These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.
| Metric | Current Period | Year-on-Year Period | YoY |
|---|---|---|---|
| Revenue | ¥398.1B | ¥414.2B | -3.9% |
| Operating Income | ¥11.0B | ¥7.1B | +55.1% |
| Ordinary Income | ¥13.9B | ¥5.0B | +175.7% |
| Net Income | ¥6.8B | ¥4.2B | +62.9% |
| ROE | 0.6% | 0.4% | - |
Although revenue declined, earnings increased this quarter, resulting in financial results reflecting qualitative improvements in profitability. Revenue decreased to ¥398.1B (-3.9% YoY), while Operating Income increased significantly to ¥11.0B (+55.1%), Ordinary Income to ¥13.9B (+175.7%), and Net Income to ¥6.8B (+62.9%). Improvements in the gross profit margin and growth in high-margin segments were the primary factors enabling earnings growth despite the decline in revenue.
【Revenue】Revenue decreased 3.9% YoY to ¥398.1B. While the Surface Finishing domain (58.9% of revenue composition, +1.8%) and Environmental Technologies domain (7.7%, +12.3%) secured revenue growth, the Handling Technologies domain (-48.2%), Materials + Forming domain (-8.4%), and Support Technologies domain (-15.2%) weighed on overall results. The company has a high degree of revenue dependence on the Surface Finishing domain, creating a structure in which demand fluctuations in a single domain have a significant impact on company-wide performance.
【Profit and Loss】Operating Income increased 55.1% YoY to ¥11.0B, while the gross profit margin improved by +1.98pt YoY to 29.8%. The Surface Finishing domain recovered substantially, generating profit of ¥10.1B (+262.9%), while the Environmental Technologies domain maintained high profitability with a profit margin of 16.8%, driving company-wide earnings. Meanwhile, the Support Technologies domain continued to suffer from structural weakness, recording an Operating Loss of ¥2.4B, with the deficit expanding from -¥1.0B in the prior year. Ordinary Income rose to ¥13.9B (+175.7%), supported by non-operating income including dividends received of ¥4.7B and foreign exchange gains of ¥0.8B. However, the effective tax rate remained high at approximately 49.6%, partially offsetting the increase in Net Income to ¥6.8B. The results reflected higher earnings despite lower revenue, with an improved business mix and non-operating income leading profit growth.
Margins varied significantly by segment. The Surface Finishing domain generated revenue of ¥234.5B (58.9% of composition, +1.8%) and Operating Income of ¥10.1B (+262.9%, 4.3% margin), making it the largest contributor to company-wide earnings. The Environmental Technologies domain generated revenue of ¥30.6B (+12.3%) and Operating Income of ¥5.1B (+59.6%), with a margin of 16.8%, demonstrating the highest profitability company-wide. The Materials + Forming domain recorded revenue of ¥110.4B (-8.4%) and profit of ¥0.5B (-53.2%), representing a decline in earnings. The Handling Technologies domain experienced a substantial revenue decline to ¥13.3B (-48.2%), with profit nearly disappearing at ¥0.1B (-95.5%). The Support Technologies domain generated revenue of ¥11.1B (-15.2%) while its Operating Loss expanded to ¥2.4B, diluting the company-wide margin.
【Profitability】The Operating Income margin improved to 2.8% from 1.7% in the prior year, an increase of +1.1pt, while the gross profit margin also improved to 29.8% from 27.8% in the prior year. However, the SG&A expense ratio increased to 27.0% from 26.1%, partially offsetting the earnings growth effect. 【Investment Efficiency】ROE remained low at 0.6%, consisting of a Net Profit margin of 1.7%, total asset turnover of 0.171 times, and financial leverage of 1.90 times. The low asset turnover is the primary constraint on capital efficiency. 【Financial Soundness】The Equity Ratio improved to 52.7% from 48.9% in the prior year. The company maintains a conservative financial structure, holding cash and deposits of ¥381.4B and long-term borrowings of ¥402.4B. 【Per-Share Indicators】EPS increased to ¥12.98 from ¥3.56 in the prior year, while BPS increased to ¥2,191.80 from ¥2,115.08.
Because the company did not disclose a statement of cash flows for these results, cash trends are assessed based on movements in the balance sheet. Cash and deposits amounted to ¥381.4B, a decrease of ¥31.8B from the end of the previous fiscal year, apparently reflecting highly seasonal cash outflows such as payments of income taxes payable (-¥17.9B) and the reversal of the provision for bonuses (-¥9.4B). Meanwhile, work-in-process inventory increased by +¥13.7B, suggesting inventory accumulation associated with project progress. Investment securities increased by +¥59.5B, with accumulated valuation differences and certain additional investments contributing to the increase in net assets. The current ratio remained high at 232%, indicating sufficient short-term financial flexibility.
