Y.A.C.HOLDINGS (6298) FY2026 Q3 Earnings Report

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Executive Summary

This earnings result reflects substantial increases in operating income, ordinary income, and net income, driven by revenue growth and the emergence of operating leverage. Revenue was ¥19.06B (+17.6% YoY), operating income was ¥1.17B (+53.2%), ordinary income was ¥1.11B (+90.4%), and net income attributable to owners of the parent was ¥0.66B (+259.5%). The primary driver of earnings growth was the fixed-cost absorption effect resulting from SG&A expenses increasing by 10.4%, below the 17.6% revenue growth rate; the gross margin itself was 28.1%, roughly in line with the previous year.

Factors Driving Earnings Changes

【Revenue】Revenue of ¥19.06B increased 17.6% YoY. By segment, Semiconductor and Mechatronics-Related generated ¥7.89B (+12.7% YoY; 41.4% composition ratio), Environment and Social Infrastructure-Related generated ¥7.03B (+35.8%; 36.9%), and Medical and Healthcare-Related generated ¥4.19B (+3.1%; 22.0%). The strong growth in Environment and Social Infrastructure-Related includes the contribution from the acquisition of TT Holdings as a wholly owned subsidiary.

【Profit and Loss】Operating income was ¥1.17B (+53.2%), with an operating margin of 6.1% (+1.4pt from 4.7% in the previous year). Segment profit margins were 14.4% for Semiconductor and Mechatronics-Related, 7.0% for Environment and Social Infrastructure-Related, and 4.3% for Medical and Healthcare-Related, indicating a structure in which the high profitability of the core businesses supports company-wide earnings. Medical and Healthcare-Related recorded a 32.6% decline in segment profit despite higher revenue, indicating deteriorating profitability. Ordinary income was ¥1.11B (+90.4%), reflecting non-operating income of ¥0.16B, including a ¥0.07B foreign exchange gain, and non-operating expenses of ¥0.22B, including ¥0.15B in interest expenses. Profit before tax was ¥1.05B after deducting extraordinary losses of ¥0.06B, primarily losses on the disposal and sale of fixed assets. The effective tax rate declined to 35.5% from the previous year, contributing to the increase in net income to ¥0.68B (+267.4%). Overall, the Company recorded higher revenue and earnings, with operating leverage evident in the earnings growth rate exceeding the revenue growth rate.

Segment Analysis

Semiconductor and Mechatronics-Related generated revenue of ¥7.89B (+12.7% YoY) and operating income of ¥1.13B (+17.9%), with a 14.4% margin, making it the Company’s most profitable and largest profit-contributing segment. Environment and Social Infrastructure-Related generated revenue of ¥7.03B (+35.8%) and operating income of ¥0.50B (+207.5%), recording the highest profit growth rate, while newly recognizing ¥0.335B in goodwill associated with the acquisition of TT Holdings as a wholly owned subsidiary. Medical and Healthcare-Related recorded only modest revenue growth to ¥4.19B (+3.1%), while operating income declined to ¥0.18B (-32.6%); continued deterioration in profitability could weaken this segment’s contribution to company-wide earnings. Company-wide adjustments expanded to -¥0.64B from -¥0.63B in the previous year, requiring continued growth in highly profitable businesses to absorb common expenses.

Key Financial Indicators

【Profitability】The operating margin was 6.1% (+1.4pt from 4.7% in the previous year), while the net profit margin was 3.5% (+2.4pt from 1.1%). The improvement in margins was driven not by the gross margin, which remained at 28.1%, roughly in line with the previous year, but by the decline in the SG&A ratio to 22.0% (-3.3pt from 25.3%), namely operating leverage resulting from fixed-cost absorption.【Cash Flow Quality】Cash and deposits were ¥8.11B, up from ¥7.18B at the end of the previous year, while work in process of ¥8.95B accounted for 72.0% of total inventory, suggesting that working capital is tied up alongside revenue expansion.【Investment Efficiency】Annualized ROE was 5.4%, indicating that the improvement in capital efficiency was limited relative to the improvement in the operating margin. R&D expenses were ¥0.30B, equivalent to 1.6% of revenue.【Financial Soundness】The equity ratio was 39.8%, nearly unchanged from 40.1% at the end of the previous year. Net assets were ¥16.62B against total assets of ¥41.74B, while short-term borrowings increased to ¥6.69B from ¥5.45B at the end of the previous year.

Cash Flow Analysis

As the Company did not provide detailed disclosure of the cash flow statement in this earnings release, funding trends are analyzed based on changes in the balance sheet. Cash and deposits increased by ¥0.93B to ¥8.11B from ¥7.18B at the end of the previous year, while short-term borrowings increased by ¥1.24B to ¥6.69B from ¥5.45B, indicating that the Company increased on-hand liquidity while securing additional financing. In terms of working capital, work in process of ¥8.95B accounted for the majority of inventory and increased by ¥0.62B from ¥8.33B at the end of the previous year, suggesting that assets related to ongoing projects accompanying revenue expansion may be affecting capital efficiency. Accounts receivable and notes receivable were ¥7.52B, down from ¥8.29B at the end of the previous year, indicating improvement in collections. Current assets of ¥29.63B exceeded current liabilities of ¥16.16B by ¥13.46B, providing a certain degree of short-term financial flexibility.

