KONISHI CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

In addition to higher revenue and earnings, the substantial improvement in the operating margin—driven by correction of the price and product mix and cost controls—represents the most significant feature of the current period, indicating a qualitative improvement in the earnings structure. Revenue was ¥36.20B (+12.3% year on year), Operating Income was ¥3.26B (+52.5%), Ordinary Income was ¥3.48B (+54.2%), and Net Income attributable to owners of the parent was ¥2.37B (+53.1%). The operating margin improved to 9.0% from 6.6% in the previous year, a +2.4pt improvement. Recovery in the profitability of the core Bond segment and higher revenue and earnings in Chemicals drove results, while Construction shifted to lower earnings.

Factors Affecting Results

【Revenue】Revenue was ¥36.20B (+12.3% year on year). By segment, Bond generated ¥19.75B (54.6% composition ratio, +9.1%), Chemicals generated ¥10.82B (29.9%, +15.1%), and Construction generated ¥5.75B (15.9%, +15.1%). Chemicals and Construction exceeded Bond in growth rate and drove overall growth.

【Profit and Loss】Operating Income was ¥3.26B (+52.5%), and the operating margin was 9.0% (6.6% in the previous year, +2.4pt). The gross margin improved to 21.1% from 20.0%, a +1.1pt improvement, while the SG&A expense ratio declined slightly to 12.1% from 12.4%. The increase in actual SG&A expenses (+1.6%) was significantly below revenue growth (+12.3%), resulting in operating leverage. Ordinary Income of ¥3.48B was further boosted from Operating Income by net non-operating income of +¥0.23B, mainly consisting of ¥0.15B in dividend income. Extraordinary income of ¥0.05B and extraordinary losses of ¥0.01B resulted in a modest net gain of +¥0.04B, indicating a limited contribution from one-time factors. Against income before income taxes of ¥3.53B, income taxes amounted to ¥1.15B (effective tax rate of 32.6%), resulting in Net Income of ¥2.37B. The approximately -32% gap between Ordinary Income and Net Income was primarily attributable to the tax burden rather than extraordinary items. In conclusion, the company achieved higher revenue and earnings accompanied by improved profitability.

Segment Analysis

Bond generated revenue of ¥19.75B (54.6% composition ratio, +9.1%) and Operating Income of ¥2.46B (+69.5%). Its margin improved to 12.4% from 8.0%, a +4.4pt improvement, driving the recovery in profitability as the core business generating 75.5% of total-company Operating Income. Chemicals generated revenue of ¥10.82B (29.9% composition ratio, +15.1%) and Operating Income of ¥0.50B (+67.4%). Its margin improved to 4.6% from 3.2%, a +1.4pt improvement, accounting for 15.3% of total-company earnings. Construction posted higher revenue of ¥5.75B (15.9% composition ratio, +15.1%), but Operating Income declined to ¥0.28B (-24.9%), and its margin fell to 4.9% from 7.5%, a -2.6pt decline. The deterioration in project profitability exerted downward pressure on the overall company margin. Among the three segments, improved profitability in Bond and Chemicals offset the deterioration in Construction and contributed to higher earnings company-wide.

Key Financial Indicators

【Profitability】The operating margin was 9.0%, improving by +2.4pt from 6.6% in the previous year. The gross margin also rose to 21.1% from 20.0%, a +1.1pt improvement, while the net margin attributable to owners of the parent improved to 6.6% from 4.8%.【Cash Flow Quality】Accounts receivable were ¥34.83B (¥34.65B in the previous year, +0.5%), and inventories were ¥9.59B (¥9.11B in the previous year, +5.3%). Both increased at rates below revenue growth of +12.3%, indicating that working capital efficiency is instead improving.【Investment Efficiency】ROE was 2.6% (based on Q1, before annualization), with growth in Net Income and an increase in total asset turnover serving as upward drivers.【Financial Soundness】The Equity Ratio remained high at 63.8% (equivalent to 63.6% in the previous year). The current ratio was 197.3% (195.0% in the previous year), and interest-bearing debt was virtually nonexistent. Interest expense was ¥0.01B versus interest income of ¥0.01B, indicating a financial structure close to net debt-free.

