Quick View
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥48.4B | ¥36.3B | +33.3% |
| Operating Income | ¥5.7B | ¥3.5B | +62.0% |
| Ordinary Income | ¥7.4B | ¥5.1B | +46.1% |
| Net Income | ¥5.3B | ¥4.2B | +26.2% |
| ROE | 4.4% | 3.5% | - |
Executive Summary
The most important point this quarter was the improvement in margins, driven by operating income growth that exceeded revenue growth amid higher revenue and profits. Revenue was ¥48.4B (+33.3% YoY), operating income was ¥5.7B (+62.0%), ordinary income was ¥7.4B (+46.1%), and net income attributable to owners of the parent was ¥5.3B (+26.2%). In addition to higher revenue, progress in fixed-cost absorption expanded the operating margin to 11.8%; however, the growth in ordinary income included a ¥1.9B contribution from foreign exchange gains, which must be evaluated separately from the growth of the core business.
Factors Affecting Performance
【Revenue】Revenue increased 33.3% YoY to ¥48.4B. The Company operates a single business comprising vibration simulation systems, outsourced vibration testing, and measuring systems, and does not disclose a breakdown by segment. However, contract liabilities (advance receipts) increased to ¥47.5B (¥34.5B in the same period of the previous year), suggesting that expansion in orders received and project progress supported revenue growth.
【Profit and Loss】Operating income rose 62.0% YoY to ¥5.7B, substantially exceeding the revenue growth rate, and the operating margin improved to 11.8% (9.7% in the previous year). The gross margin was 39.0% and the SG&A ratio was 27.2%, indicating the emergence of operating leverage through fixed-cost absorption. Ordinary income was ¥7.4B (+46.1% YoY); however, foreign exchange gains accounted for ¥1.9B of ¥2.0B in non-operating income, making a significant contribution to the increase in ordinary income. Net income was ¥5.3B (+26.2% YoY), a reasonable level relative to the growth in ordinary income when the tax burden (effective tax rate of 28.5%) is taken into account. Higher revenue and profits.
Key Financial Metrics
【Profitability】The operating margin improved to 11.8% (9.7% in the previous year), while the net profit margin was 10.9%. The operating income growth rate (+62.0%) exceeded the revenue growth rate (+33.3%), indicating the emergence of operating leverage.【Cash Flow Quality】Annualized DSO was 92 days, DIO was 191 days, and CCC was 246 days, all of which are lengthy. Work in process amounted to ¥38.2B, accounting for more than 60% of total inventory. Trade receivables increased to ¥49.0B, indicating that working capital expanded in line with higher revenue.【Investment Efficiency】ROE was 4.4%. Although the net profit margin of 10.9% was favorable, the low annualized total asset turnover of 0.199x constrained ROE through inefficient asset utilization.【Financial Soundness】The equity ratio was 49.4% and the current ratio was 154.9%, ensuring a certain degree of financial safety. However, current liabilities reached ¥111.8B, including ¥21.6B in short-term borrowings, indicating a high dependence on short-term liabilities.
Cash Flow Analysis
Because cash flow statement data have not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits amounted to ¥41.7B, down from ¥48.8B in the previous year. This decline may have been attributable to funds being tied up as trade receivables expanded from ¥39.4B to ¥49.0B and work in process increased from ¥31.3B to ¥38.2B. Working capital reached ¥61.5B, with inventories and trade receivables accumulating alongside revenue growth. Contract liabilities (advance receipts) increased from ¥35.0B to ¥47.5B, suggesting that receipts of advance payments mitigated cash outflows to some extent. However, given the lengthy cash conversion cycle of CCC246 days, the business has a structure in which profit growth is unlikely to translate directly into cash generation.