The earnings growth for the current period was primarily driven by recurring factors, while the impact of one-time items was limited. Non-operating income of ¥7.7B mainly consisted of dividends received of ¥4.7B, interest received of ¥1.3B, and foreign exchange gains of ¥0.8B, each remaining below 2% of revenue. Extraordinary income and losses amounted to a net -¥0.3B, having a limited impact on Net Income of ¥6.8B. Meanwhile, the gap between Ordinary Income of ¥13.9B and Net Income of ¥6.8B was primarily attributable to the high tax burden. The effective tax rate was high at approximately 49.6%, with income taxes and other taxes of ¥6.7B against Profit Before Tax of ¥13.6B. This heavy tax burden makes it difficult for improvements at the operating and ordinary income stages to flow through fully to bottom-line growth, making trends in the tax rate an important consideration when assessing earnings quality.
Q1 progress against the full-year plan was broadly in line with the plan for revenue, at ¥398.1B against a target of ¥1700B, representing a progress rate of 23.4%. In contrast, Operating Income was ¥11.0B against a target of ¥73.0B, representing a progress rate of 15.1%, while Net Income was ¥6.8B against a target of ¥56.0B, representing a progress rate of 12.2%. Progress on earnings therefore lagged behind revenue. The company has not revised its earnings forecast, suggesting that the plan is based on the assumption of project execution and improved cost efficiency in the second half of the fiscal year.
The annual dividend forecast is ¥48.00, representing a Payout Ratio of approximately 45.0% based on the company’s planned EPS of ¥106.63. The dividend was ¥22 in the prior year, and no revision to the dividend forecast had been made as of Q1. The company holds cash and deposits of ¥381.4B and has a stable financial base, with an Equity Ratio of 52.7%; therefore, financial constraints on maintaining the dividend are considered limited.
Segment Concentration Risk: The Surface Finishing domain accounts for 58.9% of revenue, and demand fluctuations in this domain have a significant impact on company-wide performance. Operating Income from this domain was ¥10.1B, accounting for the majority of company-wide Operating Income of ¥11.0B, making the high degree of dependence a structural characteristic.
Profitability Gap and Portfolio Risk: The Support Technologies domain recorded revenue of ¥11.1B against an Operating Loss of ¥2.4B, with the loss expanding and the profit margin deteriorating to -21.8%. The Handling Technologies domain also experienced a sharp revenue decline of -48.2% YoY, with its profit margin falling to 1.0%. Structural declines in the profitability of multiple businesses are diluting the company-wide margin.
Tax Burden Risk: The effective tax rate remained high at approximately 49.6%, with income taxes and other taxes of ¥6.7B recorded against Profit Before Tax of ¥13.6B. If this level persists, improvements at the operating and ordinary income stages may continue to be reflected less fully in Net Income growth.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 2.8% | 8.7% (4.2%–14.2%) | -5.9pt |
| Net Profit Margin | 1.7% | 7.0% (3.2%–10.6%) | -5.3pt |
The company’s profitability is significantly below the industry median and ranks in the lower tier within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -3.9% | 6.2% (-1.1%–14.6%) | -10.2pt |
Revenue growth is also substantially below the industry median, placing the company in the lower tier of the industry in terms of growth.
※Source: Company research
The company secured earnings growth despite lower revenue through an improved gross profit margin and growth in high-margin segments, namely Environmental Technologies and Surface Finishing. This is noteworthy as an effect of an improved business portfolio mix. However, the SG&A expense ratio also increased, partially offsetting the earnings growth effect.
The effective tax rate was high at approximately 49.6%, and the substantial increase in Ordinary Income was not fully reflected in Net Income. Tax burden trends will be an important indicator when monitoring future earnings growth.
Progress against the full-year plan was broadly on track for revenue at 23.4%, but delays were evident on the earnings side, with progress of 15.1% for Operating Income and 12.2% for Net Income. The company’s ability to execute earnings improvements in the second half of the fiscal year will be a key point of focus in assessing achievement of the full-year plan.
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 to take any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear (bearish) | ¥1,896 |
| base (base case) | ¥1,921 |
| bull (bullish) | ¥1,957 |
| Calculation Assumption | Value |
|---|---|
| Book Value Per Share (BPS) | ¥2,192 |
| Adjusted Forecast EPS | ¥114.2 |
| Cost of Equity r | 9.77% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 1.00%) |
| Residual Income Persistence Factor ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 45.0% |
| Forecast EPS Confidence Adjustment | ×1.071 (based on the industry’s historical guidance achievement rate) |
| Implied PBR / PER |
Sensitivity: ¥1,868–¥1,975 at ±1% for the cost of equity, and ¥1,912–¥1,926 at ±0.1 for ω.
Notes:
(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-07 / This value does not predict or guarantee the future share price.)
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 discretion and responsibility, after consulting professionals as necessary.
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| 0.88x / 16.8x |