| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥296.7B | ¥283.6B | +4.6% |
| Operating Income / Operating Profit | ¥121.6B | ¥105.1B | +15.6% |
| Ordinary Income | ¥124.5B | ¥109.2B | +14.0% |
| Net Income / Net Profit | ¥91.1B | ¥81.1B | +12.3% |
| ROE | 16.7% | 17.0% | - |
For the fiscal year ended March 2026, Revenue was ¥296.7B (YoY +¥13.2B +4.6%), Operating Income was ¥121.6B (YoY +¥16.5B +15.6%), Ordinary Income was ¥124.5B (YoY +¥15.3B +14.0%), and Net Income was ¥91.1B (YoY +¥10.0B +12.3%), achieving both revenue and profit growth. Operating margin improved to 41.0% (up +3.9pt from 37.1% a year earlier), and Net margin improved to 30.7% (up +2.1pt from 28.6%), indicating a significant improvement in profitability. Gross margin was 69.5% (up +3.9pt from 65.6%), reflecting the impact of a higher value-added product mix. The Chemical business generated 90.7% of Revenue and virtually all Operating Income, while the Equipment business recorded declines in Revenue (-34.7%) and profit (-44.2%). ROE remained high at 16.7%, Total Assets increased to ¥626.8B (YoY +¥78.4B +14.3%) driven by large investments in tangible fixed assets. Cash and deposits stood at ¥242.3B and interest-bearing debt was ¥3.3B, maintaining an effectively debt-free financial position.
Revenue: Revenue of ¥296.7B (YoY +4.6%) was driven by growth in the Chemical business. By segment, Chemical recorded ¥269.3B (YoY +11.5%), achieving double-digit growth and representing 90.7% of Revenue. Expansion in demand for surface treatment chemicals and related materials and a shift toward higher value-added products contributed. By region, China was the largest market at ¥119.1B (YoY +10.3%), Taiwan ¥46.8B (YoY +28.4%), Korea ¥23.8B (YoY +2.5%), and Other Asia ¥29.7B (YoY +7.7%), with overseas markets performing solidly. Domestic sales declined to ¥64.6B (YoY -15.1%). The Equipment business decreased sharply to ¥27.5B (YoY -34.7%), mainly due to a fall in surface treatment equipment to ¥23.5B (YoY -37.8%). Plasma treatment equipment was ¥3.1B (YoY +8.0%), a marginal increase.
Profitability: Cost of sales declined to ¥90.6B (YoY -7.1%), resulting in Gross Profit of ¥206.1B (YoY +10.8%). Gross margin improved to 69.5% (up +3.9pt from 65.6%) due to the higher value-added product mix and cost efficiency. Selling, General & Administrative expenses (SG&A) were ¥84.5B (YoY +4.5%), increasing in line with revenue growth, but the SG&A ratio was controlled at 28.5% (same as prior year). Compensation and allowances were ¥25.8B (YoY +5.0%), bonuses ¥7.6B (YoY +4.3%), and depreciation (SG&A) ¥7.4B (YoY +22.4%), reflecting rises in personnel and depreciation expenses. Operating Income improved to ¥121.6B (YoY +15.6%), with Operating margin at 41.0% (up +3.9pt YoY). By segment, Chemical Operating Income was ¥127.2B (YoY +19.1%) with a margin of 47.2%, maintaining high profitability; Equipment Operating Income was ¥4.1B (YoY -44.2%) with a 15.0% margin, underperforming. Non-operating income totaled ¥3.5B (interest income ¥1.3B, equity-method investment income ¥0.4B, foreign exchange gains ¥0.4B, etc.), and non-operating expenses were minor at ¥0.6B, resulting in Ordinary Income of ¥124.5B (YoY +14.0%). Extraordinary gains totaled ¥1.7B (gain on sale of investment securities ¥0.5B, gain on sale of fixed assets ¥0.2B, etc.), and extraordinary losses totaled ¥0.5B (impairment losses ¥0.1B, loss on retirement of fixed assets ¥0.1B, etc.), indicating limited one-off items. Profit before tax was ¥125.7B (YoY +14.7%); income taxes amounted to ¥34.9B (effective tax rate 27.8%), leading to Net Income of ¥91.1B (YoY +12.3%). In conclusion, the company achieved revenue and profit growth.
