| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥209.4B | ¥141.2B | +48.3% |
| Operating Income | ¥56.5B | ¥28.6B | +97.6% |
| Ordinary Income | ¥59.9B | ¥29.0B | +106.4% |
| Net Income | ¥43.9B | ¥16.7B | +162.5% |
| ROE | 5.9% | 2.5% | - |
FY2026 Q1 results delivered substantial revenue and profit growth: Revenue ¥209.4B (YoY +¥68.2B +48.3%), Operating Income ¥56.5B (YoY +¥27.9B +97.6%), Ordinary Income ¥59.9B (YoY +¥30.9B +106.4%), Net Income ¥43.9B (YoY +¥27.2B +162.5%). The core Probe Card business led results with Revenue ¥206.3B (+51.0%) and Operating Income ¥68.2B (+85.4%), lifting the operating margin to 27.0% (up 6.8ppt from 20.2% a year earlier). Gross margin slightly declined to 47.3% (from 53.9%), but SG&A ratio was compressed to 20.3% (from 33.7%), a 13.4ppt improvement, demonstrating strong operating leverage. At the ordinary income level, foreign exchange gains of ¥3.2B contributed, and recognition of Special Gain ¥10.0B (subsidy) pushed the net income margin to 21.0%. Progress against the full-year forecast (Revenue ¥457.0B, Operating Income ¥129.0B, Net Income ¥92.0B) is strong at 45.8% of Revenue, 43.8% of Operating Income, and 47.7% of Net Income, meaningfully above the typical Q1 contribution of 25%.
[Revenue] Revenue ¥209.4B (+48.3%) comprised Probe Card Business ¥206.3B (+51.0%) and Test Equipment Business ¥3.2B (-31.3%). The Probe Card Business accounted for 98.5% of total revenue; recovery in semiconductor test demand and a mix shift toward higher value-added products drove the revenue increase. Test Equipment revenue fell from ¥4.6B to ¥3.2B, indicating further portfolio concentration. Cost of sales was ¥110.5B, yielding a gross margin of 47.3% (down 6.6ppt from 53.9%), partly due to higher variable costs from scale expansion and work-in-process (WIP) increasing to ¥91.2B (from ¥82.5B) causing production-stage accumulation. Gross profit rose materially to ¥99.0B (prior ¥76.1B, +30.0%) in absolute terms.
[Profitability] SG&A was ¥42.5B, down ¥5.1B from ¥47.6B a year earlier, compressing to 20.3% of sales (prior 33.7%), reflecting relative dilution of fixed costs and operating leverage. Operating Income ¥56.5B (+97.6%), Operating Margin 27.0% (up 6.8ppt from 20.2%). Non-operating items included foreign exchange gains of ¥3.2B contributing to Non-operating Income of ¥3.8B, offset by Non-operating Expenses of ¥0.3B (including interest expense ¥0.2B), resulting in Ordinary Income ¥59.9B (+106.4%). Special Gain ¥10.0B (subsidy) was a one-off factor; after Special Loss ¥0.1B, Pre-tax Income was ¥69.8B. Less corporate taxes and others of ¥25.9B (effective tax rate 37.1%) yields Net Income ¥43.9B (+162.5%). Comprehensive Income reached ¥116.2B, 2.6x Net Income, mainly due to Other Securities Valuation Gains of ¥75.8B. In conclusion, large revenue growth in the core business and efficient absorption of fixed costs drove the earnings expansion, but excluding the one-off Special Gain ¥10.0B and FX gain ¥3.2B, the underlying ordinary-level net income is estimated at approximately ¥30B.
The Probe Card Business posted Revenue ¥206.3B (+51.0%), Operating Income ¥68.2B (+85.4%), and an Operating Margin of 33.0%, maintaining high profitability. This marks substantial expansion from prior-year Revenue ¥136.6B and Operating Income ¥36.8B, with higher-value products for advanced nodes growing amid semiconductor test demand recovery. The 33.0% margin is 6.0ppt above the company-wide average of 27.0%, highlighting strong profitability of the core segment. Conversely, the Test Equipment Business recorded Revenue ¥3.2B (-31.3%) and Operating Loss ¥3.1B (widened from operating loss ¥1.0B prior year, -222.9%), with an Operating Margin of -98.1%. The contraction from prior Revenue ¥4.6B continues, and delayed structural reforms in the segment diluted group margin by about ¥6.0B. Corporate overheads (administrative costs) were ¥8.6B (prior ¥7.2B, +18.9%), representing 4.1% of revenue and remaining relatively contained against the revenue increase.
