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 | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1306.7B | ¥1057.3B | +23.6% |
| Operating Income | ¥148.2B | ¥106.3B | +39.5% |
| Profit Before Tax | ¥141.1B | ¥78.7B | +79.2% |
| Net Income | ¥86.2B | ¥44.8B | +92.5% |
| ROE | 1.8% | 0.9% | - |
Q1 FY2027 posted higher revenue and earnings, with a strong set of results reflecting operating leverage. Revenue was ¥1306.7B (¥1057.3B in the prior year, +23.6%), Operating Income was ¥148.2B (¥106.3B in the prior year, +39.5%), and Net Income attributable to owners of the parent was ¥86.9B (¥45.5B in the prior year, +90.9%). The primary drivers of revenue growth were the Americas (+37.2%), EMEA (+24.7%), and Head Office Operations (+49.6%), while China was the only region to post a decline (-22.6%). The SG&A ratio declined to 32.6% (36.2% in the prior year), and together with the impact of higher revenue, this improved the Operating Income margin to 11.3% (10.1% in the prior year).
【Revenue】Revenue was ¥1306.7B, representing a year-on-year increase of +23.6%. By region, the Americas at ¥392.1B (+37.2%), EMEA at ¥423.8B (+24.7%), and Head Office Operations at ¥254.3B (+49.6%) led growth, while AP also secured higher revenue at ¥103.1B (+15.5%). China, at ¥133.4B (-22.6%), was the only segment to post a revenue decline.
【Profitability】Operating Income was ¥148.2B (+39.5%). Although the cost of sales ratio rose slightly to 49.3% (48.5% in the prior year), the SG&A ratio declined to 32.6%, resulting in positive operating leverage. Profit Before Tax was ¥141.1B (+79.2%); foreign exchange gains of ¥7.9B partially offset financial expenses of ¥12.7B and equity-method investment losses of ¥4.8B. The effective tax rate remained high at 38.9%, partially limiting Net Income growth, but Net Income increased substantially to ¥86.9B (+90.9%). The company achieved both revenue and earnings growth, with improved regional mix and greater cost efficiency supporting profit growth.
Head Office Operations was the largest contributor to company-wide profit, with Operating Income of ¥64.4B (profit margin of 25.3%), representing substantial earnings growth of +189.0% year on year. EMEA recorded higher revenue and earnings, with revenue of ¥423.8B (+24.7%) and Operating Income of ¥37.0B (+63.7%, profit margin of 8.7%). The Americas continued to expand in scale, with revenue of ¥392.1B (+37.2%), while Operating Income was ¥25.9B (+223.7%, profit margin of 6.6%), remaining less profitable than other regions. AP posted higher revenue of ¥103.1B (+15.5%), but Operating Income declined to ¥10.6B (-31.0%, profit margin of 10.3%). China was the only segment to record both lower revenue and lower earnings, with revenue of ¥133.4B (-22.6%) and Operating Income of ¥9.5B (-42.9%, profit margin of 7.1%), making it an area requiring close monitoring of demand trends.
【Profitability】The Operating Income margin improved to 11.3% from 10.1% in the prior year, while the Net Income margin expanded to 6.6% from 4.2%. Although the gross profit margin was largely flat at 50.7% (51.5% in the prior year), the decline in the SG&A ratio (32.6%, versus 36.2% in the prior year) contributed to the improvement in profit margins. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥355.9B, reaching 4.1 times Net Income of ¥86.2B, indicating strong cash conversion. 【Investment Efficiency】ROE was 1.8% (quarterly figure), while R&D expenses amounted to ¥72.1B, equivalent to 5.5% of revenue, demonstrating continued investment in technology. 【Financial Soundness】The Equity Ratio was 65.0% (down from 71.4% in the prior year), and interest-bearing debt increased, with long-term borrowings of ¥814.7B (+157.4% year on year). Nevertheless, the capital structure remains at a conservative level.
Operating Cash Flow was ¥355.9B, a substantial increase from ¥94.9B in the prior year, representing strong cash generation equivalent to 4.1 times Net Income of ¥86.2B. The primary drivers of the increase were a decrease in trade receivables (+¥176.9B cash inflow) and lower corporate income tax payments (from ¥116.4B in the prior year to ¥15.2B), partially offset by an increase in inventories (-¥47.1B). Investing Cash Flow was -¥185.9B; in addition to capital expenditures of ¥63.1B, expenditures of ¥78.4B related to the acquisition of subsidiaries were incurred, resulting in an expansion in investment compared with the prior year. Free Cash Flow (Operating Cash Flow + Investing Cash Flow) was ¥170.0B, below total shareholder returns of ¥346.9B, comprising dividend payments of ¥118.1B and share repurchases of ¥228.8B. The difference was covered by ¥500B in long-term borrowings. Cash and cash equivalents increased to ¥1136.3B at period-end, and the funding base remains stable despite the proactive capital allocation policy.
