JSP Corporation FY2027 Q1 Earnings Report

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Executive Summary

Revenue and earnings increased, with gross margin and operating margin improving significantly owing to the establishment of price pass-through and a recovery in demand. Revenue was ¥4.095B (+19.1% YoY), operating income was ¥0.354B (+182.5%), ordinary income was ¥0.358B (+179.4%), and net income attributable to owners of the parent was ¥0.279B (+116.0%). The gross margin improved by +3.7pt to 28.8% (25.1% in the previous year), while the decline in the SG&A ratio also contributed to a +5.0pt expansion in the operating margin to 8.6% (3.6% in the previous year). Both the Beads and Extrusion segments achieved double-digit revenue growth and substantial earnings growth, driving the improvement in profitability.

Factors Affecting Performance

【Revenue】Revenue was ¥4.095B (+19.1% YoY), with the Beads Business at ¥2.714B (+21.9% YoY; 65.8% composition ratio) and the Extrusion Business at ¥1.411B (+14.3% YoY; 34.2% composition ratio), both achieving double-digit growth. Recovery appears to have progressed in both price and volume terms across both businesses, while the high concentration of revenue in the Beads Business is a notable characteristic.

【Profit and Loss】Operating income was ¥0.354B (+182.5% YoY), reflecting operating leverage as gross margin improvement (+3.7pt) and a decline in the SG&A ratio (20.2% versus 21.5% in the previous year) occurred simultaneously. Ordinary income was ¥0.358B (+179.4% YoY), with non-operating income and expenses nearly balanced (non-operating income of ¥0.017B and non-operating expenses of ¥0.014B), resulting in no significant divergence. Extraordinary items were minor, comprising extraordinary income of ¥0.005B and extraordinary losses of ¥0.002B, indicating a limited impact from temporary factors. Net income attributable to owners of the parent after deducting income taxes of ¥0.079B (an effective tax burden of approximately 21.9% against profit before tax of ¥0.360B) was ¥0.279B (+116.0% YoY), representing a result characterized by higher revenue and earnings.

Segment Analysis

Both segments recorded higher revenue and earnings, with profit margins converging at nearly the same level. The Beads Business generated revenue of ¥2.714B (+21.9% YoY) and segment profit of ¥0.248B (+134.0% YoY), with a 9.1% profit margin, making it the core business accounting for 65.8% of total revenue. The Extrusion Business generated revenue of ¥1.411B (+14.3% YoY) and segment profit of ¥0.131B (+210.4% YoY), with a 9.3% profit margin; its earnings growth rate exceeded that of the Beads Business. The convergence of both businesses’ profit margins in the 9% range suggests that price pass-through has permeated across the businesses. On the other hand, the concentration of revenue in the Beads Business means that consolidated performance has relatively high sensitivity to demand and pricing trends in that business.

Key Financial Indicators

【Profitability】The operating margin improved by +5.0pt to 8.6% (3.6% in the previous year), while the net profit margin (based on net income attributable to owners of the parent) also expanded by +3.1pt to 6.8% (3.8% in the previous year). ROE was 2.4% (quarterly result, before annualization), with improved profitability resulting primarily from the improvement in gross margin and the decline in the SG&A ratio.【Cash Flow Quality】Operating Cash Flow (OCF) turned negative at -¥0.036B against net income of ¥0.279B, creating a divergence between earnings and cash generation. The primary factor was pressure on working capital from increases in trade receivables and inventories, and monitoring is necessary because the current period’s earnings are taking longer to be converted into cash.【Investment Efficiency】Capital expenditures were ¥0.245B, equivalent to 1.11 times depreciation of ¥0.220B, indicating continued growth investment. EBITDA was ¥0.574B, and the EBITDA margin was 14.0%, consistent with the scale of improvement on an operating income basis.【Financial Soundness】The company maintained substantial liquidity, with an equity ratio of 67.1%, a current ratio of 205.6%, and a quick ratio of 181.9%. Meanwhile, short-term borrowings increased to ¥1.305B (¥0.804B in the previous year, +62.3%), indicating greater reliance on short-term funding. Interest coverage was approximately 35 times, indicating high resilience to interest payments, and financial soundness remains intact for the time being.

Cash Flow Analysis

OCF turned negative at -¥0.036B (compared with +¥0.129B in the previous year) despite the increase in earnings. The subtotal before changes in working capital was positive at ¥0.057B, but an increase in trade receivables associated with higher revenue (-¥0.519B) and increased inventories (-¥0.190B) absorbed cash. After an increase in trade payables (+¥0.209B) and payment of income taxes (-¥0.098B), OCF became negative. Investing Cash Flow was -¥0.327B, of which capital expenditures accounted for ¥0.245B, indicating continued growth investment. As a result, free cash flow was -¥0.363B, which was offset by financing cash flow of +¥0.193B, reflecting financing such as a net increase in short-term borrowings. The buildup of working capital during a period of revenue growth is placing pressure on cash management, and the collection and optimization of trade receivables and inventories will be important points to monitor for a recovery in cash-generation capacity.

