JAPAN CASH MACHINE CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

The results reflected higher revenue and profits, accompanied by a structural improvement in profit margins, primarily driven by substantial growth in the GlobalGaming segment. Revenue was ¥10.28B (+35.1% YoY), Operating Income was ¥1.62B (+268.2%), Ordinary Income was ¥1.87B (+615.2%), and Net Income was ¥1.59B (+1973.4%). The Operating Income margin improved to 15.8%, up +10.0pt from 5.8% in the previous year, supported by fixed-cost absorption resulting from higher revenue and an improved product mix. Ordinary Income and Net Income grew faster than Operating Income because a foreign exchange gain of ¥0.14B and extraordinary income of ¥0.17B, primarily gains on the liquidation of subsidiaries, were additionally recorded.

Factors Affecting Performance

【Revenue】The main driver of Revenue of ¥10.28B (+35.1%) was GlobalGaming, which generated Revenue of ¥7.57B (+53.4%) and accounted for 73.6% of consolidated Revenue. OverseasCommercial also grew to ¥1.69B (+62.8%). In contrast, DomesticCommercial declined to ¥0.37B (-43.5%), while EquipmentForAmusementIndustry declined to ¥0.65B (-34.1%), indicating softer demand in the domestic and equipment-related segments.

【Profit and Loss】The gross profit margin improved to 41.2%, up +2.7pt from 38.6% in the previous year, while the SG&A ratio declined to 25.4% from 32.8%, resulting in the Operating Income margin expanding to 15.8%, up +10.0pt from 5.8% in the previous year. In non-operating income, a foreign exchange gain of ¥0.14B boosted Ordinary Income, which reached ¥1.87B (+615.2%). Extraordinary income of ¥0.17B, primarily gains on the liquidation of subsidiaries, was also added to profit before tax, resulting in Net Income expanding to ¥1.59B (+1973.4%). Although revenue and profits increased, temporary factors made a relatively significant contribution from the Ordinary Income stage downward.

Segment Analysis

GlobalGaming was the core contributor to consolidated profits, with Revenue of ¥7.57B (73.6% composition ratio, +53.4%) and Operating Income of ¥2.10B (27.7% margin, +97.7%). OverseasCommercial generated Revenue of ¥1.69B (+62.8%) and Operating Income of ¥0.03B (1.5% margin), turning profitable from a ¥0.34B loss in the previous year. DomesticCommercial recorded Revenue of ¥0.37B (-43.5%) and an Operating Loss of ¥0.08B, falling into the red from a ¥0.07B profit in the previous year. EquipmentForAmusementIndustry recorded Revenue of ¥0.65B (-34.1%) and an Operating Loss of ¥0.09B, with the loss widening from ¥0.03B in the previous year. The concentration of consolidated profits in GlobalGaming has intensified.

Key Financial Metrics

【Profitability】The Operating Income margin improved to 15.8%, up +10.0pt from 5.8% in the previous year, while the Net Income margin also rose significantly to 15.4% from 1.0% in the previous year. ROE was 4.3%; despite the sharp increase in Net Income, quarterly total asset turnover remained low at 0.19x. 【Cash Flow Quality】Operating Cash Flow was approximately in line with Net Income (OCF/Net Income ratio of 1.00x), and the OCF/EBITDA ratio was 0.88x, generally a favorable level. 【Investment Efficiency】Total asset turnover was 0.19x (quarterly), with inventory and accounts receivable balances weighing on turnover. 【Financial Soundness】The Equity Ratio was 69.1% (68.6% in the previous year), and the current ratio was extremely high at 573.9%. Against cash and deposits of ¥20.92B, interest-bearing debt—comprising long-term borrowings of ¥1.80B and bonds of ¥6.00B—was limited, indicating a conservative financial foundation.

Cash Flow Analysis

Operating Cash Flow was ¥1.59B, down -18.8% from ¥1.96B in the previous year, but remained approximately at the same level as Net Income of ¥1.59B. In terms of working capital, accounts receivable increased by ¥0.88B, while inventories decreased by ¥0.63B and accounts payable increased by ¥1.03B; the latter two factors supported OCF. Investing Cash Flow was positive at +¥0.79B due to the sale of securities and other factors, generating cash inflows exceeding capital expenditures of ¥0.20B. Financing Cash Flow was -¥1.00B, mainly due to dividend payments of ¥0.54B and other factors. However, Free Cash Flow, comprising the sum of OCF and Investing Cash Flow, was ample at ¥2.38B, a sufficient level to fund dividends and capital expenditures.