[Profitability] Operating Margin 27.0% improved 6.8ppt from 20.2% due to revenue growth and fixed cost absorption. Net Margin 21.0% rose 9.2ppt from 11.8%, but excluding Special Gain ¥10.0B (≈22.8% of net income), underlying net margin is estimated around 14%. ROE 5.9% remains subdued despite large net income increase, due to expanded average equity during the period of ¥700.2B. ROE decomposition: Net Margin 21.0% × Asset Turnover 0.19 × Financial Leverage 1.53x.
[Cash Quality] Working capital efficiency deteriorated: DSO 241 days (Accounts Receivable ¥138.3B ÷ Q1 Revenue ¥209.4B × 365), DIO 469 days (Inventory ¥142.2B ÷ COGS ¥110.5B × 365), CCC 404 days – levels of concern. WIP ¥91.2B accounts for 64.3% of inventories, suggesting production-stage accumulation. [Investment Efficiency] Asset Turnover 0.19x (= Revenue ¥209.4B ÷ Ending Total Assets ¥1,134.6B × 4) is low, pressured by growth in Investment Securities ¥216.9B (19.1% of total assets). [Financial Soundness] Equity Ratio 65.2% (prior 66.7%), D/E 0.53x (Interest-bearing debt total ¥65.2B ÷ Equity ¥739.9B), Debt/Capital 8.0% – conservative. Interest Coverage 332x (Operating Income ¥56.5B ÷ Interest Expense ¥0.2B) indicates very strong interest-bearing capacity. Current Ratio 171.6%, Quick Ratio 171.6% show ample short-term liquidity; Cash ¥151.4B far exceeds Short-term Borrowings ¥2.9B.
Cash flow statement data were not disclosed; funding trends are inferred from balance sheet movements. Cash stood at ¥151.4B (down ¥41.7B from prior ¥193.1B), and an increase in Investment Securities (¥216.9B, up ¥110.3B from prior ¥106.6B) likely absorbed funds beyond cash generated by operations. In working capital, Accounts Receivable ¥138.3B (prior ¥114.1B, +¥24.2B) and Inventories ¥142.2B (prior ¥131.9B, +¥10.3B) increased funding needs, partially offset by Accounts Payable ¥92.8B (prior ¥74.9B, +¥17.9B). Working capital expansion is estimated at about ¥1.6B? [Note: original numeric estimate was 約16億円; preserve as approx. ¥16B] — estimated increase is approximately ¥16B, indicating cash generation lagging high growth. Decrease in Product Warranty Provisions to ¥12.9B (prior ¥16.1B, -¥3.2B) reduces future cash outflow pressure, but warranty cost level of 6.2% of sales remains high, posing risk of additional cash outflows if quality issues arise. Of Comprehensive Income ¥116.2B, ¥72.3B above Net Income ¥43.9B is OCI (mainly Other Securities Valuation Gains ¥75.8B), meaning valuation gains boosted equity without cash inflows. Interest-bearing debt is ¥65.2B (Short-term Borrowings ¥2.9B + Long-term Borrowings ¥61.3B, marginally down from prior ¥65.3B), essentially flat. Overall, equity growth has been driven more by valuation gains than by free cash generation.
Operating Income ¥56.5B reflects recurring core earnings from the Probe Card Business. The ¥3.4B gap between Ordinary Income ¥59.9B and Operating Income is attributable to Non-operating Income ¥3.8B (chiefly FX gains ¥3.2B) less Non-operating Expenses ¥0.3B; FX gains are market-dependent and variable. The ¥16.0B gap between Ordinary Income ¥59.9B and Net Income ¥43.9B is mainly Special Gain ¥10.0B (subsidy, one-off) and corporate taxes ¥25.9B. Excluding Special Gain, underlying net income is estimated at approx. ¥33B, implying EPS around 85¥. The difference between Comprehensive Income ¥116.2B and Net Income ¥43.9B of ¥72.3B is mainly Other Securities Valuation Gains ¥75.8B; these valuation gains raise equity without cash inflow and could reverse on market downturns. On working capital, despite revenue growth of +48.3%, inventories rose only +7.8% and accounts receivable +21.2% relatively, but absolute DSO 241 days and DIO 469 days indicate long-term accumulation, and delays in acceptance or production-stage accumulation are impairing cash generation via accruals. Product Warranty Provisions ¥12.9B (6.2% of sales) reflect heavy quality costs and potential future cash outflow risk. In sum, core operating profit quality is high, but one-off items and valuation gains inflate reported profits, and deteriorating working capital efficiency constrains cash-based earnings quality.
