| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥69.7B | ¥79.0B | -11.8% |
| Operating Income / Operating Profit | ¥5.1B | ¥7.5B | -32.3% |
| Ordinary Income | ¥2.9B | ¥7.4B | -61.3% |
| Net Income / Net Profit | ¥-1.0B | ¥7.7B | -113.1% |
| ROE | -0.1% | 1.3% | - |
FY2026 Q1 results showed Revenue ¥69.7B (YoY -¥9.3B -11.8%), Operating Income ¥5.1B (YoY -¥2.4B -32.3%), Ordinary Income ¥2.9B (YoY -¥4.5B -61.3%), and Net Income attributable to owners of the parent ¥-0.8B (YoY -¥8.9B -110.1%), resulting in reduced sales and profits and a return to a final-period loss. At the operating stage, delays in equipment deliveries and a decline in fixed-cost absorption reduced the margin by 2.3pt to 7.3% (prior year 9.6%). From the ordinary-income stage onward, non-operating losses worsened due to an exchange loss of ¥1.1B and an equity-method investment loss of ¥2.0B, and an abnormal effective tax rate of approximately 136% significantly depressed Net Income. Conversely, Other Comprehensive Income was a large surplus of ¥240.2B, mainly due to valuation gains on investment securities of ¥229.3B, and Net Assets increased ¥229.5B year-on-year to ¥805.6B.
[Revenue] Revenue was ¥69.7B (YoY -11.8%), a decline. The company operates a single segment, the Thin Film Equipment Business, and quarterly results are highly variable depending on the timing of equipment deliveries and customer acceptance. Work-in-progress inventory stood at ¥166.1B, up ¥40.6B (+32.4%) YoY, indicating production progress but delayed customer acceptance, which is inferred to be the main cause of revenue decline. Contract liabilities (advance receipts) accumulated to ¥181.3B, up ¥66.4B (+57.8%) YoY, indicating substantial future revenue recognition potential and a possible recovery foundation from H2 onward.
[Profitability] Cost of sales was ¥46.3B, gross profit ¥23.4B, and gross margin improved 0.5pt to 33.5% (prior 33.0%). SG&A was ¥18.3B (SG&A ratio 26.2%), nearly flat YoY (-¥0.3B), but due to lower sales the SG&A ratio rose about 2.8pt, and impaired fixed-cost absorption pressured Operating Income. Operating Income was ¥5.1B (Operating margin 7.3%), a decrease of ¥2.4B (-32.3%) YoY. In non-operating items, non-operating income of ¥1.5B (including interest income ¥0.7B) was offset by non-operating expenses of ¥3.7B (including exchange loss ¥1.1B and equity-method investment loss ¥2.0B), yielding non-operating income/expense of -¥2.2B versus -¥0.0B a year ago. Ordinary Income was ¥2.9B (Ordinary margin 4.1%), down 61.3% YoY. Special losses were minor at only ¥0.1B (loss on retirement of non-current assets), but Corporate taxes and others were ¥3.8B (effective tax rate approximately 136%), creating an abnormal high tax burden and reducing the tax burden coefficient to -0.29. As a result, Net Income attributable to owners of the parent fell to ¥-0.8B (Net margin -1.2%), turning to a loss on lower sales and profits.
[Profitability] Operating margin 7.3% (prior 9.6%) and Net margin -1.2% (prior 10.2%) both deteriorated. ROE fell sharply to -0.1% (prior 1.4%). DuPont decomposition: Net margin -1.2% × Total Asset Turnover 0.058 × Financial Leverage 1.48x = -0.1%, with deterioration in Net margin driven primarily by non-operating losses and tax burden. [Cash Quality] DIO (Days Inventory Outstanding) is extremely prolonged at 1,631 days, and CCC (Cash Conversion Cycle) reached 1,616 days. The accumulation of WIP ¥166.1B is substantially tying up working capital. DSO (Days Sales Outstanding) is 263 days, with delayed customer acceptance after equipment delivery extending receivables collection cycles. [Investment Efficiency] Total Asset Turnover is extremely low at 0.058 turns/year, with investment securities of ¥332.1B (27.9% of total assets) inflating the denominator. [Financial Soundness] Equity Ratio is 67.6% (prior 66.9%), Current Ratio 245.7%, Quick Ratio 245.7%, indicating very high financial soundness. Cash and deposits were ¥356.8B and interest-bearing debt consisted only of short-term borrowings of ¥4.0B, with Debt/Capital ratio 0.5%, maintaining effectively debt-free operations. Interest Coverage was 9.4x, indicating minimal interest burden.
Cash and deposits were ¥356.8B, up ¥52.3B YoY, indicating very strong liquidity. On the working capital side, WIP increased to ¥166.1B, and extreme prolongation with DIO 1,631 days and CCC 1,616 days signals delayed cash conversion. Contract liabilities of ¥181.3B are largely advance receipts already cashed in, and as deliveries and customer acceptance proceed, inventory cash conversion could accelerate. Investment securities increased to ¥332.1B, up ¥290.3B YoY, reflecting both fair-value increases and additional acquisitions. Exchange loss ¥1.1B and equity-method loss ¥2.0B are accounting losses that do not necessarily equate to cash outflows; thus, if inventory normalizes, the company's ability to generate Operating Cash Flow is recoverable. Capital expenditure is modest, with PPE balance ¥136.6B, up ¥1.5B YoY, indicating restrained investment burden.
