SHOEI CO.,LTD. FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 period of the fiscal year ending March 2026, the Company recorded increases in both revenue and profit, securing ahead-of-plan progress toward its full-year targets on the earnings front. Revenue was ¥24.35B (¥22.93B in the previous year, YoY +6.2%), Operating Income was ¥7.33B (¥6.70B, YoY +9.3%), Ordinary Income was ¥7.56B (¥6.63B, YoY +14.0%), and Net Income attributable to owners of the parent was ¥5.20B (¥4.63B, YoY +12.4%). The Operating Income margin improved to 30.1% from 29.2% in the previous year, with an increase in the gross margin, in addition to higher revenue, driving profit growth. Ordinary Income grew faster than Operating Income because non-operating income of ¥0.26B, including foreign exchange gains, contributed to the increase.

Factors Affecting Results

【Revenue】Revenue was ¥24.35B, representing a 6.2% year-on-year increase. The Company’s principal business is the manufacture and sale of motorcycle helmets, and because it discloses results as a single segment, breakdowns by business and region cannot be confirmed. However, the improvement in the gross margin to 49.5% (up +2.1pt from 47.4% in the previous year) suggests that pricing policies and an improved product mix contributed to a qualitative improvement accompanying the revenue increase.

【Profit and Loss】Operating Income was ¥7.33B (YoY +9.3%), and the Operating Income margin improved by approximately 0.9pt year on year to 30.1%. While gross profit expanded due to a decline in the cost-of-sales ratio, SG&A expenses increased by +13.3% to ¥4.73B from ¥4.17B in the previous year, growing faster than revenue. Ordinary Income was ¥7.56B (YoY +14.0%), boosted by ¥0.26B in non-operating income, including a foreign exchange gain of ¥0.13B. Extraordinary losses were limited to a minor ¥0.02B loss on disposal of fixed assets, indicating a limited impact from temporary factors. Net Income of ¥5.20B (YoY +12.4%) reflects an effective tax rate of approximately 31.0% applied to Profit Before Tax of ¥7.54B, with no significant change in the tax burden. Revenue and profit both increased.

Key Financial Indicators

【Profitability】The Operating Income margin of 30.1% and Net Income margin of 21.4% both improved from the previous year, while ROE remained high at 16.0%. ROE can be explained as the product of a Net Income margin of 21.4%, total asset turnover of 0.64x, and financial leverage of 1.17x, indicating a structure in which the high profit margin drives capital efficiency.【Cash Quality】Cash and deposits declined -10.5% to ¥17.84B from ¥19.94B in the previous year, while accounts receivable increased to ¥3.79B (+28.0%) and inventories to ¥3.26B (+17.8%), indicating increases in working capital items and the possibility of a lag in cash conversion relative to profit growth.【Investment Efficiency】Total asset turnover was 0.64x, with no significant change from the previous year. Investment in fixed assets remained limited, at ¥8.10B in tangible fixed assets and ¥0.17B in intangible fixed assets.【Financial Soundness】The Equity Ratio was extremely high at 85.7% (85.1% in the previous year). With current assets of ¥28.97B and cash and deposits of ¥17.84B against current liabilities of ¥4.78B, the financial foundation is strong.

Cash Flow Analysis

As no cash flow statement is disclosed, funding trends are analyzed based on changes in the balance sheet. Cash and deposits declined -10.5% to ¥17.84B from ¥19.94B at the end of the previous year, while accounts receivable increased to ¥3.79B (+28.0%) and inventories to ¥3.26B (+17.8%) during the same period. The combination of declining cash despite Net Income of ¥5.20B suggests that the accumulation of accounts receivable and inventory expansion accompanying revenue growth absorbed funds as working capital. Meanwhile, the current ratio was 606%, and the quick ratio was also at a high level, indicating limited concern regarding short-term payment capacity. Given the financial structure reflected by an Equity Ratio of 85.7%, the increase in working capital is not at a level that compromises financial soundness. However, future inventory turnover and accounts receivable collections warrant monitoring as factors that may influence cash-generation capacity.

Quality of Earnings

Current-period earnings were primarily generated by recurring business activities, with a limited impact from extraordinary gains and losses. Extraordinary losses consisted solely of a ¥0.02B loss on disposal of fixed assets, while virtually no extraordinary gains were recorded. Accordingly, the gap between Ordinary Income of ¥7.56B and Net Income of ¥5.20B can be explained by the tax burden, including corporate income taxes of ¥0.23B, and no unusual accounting discrepancy is evident. The ¥0.26B in non-operating income comprised a foreign exchange gain of ¥0.13B, other income of ¥0.03B, and other items, equivalent to approximately 1.1% of revenue and approximately 3.5% of Operating Income, and is not large enough to materially distort core earnings. Meanwhile, comprehensive income was ¥5.84B, exceeding Net Income of ¥5.20B, with the difference primarily attributable to foreign currency translation adjustments of ¥0.64B, indicating that translation gains at overseas subsidiaries lifted comprehensive income. The fact that accounts receivable and inventories are increasing faster than revenue suggests, from an accounting accrual perspective, that a certain lag may be emerging in the conversion of earnings into cash.

