MICRONICS JAPAN CO.,LTD. FY2026 Q2 Earnings Report

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Executive Summary

Against the backdrop of expanding demand for probe cards used in semiconductor testing, the Company delivered a highly profitable earnings result, with both revenue and profit increasing and profit growth significantly outpacing revenue growth. Revenue was ¥49.21B (+48.6% YoY), Operating Income was ¥15.56B (+105.5%), Ordinary Income was ¥16.26B (+119.9%), and Net Income was ¥11.46B (+140.1%), with all figures showing growth well above double digits. The profit growth rate exceeded twice the revenue growth rate, reflecting the high-margin mix of the core ProbeCard Business and operating leverage from the absorption of fixed costs.

Factors Affecting Business Results

【Revenue】Revenue was ¥49.21B (+48.6% YoY). By segment, ProbeCard led the Company with revenue of ¥48.54B (+50.8% YoY; 98.7% of total), while TestEquipment contracted to ¥0.66B (-27.9% YoY). Dependence on ProbeCard has increased further.

【Profit and Loss】Operating Income was ¥15.56B (+105.5% YoY), and the Operating Income margin improved by approximately 8.8pt from the previous year to 31.6%. The gross margin improved from the previous year to 51.0%, while SG&A expenses increased 8.2% to ¥9.56B, substantially below the rate of revenue growth, resulting in positive operating leverage. ProbeCard generated Operating Income of ¥18.29B, with a high margin of 37.7%, while TestEquipment recorded an Operating Loss of ¥0.78B, diluting Company-wide profits. Ordinary Income was ¥16.26B (+119.9% YoY), including non-operating income of ¥0.80B, of which foreign exchange gains accounted for ¥0.69B. Net Income was ¥11.46B (+140.1% YoY), despite including extraordinary income of ¥1.00B from subsidies and bearing ¥5.79B in income taxes and other taxes. The key characteristic was an improvement in the earnings structure, with both revenue and profit increasing and the profit growth rate substantially exceeding the revenue growth rate.

Segment Analysis

The ProbeCard Business was the core of both revenue and profit, maintaining high profitability with revenue of ¥48.54B (+50.8% YoY), Operating Income of ¥18.29B (+94.1% YoY), and a margin of 37.7%. The TestEquipment Business recorded an Operating Loss of ¥0.78B on revenue of ¥0.66B (-27.9% YoY), deteriorating from the ¥0.27B Operating Loss recorded in the previous year. Against Company-wide Operating Income of ¥15.56B, ProbeCard independently generated ¥18.29B, while TestEquipment and the ¥1.95B Company-wide expense adjustment offset part of this amount, demonstrating the extreme dependence of earnings on the single ProbeCard Business.

Key Financial Indicators

【Profitability】The Operating Income margin of 31.6% and Net Income margin of 23.3% both improved substantially from the previous year. Starting from a gross margin of 51.0%, the balance with the SG&A expense ratio of 19.4% supported the expansion of profit margins. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥12.17B, or 1.06x Net Income, indicating solid cash generation. However, increases of ¥4.41B in accounts receivable and ¥2.48B in inventories constrained cash conversion, with ¥2.74B absorbed by changes in working capital from the OCF subtotal of ¥14.91B. 【Investment Efficiency】ROE was 12.5%, primarily driven by the increase in the Net Income margin. Total assets expanded to ¥138.80B, while investment securities amounted to ¥36.40B, accounting for more than one-quarter of the asset composition. 【Financial Soundness】The Equity Ratio was 65.8%. Cash and deposits of ¥20.05B against current assets of ¥53.99B indicate ample short-term liquidity.

Cash Flow Analysis

Operating Cash Flow was ¥12.17B, a substantial increase from ¥4.47B in the previous year, generating cash at almost the same level as Net Income of ¥11.46B. However, the increase in working capital had an impact: the increase in trade receivables reduced OCF by ¥4.41B, and the increase in inventories reduced OCF by ¥2.48B, while the ¥2.33B increase in trade payables partially offset these effects. Investing Cash Flow was negative ¥7.50B, primarily due to capital expenditures of ¥7.65B, indicating an aggressive investment stance aimed at future growth. Financing Cash Flow was negative ¥3.77B, mainly due to dividend payments of ¥3.68B. As a result, the Company secured positive Free Cash Flow of ¥4.66B, retaining sufficient financial capacity to balance investment and shareholder returns.

