| Metric | Current Period | Prior-year Period | YoY |
|---|---|---|---|
| Revenue | ¥344.6B | ¥249.5B | +38.1% |
| Operating Income | ¥27.7B | ¥5.7B | +382.9% |
| Ordinary Income | ¥28.4B | ¥6.1B | +367.6% |
| Net Income | ¥21.5B | ¥4.3B | +397.7% |
| ROE | 9.2% | 2.0% | - |
FY2026 Q3 results delivered significant increases in both revenue and earnings: Revenue ¥344.6B (YoY +¥95.1B, +38.1%), Operating Income ¥27.7B (YoY +¥22.0B, +382.9%), Ordinary Income ¥28.4B (YoY +¥22.3B, +367.6%), and Net Income ¥21.5B (YoY +¥17.2B, +397.7%). Gross margin improved to 20.4% from the prior year, and operating margin expanded to 8.0% (up +5.7pt from 2.3% a year earlier). With operating leverage driving results, the SG&A ratio declined to 12.3%. Extraordinary Income of ¥4.52B, including ¥3.96B in gains on sale of investment securities, lifted profit before tax to ¥32.4B, and EPS (Basic) reached ¥206.63 (up +¥164.79 from ¥41.84 a year earlier). ROE improved markedly to 9.2%; the DuPont three factors are a net profit margin of 6.2%, total asset turnover of 0.837, and financial leverage of 1.76x. Short-term borrowings fell 96.4% from ¥16.45B in the previous fiscal year to ¥0.60B, the current ratio stands at 170.2%, and with cash and deposits of ¥80.58B, the financial position is sound. By segment, the core Security segment led earnings contribution with revenue of ¥262.7B. The company’s full-year guidance calls for revenue of ¥420.0B (+20.3%), operating income of ¥24.5B, net income of ¥16.0B, and a dividend of ¥33.
[Profitability] ROE at 9.2% (DuPont three factors: net profit margin 6.2%, total asset turnover 0.837, financial leverage 1.76x) shows a substantial improvement from the prior-year period. Operating margin expanded significantly to 8.0% (improved by +5.7pt from 2.3% a year earlier), and net margin to 6.2% (improved by +4.5pt from 1.7%). Interest coverage is 49.47x, indicating a very light interest burden. [Cash Quality] With cash and deposits of ¥80.58B, cash coverage of short-term borrowings of ¥0.60B is 134.3x. Coverage of current liabilities of ¥107.48B is 0.75x. [Investment Efficiency] Total asset turnover improved YoY to 0.837. Days Sales Outstanding is 45.2 days, and Days Inventory Outstanding is 0.07 days, indicating extremely high inventory efficiency. [Financial Soundness] Equity Ratio 56.8% (+0.8pt from 56.0% a year earlier), Current Ratio 170.2% (improved from 157.7% a year earlier), and Quick Ratio 170.1%, reflecting sound short-term liquidity. Interest-bearing debt is ¥46.03B (breakdown: long-term borrowings ¥45.43B, short-term borrowings ¥0.60B), with a D/E ratio of 0.20, indicating a conservative capital structure. The company holds goodwill of ¥25.88B and intangible assets of ¥35.07B.
Cash and deposits increased by +¥4.07B (+5.3%) from ¥76.51B a year earlier to ¥80.58B, suggesting that the significant profit increase contributed to cash accumulation. In working capital efficiency, receivables were ¥42.72B (flat from ¥42.89B a year earlier), and inventories were ¥0.07B (down -42.3% from ¥0.11B a year earlier), indicating further improvement in inventory efficiency. Short-term borrowings were substantially reduced by -96.4%, from ¥16.45B in the previous fiscal year to ¥0.60B, suggesting that the significant increase in operating income and the contribution of extraordinary income facilitated repayment of short-term debt. On the investment side, property, plant and equipment increased by +¥0.65B from ¥73.16B in the previous fiscal year to ¥73.81B, implying capital expenditures exceeding depreciation. Investment securities decreased by -¥3.76B from ¥24.02B in the previous fiscal year to ¥20.26B, consistent with recognition of ¥3.96B in gains on sale. On the financing side, treasury stock increased by -¥0.50B from -¥11.67B in the previous fiscal year to -¥12.17B, suggesting share repurchases. With the substantial compression of short-term borrowings and maintenance of cash, cash coverage of short-term liabilities improved significantly from 4.65x in the previous fiscal year to 134.3x, indicating ample liquidity.