Earnings Forecasts and Guidance

Progress toward the full-year earnings forecasts was 71.7% for revenue (forecast: ¥33.95B), 87.6% for Operating Income (forecast: ¥8.37B), 90.2% for Ordinary Income (forecast: ¥8.38B), and 87.5% for Net Income (forecast: ¥5.94B). Compared with the simple Q3 cumulative progress benchmark of 75%, revenue was slightly below the benchmark, while Operating Income, Ordinary Income, and Net Income were all substantially above it, indicating ahead-of-plan progress on the profit front. The full-year forecasts for Operating Income and Ordinary Income remain unchanged as plans for year-on-year declines of -5.9% and -5.8%, respectively, and no revisions have been made to the earnings or dividend forecasts as of this quarter. The fact that actual results are progressing substantially ahead of the pace implied by this earnings decline plan will be a factor in assessing whether the outlook is revised, together with demand trends and inventory adjustments toward the fiscal year-end.

Shareholder Returns

The full-year dividend forecast is ¥60, with no interim dividend (¥0), meaning that a year-end dividend of ¥60 is planned. The Payout Ratio based on forecast EPS of ¥116.67 is approximately 51.4%. Based on the number of shares outstanding after deducting treasury shares (approximately 51.20M shares) and the forecast dividend, total annual dividends are calculated at approximately ¥3.07B, corresponding to a Payout Ratio of approximately 51.7% against forecast full-year Net Income of ¥5.94B. Given the ample cash and deposits of ¥17.84B, this dividend level is considered reasonable in light of the Company’s financial capacity to make payments. As no information on share buybacks has been disclosed, shareholder returns are centered on dividends.

Risk Factors

1. Working Capital Expansion Risk: Accounts receivable increased +28.0% year on year to ¥3.79B, while inventories increased +17.8% to ¥3.26B, and cash and deposits declined -10.5% during the same period. If working capital continues to increase faster than profit growth, it could affect short-term cash-generation capacity.

2. Foreign Exchange Risk: A foreign exchange gain of ¥0.13B boosted Ordinary Income in the current period, although this represented a fluctuating factor equivalent to approximately 1.7% of Operating Income. Given the business structure, which includes overseas sales, a reversal in foreign exchange movements could cause fluctuations in Ordinary Income through non-operating income and expenses.

3. Risk of Margin Pressure from Higher SG&A Expenses: SG&A expenses increased +13.3% year on year to ¥4.73B, exceeding the revenue growth rate of +6.2%. If this trend continues, the pace of improvement in the Operating Income margin, which has reached 30.1%, may slow.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (manufacturing)

Profitability and Returns

Both the Operating Income margin and Net Income margin are substantially above the industry median, positioning the Company among the high-profitability group within the manufacturing industry.

Growth and Capital Efficiency

The revenue growth rate is slightly above the industry median and remains within the IQR upper bound of 9.5%.

※Source: Company analysis

Key Points from the Earnings Results

1. The Operating Income margin of 30.1% and Net Income margin of 21.4% are substantially above the industry median and expanded further from the previous year, primarily due to an improvement in the gross margin (+2.1pt). A highly profitable structure based on a premium pricing strategy and product mix has been quantitatively confirmed.

2. Progress toward the full-year earnings forecasts was 87.6% for Operating Income, 90.2% for Ordinary Income, and 87.5% for Net Income, substantially exceeding the quarterly progress benchmark of 75%. The full-year plan itself is conservative, forecasting year-on-year declines in both Operating Income and Ordinary Income, making the divergence from actual results a key point of focus going forward.

3. Cash and deposits declined -10.5% as accounts receivable (+28.0%) and inventories (+17.8%) increased. While high profitability is being maintained, the expansion of working capital is creating a lag in cash conversion, which warrants observation when assessing earnings quality.

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: ¥809–¥855 at ±1% for the cost of equity, and ¥827–¥839 at ±0.1 for ω.

Notes:

• Because Net Income progress against the full-year forecast (88%) exceeds the standard benchmark (75%), 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).
• Net assets as of the quarter-end have been used (there is a timing difference from the full-year forecast).

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This value does not forecast or guarantee a future share price)

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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, after consulting with professionals as necessary.

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