The Chemical Business recorded Revenue of ¥269.3B (YoY +11.5%), Operating Income of ¥127.2B (YoY +19.1%), and an Operating margin of 47.2% (up +2.9pt YoY), maintaining high profitability. Growth in demand for surface treatment chemicals and related materials and improvements in product mix drove results, positioning the segment as the core business generating the majority of corporate profits. Regionally, strong growth was seen across Asian markets including China, Taiwan, and Korea, with steady demand from electronic components and semiconductor sectors. The Equipment Business reported Revenue of ¥27.5B (YoY -34.7%), Operating Income of ¥4.1B (YoY -44.2%), and an Operating margin of 15.0% (down -2.6pt YoY), reflecting declines. Reduced orders for surface treatment equipment were the primary cause; plasma treatment equipment saw only marginal increases, and the segment overall did not recover. There is a large profitability gap between segments, resulting in high dependence on the Chemical business.
Profitability: Operating margin of 41.0% (prior year 37.1%) improved by +3.9pt due to higher Gross margin of 69.5% (prior year 65.6%) and controlled SG&A ratio of 28.5%. ROE was high at 16.7%, driven by Net margin 30.7% (prior year 28.6%) × Total asset turnover 0.473x × Financial leverage 1.15x. ROA (on an Ordinary Income basis) improved to 21.2% (prior year 20.9%). Cash Quality: Operating Cash Flow / Net Income ratio was 0.99x; Operating Cash Flow / EBITDA ratio was 0.69x, indicating good alignment with profits but weaker cash conversion efficiency due to working capital retention. Days Sales Outstanding (DSO) were 102 days, Days Inventory Outstanding (DIO) 89 days, Days Payable Outstanding (DPO) 82 days, resulting in a Cash Conversion Cycle (CCC) of 109 days, indicating room for working capital efficiency improvement. Investment Efficiency: Total asset turnover was 0.473x (prior year 0.517x), declining due to increased tangible fixed assets. Capex was ¥73.3B, 7.3x depreciation of ¥10.1B, indicating an active investment phase; Construction in progress was ¥55.9B (28.4% of tangible fixed assets), showing a deep investment pipeline. Financial Soundness: Equity Ratio was 87.1% (prior year 87.2%), Current Ratio 518%, and Quick Ratio 488%, reflecting a very conservative balance sheet. Interest-bearing debt was ¥3.3B (short-term borrowings ¥3.0B, long-term borrowings ¥0.3B), effectively debt-free; Debt/EBITDA was 0.03x, and Interest Coverage was 3,039x, indicating extremely limited financial risk. Cash and deposits of ¥242.3B cover short-term liabilities of ¥75.7B by 3.2x, providing solid liquidity.
Operating CF was ¥90.4B (YoY +7.3%), derived from profit before tax of ¥130.2B adjusted for increases in working capital and payment of income taxes. Operating CF / Net Income ratio was 0.99x, indicating good alignment with accounting profits. However, Operating CF / EBITDA ratio was 0.69x, with the main drivers being an increase in inventories of ¥6.7B, a decrease in trade receivables of ¥5.8B, a decrease in trade payables of ¥3.1B (net working capital increase), and income tax payments of ¥41.6B. Contract liabilities increased by ¥1.4B, indicating a rise in advance receipts. Investing CF was -¥83.5B, led by acquisition of tangible fixed assets of ¥73.3B, making Capex 7.3x depreciation of ¥10.1B and showing continued aggressive investment. Acquisition of intangible fixed assets ¥1.9B and time deposit placements ¥8.5B were additional outflows. Free CF was ¥6.9B, modest as strong Operating CF was absorbed by Capex. Financing CF was -¥36.0B, mainly due to dividend payments of ¥19.9B and share buybacks of ¥15.0B; debt repayments of ¥0.9B were minor. As a result, Cash and cash equivalents decreased to ¥220.1B (YoY -¥28.0B). While cash generation correlates with profit levels, improving working capital efficiency (shortening DSO/DIO) and realizing revenue contributions from Capex will be future focal points.
