RAIZNEXT Corporation FY2026 FY Earnings Report

Financial Highlights

• Net Sales: ¥174.53B
• Operating Income: ¥14.71B
• Net Income: ¥9.96B
• EPS: ¥193.71

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

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AI Financial Analysis

Executive Summary

FY2026 was a strong year for レイズネクスト (6379), delivering double-digit top-line growth and outsized operating leverage, culminating in robust ROE and healthy cash generation. Revenue rose to 1,745.31 (100M JPY, +10.9% YoY), while operating income increased to 147.13 (+35.5% YoY), driving an operating margin of 8.4%. Net income attributable to owners reached 104.59 (+29.1% YoY), translating to a net margin of 6.0%. Gross profit expanded to 244.88 with a gross margin of 14.0%, up ~200 bps YoY on better project economics. Operating margin expanded by ~153 bps YoY (8.4% vs 6.9%), and net margin by ~84 bps (6.0% vs 5.2%), reflecting improved execution and cost control. DuPont ROE printed at 11.3%, supported by solid profitability (net margin 6.0%) and healthy asset turnover (1.44x) with conservative leverage (1.31x). Earnings quality was high: OCF of 143.88 exceeded net income by 1.38x, and free cash flow totaled 92.59 after 51.93 of growth capex. Cash conversion (OCF/EBITDA) of 0.87x was near the high-quality threshold, aided by favorable progress billings and working capital discipline. The balance sheet is robust: current ratio 341%, Debt/EBITDA 0.09x, and EBITDA interest coverage 144x, with cash at 3.86x short-term debt. Dividend payout ratio was 60.6% with FCF coverage of 1.46x, indicating sustainability alongside elevated reinvestment (CapEx/Depreciation ~3.0x). Management handily beat full-year guidance on profit: operating income +13% and net income +16% vs plan, despite slightly undershooting revenue by 0.3%. Extraordinary items and non-operating contributions were immaterial to the earnings outcome. Industry demand for engineering/construction services remained supportive, and a major customer concentration with ENEOS persisted. Forward implications include improved capacity and margin resilience given higher PPE and intangible investments, with ample balance sheet capacity to fund growth and shareholder returns.

Profitability Analysis

ROE (11.3%) = Net Profit Margin (6.0%) × Asset Turnover (1.44x) × Financial Leverage (1.31x). The largest YoY driver was net profit margin improvement (c.+84 bps), underpinned by a ~200 bps expansion in gross margin and a ~153 bps expansion in operating margin as execution improved on completed construction. SG&A rose to 97.75 but remained well-contained relative to revenue growth, enabling operating leverage. Interest burden was favorable (EBT/EBIT 1.019), reflecting very low interest costs, and the tax burden (NI/EBT 0.697) was within a normal range. The margin gains look largely operational—better project mix and cost control—with sustainability supported by disciplined bidding and provisioning; however, competitive pricing and input inflation can moderate further expansion. No signs of cost drift or SG&A outpacing sales were evident; profitability trends remain constructive.

Growth Assessment

Revenue grew 10.9% YoY to 1,745.31, with completed construction gross profit up 29.4% to 244.88, signaling healthy demand and improved unit economics. Operating income grew 35.5%, outpacing sales due to operating leverage. EBITDA rose to 164.75 (margin 9.4%), reinforcing cash-generative growth. Investment intensity increased (CapEx 51.93 vs Depreciation 17.62), consistent with capacity expansion and productivity upgrades. Management’s full-year plan was exceeded on profit: operating income +13.2% and net income +16.2% vs guidance, while sales were essentially on plan (-0.3%), implying better-than-expected margins. Outlook is supported by domestic engineering demand and strong customer relationships, though customer concentration and periodic project volatility remain watch points.

Financial Health

Liquidity is strong: current ratio 340.8% and quick ratio 340.8%. Solvency is conservative: Debt/EBITDA 0.09x, EBITDA interest coverage 144.5x, and Debt/Capital 1.6%. Working capital is ample with 623.91 of surplus and cash/short-term debt at 3.86x, limiting maturity mismatch risk. Equity increased to 926.29, supported by retained earnings and AOCI gains. Investment securities rose to 64.06, enhancing financial flexibility. Intangibles remain low at 1.7% of assets, indicating limited balance-sheet risk from M&A-related assets.

Notable B/S Changes

Cash & Deposits: +22.22 (+62.2%) - Strengthened liquidity from improved OCF and disciplined working capital. Investment Securities: +16.95 (+36.0%) - Increased financial assets enhance optionality and income resilience. Intangible Assets: +4.28 (+25.4%) - Incremental IT/engineering capabilities; amortization burden remains minimal.

Cash Flow Quality

OCF of 143.88 covered net income 1.38x, indicating high earnings quality. Free cash flow of 92.59 funded dividends with 1.46x coverage, even as capex accelerated (51.93; CapEx/Depreciation ~2.95x). Working capital dynamics were constructive: receivables collection contributed positively, payables normalization slightly consumed cash, and advances on uncompleted contracts exceeded costs on uncompleted (9.03 vs 7.27), supporting positive progress-billing cash. Accruals ratio of -3.2% corroborates cash-backed earnings. No indications of working capital manipulation are evident in the period.

Dividend Sustainability

Total DPS was 117 JPY, equating to a 60.6% payout ratio on reported EPS of 193.71 JPY. FCF coverage was 1.46x, leaving headroom for reinvestment and potential incremental returns. DOE stood around the mid-single digits, aligned with conservative capital policy. With low leverage, strong OCF, and manageable capex, the current dividend level appears sustainable within the company’s cash generation profile.

Risk Assessment

Business risks include Project execution risk inherent in EPC and construction, including potential cost overruns and schedule delays, Customer concentration: ENEOS accounted for roughly 38% of sales (659.85 out of 1,745.31, 100M JPY basis), Input cost and subcontractor availability risk affecting gross margins, Domestic demand concentration with revenue and assets predominantly in Japan.

Financial risks include Short-term debt ratio at 100% of total debt, creating nominal refinancing exposure despite strong liquidity, Provisioning for construction losses (3.66) could rise if project conditions deteriorate, Interest rate normalization could marginally reduce interest burden, though sensitivity is low given minimal debt.

Key concerns include Margin sustainability as competitive dynamics and materials/labor inflation fluctuate, Order intake visibility and backlog conversion cadence typical of the construction/engineering cycle, High reliance on a single large customer increases earnings volatility if spending plans change.

Investment Implications

Key takeaways include Quality beat: Profit significantly exceeded plan on stronger margins; cash generation was robust, Operating leverage evident with ~153 bps operating margin expansion and ~200 bps gross margin expansion, Balance sheet strength (Debt/EBITDA 0.09x; current ratio 341%) provides ample strategic flexibility, Dividend appears well-covered by FCF despite elevated growth capex, Customer concentration remains the key structural risk to monitor.

Metrics to watch include Gross margin on completed construction and provision for loss on construction, Order intake and backlog-to-revenue ratio, Receivables days and advances vs. costs on uncompleted construction, CapEx/Depreciation and EBITDA cash conversion, Revenue and profit concentration by top customer.

Regarding relative positioning, Within Japan’s engineering/construction peers, レイズネクスト combines above-peer balance sheet conservatism with improving margin quality and strong cash generation, positioning it favorably on profitability resilience and capital allocation flexibility.