Earnings Quality

Of Net Income of ¥1.59B, in addition to the expansion of recurring earnings power represented by Operating Income of ¥1.62B, temporary factors—namely a foreign exchange gain of ¥0.14B and extraordinary income of ¥0.17B, primarily gains on the liquidation of subsidiaries—contributed to the increase. Even on a profit-before-tax basis excluding extraordinary income, a significant improvement from the previous year was observed, indicating that the primary driver of profit growth was a structural improvement in profitability at the operating level. Comprehensive Income was ¥1.82B, a difference of ¥0.23B from Net Income of ¥1.59B. This comprised foreign currency translation adjustments of +¥0.11B and valuation differences on securities of +¥0.12B, neither of which represents a material divergence from the underlying business performance. In terms of working capital, the increase in accounts receivable partially restrained OCF growth relative to Net Income as an accrual-related factor.

Earnings Forecast and Guidance

Progress against the Full-Year forecast was 26.4% for Revenue, approximately in line with the 25% benchmark, while profit items were substantially ahead at 54.1% for Operating Income, 60.3% for Ordinary Income, and 69.0% for Net Income attributable to owners of the parent. This was partly attributable to the foreign exchange gain of ¥0.14B and extraordinary income of ¥0.17B, representing gains on the liquidation of subsidiaries, recorded in Q1. These temporary factors may normalize over the Full Year. The Full-Year forecast calls for Ordinary Income to decline -12.1% YoY, while Revenue and Operating Income are expected to increase, indicating an anticipated change in the earnings mix. There were no revisions to the earnings or dividend forecasts during the quarter.

Shareholder Returns

The annual dividend forecast is ¥46.00, implying a Payout Ratio of approximately 54.3% against forecast EPS of ¥84.79. The breakdown between the interim and year-end dividends has not been disclosed in the available data, but this can be viewed as the Full-Year Payout Ratio. Share repurchases were negligible (¥0.00B), with shareholder returns during the period centered solely on dividends. Free Cash Flow of ¥2.38B exceeded total annual dividends (approximately ¥1.25B based on shares outstanding), and given the cash and deposits balance of ¥20.92B, the company has a financial foundation supporting the sustainability of its dividends.

Risk Factors

1. Segment concentration risk: GlobalGaming accounts for 73.6% of consolidated Revenue and the majority of Operating Income, meaning that demand fluctuations in a specific business area could have a substantial impact on overall performance.

2. Deterioration in the domestic and equipment-related segments: DomesticCommercial recorded Revenue of ¥0.37B (-43.5%) and fell into an Operating Loss of ¥0.08B, while EquipmentForAmusementIndustry also recorded an Operating Loss of ¥0.09B, with the loss widening from the previous year.

3. Reliance on temporary factors: The growth in Ordinary Income and Net Income includes a foreign exchange gain of ¥0.14B and extraordinary income of ¥0.17B, representing gains on the liquidation of subsidiaries. It is therefore necessary to assess the underlying earnings level excluding these factors.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Income margin and Net Income margin exceed the industry median, placing the company among the industry’s higher profitability levels.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeds the industry median, representing an outstanding pace of Revenue growth within the industry.

※Source: Company compilation

Key Earnings Highlights

1. The Operating Income margin improved to 15.8%, up +10.0pt from 5.8% in the previous year, confirming a structural improvement in profitability driven by GlobalGaming’s growth and fixed-cost absorption.

2. Full-Year progress is ahead at 54.1% for Operating Income, 60.3% for Ordinary Income, and 69.0% for Net Income; however, because this includes contributions from foreign exchange gains and extraordinary income, monitoring normalized underlying performance will be important going forward.

3. From a working capital perspective, the decline in inventories and increase in accounts payable supported OCF. Changes in capital efficiency during the period of rapid Revenue expansion warrant attention.

Theoretical Share Price (Reference Value)

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.

Sensitivity: ¥1,225–¥1,294 at ±1% for the cost of equity, and ¥1,255–¥1,261 at ±0.1 for ω.

Notes:

• Because Net Income progress against the Full-Year forecast (69%) exceeds the standard benchmark (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies ahead of schedule tend to exceed their forecasts; adjustments may be excessive for businesses with strong seasonality).
• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter are used (there is a timing difference from the Full-Year forecast).

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value 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 available earnings data. Investment decisions should be made at your own discretion and responsibility, with consultation with a professional adviser as necessary.

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