AKIBA Holdings (6840) FY2026 Q3 Earnings Report

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Executive Summary

Revenue increased 38.2% and operating income increased 59.9%, resulting in higher revenue and earnings, although the earnings structure relied on restraining SG&A expenses to offset the decline in the gross profit margin. Revenue was ¥169.1B (¥122.4B in the previous year, +38.2%), operating income was ¥5.6B (¥3.5B in the previous year, +59.9%), ordinary income was ¥5.6B (¥3.1B in the previous year, +79.2%), and net income attributable to owners of the parent was ¥3.3B (¥0.5B in the previous year, +632.9%). The substantial increase in net income was primarily attributable to the comparative effect of the ¥1.5B extraordinary loss recorded in the same period of the previous year, which was absent in the current period, in addition to the increase in operating income. The gross profit margin declined to 17.5% from 21.8% in the same period of the previous year, but the decline in the SG&A ratio offset this, resulting in a modest improvement in the operating margin to 3.3%.

Factors Driving Performance Changes

【Revenue】Revenue increased to ¥169.1B, representing a year-on-year increase of +38.2%. The Memory, PC-Related Devices and IoT Business expanded sharply to ¥91.0B (53.8% of the total, +80.9% year-on-year), driving company-wide growth. The HPC Business generated ¥22.0B (13.0% of the total, +25.4%), while the Telecommunications Construction Tech Business generated ¥53.9B (31.9% of the total, +2.8%), with growth remaining limited.

【Profit and Loss】Operating income increased to ¥5.6B, representing a year-on-year increase of +59.9%. The gross profit margin declined to 17.5% from 21.8% in the same period of the previous year, a decrease of approximately 427bp, but the SG&A ratio declined by approximately 472bp to 14.2%, improving the operating margin to 3.3% (2.9% in the previous year). Ordinary income was ¥5.6B (+79.2%), including a ¥0.5B foreign exchange gain. Net income of ¥3.3B (+632.9%) was primarily attributable to the reversal of the previous year’s ¥1.5B extraordinary loss and should be evaluated separately from an improvement in recurring earnings power. In conclusion, the company achieved both revenue and earnings growth.

Segment Analysis

The HPC Business grew into the largest earnings contributor, with revenue of ¥22.0B (+25.4% year-on-year), operating income of ¥2.7B (+128.7%), and a profit margin of 12.2% (6.7% in the previous year). The Memory, PC-Related Devices and IoT Business was the largest segment by scale, with revenue of ¥91.0B (+80.9%), but operating income was limited to ¥0.6B and the profit margin to 0.7%. Although the segment returned to profitability from a ¥0.8B loss in the same period of the previous year, profitability remained thin. The Telecommunications Construction Tech Business recorded revenue of ¥53.9B (+2.8%) but operating income declined to ¥1.9B (▲26.1%), with the profit margin falling to 3.5% from 4.8% in the previous year. There are clear differences in earnings power among the businesses, and the rapid growth of the low-margin IoT Business is structurally depressing the company-wide gross profit margin.

Key Financial Indicators

【Profitability】The operating margin of 3.3% (2.9% in the previous year), ordinary income margin of 3.3% (2.5% in the previous year), and net profit margin of 2.3% (attributable to owners of the parent; 0.4% in the previous year) are all trending upward, but remain at low levels. The gross profit margin was 17.5%, down from 21.8% in the same period of the previous year. 【Cash Flow Quality】Cash and deposits were ¥43.5B, and short-term liquidity was secured as current assets of ¥141.1B exceeded current liabilities of ¥83.9B. On the other hand, accounts receivable of ¥62.0B accounted for 41.2% of total assets, with a lengthening collection cycle contributing to the tying up of funds. 【Investment Efficiency】Annualized ROE was 11.9%, with a significant contribution from financial leverage in addition to the net profit margin and asset turnover. 【Financial Soundness】The equity ratio was 29.1% (improved from 25.9% in the previous year), but interest-bearing debt remained high. Dependence on current liabilities, including short-term borrowings of ¥33.7B, is a point requiring attention from a funding perspective.