Full-year forecast: Revenue ¥457.0B (+38.0%), Operating Income ¥129.0B (+70.4%), Ordinary Income ¥127.0B (+71.7%), Net Income ¥92.0B, EPS237.33円. Q1 progress ratios are Revenue 45.8%, Operating Income 43.8%, Ordinary Income 47.2%, Net Income 47.7%, well above the typical Q1 contribution of 25%. Sales and profits are thus likely being achieved ahead of schedule, and the company has revised guidance at the quarter-end. Note Q1 included Special Gain ¥10.0B (subsidy); excluding this, ordinary-basis net income is about ¥33B. Against the full-year Net Income forecast ¥92.0B, remaining net income required over the next three quarters is ¥58B (average ¥19B per quarter), achievable even excluding recurrence of the special gain. On an operating income basis, with full-year target ¥129.0B and Q1 contribution ¥56.5B (43.8%), remaining ¥72.5B (average ¥24B per quarter) is required. If Q1 operating margin 27.0% is maintained, the company could exceed the full-year forecast, but seasonality and order timing variability suggest only a modest upside relative to current guidance at this stage.
No dividend was paid in Q1 (same as prior year), giving a Payout Ratio of 0%. Company policy indicates year-end dividend forecast will be disclosed at the Q2 results. Given Net Income ¥43.9B, Cash ¥151.4B, and estimated Operating Cash Flow generation, dividend-paying capacity appears sufficient, but working capital stagnation (CCC 404 days) may constrain free cash generation; dividend policy will be decided based on performance progress and cash generation. No share buyback was disclosed; shareholder returns are presumed to focus on dividends. Shares outstanding 40,025 thousand shares (including 1,261 thousand treasury shares), weighted average shares during the period 38,764 thousand shares, indicating limited dilution.
Working capital efficiency deterioration risk: DSO 241 days, DIO 469 days, CCC 404 days indicate prolonged accumulation; WIP ratio 64.3% suggests production bottlenecks and acceptance delays. Working capital burden is estimated to have increased by approx. ¥16B in the high-growth phase; if revenues plateau or decline, inventory write-downs or delayed accounts receivable collections could pressure cash flows and erode investment capacity and dividend resources.
Upside in quality costs risk: Product Warranty Provisions ¥12.9B (6.2% of sales) exceed industry norms; additional claims or rework would require provisioning and compress gross margins. Given the nature of semiconductor test equipment, customer-side defects can lead to delivery delays and damages, so variability in warranty costs could materially affect the sustainability of the 27.0% operating margin.
Business concentration risk: Probe Card Business accounts for 98.5% of revenue, making performance highly correlated to demand from specific customers and applications. The Test Equipment Business is loss-making (Operating Loss ¥3.1B, margin -98.1%), and without diversification progress, cyclical downturns in semiconductors could result in revenue and earnings declines. Investment Securities ¥216.9B (19.1% of assets) valuation swings also affect Comprehensive Income and equity; market downturns could generate valuation losses that weaken financial soundness metrics.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 27.0% | 6.8% (2.9%–9.0%) | +20.1pt |
| Net Margin | 21.0% | 5.9% (3.3%–7.7%) | +15.0pt |
Profitability materially exceeds the industry median; Operating Margin is at the top-tier level.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 48.3% | 13.2% (2.5%–28.5%) | +35.1pt |
Growth rate exceeds industry median by ~35ppt, indicating strong growth momentum.
※ Source: Company compilation
High profitability of the core business and fast progress toward full-year targets: Probe Card Operating Margin 33.0% and Company-wide Operating Margin 27.0% exceed the industry median of 6.8% by ~20ppt, indicating a high value-added position in semiconductor test equipment. Q1 progress vs. full-year forecast (Revenue 46%, Operating Income 44%, Net Income 48%) well exceeds typical 25% and suggests upside to full-year forecasts. However, underlying net income excluding Special Gain ¥10.0B (22.8% of net income) and FX gain ¥3.2B is estimated around ¥33B, so assessment of sustainable earnings power is necessary.
Monitoring of working capital efficiency and quality costs is critical: DSO 241 days, DIO 469 days, CCC 404 days represent warning levels; WIP ratio 64.3% suggests production inefficiency. Working capital likely expanded by about ¥16B in the high-growth phase, so if future revenue growth slows, inventory write-downs or AR collection delays could impair free cash flow. Product Warranty Provisions ¥12.9B (6.2% of sales) exceed industry norms; upside in warranty costs would challenge the sustainability of the 27.0% operating margin. Quarterly trends in working capital days and warranty cost ratio will be key indicators to assess earnings quality and cash generation.
This report is an AI-generated earnings analysis based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm from publicly disclosed financial statements. Investment decisions are your responsibility; consult a professional advisor as appropriate.