| Metric | This Period | YoY Period | YoY |
|---|---|---|---|
| Revenue | ¥101.3B | ¥97.1B | +4.3% |
| Operating Income | ¥11.3B | ¥11.3B | -0.4% |
| Ordinary Income | ¥11.4B | ¥11.4B | -0.2% |
| Net Income | ¥7.3B | ¥7.3B | -0.8% |
| ROE | 5.0% | 5.0% | - |
FY2026 Q1 results: Revenue ¥101.3B (YoY +¥4.2B +4.3%), Operating Income ¥11.3B (YoY ±¥0.0B -0.4%), Ordinary Income ¥11.4B (YoY ±¥0.0B -0.2%), Net Income ¥7.3B (YoY -¥0.1B -0.8%). Two-digit growth in the SecuritySystem segment (+13.8%) drove revenue increase, but Operating Income was restrained by a decline in InformationService operating profit (-22.3%) and a drop in gross margin (26.5%, vs 27.3% prior year, approximately -0.8pt). Progress against the Full Year plan (Operating Income ¥30.0B) is 37.6%, well above the typical 25% pace, supported by continued high-margin projects in SecuritySystem.
[Revenue] Revenue ¥101.3B (YoY +4.3%) was driven by SecuritySystem, which achieved double-digit growth at ¥22.0B (+13.8%) and accounted for 21.7% of revenue. InformationService recorded ¥79.7B (+1.9%), low growth while comprising 78.3% of revenue as the core business. After adjusting for inter-segment transactions, consolidated revenue increased. Gross profit was ¥26.8B with a gross margin of 26.5%, down from c.27.3% last year (~-0.8pt), as cost of sales rose (suggesting higher subcontracting and labor costs), pressuring profitability.
[Profitability] Operating Income was ¥11.3B (YoY -0.4%), essentially flat. Selling, General & Administrative expenses (SG&A) were ¥15.5B, an SG&A ratio of 15.3% (improved from c.15.6% prior year, ~-0.3pt), indicating effective cost control that was offset by the gross margin decline. By segment, SecuritySystem posted Operating Income ¥5.8B (+34.3%), margin 26.4%, representing 51.3% of consolidated operating profit. InformationService reported Operating Income ¥5.4B (-22.3%), margin down to 6.8%, a large decline despite revenue growth of +1.9%. Non-operating income/expense had minimal effect (non-operating income ¥0.1B, non-operating expense ¥0.0B). Ordinary Income was ¥11.4B (YoY -0.2%), Pretax Income ¥11.4B (YoY -0.2%), maintaining operating-level stability. Income taxes were ¥4.1B (effective tax rate 36.3%), slightly up from 35.9% prior year. Net Income ¥7.3B (YoY -0.8%), with gross margin decline and higher effective tax rate reducing net margin to 7.2% (from c.7.5%, ~-0.3pt). Conclusion: revenue up, slight profit decline.
InformationService: Revenue ¥79.7B (YoY +1.9%), Operating Income ¥5.4B (YoY -22.3%), margin 6.8% (down 2.1pt from 8.9% prior year). Low growth and margin deterioration occurred simultaneously, suggesting delayed pass-through of unit price increases or reduced utilization. SecuritySystem: Revenue ¥22.0B (YoY +13.8%), Operating Income ¥5.8B (YoY +34.3%), margin 26.4% (improved 4.0pt from 22.4% prior year). Continued high-margin projects and improved product mix contributed, with SecuritySystem accounting for the majority of consolidated operating profit. Margin gap between segments widened to c.19.6pt, positioning SecuritySystem as the driver of consolidated profitability.
[Profitability] Operating margin 11.1% (vs 11.7% prior year, -0.6pt), Net margin 7.2% (vs 7.5% prior year, -0.3pt). Gross margin 26.5% down ~-0.8pt from 27.3%, indicating realized cost pressures. SG&A ratio 15.3% improved ~-0.3pt from 15.6%, showing fixed-cost control. [Investment Efficiency] ROE 5.0% is based on equity ¥145.7B and Net Income ¥7.3B. EPS ¥63.41 (vs ¥64.08 prior year, -1.0%) reflects lower Net Income. [Financial Soundness] Equity Ratio 69.5% (vs 67.2% prior year, +2.3pt), with Total Assets ¥209.6B and Net Assets ¥145.7B. Current Ratio 300.6%, Quick Ratio 283.7%, indicating very strong liquidity, and Cash & Deposits ¥79.8B (38.1% of Total Assets) providing a substantial cushion. Interest-bearing debt is only short-term borrowings ¥1.2B, Debt/Equity 0.8%, effectively net cash. [Cash Quality] Accounts receivable ¥70.1B (vs ¥63.9B prior year, +9.7%) increased faster than revenue (+4.3%), worsening DSO to 253 days, suggesting possible collection delays. Accounts payable ¥17.5B (vs ¥23.7B prior year, -26.2%) fell sharply, implying shortened payment terms or timing changes, which pressures working capital. CCC 167 days worsened due to both collection delays and shortened payables, warranting attention to cash generation.
Cash flow statement data was not disclosed, but balance sheet movements suggest funding trends. Cash & Deposits ¥79.8B decreased ¥11.0B from ¥90.8B prior year. Increases in Accounts Receivable (+¥6.2B) and decreases in Accounts Payable (-¥6.2B) together likely pressured working capital by about ¥12.4B, plausibly the main driver of cash decline. Inventories ¥9.2B fell ¥2.1B from ¥11.3B, improving inventory efficiency. Cash decline of -¥11.0B against Net Income ¥7.3B indicates delayed monetization of profits, with prolonged DSO (253 days) and shortened payables being the combined cause. Total Assets ¥209.6B decreased ¥6.5B from ¥216.1B, indicating asset shedding. Interest-bearing debt is minimal at ¥1.2B, so financing outflows via financing cash flow are limited.
