SAMCO (6387) FY2026 FY Earnings Report

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Executive Summary

In addition to higher revenue, operating leverage driven by improved gross margin and control of SG&A expenses resulted in higher revenue and earnings, with profit growth exceeding revenue growth. Revenue was ¥108.0B (+15.6% YoY), Operating Income was ¥30.0B (+28.2%), Ordinary Income was ¥31.1B (+31.0%), and Net Income was ¥22.3B (+31.4%). The Operating Income margin improved to 27.8% from 25.1% in the previous year, with improved gross profitability, in addition to the benefit of higher revenue, leading the increase in earnings.

Factors Affecting Performance

【Revenue】Revenue increased 15.6% YoY to ¥108.0B. By region, Japan was the core market (¥57.6B based on the previous year’s disclosed figures), while overseas revenue from Taiwan, China, the United States, and other regions accounted for a certain proportion of total revenue, with progress in overseas projects apparently contributing to revenue growth. Contract liabilities (customer advances) increased by ¥11.1B YoY to ¥15.4B, and the accumulation of project backlogs is providing a foundation for revenue growth.

【Profit and Loss】The gross margin improved to 51.3% from 50.0% in the previous year, while SG&A expenses increased 8.8% YoY to ¥25.3B, below the 15.6% revenue growth rate. As a result, the Operating Income margin improved by 270bp to 27.8% from 25.1% in the previous year, and Operating Income increased 28.2% to ¥30.0B. Non-operating income was ¥1.3B, primarily comprising a ¥0.7B foreign exchange gain, resulting in Ordinary Income of ¥31.1B (+31.0%). Although a ¥0.1B loss on disposal of fixed assets was recorded as an extraordinary loss, the impact was minor, and Net Income was ¥22.3B (+31.4%). The company achieved both revenue and earnings growth, while the quality of profitability also improved.

Segment Analysis

Although operating profit and loss data by segment have not been disclosed, revenue by region has been disclosed. Japan accounted for ¥57.6B, China ¥14.1B, the United States ¥8.3B, Taiwan ¥5.5B, South Korea ¥3.4B, Southeast Asia and India ¥2.2B, and other regions ¥2.4B (previous-period results, totaling ¥93.4B), with Japan accounting for slightly more than 60% of total revenue. As current-period data by region has not been disclosed, the previous-period composition is presented for reference.

Key Financial Metrics

【Profitability】The Operating Income margin of 27.8% (25.1% in the previous year), Net Income margin of 20.6% (18.2% in the previous year), and ROE of 14.3% (13.1% in the previous year) all improved from the previous year. The gross margin improved to 51.3% from 50.0% in the previous year, with both revenue growth and improved profitability supporting earnings growth. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥38.1B, approximately 1.7 times Net Income of ¥22.3B, indicating strong cash conversion. Accruals (the difference between profit and cash flow) were negative, indicating high earnings quality from an accounting perspective; however, increases in inventories, particularly work in process of ¥27.9B, were a factor depressing OCF. 【Investment Efficiency】Capital expenditures were ¥1.2B, slightly below depreciation and amortization of ¥1.3B, indicating that investment was primarily for the maintenance and replacement of existing facilities. Total asset turnover was approximately 0.5x. 【Financial Soundness】The Equity Ratio was 72.6% (slightly down from 76.3% in the previous year), while the Current Ratio was high at approximately 3.3x, with current assets of ¥158.4B against current liabilities of ¥48.5B. Interest-bearing debt consisted solely of ¥10.0B in short-term borrowings; however, cash and deposits of ¥102.0B substantially exceeded this amount, limiting the company’s substantive liquidity risk.

Cash Flow Analysis

Cash flow from operating activities was ¥38.1B, a substantial 215.7% increase YoY, demonstrating cash generation exceeding Net Income of ¥22.3B. Factors contributing to the increase included an ¥11.1B increase in contract liabilities, a ¥6.7B decrease in trade receivables, and a ¥3.2B increase in trade payables, while a ¥10.9B increase in inventories was a negative factor. Cash flow from investing activities was -¥1.5B, primarily reflecting ¥1.2B in capital expenditures, indicating that the company is not in a phase of large-scale investment. Cash flow from financing activities was -¥5.2B, mainly due to dividend payments and other items. As a result, free cash flow (OCF + investing CF) was a substantial positive ¥36.6B, securing ample funds for dividends and further accumulation of cash on hand. Cash and deposits increased to ¥102.0B, representing approximately 47% of total assets and maintaining a strong liquidity position.

