KOHSOKU (7504) FY2026 Q3 Earnings Report

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Executive Summary

The Company achieved increases in both revenue and earnings, with profit progress toward the full-year plan advancing at a pace exceeding that of revenue. Revenue was ¥9.561B (+8.2% YoY), Operating Income was ¥424M (+8.8%), Ordinary Income was ¥453M (+9.4%), and Net Income attributable to owners of the parent was ¥308M (+9.5%). The primary drivers of revenue growth were expanded transactions resulting from the opening of new locations and price revisions. Operating Income slightly outpaced revenue growth, resulting in increases in both revenue and earnings.

Factors Affecting Business Performance

【Revenue】Revenue was ¥9.561B, representing an 8.2% YoY increase. The opening of new locations in Hiroshima, Himeji, and other areas since summer 2024, together with price revisions, drove transaction expansion company-wide. In the nationwide business, expanded transactions with major corporations contributed, while in the region-specific business, transactions with mid-sized and small and medium-sized enterprises expanded as a result of new locations.

【Profit and Loss】Operating Income was ¥424M (+8.8%), Ordinary Income was ¥453M (+9.4%), and Net Income was ¥308M (+9.5%). Gross profit was ¥1.888B (gross profit margin: 19.7%), improving from the previous year, while increases in personnel and logistics expenses were absorbed through control of SG&A expenses supported by higher productivity per employee. A gain on the sale of investment securities of ¥2M was recorded in extraordinary income; however, the amount was immaterial and the impact of temporary factors was limited. The divergence between Ordinary Income and Net Income was small, and there are no significant concerns regarding earnings quality. Revenue and earnings both increased.

Segment Analysis

Although detailed disclosure of segment-level operating income and loss is limited, the nationwide business, which accounts for a large proportion of the business composition, is positioned as the core business. Expanded transactions with major corporations and value-added proposals drove the increase in gross profit. The region-specific business contributed to revenue growth through expanded transactions with mid-sized and small and medium-sized enterprises following the opening of new locations. Group companies also improved profitability and contributed to the increase in consolidated Operating Income. All segments are on a revenue growth trend, and their contribution to fluctuations in business performance is driven more by company-wide transaction expansion than by dependence on any specific segment.

Key Financial Indicators

Profitability: ROE was 7.3%, and the Operating Income margin was 4.4% (a slight improvement from the previous year). The Net Income margin was 3.2%.
Financial soundness: The Equity Ratio was 60.2%, the Current Ratio was 145.0%, and the debt-to-equity ratio was 0.66x.
Asset efficiency: Total asset turnover was 1.371x, and accounts receivable were ¥2.336B (33.5% of total assets), with DSO at approximately 67 days.
Capital structure: Retained earnings were substantial at ¥3.789B, indicating a conservative financial foundation.

Cash Flow Analysis

Specific figures for Operating Cash Flow (OCF), Investing Cash Flow, and Financing Cash Flow are not included in the disclosed data and therefore cannot be assessed. Property, plant and equipment increased by ¥380M from the previous fiscal year due to the acquisition of the Western Japan Sales Center (Hirakata City, Osaka Prefecture; investment amount: ¥3.2B), with this investment representing the primary use of funds. Cash and deposits were ¥466M, down from ¥818M in the previous year, apparently reflecting the combined impact of capital expenditures and increases in working capital (accounts receivable and inventories).

Earnings Quality

The difference between Ordinary Income of ¥453M and Net Income of ¥308M was primarily attributable to income taxes and other taxes of ¥147M, resulting in an effective tax rate of approximately 32.3%, which is within the normal range. Non-operating income was ¥36M, equivalent to only 0.4% of revenue, and Ordinary Income was led by Operating Income from the core business. The ¥2M gain on the sale of investment securities recorded as extraordinary income was immaterial and did not materially distort earnings quality.

Earnings Forecast and Guidance

Progress against the full-year forecast (Revenue: ¥12.400B, Operating Income: ¥485M, Ordinary Income: ¥515M) was 77.1% for revenue, 87.4% for Operating Income, 88.0% for Ordinary Income, and 84.5% for Net Income. Compared with the standard progress rate of 75%, progress in Operating Income and Ordinary Income in particular exceeded the benchmark by 12–13pt, reflecting transaction expansion and the effects of price revisions in the first half. Meanwhile, the Q4 Operating Income margin implied by the full-year forecast is approximately 2.3%, calculated to be below the 4.4% for the nine-month cumulative period. This reflects an expected pause in the pace of revenue growth in the second half as the effects of price revisions run their course.

Shareholder Returns

For FY2025, the Company plans to pay an annual dividend of ¥116, including a ¥60 commemorative dividend for its 60th anniversary, marking the expected 22nd consecutive fiscal year of dividend growth. The Payout Ratio relative to cumulative Net Income of ¥308M is approximately 39.5% on a simple calculation, while the forecast Payout Ratio is approximately 62.0% based on forecast Net Income of ¥365M and forecast EPS of ¥187.23. No disclosure regarding share repurchases has been made; as returns are provided solely through dividends, this is classified as a “Payout Ratio.” Given the substantial retained earnings of ¥3.789B, dividend sustainability appears secured.

Catalysts

【Short Term】Achievement against the full-year forecast, particularly trends in the Q4 Operating Income margin (profitability after the effects of price revisions run their course), and working capital fluctuations during the peak-demand period in December.

【Long Term】Expansion of shipping capacity and inventory-holding capacity through the full-scale operation of the Western Japan Sales Center (Hirakata City, Osaka Prefecture; investment amount: ¥3.2B) in the fiscal year ending March 2027, and the transaction expansion strategy aimed at achieving 11 consecutive fiscal years of record-high revenue.

Industry Benchmarks (Reference; Compiled by the Company)

Industry Benchmarks (trading)

Profitability and Returns

Growth and Capital Efficiency

※Source: Compiled by the Company

Risk Factors

1. Low Gross Margin Structure Risk: The gross profit margin of 19.7% is below 20%, creating a structure in which increases in procurement prices or delays in passing through costs to prices can readily pressure the Operating Income margin of 4.4%.

2. Accounts Receivable Collection Risk: DSO is approximately 67 days, and accounts receivable of ¥2.336B account for 33.5% of total assets. Seasonal increases in accounts receivable and inventories during the peak-demand period in December represent factors that may cause working capital fluctuations.

3. Risk of Slower Revenue Growth in the Second Half: The pace of revenue growth in the second half is expected to pause as the effects of price revisions run their course. The Q4 Operating Income margin implied by the full-year forecast is approximately 2.3%, below the nine-month cumulative margin.

Key Earnings Highlights

1. The full-year progress rates for Operating Income and Ordinary Income (87.4% and 88.0%) exceed the standard progress rate by more than 10pt, confirming that the effects of new-location openings and price revisions in the first half drove business performance.

2. The ¥380M YoY increase in property, plant and equipment was attributable to the acquisition of the Western Japan Sales Center (investment amount: ¥3.2B), indicating a structurally notable period of upfront investment ahead of its full-scale operation in the fiscal year ending March 2027.

3. The dividend is expected to increase for the 22nd consecutive fiscal year. Against the backdrop of substantial retained earnings of ¥3.789B, continuity in long-term shareholder returns has been confirmed.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,047–¥2,162 at ±1% in the cost of equity, and ¥2,102–¥2,104 at ω±0.1.

Notes:

• Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the quarter-end 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 the future share price.)

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This report is an earnings analysis document automatically generated by AI through integrated analysis of XBRL earnings summary data and PDF earnings presentation materials. 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 and, where necessary, after consulting with a professional advisor.

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