Earnings Quality
As a factor explaining the difference between ordinary income and net income, foreign exchange gains accounted for ¥1.9B of ¥2.0B in non-operating income. It should be noted that a considerable portion of ordinary income of ¥7.4B was generated by temporary and highly volatile foreign exchange factors. Ordinary income exceeded operating income of ¥5.7B by ¥1.7B, and because foreign exchange gains were the primary driver of this upside, it is appropriate to evaluate the profitability of the core business based on operating income. Comprehensive income was ¥6.0B, and the difference from net income of ¥5.3B was attributable to foreign currency translation adjustments of ¥0.6B, which does not represent a major divergence. The expansion of work in process and trade receivables may indicate an accrual-based accumulation of earnings. As operating cash flow data have not been disclosed, the degree to which earnings are converted into cash will need to be monitored through future disclosures.
Earnings Forecasts and Guidance
Progress against the full-year forecast was 24.2% for revenue, 23.7% for operating income, 31.0% for ordinary income, and 28.6% for net income, broadly in line with the standard progress benchmark of 25%. Revenue and operating income are tracking the plan, while progress in ordinary income and net income exceeds the standard level due to the aforementioned contribution from foreign exchange gains. Accordingly, greater emphasis should be placed on the operating income progress rate as an indicator of the pace of progress in the core business. The Company’s full-year plan calls for revenue of ¥200.0B (YoY+11.5%), operating income of ¥24.0B (YoY+3.6%), and ordinary income of ¥24.0B (YoY-6.6%). The Company expects higher revenue and operating income for the full year, while ordinary income is forecast to decline due to the reversal of temporary factors in the previous year.
Shareholder Returns
The full-year forecast dividend is ¥30.00 per share. Based on forecast full-year EPS of ¥116.28, the payout ratio is 25.8%. As this is below the sustainability benchmark of approximately 60%, the Company has ample dividend capacity on an earnings basis. However, operating cash flow has not been disclosed, and given the lengthy cash conversion cycle of CCC246 days, earnings-based dividend capacity and actual cash-generation capacity should be evaluated separately. No data on share buybacks have been identified.
Risk Factors
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Working Capital Expansion Risk: DSO of 92 days, DIO of 191 days, and CCC of 246 days are all at cautionary levels, while work in process of ¥38.2B accounts for 61.6% of total inventory. The structure of the business means that working capital requirements increase as revenue continues to grow, creating a risk that profit growth will not translate directly into cash generation.
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Foreign Exchange Volatility Risk: Foreign exchange gains of ¥1.9B were recorded within non-operating income of ¥2.0B, representing an amount equivalent to 33.0% of operating income. If foreign exchange trends reverse, ordinary income may fluctuate more significantly than operating income.
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Refinancing and Asset Efficiency Risk: Current liabilities, including ¥21.6B in short-term borrowings, reached ¥111.8B, indicating a high dependence on short-term liabilities. Asset efficiency is low, with ROE of 4.4% and annualized total asset turnover of 0.199x. If the conversion of operating assets into cash is delayed, dependence on external financing may increase.
Industry Benchmark (Reference; Compiled by the Company)
Industry Benchmark (manufacturing)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.8% | 7.2% (3.2%–12.5%) | +4.6pt |
| Net Profit Margin | 10.9% | 5.9% (2.9%–12.5%) | +5.1pt |
The Company’s operating margin and net profit margin exceed the industry median, placing its profitability in the upper tier of the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 33.3% | 5.6% (1.1%–13.9%) | +27.7pt |
The revenue growth rate substantially exceeds the industry median, demonstrating a high level of growth within the industry.
※Source: Compiled by the Company
Key Points from the Earnings Results
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Revenue increased 33.3% and operating income increased 62.0%, confirming profit growth that exceeded the revenue growth rate. The operating margin improved to 11.8%, indicating the emergence of operating leverage through fixed-cost absorption.
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Foreign exchange gains of ¥1.9B made a significant contribution to the growth in ordinary income. It is therefore necessary to distinguish between core business growth on an operating income basis and the growth in ordinary income.
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Increases in work in process of ¥38.2B and trade receivables of ¥49.0B resulted in working capital cycle metrics of DSO92 days, DIO191 days, and CCC246 days, all at high levels. Trends in working capital management will remain an important monitoring point when evaluating the quality of revenue growth.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.
