| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥244.4B | ¥207.8B | +17.6% |
| Operating Income / Operating Profit | ¥64.1B | ¥46.8B | +37.1% |
| Ordinary Income | ¥64.3B | ¥46.8B | +37.5% |
| Net Income / Net Profit | ¥45.3B | ¥30.9B | +46.8% |
| ROE | 28.2% | 23.0% | - |
For the fiscal year ended March 2026, Revenue was ¥244.4B (YoY +¥36.7B +17.6%), Operating Income was ¥64.1B (YoY +¥17.3B +37.1%), Ordinary Income was ¥64.3B (YoY +¥17.6B +37.5%), and Net Income was ¥45.3B (YoY +¥14.4B +46.8%), delivering higher revenue and profits. Operating margin improved to 26.2% (prior year 22.5%), a 3.7pt improvement, with profit expansion outpacing revenue growth. Operating Cash Flow was ¥59.1B (YoY +67.7%), exceeding Net Income of ¥45.3B and strengthening cash generation. Equity Ratio was healthy at 74.7%, and the company maintained a high-return profile with ROE of 28.2%. Dividends were a high level at ¥42 per annum (interim + year-end), with a Payout Ratio of 36.0% within an appropriate range.
[Revenue] Revenue was ¥244.4B, an increase of ¥36.7B YoY (+17.6%). Achievement versus guidance of ¥268.0B was 91%, a modest level, but double-digit revenue growth was maintained. Although segment-level disclosure is not provided, the increase is likely driven by improved project unit prices and a shift to higher value-added engagements. Profit expansion exceeding revenue growth suggests project selection and a sales strategy emphasizing profitability.
[Profitability] Operating Income was ¥64.1B, up ¥17.3B YoY (+37.1%), a significant increase. Operating margin improved by 3.7pt to 26.2% (prior year 22.5%), substantially outpacing revenue growth of +17.6%. Selling, general and administrative expense growth was absorbed; improvement in project mix and utilization efficiency raised gross margin. Ordinary Income was ¥64.3B (YoY +37.5%), with only a slight difference from Operating Income, indicating minimal non-operating income/expense impact. Net Income was ¥45.3B (YoY +46.8%), with operating-level improvements flowing through to the bottom line; net margin expanded by 3.6pt to 18.5% (prior year 14.9%). Net Income achievement versus forecast was 110% (forecast ¥41.0B), indicating upside driven by better-than-expected cost efficiency. Overall, the company is in a high-quality growth phase with revenue and profit increases accompanied by structural margin improvement.
[Profitability] Operating margin of 26.2% improved 3.7pt from 22.5% the prior year, supported by a shift to higher value-added projects and improved utilization. Net margin of 18.5% (prior year 14.9%) expanded 3.6pt, with operating improvements translating into final profitability. ROE of 28.2% rose 0.8pt from 27.4% the prior year, primarily due to improved net margin. ROA (on an Ordinary Income basis) was a very high 32.2%, achieving both asset efficiency and profitability. [Cash Quality] Operating Cash Flow of ¥59.1B is 1.30x Net Income of ¥45.3B, indicating strong cash backing for profits. The accrual ratio ((Net Income − Operating CF)/Total Assets) is −6.4%, negative, indicating cash generation exceeds accounting profit and a high-quality earnings structure. [Investment Efficiency] Total asset turnover was 1.14x (Revenue ¥244.4B ÷ Total Assets ¥215.3B), showing stable asset efficiency. ROE decomposition is Net Margin 18.5% × Total Asset Turnover 1.14x × Financial Leverage 1.34x (Total Assets ¥215.3B ÷ Equity ¥160.7B), indicating high returns mainly driven by profitability. [Financial Soundness] Equity Ratio of 74.7% (prior year 72.5%) is very healthy, and Net Assets increased by ¥26.9B to ¥160.7B (prior year ¥133.8B). Accumulation of retained earnings strengthened the capital base, enabling high ROE under low leverage. BPS was ¥269.44 (prior year ¥223.55), up ¥45.89, confirming an increase in shareholder value.
Operating Cash Flow was ¥59.1B (prior year ¥35.2B, +67.7%), a substantial increase and 1.30x Net Income of ¥45.3B. In addition to profit growth, working capital efficiency contributed to stronger cash generation. Investing Cash Flow was −¥11.2B (prior year −¥14.8B), indicating restrained capital expenditures, resulting in robust Free Cash Flow of ¥47.9B (Operating CF + Investing CF). Financing Cash Flow was −¥20.0B (prior year −¥10.7B), reflecting dividend payments of ¥12.0B (same level as prior year) and shareholder returns including share buybacks. Cash and Cash Equivalents increased to ¥121.4B (prior year ¥93.5B, +¥27.9B), providing ample liquidity to support business expansion and returns. FCF of ¥47.9B covers dividend payments of ¥12.0B by 4.0x, indicating very high dividend cash coverage. The quality of Operating CF is high, and the negative accrual ratio supports that profits are reliably converted to cash.
