BML,INC. FY2027 Q1 Earnings Report

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Executive Summary

Revenue and profit both increased in the quarter, continuing the trend of profit improvement from the previous year. Revenue was ¥390.4B (+2.7% YoY), Operating Income was ¥30.0B (+7.0%), Ordinary Income was ¥31.1B (+7.2%), and Net Income attributable to owners of the parent was ¥19.8B (+6.3%). Operating leverage emerged as a result of improved gross profit margins and SG&A expense control, enabling profit growth to exceed revenue growth. Progress against the full-year plan was 25.2% for revenue and 28.6% for Operating Income, exceeding the simple one-quarter benchmark, indicating solid progress at this stage.

Factors Affecting Financial Performance

【Revenue】Revenue increased 2.7% YoY to ¥390.4B. The only reported segment is the “Testing Business,” and because the business has a single-segment structure, the factors behind revenue growth depend on overall demand trends at the top-line level. Trade receivables increased to ¥289.8B (+8.0% YoY), reflecting the increase in revenue.

【Profit and Loss】Operating Income was ¥30.0B (+7.0%), Ordinary Income was ¥31.1B (+7.2%), and Net Income attributable to owners of the parent was ¥19.8B (+6.3%). The gross profit margin improved by +0.6pt from the previous year to 33.5%. Although the SG&A ratio rose slightly to 25.8%, the increase in gross profit exceeded this rise, improving the Operating Income margin to 7.7% (+0.3pt YoY). Non-operating income of ¥1.6B, including ¥0.8B in dividend income, exceeded non-operating expenses of ¥0.5B and contributed to higher Ordinary Income. Extraordinary income and losses were limited to a ¥0.1B loss on disposal of fixed assets and were immaterial; current-period profit was therefore composed primarily of recurring factors arising from the core business. Revenue and profit both increased.

Segment Analysis

The only reported segment is the “Testing Business,” while disclosure of other businesses has been omitted because they are not material. Comparative data on changes between segments has not been disclosed.

Key Financial Indicators

【Profitability】The Operating Income margin was 7.7%, improving by +0.3pt from 7.4% in the same period of the previous year. The Net Income margin was 5.1%, representing a slight improvement from 5.1% in the same period of the previous year. The gross profit margin rose by +0.6pt from the previous year to 33.5%, supported by improvements in pricing and product mix.【Cash Flow Quality】Trade receivables increased 8.0% YoY to ¥289.8B, expanding at a faster pace than revenue and making trends in the collection cycle a factor that could affect cash flow quality.【Investment Efficiency】ROE remained low at 1.6%, primarily due to the low total asset turnover ratio. Under a capital-intensive structure with an Equity Ratio of 73.1%, improving asset efficiency will be key to enhancing capital efficiency.【Financial Soundness】The Equity Ratio was extremely high at 73.1% (+3.4pt YoY). While property, plant and equipment expanded to ¥724.2B (+14.0% YoY), cash and deposits declined from the previous year to ¥533.6B, indicating a shift in asset allocation from cash to fixed assets.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is unavailable, funding trends can be inferred from changes in the balance sheet. Cash and deposits stood at ¥533.6B, down from the previous year, while property, plant and equipment—primarily land and buildings—expanded, suggesting a shift in asset allocation in which funds on hand were deployed toward capital investment. Trade receivables increased to ¥289.8B, potentially absorbing part of the cash generated by operating activities as a result of an extended collection cycle accompanying revenue growth. Current liabilities declined from the previous year, indicating progress in reducing short-term debt. Overall, the allocation of funds to investment activities and the increase in working capital lowered the cash balance. Given cash on hand of ¥533.6B and the high Equity Ratio of 73.1%, the company is at a level where concerns regarding near-term liquidity are unlikely to arise.