Earnings Quality

The ¥8.8B difference between Ordinary Income of ¥31.1B and Net Income of ¥22.3B primarily comprised income taxes and other taxes of ¥8.7B, resulting in an effective tax rate of approximately 28.1%, within the normal range. Extraordinary losses consisted solely of a ¥0.1B loss on disposal of fixed assets, with a minor impact on Net Income; therefore, there was little distortion in earnings from temporary factors. Of the ¥1.3B in non-operating income, the ¥0.7B foreign exchange gain was the main component, but this represented only approximately 1% of revenue, indicating a core-business-led earnings structure with low dependence on non-operating income and expenses. From an accruals perspective, OCF of ¥38.1B exceeded Net Income of ¥22.3B, supporting the assessment that earnings quality is high because accounting profits are backed by actual cash generation. On the other hand, work in process of ¥27.9B accounted for 80% of total inventories. While this may reflect project progress, it requires monitoring from the perspectives of acceptance delays and inventory valuation.

Earnings Forecast and Guidance

The company’s full-year forecast is revenue of ¥145.0B (+34.3% YoY), Operating Income of ¥38.8B (+29.1%), Ordinary Income of ¥38.4B (+23.5%), and Net Income of ¥27.4B (+22.8%). Cumulative actual results represent 74.5% of the revenue forecast, 77.4% of the Operating Income forecast, 81.0% of the Ordinary Income forecast, and 81.4% of the Net Income forecast. Compared with a standard progress rate of 75%, earnings are progressing ahead of revenue. While achieving the full-year revenue growth target of 34.3% is expected to require accelerated revenue growth during the remainder of the period, earnings progress is ahead of schedule, and continued high profitability would provide a certain basis for achieving the full-year plan.

Shareholder Returns

The annual dividend is ¥75 per share at year-end (no dividend in the previous year), resulting in a Payout Ratio of 27.0% against current-period EPS of ¥277.73. Share repurchases were ¥0.0B and were negligible, indicating a shareholder return policy centered on dividends. Total dividends were approximately ¥6.0B, a reasonable level relative to free cash flow of ¥36.6B and OCF of ¥38.1B, and dividend sustainability is considered high given cash and deposits of ¥102.0B. Based on forecast full-year EPS of ¥341.12, the forecast Payout Ratio would be approximately 22.0%, meaning that if earnings growth is achieved, the dividend burden would become even lighter.

Risk Factors

1. Increase in work in process: Work in process was ¥27.9B, accounting for approximately 80% of total inventories, and increased substantially from the previous period. While this may reflect progress in customized production, delays in acceptance or changes in specifications could affect revenue recognition and inventory valuation.

2. Concentration of funding in short-term borrowings: Interest-bearing debt of ¥10.0B consists entirely of short-term borrowings, indicating a high degree of dependence on short-term liabilities. However, cash and deposits of ¥102.0B substantially exceed this amount, limiting the substantive impact on liquidity at present.

3. Impact of foreign exchange fluctuations: Foreign exchange gains accounted for ¥0.7B of non-operating income, representing a certain proportion of Operating Income. As the company has overseas projects, fluctuations in the yen exchange rate could affect future non-operating income and expenses as well as profitability.

Industry Benchmark (For Reference; Company Analysis)

Key Takeaways from the Financial Results

1. Revenue growth of +15.6% was accompanied by Operating Income growth of +28.2%, clearly demonstrating operating leverage from improved gross margin (51.3% versus 50.0% in the previous year) and relative control of SG&A expenses.

2. OCF reached ¥38.1B, approximately 1.7 times Net Income, indicating strong cash conversion and the ability to generate funds for dividends. Balance sheet safety was also high, with an Equity Ratio of 72.6% and a Current Ratio of approximately 3.3x.

3. Work in process represents a high proportion of inventories. Whether this reflects temporary cash tied up due to project progress or production and acceptance delays should be monitored through the future reduction in contract liabilities and the pace of conversion into revenue.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,414–¥2,561 at ±1% for the Cost of Equity, and ¥2,472–¥2,507 at ±0.1 for ω.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-08 / Mechanically calculated values based solely on publicly disclosed data; these are not forecasts of market share prices or recommendations of specific investment actions, and do not predict or guarantee future share prices.)

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

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