ENPLAS CORPORATION FY2027 Q1 Earnings Report

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Executive Summary

Revenue and profit increased significantly, primarily due to the rapid expansion of the Semiconductor Business, and the operating margin improved by +8.4pt from 10.1% in the same period of the previous year to 18.5%. Revenue was ¥125.7B (+39.7% YoY), Operating Income was ¥23.3B (+157.2%), and Ordinary Income was ¥24.0B (+191.2%). Net Income (Net Income Attributable to Owners of the Parent) was ¥17.8B (¥3.6B in the previous year, +391.9% YoY), representing a substantially higher rate of profit growth than revenue growth. Expense growth was contained relative to revenue growth, with improved profitability driving earnings growth.

Factors Affecting Business Performance

【Revenue】Revenue of ¥125.7B (+39.7%) was driven by the Semiconductor Business, which accounts for 62.7% of the revenue mix and grew by +61.2%; EnergySavingSolution, accounting for 31.5% of the mix, also continued to grow by +24.8%. Meanwhile, DigitalCommunication posted only modest revenue growth of +8.8%, while LifeScience revenue declined by -46.5%. The majority of company-wide revenue growth was driven by the expansion of demand for the Semiconductor Business, representing growth led by a single segment.

【Profit and Loss】The gross margin was 48.5% (+4.1pt from 44.4% in the previous year), while the SG&A expense ratio was 30.0% (-4.3pt from 34.3% in the previous year), resulting in an improvement in the operating margin to 18.5% (+8.4pt from 10.1% in the previous year). Ordinary Income was ¥24.0B after adding net non-operating income and expenses of +¥0.8B to Operating Income. Extraordinary gains and losses were each below ¥0.1B, and their impact on Net Income was limited. The difference between Ordinary Income and Net Income was primarily attributable to income taxes of ¥6.1B (effective tax rate: 25.3%), with virtually no distortion from temporary factors. Both revenue and profit increased substantially year on year, resulting in higher revenue and higher profit.

Segment Analysis

Segment Operating Income is highly dependent on the Semiconductor Business, which accounted for 86.3% of company-wide Operating Income of ¥23.3B, with ¥20.1B and a margin of 25.5%.

• Semiconductor: Revenue of ¥78.8B (+61.2%), Operating Income of ¥20.1B (+132.3%), and a margin of 25.5%. Growth was driven by expanding demand and a higher operating rate.
• EnergySavingSolution: Revenue of ¥39.6B (+24.8%), Operating Income of ¥4.3B (+367.4%), and a margin of 10.9%. The expansion of profitability from a low-profitability base was notable.
• DigitalCommunication: Revenue of ¥4.6B (+8.8%), Operating Loss of ¥1.2B (loss expanded year on year), and a margin of -26.5%. Losses continued despite revenue growth.
• LifeScience: Revenue of ¥2.8B (-46.5%), Operating Income of ¥0.1B (+170.0%), and a margin of 2.5%. The segment returned to a small profit despite declining revenue.

While the high profitability and substantial weighting of the Semiconductor Business are driving company-wide profit, continued losses in DigitalCommunication remain a bottleneck for overall profitability.

Key Financial Metrics

【Profitability】The operating margin improved significantly to 18.5% (10.1% in the previous year), while the net profit margin improved to 14.2% (+10.2pt YoY), reflecting fixed-cost absorption accompanying revenue growth and an increased contribution from the highly profitable Semiconductor Business.【Cash Flow Quality】Cash and deposits were ¥170.7B, down ▲28.3% year on year. While accounts receivable of ¥105.5B and inventories of ¥70.0B both increased, investment in construction in progress of ¥137.9B (46.4% of property, plant and equipment) absorbed funds.【Investment Efficiency】ROE was 2.8%, which can be explained as the product of a net profit margin of 14.2%, total asset turnover of 0.17x (on a quarterly basis), and financial leverage of 1.14x. The low asset turnover was a factor weighing on ROE despite high profitability. BPS was ¥7,114.07, up +3.0% from ¥6,905.42 in the same period of the previous year.【Financial Soundness】The Equity Ratio was 87.2% and the current ratio was 509.3% (current assets of ¥38.25B / current liabilities of ¥7.51B), indicating a high level of financial safety in terms of both leverage and liquidity.

Cash Flow Analysis

Although the statement of cash flows has not been disclosed, cash trends can be inferred from changes in the balance sheet. Cash and deposits declined by ¥6.75B (▲28.3%) from ¥23.82B in the same period of the previous year to ¥17.07B. This decline appears to reflect the accumulation of working capital, with accounts receivable increasing from ¥8.97B to ¥10.55B and inventories from ¥4.89B to ¥7.00B, as well as progress in capital investment, with construction in progress increasing by ¥4.54B (+49.0%) from ¥9.25B to ¥13.79B. Meanwhile, accounts payable increased by +43.1% from ¥1.99B to ¥2.84B, indicating increased use of payment terms accompanying the expansion of procurement and production. Overall, the Company is in a phase in which increased working capital accompanying revenue growth and investment to expand production capacity are absorbing cash. Improvements in asset efficiency following the commencement of operations at construction-in-progress assets will determine future cash-generation capacity.