Quality of earnings is high. Non-operating income of ¥3.5B (1.2% of Revenue) comprised recurring items such as interest income ¥1.3B, equity-method investment income ¥0.4B, and foreign exchange gains ¥0.4B, with no special factors. Extraordinary gains of ¥1.7B (gain on sale of investment securities ¥0.5B, gain on sale of fixed assets ¥0.2B, etc.) and extraordinary losses of ¥0.5B (impairment losses ¥0.1B, loss on retirement of fixed assets ¥0.1B, etc.) were minor at 1.9% and 0.5% of Net Income of ¥91.1B, respectively, indicating limited impact from one-off items. Operating CF / Net Income ratio of 0.99x shows strong consistency between accounting profits and cash; accruals (deviations between profit and Operating CF) were small. The gap between Ordinary Income ¥124.5B and Net Income ¥91.1B is mainly due to income taxes of ¥34.9B and is within normal range, with minimal effect from extraordinary items. Comprehensive income was ¥102.1B (Net Income YoY +12.1%), with Other Comprehensive Income of ¥11.4B composed of foreign currency translation adjustment ¥7.2B, unrealized gains on securities ¥4.1B, and share of other comprehensive income of equity-method affiliates ¥0.1B. While influenced by FX and market-to-market valuation, these do not distort the core operating earnings.
For FY2027 (fiscal year ending March 2027), the company forecasts Revenue of ¥334.0B (YoY +12.6%), Operating Income of ¥123.0B (YoY +1.2%), Ordinary Income of ¥125.0B (YoY +0.4%), and Net Income of ¥88.0B (YoY -3.4%). Progress rates are Revenue 88.9%, Operating Income 98.9%, Ordinary Income 99.6%, and Net Income 103.5%, indicating that figures below Operating Income are nearly on plan; Revenue assumes an addition of approximately ¥37.3B in Q4 (YoY +¥8.9B). While top-line growth is expected to be double-digit, Operating Income is projected to be largely flat, with Operating margin declining to 36.8% (from 41.0% this period, -4.2pt). This likely reflects higher depreciation from Capex ramp-up, SG&A increases as working capital normalizes, and a conservative recovery pace for the Equipment business. The dividend forecast is ¥90 per annum (down ¥5 from ¥95 this period), with a Payout Ratio of 25.2% (this period 26.0%), indicating a somewhat conservative stance. Although specific disclosures on order backlog and contract liabilities are not provided, contract liabilities of ¥2.8B (YoY +¥1.5B) and increased advance receipts suggest a certain order base has been secured. Demand trends in key markets—China, Taiwan, and Korea—will be critical to achieving guidance.
Annual dividend for the period was ¥95 (interim ¥41, year-end ¥54), a substantial increase of ¥58 from the prior year ¥37. Payout Ratio rose to 26.0% (prior year 12.4%) but remains at a conservative level. The company also executed share buybacks of ¥15.0B this period; combined with dividends of ¥19.9B, total shareholder returns amounted to ¥34.9B, yielding a Total Return Ratio of 38.3%. The Total Return Ratio relative to Net Income of ¥91.1B is within a healthy range, indicating a good balance between shareholder returns and retained earnings. Free CF was modest at ¥6.9B, and the funds for dividends and buybacks were primarily sourced from ample cash holdings (Cash and deposits ¥242.3B). FCF Coverage (Dividends ÷ FCF) was 2.9x, high, and in the current aggressive Capex phase, improving Operating CF (working capital efficiency) is key to sustaining dividends. Next period’s dividend is planned at ¥90 (a small reduction), maintaining a Payout Ratio of 25.2%. The effectively debt-free, high-equity-ratio balance sheet supports short-term dividend continuity, but medium-to-long-term return capacity will depend on improvements in Operating CF/EBITDA ratio and a shortened CCC.
