M&A Capital Partners Co.,Ltd. FY2026 Q3 Earnings Report

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Executive Summary

This was a strong earnings period, with both revenue and profit increasing, while the growth in SG&A expenses remained substantially below revenue growth, resulting in operating leverage and a significant improvement in profitability. Revenue was ¥206.4B (+26.9% YoY), Operating Income was ¥81.1B (+39.9%), Profit Before Tax was ¥82.6B (+42.1%), and Net Income was ¥62.1B (+43.7%). SG&A expenses increased by only +11.8% to ¥50.4B, and the Operating Income margin improved to 39.3%, up +3.6pt from 35.7% in the previous year.

Factors Affecting Business Performance

【Revenue】Revenue was ¥206.4B, representing a +26.9% increase year on year. As the Company operates as a single segment, the M&A-related services business, no business-by-business breakdown is disclosed. However, contract liabilities increased to ¥16.1B (¥13.8B in the previous year, +16.9%), suggesting an accumulation of contracted engagements as projects progress.

【Profit and Loss】Operating Income was ¥81.1B (+39.9%), and the Operating Income margin improved to 39.3% from 35.7% in the previous year, an increase of +3.6pt. While the gross margin was broadly flat at 63.7% (63.4% in the previous year), SG&A expenses increased by only +11.8% to ¥50.4B, substantially below the revenue growth rate, resulting in operating leverage. The expansion in financial income from ¥0.3B to ¥1.8B also contributed, with Profit Before Tax reaching ¥82.6B (+42.1%). The effective tax rate declined to 24.8% from 25.6% in the previous year, and Net Income increased by +43.7% to ¥62.1B, outpacing Operating Income growth. Revenue and profit both increased.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 39.3% (35.7% in the previous year), while the Net Income margin improved to 30.1% (26.6% in the previous year), and ROE was 13.0%. 【Cash Flow Quality】Comprehensive income was ¥59.3B, ¥2.8B below Net Income of ¥62.1B. The primary factor was a ¥-2.8B valuation difference on financial assets measured at fair value through other comprehensive income. 【Investment Efficiency】Total asset turnover was approximately 0.35x, based on Revenue of ¥206.4B and total assets of ¥584.3B. However, non-current assets accounted for only 14.0% of total assets, reflecting an asset-light earnings structure. 【Financial Soundness】The Equity Ratio increased to 81.6% (77.6% in the previous year). Cash-like assets, comprising ¥201.2B in cash and cash equivalents plus ¥290.0B in time deposits, totaled ¥491.2B, equivalent to 84.1% of total assets, indicating an extremely stable financial foundation.

Cash Flow Analysis

Cash and cash equivalents were ¥201.2B, an increase of +¥38.8B from ¥162.4B at the end of the same period of the previous year. Combined with ¥290.0B in time deposits, total cash-like assets reached ¥491.2B. Retained earnings were ¥421.9B, accumulating +¥45.9B from ¥376.3B at the end of the previous fiscal year, indicating the accumulation of internal reserves through the recognition of profit for the period. In terms of working capital, accounts receivable increased to ¥5.9B (¥2.7B in the previous year, +119.5%), while accounts payable decreased to ¥13.9B (¥26.8B in the previous year, -48.0%), suggesting that differences in the timing of project billings and payments may have affected short-term cash management. Contract liabilities increased to ¥16.1B (¥13.8B in the previous year), confirming the accumulation of consideration received in advance. Given the business model’s limited capital expenditure requirements, fluctuations in working capital remain at levels that can be adequately absorbed by the substantial cash-like assets.

Quality of Earnings

The majority of earnings are derived from operating activities, and no recognition of temporary extraordinary gains or losses has been identified. Financial income, an item outside operating activities, was ¥1.8B, a small component equivalent to 0.9% of Revenue. After deducting financial expenses of ¥0.3B, the net amount contributed to an increase in Profit Before Tax. The difference between Profit Before Tax of ¥82.6B and Net Income of ¥62.1B was attributable to income taxes of ¥20.5B (effective tax rate of 24.8%, compared with 25.6% in the previous year), with no unusual adjustment items identified. Comprehensive income of ¥59.3B was ¥2.8B below Net Income of ¥62.1B; the primary factor was a ¥-2.8B valuation difference on financial assets measured at fair value through other comprehensive income, a fair-value fluctuation separate from business earnings. Accordingly, profit for the period can be assessed as high-quality earnings based on recurring business activities.

Earnings Forecast and Guidance

Progress against the full-year forecast was 72.9% for Revenue (¥206.4B/¥283.3B), 74.5% for Operating Income (¥81.1B/¥108.9B), and 80.9% for Net Income (¥62.1B/¥76.8B). Compared with the 75% benchmark for quarterly progress, Revenue was slightly below the benchmark, Operating Income was broadly in line, and Net Income was ahead of schedule. The early progress in Net Income is considered to have resulted from increased financial income and a lower effective tax rate, which lifted the bottom line. During the quarter, revisions to the earnings forecast and dividend forecast were announced, increasing the accuracy of the full-year outlook compared with previously.

Shareholder Returns

The full-year dividend forecast is ¥72.47 per share, and the Payout Ratio based on the full-year forecast EPS of ¥241.58 is approximately 30.0%. There was no interim dividend in the same period of the previous year, and the Company’s dividend policy is primarily structured around a single year-end distribution. During the quarter, a revision to the dividend forecast was announced. Given the ample cash-like assets of ¥201.2B in cash and cash equivalents and ¥290.0B in time deposits, as well as the high coverage of the projected total dividend against the full-year Net Income forecast of ¥76.8B, dividend sustainability can be considered sound.

Risk Factors

1. Working capital fluctuation risk: While accounts receivable increased by +119.5% year on year to ¥5.9B, accounts payable decreased by -48.0% to ¥13.9B, and differences in the timing of billings and payments may affect short-term cash management.

2. Project pipeline dependency risk: The Company operates a single-segment M&A-related services business. While the increase in contract liabilities to ¥16.1B indicates an accumulation of contracted engagements, the business has characteristics under which the pace of project origination and completion is susceptible to macroeconomic conditions and market fluctuations.

3. Human capital dependency risk: Profit margins improved as SG&A expense growth (+11.8%) remained below revenue growth (+26.9%). However, if investment in recruitment and training remains restrained in this high-touch human-resources business, it may affect the Company’s ability to secure medium-term growth drivers.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Profitability is substantially above the industry median, positioning the Company at a high-margin level even within the IT and communications industry.

Growth and Capital Efficiency

The growth rate also ranks among the industry’s leaders, exceeding the upper bound of the IQR (19.5%).

※Source: Compiled by the Company

Key Earnings Highlights

1. The Operating Income margin improved to 39.3% (35.7% in the previous year), while the Net Income margin improved to 30.1% (26.6% in the previous year), confirming the emergence of operating leverage as SG&A expense growth (+11.8%) remained substantially below revenue growth (+26.9%).

2. Against a robust financial foundation comprising an Equity Ratio of 81.6% and cash-like assets of ¥491.2B, the Company continues to maintain a shareholder return policy targeting a full-year Payout Ratio of approximately 30%, indicating high sustainability of its capital policy.

3. While full-year progress is ahead of schedule for Net Income at 80.9%, the accumulation of contract liabilities should be monitored as a factor supporting revenue recognition from Q4 onward.

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

Sensitivity: ¥1,777–¥1,883 at Cost of Equity ±1%, and ¥1,821–¥1,841 at ω±0.1.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference relative to the full-year forecast).

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This figure does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings report 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 responsibility and, where necessary, after consulting with a professional advisor.

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