The difference between Operating Income ¥11.3B and Ordinary Income ¥11.4B is ¥0.1B, so non-operating impacts are negligible. Non-operating income ¥0.1B (interest income ¥0.0B, insurance income ¥0.1B, etc.), non-operating expense ¥0.0B (interest expense ¥0.0B) — both immaterial. Ordinary Income ¥11.4B equals Pretax Income ¥11.4B, with no extraordinary items. The gap between Net Income ¥7.3B and Comprehensive Income ¥6.8B (¥0.5B) is attributable to Other Comprehensive Income -¥0.5B (FX translation adjustment ¥0.1B, valuation difference on securities -¥0.6B), where securities valuation losses reduced comprehensive income. The drop in comprehensive income appears temporary and is limited in impact on earnings sustainability. On accruals, the increase in Accounts Receivable (+¥6.2B) constitutes a large portion of Net Income ¥7.3B, suggesting cash collection lag relative to profit recognition. The sharp decline in Accounts Payable (-¥6.2B) also strained working capital, so earnings quality is somewhat weakened on cash flow metrics.
Full Year plan: Revenue ¥385.0B (YoY +4.0%), Operating Income ¥30.0B (YoY +29.6%), Ordinary Income ¥30.5B (YoY +27.9%), EPS forecast ¥161.40. Q1 progress rates: Revenue 26.3% (slightly above standard 25%), Operating Income 37.6% (+12.6pt vs standard), Ordinary Income 37.4% (+12.4pt), indicating significant front-loading of profits. Continued high-margin SecuritySystem projects likely contributed, but if InformationService margin deterioration does not improve in H2, achieving Full Year targets will depend on sustained SecuritySystem growth. Q1 Operating Income ¥11.3B represents 37.6% of the Full Year ¥30.0B plan, suggesting either seasonality skewed toward Q1 or conservative guidance. No revision to guidance has been announced; plan remains unchanged at present.
Dividend forecast this quarter is ¥0, Full Year dividend forecast also ¥0. Payout Ratio 0%; no shareholder returns are currently being made. Given Cash & Deposits ¥79.8B and interest-bearing debt ¥1.2B, the balance sheet could support dividends, but the company may prioritize internal reserves. No share buyback disclosure; Total Return Ratio 0%. While dividend sustainability cannot be affirmed now, normalization of accounts receivable collection and stabilization of Operating Cash Flow would increase scope for initiating dividends in the future.
InformationService margin deterioration: Revenue ¥79.7B (+1.9%) vs Operating Income ¥5.4B (-22.3%), margin down to 6.8% (from 8.9%, -2.1pt). Profit pressure in the core segment (78.3% of revenue) drags on consolidated profitability. Causes likely include delayed pass-through of price increases or lower utilization; if not remedied in H2, achieving Full Year targets will be difficult.
Accounts receivable collection delays and worsening CCC: Accounts Receivable ¥70.1B (YoY +9.7%) with DSO 253 days has lengthened significantly, outpacing revenue growth (+4.3%). Accounts Payable ¥17.5B (YoY -26.2%) fell sharply, suggesting shortened payables and CCC 167 days, deteriorating working capital efficiency. Short-term cash generation is weakening; cash decreased -¥11.0B despite Net Income ¥7.3B, indicating delayed profit monetization.
Downward trend in gross margin: Gross margin 26.5% (vs 27.3% prior year, ~-0.8pt) suggests rising costs (subcontracting and labor inflation). While SG&A ratio improved (-0.3pt) keeping Operating Margin at 11.1%, continued gross margin deterioration in H2 would risk lower Full Year operating margin. SecuritySystem (margin 26.4%) lifts the consolidated average, but without InformationService margin recovery, gross margin pressure may persist.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.1% | 6.2% (4.2%–17.2%) | +4.9pt |
| Net Margin | 7.2% | 2.8% (0.6%–11.9%) | +4.4pt |
Profitability substantially exceeds industry median, driven by high-margin SecuritySystem projects (margin 26.4%) boosting the consolidated average.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.3% | 20.9% (12.5%–25.8%) | -16.6pt |
Growth lags industry median significantly, with InformationService low growth (+1.9%) dragging down the aggregate.
※ Source: Company compilation
Continued high-margin performance in SecuritySystem and front-loading of Full Year plan: Q1 Operating Income progress 37.6% (vs standard 25%, +12.6pt) was driven by SecuritySystem Operating Income ¥5.8B (+34.3%, margin 26.4%). The pace vs the Full Year ¥30.0B plan suggests either conservative guidance or Q1 seasonality. If SecuritySystem high-margin projects persist and InformationService margin recovers, upside to Full Year targets is possible.
Worsening working capital efficiency and cash generation: Increases in Accounts Receivable (+¥6.2B) and decreases in Accounts Payable (-¥6.2B) together pressured working capital by ~¥12.4B, with cash down -¥11.0B against Net Income ¥7.3B. Prolonged DSO (253 days) and CCC (167 days) suggest collection delays; absent normalization in H2, Operating Cash Flow risk increases. That said, Cash ¥79.8B and interest-bearing debt ¥1.2B provide a strong financial buffer, limiting near-term liquidity risk.
This report is an automatically generated earnings analysis document created by an AI analyzing XBRL earnings note data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed before acting.