| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥1812.4B | ¥1718.7B | +5.5% |
| Operating Income | ¥76.5B | ¥70.0B | +9.3% |
| Ordinary Income | ¥133.7B | ¥86.2B | +54.9% |
| Net Income | ¥105.3B | ¥65.4B | +61.1% |
| ROE | 1.5% | 1.0% | - |
This quarter saw higher revenue and earnings, with Ordinary Income and Net Income increasing substantially due to a boost from non-operating income. Revenue was ¥1,812.4B (+5.5% YoY), while Operating Income was ¥76.5B (+9.3% YoY), securing growth both at the top-line and operating levels. Ordinary Income was ¥133.7B (+54.9% YoY), and Net Income attributable to owners of the parent was ¥90.8B (+58.4% YoY), representing growth well above the increase in Operating Income. This divergence was primarily attributable to the accumulation of non-operating income, including foreign exchange gains of ¥17.2B, equity-method investment gains of ¥30.1B, and dividend income of ¥12.1B. In addition to improvement at the operating level, non-operating factors boosted bottom-line profit.
【Revenue】Revenue was ¥1,812.4B, representing a 5.5% YoY increase. By segment, the core Sealing Business contributed to the increase with revenue of ¥993.2B (+7.8% YoY), while the Electronic Components Business also contributed with revenue of ¥811.2B (+11.1% YoY). The Sealing Business accounted for 54.8% of company-wide revenue and was the primary driver of the revenue increase.
【Profit and Loss】Operating Income was ¥76.5B (+9.3% YoY). The gross profit margin improved to 18.8% from 18.2% in the previous year, while the SG&A expense ratio rose to 14.6% from 14.2%, partially offsetting the improvement in gross profitability. Ordinary Income increased substantially to ¥133.7B (+54.9% YoY), primarily due to increases in non-operating income, including foreign exchange gains of ¥17.2B, equity-method investment gains of ¥30.1B, and dividend income of ¥12.1B, substantially exceeding the 9.3% growth in Operating Income. Extraordinary income of ¥8.0B, including a gain on the sale of investment securities of ¥7.6B, was a temporary factor and had a limited impact on Net Income. Net Income attributable to owners of the parent was ¥90.8B (+58.4% YoY). By segment, Operating Income in the Sealing Business grew substantially to ¥96.4B (+47.5% YoY), while the Electronic Components Business recorded an Operating Loss of ¥22.3B, compared with a loss of ¥1.2B in the same period of the previous year, resulting in a wider deficit and weighing on company-wide earnings. In conclusion, revenue and earnings increased.
The Sealing Business generated revenue of ¥993.2B (+7.8% YoY) and Operating Income of ¥96.4B (+47.5% YoY), resulting in a profit margin of 9.7% and serving as the main driver of company-wide earnings. The Electronic Components Business secured higher revenue of ¥811.2B (+11.1% YoY), but its Operating Loss widened to ¥22.3B, compared with a loss of ¥1.2B in the same period of the previous year, resulting in a negative profit margin of 2.7%. The deterioration in profitability despite higher revenue suggests challenges in the cost structure and product mix. It should also be noted that the segment classification was revised beginning in Q1, with the HDD synthetic rubber and resin products business and the ultra-precision molds and injection-molded products business reclassified into the Sealing Business.
【Profitability】The Operating Income margin was 4.2% (4.1% in the previous year), the gross profit margin was 18.8% (18.2% in the previous year), the Ordinary Income margin was 7.4% (5.0% in the previous year), and the Net Income margin attributable to owners of the parent was 5.0% (3.3% in the previous year), indicating improvement at each stage. In particular, the contribution of non-operating income resulted in a larger improvement below the Ordinary Income level.【Cash Quality】Cash and deposits were ¥1,424.6B, down from ¥1,568.0B in the same period of the previous year, while inventories increased to ¥1,246.1B (¥1,171.9B in the previous year) and accounts payable decreased to ¥628.7B (¥649.6B in the previous year), indicating that the accumulation of working capital is placing pressure on cash levels.【Investment Efficiency】ROE was 1.5%. Total assets were ¥9,664.6B, while equity attributable to owners of the parent was ¥6,350.2B, indicating that profit levels remained modest relative to the asset base.【Financial Soundness】The Equity Ratio remained high at 70.5%. Including investment securities of ¥1,651.4B and cash and deposits of ¥1,424.6B, the company maintains a substantial asset buffer. Goodwill was ¥91.0B, or 0.9% of total assets, indicating that impairment risk arising from M&A is limited.
Because a statement of cash flows has not been disclosed, funding trends are assessed based on changes in the balance sheet. Cash and deposits were ¥1,424.6B, a decrease of ¥143.2B from ¥1,568.0B in the same period of the previous year. During this period, inventories increased by ¥74.2B to ¥1,246.1B (¥1,171.9B in the previous year), while accounts payable decreased by ¥20.9B to ¥628.7B (¥649.6B in the previous year), suggesting that the increase in working capital was one factor contributing to the retention of funds. Meanwhile, property, plant and equipment increased gradually to ¥2,526.3B (¥2,490.1B in the previous year), indicating that capital investment has continued. Investment securities also increased by ¥122.1B to ¥1,651.4B (¥1,529.3B in the previous year), while a gain on the sale of investment securities of ¥7.6B was recorded in extraordinary income, suggesting that portfolio rebalancing has taken place.