Earnings Quality

Current-period profit was primarily generated by recurring business activities, and earnings quality has not been impaired because extraordinary income and losses consisted only of a very limited ¥0.1B loss on disposal of fixed assets. Of the ¥1.6B in non-operating income, dividend income accounted for ¥0.8B, representing stable income from investment assets held and not including a one-off factor. Comprehensive income was ¥19.6B, of which ¥18.8B was attributable to owners of the parent. Compared with Net Income of ¥19.8B, this was slightly lower due to factors including a -¥0.8B adjustment related to retirement benefits. The gap between the two figures was small, indicating that current-period profit was subject to limited distortion from accrual factors and can be assessed as reflecting underlying conditions.

Earnings Forecast and Guidance

Progress in Q1 against the full-year company plan—revenue of ¥1550.0B, Operating Income of ¥105.0B, and Ordinary Income of ¥110.0B—was 25.2% for revenue, 28.6% for Operating Income, and 28.3% for Ordinary Income. All exceeded the simple one-quarter benchmark of 25%, indicating generally steady progress as of the quarter-end. The full-year plan calls for revenue growth of +3.2% YoY, Operating Income growth of +0.8%, and Ordinary Income growth of -0.1%. Thus, while the full-year plan assumes profit growth will slow relative to revenue growth, Q1 results showed profit growth exceeding revenue growth. Neither the earnings forecast nor the dividend forecast was revised during the quarter.

Shareholder Returns

The full-year dividend forecast is ¥125.00 per share, implying a Payout Ratio of approximately 66.9% based on the full-year EPS forecast of ¥186.75. The dividend in the previous year was ¥60, indicating an increase to the planned full-year dividend of ¥125. Although the Payout Ratio is somewhat high compared with industry peers, the company’s strong financial soundness—cash and deposits of ¥533.6B and an Equity Ratio of 73.1%—provides coverage for the burden, and concerns from the perspective of its ability to pay are limited. There was no revision to the dividend forecast as of the quarter-end.

Risk Factors

1. Persistently low capital efficiency: ROE remained at only 1.6%, with low total asset turnover representing a structural constraint. Continued monitoring is necessary to assess how the asset allocation shift from cash to fixed assets affects capital efficiency.

2. Increase in trade receivables and collection cycle: Trade receivables expanded to ¥289.8B (+8.0% YoY), increasing at a faster pace than revenue growth. A longer collection cycle could become a factor contributing to volatility in Operating Cash Flow.

3. Investment discipline accompanying the accumulation of fixed assets: Property, plant and equipment expanded to ¥724.2B (+14.0% YoY), with continued investment in land and buildings. Assessment of utilization rates and earnings contributions will affect future capital efficiency.

Industry Benchmark (For Reference; Company Research)

Industry Benchmark (it_telecom)

Profitability and Returns

Profitability is slightly below the industry median.

Growth and Capital Efficiency

The revenue growth rate is significantly below the industry median, positioning the company as having a relatively moderate growth pace within the industry.

※Source: Company research

Key Points from the Earnings Results

1. Revenue and profit both increased in Q1, with operating leverage driven by gross profit margin improvement (+0.6pt) pushing up profit growth. Progress against the full-year plan also exceeded 25%, indicating steady progress as of the quarter-end.

2. ROE remained low at 1.6%. Under a substantial capital base reflected by an Equity Ratio of 73.1%, improvement in asset efficiency remains an observed challenge. The shift in asset allocation from cash to property, plant and equipment—land and buildings—is progressing, and the utilization of these investments will determine future capital efficiency.

3. Trade receivables are increasing at a faster pace than revenue growth. Monitoring trends in the collection cycle over the coming quarters will be useful in assessing its impact on cash flow quality.

Theoretical Stock Price (Reference Value)

This is a mechanically calculated reference range based solely on 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 stock price or a recommendation to undertake any specific investment action.

Sensitivity: ¥3,033–¥3,203 at ±1% for the cost of equity, and ¥3,104–¥3,124 at ±0.1 for ω.

Notes:

• Because 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, creating a timing gap with the full-year forecast.
• Because net assets include non-controlling interests, the theoretical value may be calculated at a somewhat higher level.

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value does not predict or guarantee the future stock price.)

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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 benchmarks are reference information compiled by the company based on publicly available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.

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