The earnings increase for the current period was primarily attributable to higher revenue from recurring business activities and improved cost efficiency, with limited impact from temporary factors. Among non-operating items, financial expenses of ¥12.7B and equity-method investment losses of ¥4.8B weighed on Profit Before Tax, while foreign exchange gains of ¥7.9B partially offset these items, leaving a modest net impact. The effective tax rate was high at 38.9%, with the tax burden partially limiting growth in the Net Income margin. OCF reached 4.1 times Net Income, indicating a small divergence between earnings and cash and limited accruals, defined as the difference between accounting profit and cash. Accordingly, earnings quality for the current period can be assessed as strong. Comprehensive income was ¥152.1B (¥152.8B attributable to owners of the parent), exceeding Net Income of ¥86.9B. The primary factor was foreign currency translation adjustments of ¥65.8B related to foreign operations; this should be noted as an increase arising from a non-accrual factor, namely foreign currency translation.
Q1 progress against the full-year earnings forecast was 24.0% for revenue (¥1306.7B/¥5450.0B), 24.7% for Operating Income (¥148.2B/¥600.0B), and 23.5% for Net Income attributable to owners of the parent (¥86.9B/¥370.0B), representing standard progress broadly in line with the 25% benchmark for evenly distributed quarterly progress. The full-year forecast calls for revenue growth of +9.0% YoY and Operating Income growth of +15.8%, while the actual growth rates as of Q1—revenue +23.6% and Operating Income +39.5%—are substantially higher. The earnings forecast was revised during the current quarter, and trends in Chinese demand and changes in regional mix from the first half onward will be key factors determining the extent to which the full-year outlook is achieved.
The full-year dividend forecast is ¥40 per share, representing an increase from the prior-year dividend of ¥19 (interim portion). Based on forecast full-year Net Income of ¥370.0B, the estimated total dividend amount will be approximately ¥240B, implying a Payout Ratio of roughly 65%. During Q1, dividend payments totaled ¥118.1B, and the company also conducted ¥228.8B in share repurchases. Combined dividends and share repurchases amounted to total shareholder returns of ¥346.9B, exceeding Free Cash Flow of ¥170.0B. The portion of total returns exceeding FCF was funded through long-term borrowings. While shareholder returns reflect a proactive stance, it should be noted that, relative to cash flow, a portion of the funding source for these returns depends on external financing.
Deceleration in the China Business: Revenue of China RHQ was ¥133.4B (-22.6%) and Operating Income was ¥9.5B (-42.9%), with declines in both revenue and earnings continuing to affect the company-wide regional mix.
Increase in Interest-Bearing Debt and Interest Burden: Long-term borrowings increased to ¥814.7B, up +157.4% year on year, while the Equity Ratio declined to 65.0% (71.4% in the prior year). Interest expenses were ¥12.7B, and changes in the interest-rate environment could affect future financial expenses.
Dependence on Financing for Total Shareholder Returns: Dividends of ¥118.1B and share repurchases of ¥228.8B totaled ¥346.9B, exceeding Free Cash Flow of ¥170.0B. The shortfall was covered by ¥50.0B in long-term borrowings, and the sustainability of the funding source for shareholder returns depends on the accumulation of cash flow.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income Margin | 11.3% | 8.7% (4.2%–14.2%) | +2.6pt |
| Net Income Margin | 6.6% | 7.0% (3.2%–10.6%) | -0.4pt |
The Operating Income margin exceeds the industry median, while the Net Income margin is slightly below the median, partly due to the tax burden.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 23.6% | 6.2% (-1.1%–14.6%) | +17.4pt |
The revenue growth rate is substantially above the industry median, positioning the company among the industry’s high-growth performers.
※Source: Company analysis
The quality of revenue and earnings growth is high. OCF reached 4.1 times Net Income, and revenue growth was based on recurring business activities, namely expansion in the Americas, EMEA, and Head Office Operations, with limited dependence on temporary factors.
The slowdown in the China Business is constraining company-wide growth. China RHQ was the only segment to post both lower revenue and lower earnings, and changes in regional mix are a structural area of focus that will influence future profit-margin trends.
The capital allocation policy is becoming more proactive. A substantial increase in long-term borrowings and large-scale share repurchases are occurring concurrently, with total shareholder returns exceeding FCF and the Equity Ratio trending downward from the prior year.
This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade period). It is not a forecast of the market share price or a recommendation to undertake any specific investment action.
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥766 |
| base | ¥779 |
| bull | ¥795 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥802 |
| Adjusted Forecast EPS | ¥65.7 |
| Cost of Equity r | 9.27% (10-year Japanese government bond 2.77% + equity risk premium 6.00% + size premium 0.50%) |
| Residual Income Persistence Coefficient ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 65.7% |
| Forecast EPS Confidence Adjustment | ×1.080 (based on the industry’s historical guidance achievement rate) |
| Implied PBR / PER |
Sensitivity: ¥758–¥801 at ±1% for the cost of equity, and ¥778–¥779 at ±0.1 for ω.
Notes:
(Calculation model: Residual Income Model / Interest-rate reference month: 2026-07 / This figure does not forecast 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 responsibility, after consulting professionals as necessary.
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| 0.97x / 11.8x |