The core recurring earnings driver is equipment sales producing Operating Income ¥5.1B (Operating margin 7.3%), and the business model is highly lumpy due to delivery and acceptance timing of equipment. Special items were minor (loss on retirement of non-current assets ¥0.1B), so one-off impacts were limited; however, non-operating items—exchange loss ¥1.1B (relative to Operating Income -21.6%) and equity-method investment loss ¥2.0B (relative to Operating Income -39.3%)—significantly depressed Net Income. Corporate taxes ¥3.8B relative to pre-tax profit ¥2.8B produced an abnormal effective tax rate of approximately 136%, likely impacted by write-downs of deferred tax assets or temporary tax-effect adjustments. Meanwhile, Other Comprehensive Income of ¥240.2B diverged sharply from Net Income ¥-0.8B, mainly due to valuation gains on securities of ¥229.3B within Other Comprehensive Income. These valuation gains are unrealized and do not pass through the P&L, and should be evaluated separately from recurring earning power. Non-operating income (e.g., interest income ¥0.7B) is equivalent to about 2.2% of Revenue but is not a structural revenue source.
Full Year plan forecasts Revenue ¥382.0B (prior year +12.8%), Operating Income ¥62.0B (prior year +85.9%), Ordinary Income ¥74.0B (prior year +131.1%), and Net Income attributable to owners of the parent ¥56.0B, expecting substantial profit growth. Q1 progress rates were Revenue 18.2%, Operating Income 8.2%, Ordinary Income 3.9%, and Net Income negative, all well below a standard progress rate (~25%). The plan is back-end weighted, and while contract liabilities of ¥181.3B suggest ample revenue recognition potential in H2, achievement of the plan depends on progress in WIP acceptance and stabilization of exchange and equity-method investment results. The EPS plan is ¥140.48, with Q1 actual EPS ¥-2.08. Dividend guidance is ¥28.0 (payout ratio about 19.9%), set conservatively.
Year-end dividend guidance is ¥28.0, maintaining the prior-year amount. With Full Year EPS plan ¥140.48, the payout ratio is about 19.9%, a conservative level and indicating high dividend sustainability. Given cash and deposits ¥356.8B and interest-bearing debt ¥4.0B, the effectively debt-free balance sheet supports dividend continuity even with a temporary final-period loss. There is no disclosure of share buybacks, and shareholder returns are assumed to be dividend-focused.
Equipment delivery and customer acceptance timing risk: Accumulation of WIP ¥166.1B causes large quarterly result volatility, with DIO 1,631 days and CCC 1,616 days showing extremely poor working capital efficiency. Rigid customer investment cycles or stricter acceptance conditions could further delay planned revenue recognition.
Currency fluctuation risk: An exchange loss of ¥1.1B (relative to Operating Income -21.6%) occurred, and yen appreciation could compress margins. If hedging strategies for overseas transactions are insufficient, profit variability from the ordinary-income stage onward could be structurally large.
Marketable asset price risk: Investment securities ¥332.1B (27.9% of total assets) boosted Other Comprehensive Income via valuation gains of ¥229.3B, but market reversals could reverse shareholders’ equity through deferred tax liabilities of ¥74.5B. High exposure to market volatility may affect capital structure stability.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.3% | 6.8% (2.9%–9.0%) | +0.5pt |
| Net Margin | -1.4% | 5.9% (3.3%–7.7%) | -7.4pt |
Operating margin exceeds the industry median by 0.5pt, but Net margin falls 7.4pt below the industry median due to deterioration in non-operating items and tax burden.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -11.8% | 13.2% (2.5%–28.5%) | -24.9pt |
Revenue growth trails the industry median by 24.9pt, with delivery delays substantially weighing on growth.
※ Source: Company aggregation
The key point is that while operating-stage margins were maintained to an extent, exchange losses, equity-method investment losses, and an abnormal tax burden pushed the company into a final-period loss. Conversely, valuation gains on investment securities of ¥229.3B produced a large positive Other Comprehensive Income and strengthened Net Assets to ¥805.6B. Going forward, resolving inventory backlog and advancing customer acceptance, strengthening currency hedging, and stabilizing equity-method investee results are key to normalizing earnings.
Structurally, the build-up of contract liabilities ¥181.3B (YoY +57.8%) indicates room for future revenue recognition and could underpin performance recovery from H2 onward. Financially, cash ¥356.8B and an effectively debt-free strong balance sheet provide room for maintaining dividends and investing in the business. However, the extreme deterioration in working capital efficiency (DIO 1,631 days, CCC 1,616 days) is a risk that could delay the recovery of cash-generating capacity; monitoring inventory and WIP reduction trends will be important.
This report was auto-generated by AI analyzing XBRL financial disclosure data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult professionals as needed.