Business concentration risk: The Chemical business accounts for 90.7% of Revenue and nearly all Operating Income, creating a highly concentrated structure. The Equipment business has not recovered, with Revenue ¥27.5B (YoY -34.7%) and Operating Income ¥4.1B (YoY -44.2%). Because product mix and demand fluctuations in the Chemical business directly affect corporate performance, restructuring the Equipment business and diversifying income sources are key challenges. The wide gap in segment profitability (Chemical 47.2%, Equipment 15.0%) suggests room to improve portfolio balance.
Geopolitical / regional concentration risk: By region, China ¥119.1B (40.1% of Revenue), Taiwan ¥46.8B (15.8%), and Korea ¥23.8B (8.0%) indicate high Asia dependency. Although China grew YoY +10.3%, geopolitical risk, regulatory changes, and demand cycle volatility could materially impact results. As evidenced by the foreign currency translation adjustment of ¥7.2B in Other Comprehensive Income, sensitivity to exchange rates is high, and yen appreciation could pressure profits. Domestic sales contracted to ¥64.6B (YoY -15.1%), limiting geographic diversification.
Capex ramp-up risk: Tangible fixed assets increased substantially to ¥196.8B (YoY +66.4%), and Construction in progress of ¥55.9B (28.4% of tangible fixed assets) indicates large projects underway. Capex of ¥73.3B is 7.3x depreciation of ¥10.1B, showing ongoing aggressive investment. Project delays, budget overruns, or operational delays during the ramp-up phase could lower total asset turnover and increase depreciation burdens. The projected decline in next period’s Operating margin to 36.8% (from 41.0%, -4.2pt) reflects anticipated expense recognition from Capex, making timely investment recovery critical for sustaining profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 41.0% | 7.8% (4.6%–12.3%) | +33.2pt |
| Net Margin | 30.7% | 5.2% (2.3%–8.2%) | +25.5pt |
Profitability is extremely high within the manufacturing sector, with both Operating and Net margins significantly above the median. Technological superiority in high value-added surface treatment chemicals and pricing power in niche markets contribute.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.6% | 3.7% (-0.4%–9.3%) | +0.9pt |
Revenue growth slightly exceeds the industry median and lies within the IQR, representing a standard pace. Double-digit growth in the Chemical business is driving the company average.
※ Source: Company compilation of public financial statements
Sustainability of a high-margin model: With Operating margin 41.0%, Net margin 30.7%, and ROE 16.7%, the company demonstrates outstanding profitability within manufacturing. Technological advantages in the Chemical business and a shift toward higher value-added product mix are structural strengths, and the improving trend in Gross margin to 69.5% (YoY +3.9pt) is expected to continue. However, next period’s planned decline to Operating margin 36.8% (-4.2pt) will test the company’s ability to defend profitability during the Capex ramp-up and cost increase phase. Maintaining SG&A control at 28.5% and improving segment mix (recovery of the Equipment business) will be key to preserving margins.
Cash generation and investment balance: Operating CF of ¥90.4B aligns with profit levels, but an Operating CF/EBITDA ratio of 0.69x and CCC of 109 days indicate weaker cash conversion due to working capital. With Capex of ¥73.3B (7.3x depreciation), Free CF is limited to ¥6.9B, and total shareholder returns of ¥34.9B (dividends + buybacks) were funded from cash holdings. After the build-up in Construction in progress of ¥55.9B, revenue contribution and Operating CF enhancement are expected, but near-term improvements hinge on shortening DSO (102 days) and DIO (89 days) and better inventory and receivables management to expand Operating CF and stabilize FCF.
Financial soundness and shareholder return capacity: Equity Ratio 87.1%, Cash and deposits ¥242.3B, and effectively debt-free status (interest-bearing debt ¥3.3B) maintain a very conservative financial profile. Payout Ratio 26.0% and Total Return Ratio 38.3% indicate remaining capacity for returns, and there is substantial scope for future increases. However, FCF Coverage of 2.9x (dividends ÷ FCF) means dividends significantly exceed FCF this period; sustained enhancement of returns will depend on improving Operating CF (working capital efficiency). Next period’s dividend is set conservatively at ¥90 (-¥5), but in a recovery of Operating CF and FCF, there is potential for future increases.
This report is an AI-generated financial analysis document produced by analyzing XBRL earnings release 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 are your own responsibility; please consult a professional advisor as needed.