OHASHI TECHNICA INC. FY2027 Q1 Earnings Report

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Executive Summary

The Company posted higher revenue and earnings, as top-line growth expanded across all regions and operating leverage took effect through improved gross margins and the containment of SG&A expenses, resulting in operating income growth substantially outpacing revenue growth. Revenue was ¥11.50B (¥10.05B in the previous year, YoY +14.5%), operating income was ¥0.89B (¥0.55B in the previous year, YoY +62.8%), ordinary income was ¥1.02B (¥0.69B in the previous year, YoY +48.8%), and consolidated net income was ¥0.74B (¥0.49B in the previous year, YoY +50.4%; net income attributable to owners of the parent was ¥0.738B). The operating margin improved to 7.8%, up +2.3pt from 5.5% in the same quarter of the previous year, while the gross margin also rose to 22.9% (21.6% in the previous year, +1.3pt). By region, revenue growth in the Americas, Europe, and Taiwan, together with the expansion of high-margin segments, drove overall performance. In contrast, China experienced both a revenue decline and an expansion of its operating loss, leaving regional profitability disparities unresolved.

Factors Affecting Results

【Revenue】Revenue was ¥11.50B (YoY +14.5%), with growth primarily driven by the expansion of overseas businesses. By segment (including intersegment transactions), Japan was the largest at ¥5.82B (46.9% of total, YoY +14.6%), followed by the Americas at ¥4.41B (35.5%, +19.2%). Taiwan at ¥0.35B (+59.1%) and Europe at ¥0.50B (+31.2%) posted high growth rates despite their smaller revenue contributions, while China at ¥0.45B (3.6%, YoY -20.6%) was the only segment to post a revenue decline.

【Earnings】Operating income was ¥0.89B (YoY +62.8%), substantially exceeding revenue growth (+14.5%) as operating leverage took effect. The gross margin improved to 22.9% (21.6% in the previous year, +1.3pt), while the SG&A ratio declined to 15.1% (16.2% in the previous year, -1.0pt), contributing to the increase in the operating margin to 7.8% (+2.3pt). Ordinary income reached ¥1.02B (YoY +48.8%), supported by non-operating income totaling ¥0.13B, including interest income of ¥0.04B, dividend income of ¥0.03B, and equity-method investment income of ¥0.03B. Both extraordinary income and extraordinary losses were less than ¥0.01B, indicating a limited impact from temporary factors. Consolidated net income was ¥0.74B (YoY +50.4%), representing higher revenue and earnings.

Segment Analysis

The Americas showed the largest increase in segment profit, with operating income of ¥0.41B (YoY +83.7%) and an improved margin of 9.2%. ASEAN posted operating income of ¥0.16B (+31.1%) and a margin of 17.5%, while Europe reported operating income of ¥0.08B (+47.8%) and a margin of 15.3%. Both regions maintained the highest margins among all segments and contributed to an improved profit mix. Japan was the largest segment by revenue at ¥5.82B, but operating income was limited to ¥0.23B (+94.6%), representing a margin of 3.9%. Although its earnings growth rate was high, profitability remained below that of other regions. China recorded an operating loss of ¥0.015B against revenue of ¥0.45B (YoY -20.6%), compared with a loss of ¥0.013B in the previous year, indicating a wider loss. Taiwan expanded rapidly, with revenue of ¥0.35B (+59.1%) and operating income of ¥0.013B (+259.1%), although its margin remained low at 3.8%.

Key Financial Indicators

【Profitability】The operating margin improved to 7.8% (5.5% in the previous year), the ordinary income margin to 8.9% (6.8% in the previous year), and the consolidated net income margin to 6.4% (4.9% in the previous year). 【Cash Quality】Days sales outstanding were approximately 45 days (54 days in the previous year), inventory turnover days were approximately 62 days (71 days in the previous year), and the cash conversion cycle was approximately 70 days (85 days in the previous year). All metrics shortened from the previous year, indicating improving working capital efficiency. 【Investment Efficiency】ROE was 1.8% (quarterly basis), while interest coverage, measured as EBIT relative to interest expense, was approximately 582x, indicating an extremely light interest burden. 【Financial Soundness】The equity ratio was 84.6%, the current ratio was 639.7% (current assets of ¥37.04B / current liabilities of ¥5.79B), and cash and deposits were ¥22.65B, providing liquidity substantially in excess of current liabilities of ¥5.79B.

