Aidma Marketing Communication (9466) FY2026 Q3 Earnings Report

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Executive Summary

This earnings period saw double-digit declines in Operating Income, Ordinary Income, and Net Income, as the decline in Revenue was compounded by the downward rigidity of SG&A expenses. Revenue was ¥36.8B (¥45.1B in the same period of the previous year, YoY -18.4%), Operating Income was ¥2.3B (¥3.6B, YoY -36.6%), Ordinary Income was ¥2.3B (¥3.7B, YoY -36.9%), and Quarterly Net Income attributable to owners of the parent was ¥1.6B (¥2.7B, YoY -42.4%). Although the gross profit margin improved to 25.8%, the SG&A ratio rose to 19.5%, causing operating leverage to work in the opposite direction and serving as the primary cause of the decline in earnings.

Factors Affecting Business Performance

【Revenue】In the integrated promotional support business, which constitutes a single segment, Revenue decreased 18.4% year on year to ¥36.8B. The decline in Revenue appears to have been driven by weaker customer demand for promotional investments or weakness in project volume and unit prices.

【Profit and Loss】Gross profit was ¥9.5B (down 16.1% year on year), while the gross profit margin improved by approximately 72bp to 25.8% from 25.1% in the same period of the previous year, indicating a relative improvement in cost management itself. Meanwhile, SG&A expenses declined only 6.4% to ¥7.2B, well below the rate of decline in Revenue, causing the SG&A ratio to rise by approximately 251bp to 19.5%. This insufficient cost absorption resulted in Operating Income of ¥2.3B (down 36.6% year on year), with Ordinary Income also declining by the same amount. Since there was no extraordinary income in the current period, including the ¥0.4B gain on business transfer recorded in the same period of the previous year, the decline in profit before tax (-44.3%) exceeded the decline in Operating Income, resulting in Net Income of ¥1.6B (down 42.4% year on year). The results are classified as a decline in both Revenue and earnings.

Segment Analysis

The Company Group operates as a single segment consisting of the integrated promotional support business, and disclosure by segment has been omitted.

Key Financial Indicators

【Profitability】The Operating Income margin was 6.2%, down approximately 180bp from 8.0% in the same period of the previous year, while the Net Income margin was 4.2%, down approximately 177bp from 6.0% in the same period of the previous year. The gross profit margin improved to 25.8% from 25.1% in the same period of the previous year.【Cash Flow Quality】Accounts receivable increased 48.2% year on year to ¥7.5B, moving contrary to the decline in Revenue; therefore, the quality of working capital requires close monitoring. Work-in-process inventory remains at a high level, suggesting a risk of costs remaining tied up in ongoing projects.【Investment Efficiency】Annualized ROE was 6.2%, decomposed into a Net Income margin of 4.2% × total asset turnover of 1.047x × financial leverage of 1.41x, indicating room for improvement in both profit margins and asset turnover.【Financial Soundness】The Equity Ratio was 71.0% (72.5% in the previous year), and the Current Ratio was a robust 313.8%. With interest-bearing debt of ¥3.3B, interest coverage exceeded 59x, indicating substantial capacity to service interest payments.

Cash Flow Analysis

Since detailed disclosure of the statement of cash flows is unavailable, cash flow trends are assessed based on changes in the balance sheet. Cash and deposits stood at ¥21.0B, a slight decrease from ¥22.0B in the same period of the previous year. Long-term borrowings were reduced by 18.7% to ¥3.3B from ¥4.0B in the same period of the previous year, suggesting an outflow of funds from financing activities. Meanwhile, Accounts receivable increased by ¥2.4B, while Accounts payable and electronically recorded obligations also increased by a combined amount exceeding ¥2.3B, potentially indicating that the expansion of working capital affected capital efficiency. Investment securities increased by ¥1.0B to ¥6.0B, suggesting that a portion of surplus funds was allocated to investments. Overall, cash levels remained high, securing sufficient financial capacity for business activities.