Quality of Earnings

Recurring earnings power was centered on Operating Income of ¥15.56B. Of the ¥0.80B in non-operating income, foreign exchange gains of ¥0.69B were the largest component, although their contribution relative to revenue remained small. Extraordinary income of ¥1.00B from subsidies represented approximately 8.7% of Net Income and should be distinguished as a temporary factor. The ¥16.26B Ordinary Income compared with Net Income of ¥11.46B represents a 29.5% divergence, primarily due to the ¥5.79B burden of income taxes and other taxes, and does not indicate an abnormal cost structure. OCF being approximately equal to Net Income indicates good accrual quality; however, the delay in cash generation caused by the increase in working capital should be noted when assessing earnings quality.

Earnings Forecast and Guidance

The first-half progress rates against the Full-Year forecast were 47.4% for Revenue (¥49.21B against the forecast of ¥103.80B), 49.5% for Operating Income (¥15.56B against the forecast of ¥31.40B), and 50.8% for Ordinary Income (¥16.26B against the forecast of ¥32.00B), with all figures progressing around the 50% level expected for a half-year period. Ordinary Income was slightly ahead of schedule, while Revenue was slightly behind, but there was no significant divergence and progress can be considered to be in line with the plan. The fact that the earnings forecast and dividend forecast were revised during the current quarter should be noted as evidence of a change in the Full-Year outlook.

Shareholder Returns

The dividend paid for the first half was ¥0, while the Full-Year dividend forecast is ¥178 per share. Based on forecast Full-Year EPS of ¥593.31, the Payout Ratio is approximately 30.0%. The dividend forecast was revised during the current quarter, indicating that the upward revision to earnings was reflected in the dividend plan. Dividend payments in the previous year totaled ¥3.68B, a level sufficiently covered by first-half Free Cash Flow of ¥4.66B.

Risk Factors

1. Business concentration risk: The ProbeCard Business accounts for 98.7% of Revenue, while the TestEquipment Business continues to contract, with revenue of ¥0.66B (-27.9% YoY) and an Operating Loss of ¥0.78B. The business structure has a high degree of dependence on specific products and market trends.

2. Changes in working capital efficiency: Trade receivables increased 38.8% YoY to ¥15.84B, while work in process within inventories remained high at ¥9.36B, both acting as factors suppressing OCF. The timing of production, shipments, and collections will affect future cash generation.

3. Risk of fluctuations in valuation assets: Investment securities increased to ¥36.40B, accounting for 26.2% of total assets. Valuation differences on securities were a primary factor behind comprehensive income of ¥28.87B, creating a structure in which changes in market prices affect net assets.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Income margin and Net Income margin substantially exceeded the industry median, indicating profitability positioned in the upper tier of the industry.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeded the upper-quartile IQR value of 25.4%, demonstrating high growth relative to the industry.

※Source: Compiled by the Company

Key Earnings Highlights

1. The fact that the profit growth rate exceeded twice the revenue growth rate reflects positive operating leverage resulting from the high-margin ProbeCard mix and the containment of the SG&A expense growth rate at +8.2%, indicating a structural improvement in profit margins.

2. While OCF was approximately equal to Net Income, increases in trade receivables and inventories constrained cash conversion. Collection and inventory trends in the second half will therefore be key points of observation affecting cash flow quality.

3. The continued Operating Loss in the TestEquipment Business and the further strengthening of the Company’s dependence on the ProbeCard Business are important points for understanding the segment-based earnings structure.

Theoretical Share Price (Reference Value)

Sensitivity: ¥3,593–¥3,813 for a ±1% change in the Cost of Equity, and ¥3,664–¥3,756 for a ±0.1 change in ω.

Notes:

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

(Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not forecast or guarantee future share 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 professionals as necessary.

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