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AI Financial Analysis
Executive Summary
IMV delivered a strong FY2026 Q1 operating result, with revenue growth translating into faster operating-income growth and a material expansion in operating profitability. Revenue increased 33.3% year on year to ¥4.84bn. Operating income rose 62.0% to ¥569m. Ordinary income increased 46.1% to ¥743m, supported by ¥188m of foreign-exchange gains. Net income grew 26.3% to ¥530m. Gross profit rose to ¥1.89bn, lifting the gross margin to 39.0% from 36.2% a year earlier, an expansion of approximately 280bp. Operating margin improved to 11.8% from 9.7%, an expansion of approximately 210bp. This indicates favorable operating leverage, as SG&A expenses rose 36.9%, slightly faster than revenue, but the gross-profit increase was sufficient to more than absorb the additional fixed-cost burden. Net margin was 10.9%, down approximately 60bp from 11.6% in the prior-year quarter despite the operating-margin improvement. The lower net-margin conversion primarily reflects a normalized 28.5% effective tax rate versus an unusually low rate in the prior-year quarter. Foreign-exchange gains represented 33.0% of operating income, making ordinary-income growth more exposed to currency movements than the operating result alone suggests. Annualized ROE was 17.7%, above the 15% benchmark, supported by a 10.9% net margin, 0.797x annualized asset turnover, and 2.03x financial leverage. Liquidity remains sound, with a 154.9% current ratio, a 154.9% quick ratio, and cash equal to 1.93x short-term debt. However, the working-capital cycle is extended, with 92 days of receivables, 191 days of inventory, and a 246-day cash-conversion cycle. Work in process accounts for 61.6% of inventory, indicating that execution of long-cycle vibration-testing-system projects is central to cash realization. Q1 revenue progress is 24.2% of the full-year forecast and operating-income progress is 23.7%, both broadly aligned with the standard 25% first-quarter run rate. Net-income progress is stronger at 28.6% of the full-year target, although this includes the favorable foreign-exchange contribution. The FY2026 forecast implies 11.5% revenue growth and 3.6% operating-income growth, requiring the company to preserve the Q1 margin gain while managing project completion, collection timing, and FX volatility.
Profitability Analysis
Annualized DuPont ROE is 17.7%, decomposed into a 10.9% net profit margin, 0.797x annualized asset turnover, and 2.03x financial leverage. The principal year-on-year operating improvement was margin expansion: gross margin rose approximately 280bp to 39.0% and operating margin rose approximately 210bp to 11.8%. Revenue growth of 33.3% exceeded the 62.0% growth in operating income on an absolute basis through increased gross profit of ¥573m, versus a ¥355m increase in SG&A expenses. SG&A grew 36.9%, modestly faster than revenue, so continued gross-margin discipline is required to sustain operating leverage. The 11.8% EBIT margin falls in the favorable 8-15% profitability range for the stated benchmark. The net margin of 10.9% remains strong, but it trailed the operating-margin improvement because the effective tax rate increased to 28.5%. The five-factor decomposition shows a 0.713 tax burden, which is within the normal range, and a 1.306 interest burden because non-operating income exceeded interest expense. Interest coverage of 63.22x indicates that financing costs are not constraining profitability. Foreign-exchange gains of ¥188m were equivalent to 33.0% of operating income and were the largest identifiable source of the ordinary-income uplift beyond operations. Consequently, core profitability should be assessed principally on operating income rather than ordinary income or net income. The company operates as a single vibration-related business, covering vibration simulation systems, contracted vibration testing, and measuring systems; therefore, the consolidated operating margin represents the core business rather than a mix of separately disclosed segments.
Growth Assessment
Q1 growth was robust, with revenue up ¥1.21bn year on year and operating income up ¥218m. The higher gross margin suggests that the sales increase was not achieved solely through volume expansion at lower profitability. Contract liabilities increased ¥1.25bn year on year to ¥4.75bn, equivalent to 98.1% of Q1 revenue, supporting visibility into future delivery activity in project-oriented operations. At the same time, work in process increased ¥689m, or 22.0%, to ¥3.82bn, consistent with a large volume of production under execution. The full-year revenue target of ¥20.0bn requires 11.5% growth, materially below the Q1 growth rate. Q1 revenue represents 24.2% of the annual target, only 0.8 percentage points below the standard 25% pace. Q1 operating income represents 23.7% of the ¥2.40bn full-year forecast, also broadly in line with the seasonal benchmark. The full-year forecast implies a 12.0% operating margin, slightly above Q1's 11.8%, so the company must retain most of the first-quarter margin improvement. Q1 net income of ¥530m represents 28.6% of the ¥1.85bn annual forecast, 3.6 percentage points ahead of the standard first-quarter pace. This apparent net-income outperformance should be viewed cautiously because FX gains materially supported ordinary income. Growth sustainability will depend on converting WIP into accepted deliveries, maintaining gross-margin gains, and collecting the associated receivables on schedule.