Quality of Earnings

Current-period earnings consisted largely of recurring earnings, with only a small contribution from temporary factors. Extraordinary income of ¥0.005B and extraordinary losses of ¥0.002B were both minor, and their impact on net income attributable to owners of the parent of ¥0.279B was limited. Non-operating income of ¥0.017B consisted primarily of interest income, while non-operating expenses of ¥0.014B comprised interest expense of ¥0.010B and foreign exchange losses of ¥0.002B. The difference between ordinary income of ¥0.358B and profit before tax of ¥0.360B was therefore minimal. The divergence from ordinary income to net income attributable to owners of the parent (¥0.358B→¥0.279B) was primarily attributable to income taxes of ¥0.079B (an effective tax burden of approximately 21.9%), and no unusual adjustment factors were identified. However, OCF of -¥0.036B was below net income, and the fact that working capital factors—namely increases in trade receivables and inventories—are delaying the conversion of earnings into cash should be noted when assessing earnings quality.

Earnings Forecast and Guidance

Progress in Q1 against the full-year forecasts was 24.4% for revenue at ¥4.095B/¥16.800B, 35.4% for operating income at ¥0.354B/¥1.000B, 35.1% for ordinary income at ¥0.358B/¥1.020B, and 37.2% for net income (full-year forecast attributable to owners of the parent of ¥0.750B) at ¥0.279B. While revenue was broadly in line with the seasonal progress benchmark of approximately 25%, all profit items exceeded the expected progress rate, indicating that gross margin improvement and the dilution effect of fixed costs emerged earlier than expected in the first half. The earnings forecast was revised during the current quarter (with no revision to the dividend forecast), and it should be noted that the disclosed full-year figures reflect the revised levels.

Shareholder Returns

The company’s full-year dividend forecast is ¥100 per share, with no revision to the dividend forecast as of the current quarter. Based on 26,207 thousand shares outstanding, the annual total dividend is calculated at approximately ¥0.262B, resulting in a payout ratio of approximately 34.9% against the full-year net income forecast of ¥0.750B attributable to owners of the parent. No share repurchases were identified, and shareholder returns consist solely of dividends. Although OCF was negative in the current period, given the financial foundation of an equity ratio of 67.1% and cash and deposits of ¥1.599B, the source of dividends primarily depends on full-year earnings-generating capacity.

Risk Factors

1. Business concentration risk: The Beads Business accounts for 65.8% of revenue, resulting in relatively high sensitivity of consolidated performance to demand and pricing trends in that business.

2. Delay in cash conversion: OCF was -¥0.036B, creating a divergence from net income attributable to owners of the parent of ¥0.279B. The increase in trade receivables (-¥0.519B) and buildup of inventories (-¥0.190B) were the contributing factors. Short-term borrowings increased by +62.3% YoY (¥0.804B→¥1.305B), increasing reliance on short-term funding.

3. Raw material and foreign exchange volatility risk: The company recorded foreign exchange losses of ¥0.002B during the current period, and the sustainability of the improved gross margin (28.8%) may be affected by changes in raw material and energy costs and the environment for price pass-through.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The company’s profit margins are broadly in line with the industry median, with no significant divergence.

Growth and Capital Efficiency

The revenue growth rate significantly exceeded the industry median and was above the upper end of the IQR.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. Gross margin improved by +3.7pt YoY and operating margin by +5.0pt, confirming improved profitability driven by the establishment of price pass-through and fixed-cost dilution. The full-year operating income progress rate of 35.4% exceeded the seasonal progress benchmark of approximately 25%, indicating that earnings were realized earlier than expected in the first half.

2. Trade receivables and inventories increased during the period of revenue growth, resulting in OCF of -¥0.036B, which was negative against net income attributable to owners of the parent of ¥0.279B. Short-term borrowings also increased by +62.3% YoY, creating a timing gap between earnings growth and cash generation.

3. The full-year earnings forecast was revised during the current quarter, while the dividend forecast (¥100 annually; payout ratio of approximately 34.9%) remained unchanged. Against a plan projecting double-digit YoY growth in both revenue and earnings, profit progress as of Q1 has been running ahead of plan.

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

Sensitivity: ¥3,868–¥4,093 at ±1% for the cost of equity, and ¥3,969–¥3,983 at ±0.1 for ω.

Notes:

• Because the progress of net income against the full-year forecast (37%) exceeds the standard benchmark (25%), forecast EPS has been adjusted upward within a range of up to +10% (because companies whose progress is ahead of plan tend to exceed their 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 gap from the full-year forecast).

(Calculation model: Residual Income Model / Interest rate reference month: 2026-06 / This value does not forecast or guarantee future share prices)

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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 disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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