T.HASEGAWA CO.,LTD. FY2026 Q3 Earnings Report

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Executive Summary

Hasegawa Co., Ltd.’s cumulative results through Q3 reflected higher revenue and income, with temporary factors such as gains on the sale of investment securities contributing to double-digit growth in net income. Revenue was ¥59.35B (+8.8% YoY), operating income was ¥7.84B (+8.1%), ordinary income was ¥8.45B (+8.7%), and net income was ¥6.33B (+17.7%). While operating income growth was broadly in line with revenue growth, net income increased at a rate exceeding both revenue growth and operating income growth due to extraordinary income of ¥0.61B (gain on sale of investment securities) and the recognition of financial income.

Factors Affecting Results

【Revenue】Revenue was ¥59.35B, representing an 8.8% increase year on year. By segment, the United States posted the highest growth at ¥13.83B (+18.0%), followed by Asia at ¥14.81B (+9.0%) and Japan at ¥33.02B (+4.3%). Revenue composition was Japan 55.6%, Asia 25.0%, and the United States 23.3%; there was no significant change in the structure, with the domestic market accounting for more than half of revenue.

【Profit and Loss】Operating income was ¥7.84B (+8.1% YoY), slightly below the rate of revenue growth, and the operating margin declined 0.1pt to 13.2% from 13.3% in the previous year. The gross margin edged down to 42.1% from 42.3%, while the SG&A ratio improved to 28.9% from 29.0%, partially offsetting the decline. Asia generated the highest segment profit at ¥3.81B, with a profit margin of 25.7%, while the United States remained at ¥0.11B, with a profit margin of 0.8%; however, this represented a 130.4% improvement from ¥0.05B in the previous year. Ordinary income was ¥8.45B (+8.7%), boosted by ¥0.66B in non-operating income, including ¥0.35B in interest income and ¥0.17B in dividend income. Net income was ¥6.33B (+17.7%), exceeding ordinary income growth due to the recognition of ¥0.61B in extraordinary income from the sale of investment securities. This was a set of results characterized by higher revenue and income.

Segment Analysis

Segment operating income was ¥3.84B in Japan (+3.9%, profit margin 11.6%), ¥3.81B in Asia (-0.6%, profit margin 25.7%), and ¥0.11B in the United States (+130.4%, profit margin 0.8%). In Asia, profit was nearly flat despite a 9.0% increase in revenue, and the profit margin appears to have declined from the previous year, although it remained at the high level of 25.7%. In the United States, profit more than doubled in addition to revenue growth of +18.0%, indicating progress in improving profitability; however, the profit margin remained below 1%. In Japan, profit increased +3.9% against revenue growth of +4.3%, representing largely proportional growth, and the segment continued to perform steadily as a core contributor to company-wide profit.

Key Financial Indicators

【Profitability】The operating margin was 13.2%, down 0.1pt from 13.3% in the previous year. The decline in the gross margin to 42.1% from 42.3% was partially offset by an improvement in the SG&A ratio to 28.9% from 29.0%. The net profit margin improved 0.8pt to 10.7% from 9.9% in the previous year, growing faster than at the operating income level.【Cash Flow Quality】The difference between ordinary income of ¥8.45B and net income of ¥6.33B was primarily attributable to income taxes and other taxes of ¥2.69B (effective tax rate of approximately 29.8%). The ¥0.61B in extraordinary income should be evaluated separately as a temporary factor.【Investment Efficiency】ROE was 4.7%, representing a modest improvement from 4.4% under the same calculation for the same period of the previous year. As the pace of increases in accounts receivable and inventories slightly exceeded revenue growth, there remains room for improvement in terms of asset efficiency.【Financial Soundness】The equity ratio was 83.4%, virtually unchanged from 83.5% in the previous year, while the debt-to-equity ratio remained at a conservative 0.20x. The current ratio was 484.5%, and against interest expense of ¥0.02B, operating income was ¥7.84B, resulting in interest coverage of approximately 327x and indicating extremely ample capacity to absorb interest expenses.

Cash Flow Analysis

Because the statement of cash flows from operating activities has not been disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥35.05B, virtually unchanged from ¥34.85B in the same period of the previous year. Meanwhile, accounts receivable and notes receivable increased to ¥21.78B from ¥20.02B, and inventories increased to ¥10.05B from ¥8.75B (+14.9%), indicating that working capital has accumulated at a pace exceeding revenue growth. Accounts payable and notes payable also increased to ¥7.55B from ¥5.81B (+29.9%), absorbing part of the increase in purchases. In terms of fixed assets, property, plant and equipment of ¥43.32B and intangible assets of ¥27.82B, including goodwill of ¥10.71B, have expanded, suggesting that funds may have been deployed for new consolidations and capital investment. The parallel accumulation of working capital alongside earnings growth is an important point to monitor when evaluating future cash-generation capacity.