Financial Health
Financial health is adequate, supported by current assets of ¥17.33bn against current liabilities of ¥11.18bn. The current ratio is 154.9% and the quick ratio is also 154.9%, both above healthy thresholds. Working capital totals ¥6.15bn. Cash and deposits of ¥4.17bn cover short-term debt by 1.93x, providing a meaningful liquidity buffer. Interest-bearing debt is ¥2.91bn, equivalent to approximately 24.3% of total equity. Debt/capital is 19.5%, below the 40% investment-grade benchmark. The reported debt-to-equity ratio is 1.03x, below the 2.0x level that would indicate aggressive balance-sheet leverage. The maturity profile nevertheless warrants monitoring: 74.2% of interest-bearing debt is short-term, including current maturities, creating refinancing and rollover exposure. This risk is moderated by the cash position and strong interest coverage of 63.22x. Contract liabilities of ¥4.75bn are the largest identified current-liability component and generally provide operating funding ahead of delivery, but also require timely project execution. Total equity increased to ¥12.00bn from ¥11.88bn a year earlier, while the equity ratio declined to 49.4% from 51.0% as liabilities grew faster than equity. Asset retirement obligations of ¥59m equal only approximately 0.5% of total liabilities, indicating limited balance-sheet exposure from this obligation.
Notable B/S Changes
Total assets: +¥1.00bn (+4.3%) to ¥24.31bn - expansion was concentrated in working-capital items rather than fixed assets. Trade receivables: +¥965m (+24.5%) to ¥4.90bn - supports higher revenue but contributes to the elevated 92-day collection period. Work in process: +¥689m (+22.0%) to ¥3.82bn - reflects a larger project execution pipeline but heightens delivery-delay and cost-overrun risk. Contract liabilities: +¥1.25bn (+35.6%) to ¥4.75bn - customer advances provide funding and revenue visibility, contingent on project completion. Cash and deposits: -¥710m (-14.6%) to ¥4.17bn - liquidity remains sound, but cash deployment should be assessed alongside the rising working-capital requirement. Total liabilities: +¥885m (+7.8%) to ¥12.30bn - liabilities increased faster than equity, reducing the equity ratio to 49.4% from 51.0%.
Cash Flow Quality
The operating cash profile is principally shaped by the extended project-production and collection cycle. Receivable days are 92 days, above the 60-day warning threshold, reflecting slower conversion of billed sales into cash. Inventory days are 191 days, materially above the 90-day warning threshold. The resulting annualized cash-conversion cycle is 246 days, well above the 120-day warning threshold. Work in process totals ¥3.82bn and represents 61.6% of total inventory, above the 40% warning level and indicating substantial capital tied up in unfinished systems. This composition is consistent with long-lead, engineered manufacturing projects, but it increases the risk that schedule slippage, acceptance delays, or cost overruns postpone cash realization. Trade receivables increased ¥965m year on year to ¥4.90bn, while electronically recorded monetary claims were ¥1.50bn. WIP increased ¥689m year on year, whereas finished goods were broadly stable at ¥1.67bn and raw materials declined to ¥709m. This pattern points to funding requirements being concentrated in execution-stage projects rather than in finished-goods stocking. Electronic payables of ¥850m and trade payables of ¥1.24bn provide partial supplier financing, but do not offset the long cash-conversion cycle. Contract liabilities of ¥4.75bn provide an important advance-funding offset and should be monitored alongside WIP, receivables, and delivery timing.
