effects of cost control are temporary, the profit margin may decline again due to wage increases and higher promotional expenses.
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Valuation fluctuations in securities: Investment securities totaled ¥65.93B, accounting for 32.0% of total assets, while the valuation difference on available-for-sale securities declined YoY. Fluctuations in the stock market affect comprehensive income and net assets.
Industry Benchmark (For Reference; Compiled by the Company)
Industry Benchmark (it_telecom)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.6% | 8.0% (2.4%–15.8%) | −0.5pt |
| Net Profit Margin | 5.8% | 5.9% (1.6%–10.7%) | −0.1pt |
The company’s profitability is slightly below the industry median but remains within the IQR.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.6% | 9.3% (0.4%–16.9%) | −3.7pt |
The revenue growth rate is below the industry median but falls within the IQR.
※Source: Compiled by the company
Key Points from the Earnings Results
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The operating margin improved YoY to 7.6%, achieving profit growth that exceeded revenue growth. The simultaneous progress in gross profit improvement and SG&A expense control is noteworthy.
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Q1 progress against the full-year operating income plan was 37.4%, above the standard level; however, the operating margin assumed in the full-year plan is approximately 5.0%. The extent to which the quarter’s high profitability can be maintained throughout the full year will be a key area to monitor.
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From a financial perspective, the equity ratio was 76.1% and interest-bearing debt was negligible, indicating the continued maintenance of a conservative capital structure.
Theoretical Share Price (Reference Value)
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥3,084 |
| base | ¥3,129 |
| bull | ¥3,183 |
| Calculation Assumption | Value |
|---|---|
| Book Value Per Share (BPS) | ¥3,327 |
| Adjusted Forecast EPS | ¥236.1 |
| Cost of Equity r | 9.27% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 0.50%) |
| Persistence Coefficient of Residual Income ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 60.0% |
| Forecast EPS Confidence Adjustment | ×1.049 (based on the industry’s historical guidance achievement rate) |
| Implied PBR / PER | 0.94x / 13.3x |
Sensitivity: ¥3,044–¥3,217 at ±1% for the cost of equity, and ¥3,122–¥3,133 at ±0.1 for ω.
Notes:
- As forecast ROE is below the cost of equity, the theoretical value is below book value per share.
- Net assets as of the end of the quarter are used (there is a time lag relative to 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 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.)
This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmark is 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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