Earnings Quality

The difference between operating income of ¥1.17B and ordinary income of ¥1.11B resulted from the net balance of non-operating income of ¥0.16B, including a ¥0.07B foreign exchange gain, and non-operating expenses of ¥0.22B, mainly consisting of ¥0.15B in interest expenses, and remained within the range of recurring financial income and expenses. Extraordinary losses of ¥0.06B consisted primarily of ¥0.04B in losses on the disposal and sale of fixed assets and are classified as temporary factors. Profit before tax of ¥1.05B was ¥0.06B below ordinary income, but the scale of extraordinary gains and losses was limited and did not materially impair earnings quality. The effective tax rate was 35.5%, slightly above the statutory effective tax rate, while the strong growth in net income was also supported by the reversal of the relatively heavy tax burden in the previous year. Comprehensive income was ¥0.70B, nearly in line with net income attributable to owners of the parent of ¥0.68B, as a -¥0.05B foreign currency translation adjustment and a +¥0.07B valuation difference on securities largely offset each other.

Earnings Forecasts and Guidance

The full-year company forecast is revenue of ¥30.00B, operating income of ¥2.00B, ordinary income of ¥1.80B, and profit attributable to owners of the parent of ¥1.20B. Q3 cumulative progress rates were 63.5% for revenue, 58.3% for operating income, 61.4% for ordinary income, and 55.2% for net income, all below the 75% benchmark based on simple quarterly allocation. Revenue of ¥10.94B and operating income of ¥0.83B will be required in Q4, and achieving the full-year plan will require Q4 profitability above the cumulative operating margin of 6.1%. Although seasonality must be taken into account, the concentration of the earnings plan in Q4 warrants monitoring of progress.

Shareholder Returns

The Q2 dividend was ¥20.00 per share, and the full-year dividend forecast is ¥40.00 per share, a planned level exceeding the previous year’s annual dividend. Based on forecast profit attributable to owners of the parent of ¥1.20B and the weighted-average number of shares outstanding during the period of 18.418M shares, the forecast payout ratio is approximately 61.4%; the payout ratio is calculated based solely on dividends. Dividend sustainability will depend in part on the achievement of the full-year earnings plan, with improved profitability in Q4 being a prerequisite for meeting the plan. Treasury shares amounted to ¥0.73B, up from ¥0.47B at the end of the previous year, indicating movement in capital policy related to shareholder returns.

Risk Factors

1. Dependence on the core segment: Semiconductor and Mechatronics-Related generated revenue of ¥7.89B and segment profit of ¥1.13B, making it the largest profit-contributing business; changes in capital expenditure trends in this field could have a significant impact on company-wide earnings.

2. Working capital tied up: Work in process was ¥8.95B, accounting for the majority of total inventories, and increased by ¥0.62B from the end of the previous year. Assets tied up in long-term and individual projects could affect capital efficiency and valuation if delays in acceptance inspections or similar issues arise.

3. Deteriorating profitability in Medical and Healthcare-Related: Although revenue in this segment increased by 3.1%, segment profit declined by 32.6%. If the pattern of declining margins despite revenue growth continues, it could weaken the earnings composition of the overall business portfolio.

Industry Benchmark (For Reference; Company Research)

Industry Benchmark (manufacturing)

Profitability and Returns

The Company’s profitability is below the industry median on both measures, placing it relatively low within the industry in terms of margins.

Growth and Capital Efficiency

The revenue growth rate substantially exceeds the industry median, positioning the Company among the industry’s high-growth companies.

※Source: Company research

Key Points from the Earnings Results

1. Operating income increased by 53.2%, exceeding the 17.6% increase in revenue, and the operating margin improved by +1.4pt YoY. The primary driver was fixed-cost absorption resulting from controlled SG&A growth, rather than an improvement in the gross margin; this is viewed as a reproducible structure as long as the revenue growth phase continues.

2. Environment and Social Infrastructure-Related led growth, with revenue increasing by 35.8% and segment profit by 207.5%, alongside the acquisition of TT Holdings as a wholly owned subsidiary. Meanwhile, segment profit in Medical and Healthcare-Related declined by 32.6%, widening the profitability gap between segments.

3. Progress against the full-year company forecast was 63.5% for revenue and 58.3% for operating income, indicating a plan concentrated in Q4. The inventory composition, including ¥8.95B in work in process, provides a basis for future revenue but also warrants monitoring because the timing of acceptance inspections for ongoing projects will determine when earnings are realized.

Theoretical Share Price (Reference Value)

Sensitivity: ¥839–¥886 for ±1% in the cost of equity, and ¥860–¥863 for ±0.1 in ω.

Notes:

• As 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 relative to the full-year forecast.
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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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. 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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