Dividend Sustainability
The full-year dividend forecast is ¥30.00 per share. Against forecast EPS of ¥116.28, the implied dividend payout ratio is 25.8%. This is comfortably below the 60% sustainability benchmark and leaves substantial earnings retention capacity. Q1 EPS was ¥33.37, which is consistent with the stronger-than-standard 28.6% progress toward forecast net income. Retained earnings total ¥11.30bn, substantially exceeding annual forecast dividends implied by the current share base. Dividend capacity is supported by a healthy liquidity position, including ¥4.17bn of cash and deposits. The principal factor to monitor for dividend coverage is the long working-capital cycle, particularly the conversion of ¥3.82bn of WIP and elevated receivables into cash. The indicated payout level appears financially conservative relative to forecast earnings and the balance-sheet position.
Risk Assessment
Business risks include Project execution risk is elevated because work in process is ¥3.82bn, 61.6% of inventory. Delays in engineering, production, customer acceptance, or installation could defer revenue recognition and cash collection., Working-capital intensity is high: annualized DSO is 92 days, DIO is 191 days, and the annualized cash-conversion cycle is 246 days. This raises exposure to customer collection delays and inventory cost overruns., Manufacturing demand risk remains relevant for vibration simulation, testing, and measuring systems, where customer capital-expenditure budgets and product-development cycles can affect order timing and project volumes., FX sensitivity is material: ¥188m of FX gains equaled 33.0% of operating income. Exchange-rate reversals could reduce ordinary income even if core operating performance remains stable., Product quality and after-delivery support require monitoring, with current product-warranty provisions of ¥142m..
Financial risks include Short-term debt represents 74.2% of interest-bearing debt, creating refinancing and rollover risk despite cash covering short-term debt by 1.93x., The equity ratio decreased to 49.4% from 51.0% year on year as total liabilities increased to ¥12.30bn., The long operating cycle can increase dependence on short-term funding if receivables or WIP conversion slows..
Key concerns include Priority 1: Convert elevated WIP and receivables into completed deliveries and cash receipts without margin erosion., Priority 2: Preserve the Q1 gross-margin expansion while SG&A growth of 36.9% is running slightly above revenue growth of 33.3%., Priority 3: Distinguish recurring operating profit from FX-supported ordinary income when evaluating progress toward the full-year earnings target., Priority 4: Maintain sufficient cash and committed funding capacity against the short-term debt-heavy maturity profile..
Investment Implications
Key takeaways include Revenue growth of 33.3% and operating-income growth of 62.0% demonstrate strong first-quarter operating momentum., Gross margin improved approximately 280bp to 39.0% and operating margin improved approximately 210bp to 11.8%., Annualized ROE of 17.7% is strong, although the 2.03x financial-leverage component contributes meaningfully to the result., FY2026 Q1 progress versus guidance is broadly normal for revenue and operating income, while net-income progress is ahead of pace., The balance sheet has sound near-term liquidity, but working capital is heavily committed to receivables and WIP., The dividend forecast implies a conservative 25.8% payout ratio based on forecast EPS..
Metrics to watch include Gross margin and operating margin relative to the 39.0% and 11.8% Q1 levels, WIP balance, WIP share of inventory, milestone completion, and customer acceptance timing, DSO, DIO, payable days, and the annualized cash-conversion cycle, Contract-liability movements relative to WIP and revenue recognition, Short-term debt refinancing and cash-to-short-term-debt coverage, Foreign-exchange gains or losses relative to operating income, Progress toward ¥20.0bn revenue, ¥2.40bn operating income, and ¥1.85bn net-income guidance.
Regarding relative positioning, IMV's Q1 profitability is favorable against the provided benchmarks, with an 11.8% operating margin, 10.9% net margin, 17.7% annualized ROE, strong interest coverage, and healthy liquidity. Its relative weakness is operating-capital efficiency: the 92-day DSO, 191-day DIO, 246-day annualized cash-conversion cycle, and WIP-heavy inventory mix are well above the stated manufacturing warning thresholds. The earnings profile therefore combines attractive project-driven margin potential with above-average execution, collection, and FX sensitivity.