Quality of Earnings

The impact of extraordinary gains and losses on profit for the current quarter was extremely limited, and the results represent high-quality earnings that can be explained by improvements in the underlying business. Extraordinary income of ¥0.03B and extraordinary loss of ¥0.07B were each below 0.5% of Net Income. The difference between Ordinary Income of ¥24.0B and Net Income was primarily attributable to income taxes of ¥6.1B (effective tax rate: 25.3%). Net non-operating income and expenses were +¥0.8B (non-operating income of ¥1.3B and non-operating expenses of ¥0.5B), consisting of relatively small items such as dividends received and foreign exchange losses, with no apparent factor materially distorting recurring business earnings. Meanwhile, comprehensive income was ¥23.3B (¥23.2B attributable to owners of the parent), exceeding Net Income of ¥17.8B. This difference was attributable to non-cash and valuation-related items, including foreign currency translation adjustments of +¥3.4B and valuation differences on securities of +¥1.9B, which should be distinguished from the Company’s underlying earnings power for the current period.

Earnings Forecast and Guidance

Progress toward the full-year forecasts was favorable for both revenue and profit, particularly on the profit front. While revenue progress toward the full-year forecast was 26.2% (¥125.7B/¥480.0B), Operating Income reached 36.4% (¥23.3B/¥64.0B) and Ordinary Income reached 37.0% (¥24.0B/¥65.0B), substantially exceeding the simple quarterly allocation benchmark of 25%. Full-year forecast YoY growth rates were conservatively set at +12.8% for revenue, +3.8% for Operating Income, and +0.3% for Ordinary Income. Given the significant gap from the current Q1 results (revenue +39.7%, Operating Income +157.2%), the full-year forecasts appear to have been maintained based on an assumed slowdown in growth during the second half of the fiscal year. The earnings forecasts and dividend forecasts remain unchanged.

Shareholder Returns

The full-year dividend forecast is ¥45 per share, unchanged at the same level as the previous fiscal year’s actual result. Assuming a full-year Net Income forecast attributable to owners of the parent of ¥5.00B and approximately 9.04 million issued shares after deducting treasury shares, the total annual dividend is estimated at approximately ¥0.41B, implying a Payout Ratio of approximately 8.1%. The Company holds 0.693 million treasury shares, equivalent to 7.1% of issued shares. Together with the high Equity Ratio of 87.2%, this indicates a strong financial foundation supporting dividend sustainability.

Risk Factors

1. Segment concentration risk: The Semiconductor Business accounts for 62.7% of company-wide revenue and 86.3% of Operating Income, resulting in a high degree of sensitivity of overall performance to fluctuations in demand for this business.

2. Risk associated with the commencement of operations of capital investments: Construction in progress amounted to ¥13.79B, reaching 46.4% of property, plant and equipment, and expanding by +49.0% year on year. If the commencement of operations of new equipment is delayed from plan, the investment recovery period may be extended.

3. Increased working capital and declining cash: While cash and deposits declined by ▲28.3% year on year, accounts receivable and inventories increased at a pace exceeding revenue growth, indicating continued expansion in funding requirements during the revenue-growth phase.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (manufacturing)

Profitability and Returns

Both profitability and return metrics are substantially above the industry median, placing the Company among the higher-ranked companies in the industry.

Growth and Capital Efficiency

The revenue growth rate substantially exceeds the industry median, representing an exceptional pace of revenue growth within the industry.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The gross margin and operating margin improved by +4.1pt and +8.4pt, respectively, from the previous year, confirming a structural improvement in profitability driven by an increased mix of highly profitable products in the Semiconductor Business.

2. Progress toward the full-year Operating Income and Ordinary Income forecasts was 36.4% and 37.0%, respectively, exceeding the revenue progress rate of 26.2%. The fact that first-half profit growth is progressing ahead of the full-year plan merits attention.

3. The decline in cash and deposits and the accumulation of construction in progress indicate that investment to increase production is entering full swing. The status of the commencement of operations of these investments and trends in working capital will be key factors in evaluating future profitability and cash-generation capacity.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade period). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥6,691–¥7,094 at ±1% for the cost of equity, and ¥6,880–¥6,893 at ±0.1 for ω.

Notes:

• Because Net Income progress toward the full-year forecast (36%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies progressing ahead of plan tend to exceed forecasts; the adjustment 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 relative to the full-year forecast).

(Calculation model: Residual Income Model / Interest-rate reference month: 2026-06 / This figure 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. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting a professional as necessary.

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