Quality of Earnings

Ordinary Income for the current period remained at a level consisting of Operating Income of ¥2.3B plus a ¥0.04B surplus in net non-operating income and expenses. It was composed of relatively small items such as dividends received and foreign exchange gains, indicating that recurring earnings capacity primarily depends on the core business. The same period of the previous year included extraordinary income, including a ¥0.4B gain on business transfer, whereas the current period had no extraordinary gains or losses. As a result, the decline in profit before tax exceeded the decline in Operating Income. From a working capital perspective, Accounts receivable increased 48.2% while Revenue declined, suggesting a possible divergence between earnings recognition and cash collection. The high work-in-process inventory ratio is also a factor affecting earnings quality, as the timing of cost recognition and the certainty of project profitability influence reported earnings.

Earnings Forecast and Guidance

Progress against the full-year Company forecast was 73.7% for Revenue (slightly below the standard progress rate of 75%), 76.3% for Operating Income (slightly above the standard rate), and 62.2% for Net Income. The delay in Net Income progress partly reflects the absence of the extraordinary income recorded in the same period of the previous year, which weighs on the comparison. To achieve the full-year Net Income forecast of ¥2.5B, approximately ¥0.95B in Net Income will be required in Q4. While Operating Income is broadly on track based on progress against the forecast, Net Income remains dependent on the Q4 outcome.

Shareholder Returns

The Q2 dividend was ¥5.00 per share, with no revision from the most recently announced dividend forecast. The full-year dividend forecast remains ¥10.00 per year, unchanged from the previous announcement. Based on the full-year Net Income forecast of ¥2.5B and approximately 13.08 million average shares outstanding during the period, the forecast Payout Ratio is approximately 52.3%. With net assets of ¥33.3B and cash and deposits of ¥21.0B against interest-bearing debt of only ¥3.3B, the Company has sufficient financial capacity to support dividend stability. However, the actual Payout Ratio may fluctuate depending on the final full-year Net Income result.

Risk Factors

1. Fluctuations in promotional demand and project volume: Revenue declined 18.4% year on year, and the Company has a business structure in which performance is susceptible to trends in promotional investments by customer companies.

2. Deterioration in operating leverage due to insufficient cost absorption: The SG&A ratio increased by approximately 251bp, while the Operating Income margin declined by approximately 180bp. If the recovery in Revenue is delayed, the burden of fixed costs may continue to pressure profit margins.

3. Working capital and work-in-process accumulation: Accounts receivable increased 48.2% year on year, and the work-in-process inventory ratio remains high. Monitoring is required regarding project delays and the certainty of cost recovery.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The Company’s profitability is positioned in the lower range compared with the industry median.

Growth and Capital Efficiency

While many companies in the same industry are experiencing Revenue growth, the Company is experiencing a substantial decline in Revenue, below the lower bound of the IQR.

Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. Although the gross profit margin improved to 25.8%, the Operating Income margin declined to 6.2% due to the increase in the SG&A ratio, confirming that the fixed nature of the cost structure is pressuring profit margins during a period of declining Revenue.

2. Progress toward the full-year Operating Income plan was 76.3%, exceeding the standard rate, while Net Income progress remained at 62.2%. The degree of core-business recovery, excluding the reversal of the extraordinary income recorded in the previous year, should be closely monitored.

3. The 48.2% increase in Accounts receivable and the high work-in-process inventory ratio, as working capital trends moving contrary to the decline in Revenue, are key points requiring confirmation of the actual status of project profitability and collection management.

Theoretical Share Price (Reference Value)

Sensitivity: ¥228–¥241 at Cost of Equity ±1%, and ¥234–¥235 at ω ±0.1.

Notes:

• Since forecast ROE is below the Cost of Equity, the theoretical value is below Book Value per Share.
• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Since 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 / Mechanically calculated value based solely on publicly disclosed data; it is neither a forecast of the market share price nor a recommendation of any specific investment action, and 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 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 discretion and responsibility, after consulting professionals as necessary.

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