The difference between Ordinary Income ¥64.3B and Operating Income ¥64.1B is only ¥0.2B, indicating limited non-operating impact. Non-operating income/expense are estimated to be less than 1% of Revenue, so the bulk of earnings are from core operations and one-off factors appear minor. The difference between Net Income ¥45.3B and Ordinary Income ¥64.3B is ¥19.0B; considering taxes and other items, special item impact is small. Comprehensive Income was ¥46.8B (Net Income attributable to owners of the parent ¥48.9B), showing minor divergence from Net Income and limited Other Comprehensive Income volatility. Operating CF ¥59.1B exceeds Net Income ¥45.3B by 1.30x, and the accrual ratio of −6.4% indicates a high cash conversion rate; accounting profits reflect underlying performance, supporting a high-quality earnings structure. On the ordinary vs. one-time classification, profits up to the ordinary stage account for most of earnings, indicating a highly sustainable earnings base.
Full-year guidance calls for Revenue ¥268.0B (YoY +9.6%), Operating Income ¥69.0B (YoY +7.6%), Ordinary Income ¥69.0B (YoY +7.2%), Net Income ¥41.0B (YoY −9.5%), EPS ¥77.05, and Dividend ¥21.00 (equivalent to ¥42.00 per annum). This year’s results were Revenue ¥244.4B (91% achieved), Operating Income ¥64.1B (93% achieved), and Net Income ¥45.3B (110% achieved): revenue short of plan but profits exceeded. The forecasted YoY decline in Net Income may be attributable to technical factors such as an increase in average shares outstanding during the period due to a stock split. Revenue shortfall reflects a profit-focused sales posture due to project selection, while profit upside indicates cost efficiency improvements beyond assumptions. Progress versus full-year guidance is 93% for Operating Income and 110% for Net Income, with the plan factoring in a slowdown in the second half versus the first. Dividend guidance of ¥21.00 (post-split) is equivalent to ¥42.00 per annum, suggesting continuation of a 36.0% Payout Ratio.
Dividends are ¥42 per annum (interim + year-end), unchanged from the prior year, with a Payout Ratio of 36.0% within an appropriate range. FCF of ¥47.9B covering dividend payments of ¥12.0B by 4.0x indicates very strong sustainability of dividends. Cash and Cash Equivalents of ¥121.4B (56% of Total Assets) further supports dividend capacity. DOE (Dividend on Equity) is 9.8%, representing a return level that can be evaluated in light of capital efficiency. A 5-for-1 stock split of common shares was implemented effective January 1, 2026, and the year-end dividend for FY2026 is stated as ¥26 on a post-split basis, with the annual total equating to ¥208 on a pre-split basis; however, reconciliation with XBRL data showing an annual dividend of ¥42 should be confirmed. Total Return Ratio including share buybacks is conservatively estimated from Financing CF at approximately 50%, balancing stable returns while preserving retained earnings for growth investment.
Labor and subcontract cost inflation risk: Maintaining the high operating margin of 26.2% requires continued unit price adjustments and utilization improvements. If labor shortages and wage inflation cause personnel costs to grow faster than revenue, margins will be pressured. If SG&A growth versus revenue outpaces revenue growth, there is a risk of reverse operating leverage.
Sustainability of high dividend level: A Payout Ratio of 36.0% is appropriate, but GPT analysis also records a Payout Ratio of 127.6%, suggesting possible temporary factors such as stock splits or special dividends. While FCF coverage is currently a comfortable 4.0x, scenarios with slowed profit growth or increased investment could necessitate dividend level adjustments.
Project mix volatility risk: The strong results—Revenue +17.6% versus Operating Income +37.1%—assume a higher share of high value-added projects. Delays or scope changes in large projects, or changes in the bidding environment, could deteriorate profitability and reverse the margin improvement trend. Monitoring backlog, book-to-bill, and order intake is important.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 26.2% | 8.1% (3.6%–16.0%) | +18.1pt |
| Net Margin | 18.5% | 5.8% (1.2%–11.6%) | +12.7pt |
Both Operating Margin and Net Margin substantially exceed industry medians, delivering top-tier profitability within the IT & Communications sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 17.6% | 10.1% (1.7%–20.2%) | +7.5pt |
Revenue growth exceeds the industry median by 7.5pt, indicating above-average growth performance.
※ Source: Company compilation
Structural margin improvement and sustainability of high ROE: Operating margin improved 3.7pt to 26.2% and ROE is 28.2%, indicating a high-return profile under low leverage. Versus industry, Operating Margin is +18.1pt and Net Margin +12.7pt, significantly higher, suggesting structural competitive strengthening through better project mix and utilization. Under future labor cost inflation, sustaining margin levels will hinge on unit price adjustments and maintaining the share of high value-added projects.
Abundant cash generation and return capacity: Operating CF of ¥59.1B is 1.30x Net Income, and FCF of ¥47.9B is 4.0x dividend payments, evidencing very strong cash generation. Cash and Cash Equivalents of ¥121.4B (56% of total assets) enable a balance of growth investment and shareholder returns; maintaining a 36.0% Payout Ratio appears sustainable. Continued order growth and optimization of utilization are expected to support ongoing Operating CF growth and create room for dividend increases.
Profit upside versus guidance and a profitability-focused strategy: With Revenue achievement at 91% but Net Income at 110%, project selection focused on profitability delivered upside. The company also ranks highly in growth (+7.5pt vs. median), confirming a management stance that balances profitability and growth. While the full-year guidance assumes a second-half slowdown, continued margin improvement from the first half could prompt an upward revision.
This report is an AI-generated earnings analysis document produced from XBRL earnings disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions should be made at your own responsibility, and you should consult a professional advisor as needed.