Cash Flow Analysis

As explicit data from the statement of cash flows is unavailable, fund movements are analyzed based on changes in the balance sheet. Cash and deposits were ¥43.5B, a decrease of ¥10.1B from ¥53.7B in the previous year. Accounts receivable increased to ¥62.0B (¥52.4B in the previous year), while inventories also expanded to ¥15.9B (¥9.1B in the previous year), indicating that the accumulation of working capital accompanying the rapid expansion in sales is pressuring funds. Meanwhile, accounts payable increased substantially to ¥34.4B (¥14.0B in the previous year), suggesting that the increase in trade payables is providing a certain degree of support for cash management. Long-term borrowings declined to ¥18.6B, indicating progress in reducing liabilities, but short-term borrowings remained substantial at ¥33.7B, shortening the funding structure. Overall, the increase in working capital requirements accompanying revenue growth was a factor behind the decline in the cash balance.

Earnings Quality

The increase in earnings for the current period was primarily supported by the fixed-cost absorption effect resulting from the decline in the SG&A ratio, thereby compensating for the deterioration in the gross profit margin. Accordingly, profit conversion efficiency relative to revenue growth was not necessarily high. Other operating income included a ¥0.5B foreign exchange gain, equivalent to approximately 8.6% of operating income of ¥5.6B. Other operating expenses were mainly interest expenses of ¥0.7B, leaving other operating income and expenses approximately balanced. The substantial increase in net income (+632.9%) was significantly driven by the temporary factor of the reversal of the ¥1.5B extraordinary loss recorded in the same period of the previous year and must be distinguished from growth in recurring earnings power. Comprehensive income was ¥3.9B (¥3.4B attributable to owners of the parent), approximately in line with net income of ¥3.3B, indicating that the divergence from net income due to valuation differences on other securities, hedge accounting, and other factors was limited.

Earnings Forecast and Guidance

The full-year earnings forecast is revenue of ¥255.0B (+39.6% year-on-year), operating income of ¥9.0B (+25.7%), and ordinary income of ¥8.0B (+20.8%). The cumulative Q3 progress rates were 66.3% for revenue, 62.7% for operating income, and 69.5% for ordinary income, all below the standard 75% progress level. The delay in operating income progress was particularly notable, and achieving the plan in Q4 will require approximately ¥85.9B in revenue and ¥3.4B in operating income. The earnings forecast was revised during the current quarter, and improvement in the profitability of low-margin businesses and the sustainability of high profitability in the HPC Business will determine the extent to which the Q4 targets are achieved.

Shareholder Returns

The annual dividend forecast is ¥0, and the Q2 dividend is also ¥0. There has been no revision to the dividend forecast. Under the no-dividend policy, the payout ratio is 0%, and capital allocation is directed toward expanding working capital and managing borrowings.

Risk Factors

1. Decline in gross profit margin: The gross profit margin declined to 17.5% from 21.8% in the same period of the previous year, a decrease of approximately 427bp. The Memory, PC-Related Devices and IoT Business, which is central to the sales mix, generated revenue of ¥91.0B (+80.9%) but had a thin profit margin of 0.7%; fluctuations in the product mix and procurement prices directly affect company-wide earnings.

2. Lengthening collection period for accounts receivable: Accounts receivable of ¥62.0B accounted for 41.2% of total assets, and annualized days sales outstanding reached approximately 100 days. The effectiveness of credit and collection management accompanying sales expansion could affect cash management.

3. Financial leverage and dependence on short-term liabilities: The D/E ratio was 2.44x, and the equity ratio was 29.1%. Dependence on short-term liabilities, centered on short-term borrowings of ¥33.7B, is high, resulting in relatively high sensitivity to changes in refinancing terms.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Growth and Capital Efficiency

※Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. Despite revenue and earnings growth, the gross profit margin declined by approximately 427bp year-on-year, and the structural characteristic observed is that the primary driver of earnings growth was fixed-cost absorption resulting from the decline in the SG&A ratio.

2. The HPC Business improved its operating margin to 12.2% from 6.7% in the previous year and accounted for approximately half of consolidated operating income. Meanwhile, the Memory, PC-Related Devices and IoT Business, the largest segment by sales composition, had a profit margin of only 0.7%; the difference in profitability among businesses determines the company-wide margin level.

3. Progress against the full-year plan was 62.7% for operating income and 69.5% for ordinary income, both below the standard progress level of 75%. The profitability trend of low-margin businesses and continued growth in the HPC Business during Q4 are key points of interest in the performance data.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥494–¥525 at Cost of Equity ±1%, and ¥508–¥510 at ω±0.1.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

（Valuation 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 stock price or a recommendation of any specific investment action, and does not predict or guarantee future stock prices）

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary 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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