Ordinary Income (+54.9%) increased at a pace substantially exceeding that of Operating Income (+9.3%), with the difference attributable to the expansion of non-operating income. Of total non-operating income of ¥71.0B, the main components were foreign exchange gains of ¥17.2B, dividend income of ¥12.1B, and equity-method investment gains of ¥30.1B (EquityInEarningsOfAffiliates in all financial data). All of these items are linked to market conditions, foreign exchange rates, or the performance of affiliated companies. Extraordinary income of ¥8.0B, including a gain on the sale of investment securities of ¥7.6B, was a temporary factor and made a limited contribution to Net Income. Comprehensive income was ¥218.0B, representing a significant divergence from Net Income attributable to owners of the parent of ¥90.8B, due to the addition of valuation-based other comprehensive income items such as valuation difference on investment securities of +¥77.9B and foreign currency translation adjustments of +¥39.4B. Accordingly, it should be noted that part of the earnings growth for the period was supported not only by improvement in recurring business earnings capacity but also by non-recurring and valuation-related factors.
Progress toward the Full-Year earnings forecasts was 24.0% for Revenue (¥1,812.4B/¥7,566.0B), 21.9% for Operating Income (¥76.5B/¥350.0B), 27.7% for Ordinary Income (¥133.7B/¥483.0B), and 20.0% for EPS (¥56.99/¥285.22). Revenue and Ordinary Income were broadly close to the 25% benchmark for simple quarterly progress, while Operating Income was somewhat below that level. Building margins from Q2 onward will therefore be key to achieving the plan. The Full-Year Ordinary Income forecast assumes a 3.1% YoY decline, contrasting with the substantial increase of 54.9% recorded in Q1. This suggests that the forecast incorporates an assumption that the boost from non-operating income seen in Q1 will normalize over the full year. Neither the earnings forecast nor the dividend forecast was revised during the quarter.
The Full-Year dividend forecast is ¥140.00 per share, implying a Payout Ratio of approximately 49.1% based on forecast EPS of ¥285.22. There was no revision to the dividend forecast during the quarter. The financial base, including cash and deposits of ¥1,424.6B, retained earnings of ¥3,943.9B, and an Equity Ratio of 70.5%, is at a level that could support continued dividend payments. The company plans to establish a joint holding company through a share transfer with Eagle Industry Co., Ltd. effective October 1, 2026. As the current dividend forecast is based on the existing organizational structure, it should be noted that the dividend policy of the holding company is scheduled to be announced separately.
Segment profitability gap: The Electronic Components Business secured higher revenue of ¥811.2B (+11.1% YoY), but its Operating Loss widened to ¥22.3B, compared with a loss of ¥1.2B in the same period of the previous year, indicating deteriorating profitability despite higher revenue.
Reliance on non-operating factors: The increase in Ordinary Income (+54.9%) was highly dependent on non-operating income, including foreign exchange gains of ¥17.2B and equity-method investment gains of ¥30.1B, resulting in a substantial gap from the growth in Operating Income (+9.3%). These items are susceptible to external factors such as foreign exchange rates and the performance of affiliated companies.
Uncertainty associated with management reorganization: With the establishment of a joint holding company with Eagle Industry Co., Ltd. scheduled for October 2026, the holding company’s dividend policy and organizational structure are scheduled to be announced anew. Accordingly, the current earnings and dividend forecasts represent provisional assumptions based on the existing organizational structure.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income margin | 4.2% | 8.7% (4.2%–14.2%) | -4.5pt |
| Net Income margin | 5.8% | 7.0% (3.2%–10.6%) | -1.2pt |
Both the Operating Income margin and Net Income margin are below the industry median, placing profitability relatively low within the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | 5.5% | 6.2% (-1.1%–14.6%) | -0.8pt |
The Revenue growth rate is slightly below the industry median but is positioned near the midpoint of the IQR range.
※Source: Compiled by the company
The Sealing Business generated Operating Income of ¥96.4B (+47.5% YoY) and a profit margin of 9.7%, serving as the main driver of company-wide earnings. From the perspective of earnings quality, improvement in the profitability of the core business was the primary factor behind the earnings increase.
Although the Electronic Components Business recorded revenue growth (+11.1%), its Operating Loss widened to ¥22.3B, representing a structural factor weighing down the company-wide Operating Income margin of 4.2%.
The growth rates of Ordinary Income and Net Income (+54.9% and +58.4%, respectively) substantially exceeded the 9.3% growth rate of Operating Income. A considerable portion of the earnings increase was supported by non-operating income such as foreign exchange gains and equity-method investment gains. This can be confirmed together with the 21.9% progress toward the Full-Year Operating Income plan, which is lower than the progress rates for Revenue and Ordinary Income.
This is a mechanically calculated reference range based solely on publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market stock price or a recommendation of any specific investment action.
| Scenario | Theoretical Stock Price |
|---|---|
| bear | ¥3,747 |
| base | ¥3,828 |
| bull | ¥3,904 |
| Calculation Assumption | Value |
|---|---|
| Book value per share (BPS) | ¥3,979 |
| Adjusted forecast EPS | ¥314.5 |
| Cost of equity capital r | 9.27% (10-year 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 | 49.1% |
| Forecast EPS confidence adjustment | ×1.103 (based on the track record of guidance achievement among peers in the same industry) |
| implied PBR / PER |
Sensitivity: ¥3,723–¥3,937 at ±1% for the cost of equity capital, and ¥3,822–¥3,831 at ±0.1 for ω.
Notes:
(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value is not a forecast or guarantee of the future stock price)
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 a professional as necessary.
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| 0.96x / 12.2x |
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.