Quality of Earnings

Against ordinary income of ¥8.45B for the current period, net income was ¥6.33B, with income taxes and other taxes of ¥2.69B (effective tax rate of approximately 29.8%) being the primary reason for the difference. Ordinary income comprised operating income of ¥7.84B plus ¥0.66B in non-operating income, including ¥0.35B in interest income and ¥0.17B in dividend income, meaning that financial income accounted for a certain proportion. In addition, extraordinary income of ¥0.61B (gain on sale of investment securities) lifted profit before tax; this was a temporary factor and is not expected to recur regularly each period. Comprehensive income was ¥15.04B, substantially exceeding net income of ¥6.33B, primarily due to foreign currency translation adjustments of ¥7.89B, reflecting translation differences at overseas subsidiaries. The significant divergence between comprehensive income and net income primarily indicates the impact of foreign exchange movements rather than the underlying business performance for the period. Accordingly, analysis based on net income and ordinary income more accurately reflects the substance of earnings quality.

Earnings Forecast and Guidance

Progress against the full-year earnings forecast was 77.6% for revenue (¥59.35B/¥76.50B), 83.1% for operating income (¥7.84B/¥9.43B), 84.1% for ordinary income (¥8.45B/¥10.05B), and 86.5% for net income (¥6.33B/¥7.32B). Given that the cumulative period covers 9 months, all items exceeded the simple prorated benchmark of 75%, with profit items in particular tracking somewhat ahead of schedule. The highest progress rate for net income resulted from temporary factors such as the recognition of extraordinary income; it should be noted that similar factors may not continue to provide support throughout the full year. No revisions were made to the earnings forecast or dividend forecast during the quarter.

Shareholder Returns

An interim dividend of ¥50 has already been paid, and the full-year forecast is ¥100 (previous fiscal year actual: ¥37). Based on the annual dividend forecast of ¥100, the company’s forecast net income of ¥7.32B, and approximately 40.59 million shares outstanding after deducting treasury shares, total dividends are estimated at approximately ¥4.06B, implying a payout ratio of approximately 55.4%. The strong financial foundation, including an equity ratio of 83.4% and cash and deposits of ¥35.05B, supports the sustainability of this dividend level. No disclosure regarding share repurchases has been identified.

Risk Factors

1. Changes in working capital efficiency: Accounts receivable increased to ¥21.78B (+8.8%), while inventories increased to ¥10.05B (+14.9%); both accumulated at a pace comparable to or exceeding the revenue growth rate of +8.8%. Monitoring is necessary because the degree to which funds remain tied up will affect future cash-generation capacity.

2. Profitability of the United States segment: Revenue increased significantly to ¥13.83B (+18.0%), but the operating margin remained at 0.8%, below Japan’s 11.6% and Asia’s 25.7%. Revenue growth has not yet been sufficiently converted into profit.

3. Valuation risk associated with goodwill growth: Goodwill was ¥10.71B, an increase of +46.6% year on year, reaching 7.9% of net assets. This appears to reflect the impact of new consolidations, and depending on future earnings contributions, the balance may become subject to impairment testing.

Industry Benchmark (For Reference; Company Analysis)

Profitability and Returns

Both profitability indicators clearly exceeded the industry median, placing the company among the higher performers in the industry.

Growth and Capital Efficiency

The revenue growth rate also significantly exceeded the industry median, demonstrating strong growth within the industry.

※Source: Company compilation

Key Earnings Takeaways

1. A significant portion of the +17.7% growth in net income was attributable to temporary factors, including the ¥0.61B gain on the sale of investment securities. The difference from operating income growth of +8.1% cannot be explained solely by an improvement in recurring earnings power.

2. Asia maintained high profitability with an operating margin of 25.7% and continued to support company-wide profit, while the United States remained at a profit margin of 0.8% despite revenue growth. The profitability gap between regions therefore remains a structural characteristic.

3. Cumulative progress against the full-year forecast reached the high-80% range for profit items, confirming a trend toward front-loaded performance, while part of this progress was supported by temporary factors.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from 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 share price or a recommendation to take any specific investment action.

Sensitivity: ¥2,913–¥3,079 at ±1% for the cost of equity, and ¥2,983–¥3,001 at ±0.1 for ω.

Notes:

• Because cumulative net income progress against the full-year forecast is 86%, exceeding the standard benchmark of 75%, forecast EPS has been adjusted upward within a maximum range of +10% (because companies tracking ahead of schedule tend to exceed their forecasts; the adjustment may be excessive for businesses with strong seasonality).
• 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 have been used; there is a timing difference 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 / 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 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 discretion and responsibility, after consulting professionals as necessary.

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