Cash Flow Analysis

Cash and deposits increased by +¥0.63B (+2.9%) to ¥21.92B from ¥21.29B in the previous year. Retained earnings accumulated by +¥1.19B, and the retention of ¥2.37B in Net Income for the current period was the primary driver of the increase in cash. Meanwhile, the +¥2.43B (+7.4%) increase in accounts payable supported liquidity through the use of extended payment terms. On the other hand, the reversal of the provision for bonuses, amounting to -¥0.72B (-49.7%), and the -¥1.35B (-61.4%) decrease resulting from payments of accrued income taxes exerted downward pressure on cash. Investment securities increased by +¥2.59B (+23.9%), but most of the increase reflected the expansion of unrealized gains due to higher valuation differences; the scale of new investments involving cash outflows is considered limited. As a result, total assets increased by +¥4.45B (+3.2%), and net assets increased by +¥3.02B (+3.4%), confirming the steady expansion of the funding base centered on retained earnings from operating activities.

Quality of Earnings

Non-operating income was limited to ¥0.27B (0.7% of revenue), primarily consisting of ¥0.15B in dividend income, indicating that the improvement in earnings originated from the core business. Extraordinary income of ¥0.05B and extraordinary losses of ¥0.01B resulted in a modest net gain of +¥0.04B and made only a small contribution to Net Income, indicating a low level of dependence on one-time factors. Net Income was ¥2.37B against Ordinary Income of ¥3.48B, a gap of approximately -32%; this was attributable to the tax burden associated with the effective tax rate of 32.6% and not to special factors. Comprehensive income was ¥4.21B, exceeding Net Income of ¥2.37B. The difference was primarily attributable to +¥1.86B in valuation differences on securities, with changes in the market value of held shares boosting shareholders’ equity. The gap between Net Income and comprehensive income reflects market-linked valuation factors and should be distinguished from recurring earnings power.

Earnings Forecast and Guidance

Progress toward the full-year plan was 24.1% for revenue (¥36.20B/¥150.00B), 28.3% for Operating Income (¥3.26B/¥11.50B), 29.3% for Ordinary Income (¥3.48B/¥11.90B), and 29.0% for Net Income (¥2.37B/¥8.19B). Compared with the 25% benchmark for evenly distributed quarterly progress, revenue remained approximately in line, while all earnings indicators exceeded the benchmark, indicating that profitability improvements are ahead of plan. As of the current quarter, no revisions have been made to the earnings forecast or dividend forecast.

Shareholder Returns

The annual dividend forecast is ¥19.00, maintained at the same level as the previous fiscal year’s actual dividend. Based on the company’s forecast EPS of ¥131.21, the Payout Ratio is approximately 14.5% (¥19.00/¥131.21), remaining at a conservative level. Given ample cash and deposits of ¥21.92B, an Equity Ratio of 63.8%, and low interest-bearing debt, the current dividend is well supported.

Risk Factors

1. Segment concentration risk: Bond accounts for 54.6% of revenue and 75.5% of Operating Income, resulting in a high degree of earnings dependence on supply-demand and pricing trends in a single business.

2. Deterioration in Construction profitability: While revenue increased by +15.1%, Operating Income declined by -24.9%, and the segment margin fell to 4.9% from 7.5%, a -2.6pt decline. Changes in the project mix and cost structure are pushing down the profit margin.

3. Sensitivity to changes in the market value of investment securities: The balance of investment securities was ¥13.44B, accounting for 9.3% of total assets, and increased by +23.9% year on year. The primary cause of the increase was the expansion of valuation differences, and fluctuations in the equity market could become a factor affecting comprehensive income and shareholders’ equity.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The operating margin is slightly above the industry median, while the net margin is slightly below the median due to the impact of the tax burden and other factors.

Growth and Capital Efficiency

The revenue growth rate is significantly above the industry median and represents a high level of growth close to the upper end of the IQR.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The operating margin improved by +2.4pt to 9.0%, with operating leverage resulting from the higher gross margin and restrained growth in SG&A expenses serving as the primary drivers of improved profitability.

2. Margin improvements in Bond and Chemicals drove higher earnings company-wide, while Construction’s margin declined from 7.5% to 4.9%, widening the profitability gap among segments.

3. Full-year progress was 28.3% for Operating Income, 29.3% for Ordinary Income, and 29.0% for Net Income, all exceeding the 25% benchmark for evenly distributed quarterly progress. No revisions have been made to the earnings forecast or dividend forecast.

Theoretical Share 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 five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,427–¥1,513 at a ±1% change in the cost of equity, and ¥1,469–¥1,469 at a ±0.1 change in 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 (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not predict or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on 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 disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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