Ordinary Income was ¥28.4B versus Operating Income of ¥27.7B, resulting in net non-operating income of +¥0.77B, which is estimated to consist largely of financial income such as interest and dividends received. Non-operating income/expenses amounted to 0.2% of revenue, indicating a high reliance on core business earnings. Extraordinary gains/losses produced a net surplus of +¥3.88B, mainly due to ¥3.96B in gains on sale of investment securities. Extraordinary Income of ¥4.52B accounted for 13.9% of profit before tax of ¥32.43B, evidencing a clear contribution from one-off factors. At the operating level, operating margin improved substantially to 8.0%, indicating that core business profitability itself has strengthened. While the absence of disclosure on Operating Cash Flow limits assessment on an accrual basis, the buildup of cash balances and the substantial reduction in short-term borrowings support, to a certain extent, the quality of earnings. However, assuming the roll-off of extraordinary gains such as gains on sale of investment securities, caution is warranted regarding the sustainability of net income.
Sustainability of revenue growth: Whether rapid growth of +38.1% YoY is sustainable depends on order trends and customer concentration. As Q3 progress significantly outpaces full-year guidance (+20.3%), it is necessary to check for Q4 deceleration risks or the presence of any temporary year-end uplift factors. Goodwill and intangible asset impairment risk: The company holds total goodwill of ¥25.88B (6.3% of total assets) and intangible assets of ¥35.07B (8.5% of total assets), a combined ¥60.95B. If the profitability of acquired assets declines, an impairment loss would correspond to approximately 26% of shareholders’ equity of ¥233.95B, necessitating monitoring of investment recovery. Risk of reliance on one-off factors for profits: Extraordinary gains such as ¥3.96B in gains on sale of investment securities account for roughly 18% of current period net income of ¥21.5B; if these roll off, net income could decline significantly. The divergence between full-year guidance for net income of ¥16.0B and Q3 actual of ¥21.5B also suggests such an impact.
[Position within industry] (Reference information; our research) Profitability: Operating margin of 8.0% exceeds the industry median of 7.1% (2025 Q3, healthcare sector, 56 companies) by +0.9pt, placing the company above the midpoint within the sector. Net margin of 6.2% exceeds the industry median of 5.3% by +0.9pt and is similarly favorable. ROE of 9.2% exceeds the industry median of 6.5% by +2.7pt, reaching a top-tier level within the sector. Efficiency: Total asset turnover of 0.837 slightly exceeds the industry median of 0.81, indicating asset efficiency around the industry average. DSO of 45.2 days is -12.7 days better than the industry median of 57.87 days, showing superior collection efficiency. Soundness: Equity Ratio of 56.8% is almost in line with the industry median of 57.1%, representing standard financial soundness within the sector. Current Ratio of 170.2% (1.70x) is below the industry median of 2.30x, but short-term liquidity remains at a sound level. Growth: Revenue growth of +38.1% significantly exceeds the industry median of +9.1%, achieving remarkable high growth within the sector. EPS growth is +293.8% YoY (EPS ¥41.84 → ¥206.63), far surpassing the industry median of +10.0%. Financial leverage of 1.76x is nearly the same as the industry median of 1.72x, indicating a balanced capital structure. Overall, the company ranks high in profitability and growth within the sector while maintaining standard levels of soundness. Note: Sector: healthcare (56 companies), comparison period: 2025 Q3, Source: Our compilation
Significant profitability improvement driven by operating leverage: With revenue up +38.1%, operating margin expanded from 2.3% to 8.0% (+5.7pt), demonstrating pronounced fixed-cost absorption through a lower SG&A ratio. Against full-year guidance for operating income of ¥24.5B, Q3 operating income is already ¥27.7B, a progress rate of 113%, confirming an upside at the operating level. Compression of short-term debt and stronger financial profile: Short-term borrowings were reduced by -96.4% from ¥16.45B in the previous fiscal year to ¥0.60B, and with cash and deposits maintained at ¥80.58B, liquidity improved significantly. This financial restructuring greatly reduced short-term liquidity risk and secured an extremely high interest coverage of 49.47x. One-off contributions and notes on earnings quality: Gains on sale of investment securities of ¥3.96B account for roughly 18% of net income of ¥21.5B. Given that full-year guidance for net income of ¥16.0B is set below the Q3 actual, it is inferred that the company itself is factoring in the roll-off of extraordinary gains. Although the absence of disclosure on Operating Cash Flow constrains confirmation of cash conversion, the accumulation of cash and the compression of short-term borrowings suggest that de facto cash generation capacity is at least solid.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our firm based on publicly available financial statements. Investment decisions are your own responsibility; consult a professional as needed before making any decisions.
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