Cash Flow Analysis

Cash and deposits were ¥22.65B, a slight increase from ¥22.60B at the end of the same quarter of the previous year, while the cash ratio relative to total assets remained high. Trade receivables declined to ¥5.73B (¥5.94B in the previous year), and inventories declined to ¥6.01B (¥6.11B in the previous year), while accounts payable increased to ¥3.58B (¥3.45B in the previous year). This shift toward working capital compression suggests improved cash efficiency. On the fixed-asset side, construction in progress increased to ¥1.34B (¥1.11B in the previous year, +21.3%), indicating progress in the expansion and renewal of production facilities. Given the financial structure in which cash on hand substantially exceeds current liabilities and interest-bearing debt is minimal, these investments are considered sufficiently financeable through internal funds.

Quality of Earnings

Against operating income of ¥0.89B, ordinary income was ¥1.02B. The primary factors behind the difference were recurring non-operating income totaling ¥0.13B, including interest income of ¥0.04B, dividend income of ¥0.03B, and equity-method investment income of ¥0.03B, while non-operating expenses were negligible at ¥0.00B. Both extraordinary income and extraordinary losses were less than ¥0.01B, indicating that the current-period earnings growth was driven by improved core profitability, with a limited contribution from temporary factors. Comprehensive income was ¥1.03B (¥1.02B attributable to owners of the parent), and the primary reason for the difference from net income of ¥0.74B was a foreign currency translation adjustment of +¥0.34B, reflecting valuation differences arising from the translation of overseas subsidiaries into yen. As revenue and earnings growth was accompanied by reductions in trade receivables and inventories, the cash backing of earnings is considered relatively strong from an accruals perspective.

Earnings Forecast and Guidance

Progress toward the full-year company plan was 26.7% for revenue, at ¥11.50B / ¥43.00B; 35.1% for operating income, at ¥0.89B / ¥2.55B; and 34.1% for ordinary income, at ¥1.02B / ¥3.00B. All were progressing ahead of the standard Q1 benchmark of 25%. Net income attributable to owners of the parent of ¥0.738B also represented progress of 35.1% against the full-year plan of ¥2.10B. As of the current quarter, the earnings forecast had not been revised. The full-year EPS forecast remains ¥82.11, and the dividend forecast remains ¥45.00.

Shareholder Returns

The full-year dividend forecast is ¥45.00 per share, implying a payout ratio of approximately 54.8% based on the EPS forecast of ¥82.11. The previous fiscal year’s actual dividend was ¥37.00 per share; however, the Company conducted a 2-for-1 stock split of its common shares effective January 1, 2026. On a pre-split basis, the previous fiscal year’s annual dividend would be equivalent to ¥74.00 per share, and the impact of the stock split must therefore be considered when making a simple year-on-year comparison. Given the financial base of an equity ratio of 84.6% and cash and deposits of ¥22.65B, the payout ratio is considered not excessive relative to the current earnings level.

Risk Factors

1. Deterioration in the profitability of the China business: Against revenue of ¥0.45B (YoY -20.6%), the operating loss widened to ¥0.015B from a loss of ¥0.013B in the previous year, contrasting with the revenue growth trend in other regions.

2. Volatility in OCI due to foreign exchange fluctuations: Foreign currency translation adjustments accounted for +¥0.34B of comprehensive income of ¥1.03B. Given the high proportion of overseas subsidiaries in the business structure, foreign exchange movements have a relatively significant impact on the financial statements.

3. Profitability disparities among segments: Japan is the largest segment, accounting for 46.9% of revenue, but its operating margin is limited to 3.9%, significantly below ASEAN (17.5%) and Europe (15.3%). Differences in domestic and overseas earnings structures therefore warrant monitoring.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (trading)

Profitability and Returns

The Company’s operating margin and net income margin both substantially exceed the industry median and are at levels that rank among the top performers in the industry.

Growth and Capital Efficiency

The revenue growth rate also substantially exceeds the industry median, representing a top-tier revenue growth pace within the industry.

Source: Company compilation

Key Points from the Earnings Results

1. Operating income growth (+62.8%) substantially exceeded revenue growth (+14.5%), clearly demonstrating operating leverage from gross margin improvement (+1.3pt) and a decline in the SG&A ratio (-1.0pt).

2. Progress toward the full-year plan exceeded the standard benchmark of 25% for both revenue and earnings. In particular, operating income and ordinary income were approximately 34–35% of their respective full-year plans, making performance trends from Q2 onward a key focus.

3. In terms of working capital, the cash conversion cycle shortened year on year, indicating efficiency gains even amid revenue growth. However, the widening loss in the China segment remains a point of concern in the earnings structure.

Theoretical Share Price (Reference Value)

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 period). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,403–¥1,482 at ±1% for the cost of equity, and ¥1,436–¥1,446 at ±0.1 for ω.

Notes:

• Because progress of net income toward the full-year forecast (35%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies progressing ahead of schedule tend to outperform 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 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 / Interest rate reference month: 2026-07 / This value does not predict 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, and you should consult a professional advisor as necessary.

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