| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥215.0B | ¥201.9B | +6.4% |
| Operating Income | ¥19.0B | ¥17.8B | +6.4% |
| Ordinary Income | ¥19.0B | ¥17.9B | +6.0% |
| Net Income | ¥9.7B | ¥13.4B | -27.5% |
| ROE | 2.2% | 3.0% | - |
The 2027 FY Q1 (Mar–May 2026) results showed Revenue of ¥215.0B (YoY +¥13.0B +6.4%), Operating Income of ¥19.0B (YoY +¥1.2B +6.4%), Ordinary Income of ¥19.0B (YoY +¥1.1B +6.0%), and Net Income attributable to owners of the parent of ¥8.4B (YoY -¥3.7B -30.3%). Both Revenue and Operating Income increased, but Net Income declined significantly due to the booking of Special Losses of ¥4.0B. By segment, the Security Business recorded Revenue of ¥209.7B (+6.3%) and Operating Income of ¥17.7B (+1.6%), while the Building Management & Real Estate Business recorded Revenue of ¥6.8B (+3.1%) and Operating Income of ¥1.2B (+230.1%), with both segments achieving revenue growth. Progress toward the full-year plan (Revenue ¥780.0B, Operating Income ¥35.0B, Ordinary Income ¥36.0B, Net Income ¥23.0B) was: Revenue 27.6%, Operating Income 54.3%, Ordinary Income 52.8%, Net Income 36.7%, indicating stronger-than-expected profit momentum.
Revenue: Revenue was ¥215.0B, up +6.4% YoY. By segment, the core Security Business delivered ¥209.7B (97.5% of total) +6.3%, and Building Management & Real Estate delivered ¥6.8B (3.2% of total) +3.1%, with growth in both segments. Gross profit was ¥50.6B (+3.2%), and gross margin was 23.5%, down -0.7pt from 24.3% a year earlier. Cost of sales was ¥164.4B (+7.5%), outpacing revenue growth (+6.4%), and wage increases and higher input costs pressured gross margin.
Profitability: Operating Income was ¥19.0B (+6.4%) with an operating margin of 8.8% (8.8% prior year), effectively flat. SG&A was ¥31.6B (+1.4%), with an SG&A ratio of 14.7%, improving -0.7pt from 15.4% in the prior year. Key personnel cost items included salaries and allowances of ¥9.9B and a bonus provision within SG&A of ¥2.2B, but personnel costs were controlled relative to sales. Non-operating income and expenses were roughly balanced at ¥0.3B each, and Ordinary Income held at ¥19.0B (+6.0%). However, a Special Loss of ¥4.0B (prior year had Special Gain ¥2.4B) reduced profit before tax to ¥15.0B (prior year ¥20.3B, -26.0%). After deducting corporate taxes of ¥5.3B and excluding non-controlling interests of ¥1.3B, Net Income attributable to owners of the parent was ¥8.4B (-30.3%). Net margin was 3.9%, down -2.1pt from 6.0% in the prior year, primarily due to the reversal in special items and tax burden; on an Ordinary Income basis, earnings power remains solid. In conclusion, the company is on a revenue and operating profit uptrend, but Special Losses led to a decline in Net Income.
The Security Business recorded Revenue ¥209.7B (+6.3%), Operating Income ¥17.7B (+1.6%), and an operating margin of 8.5% (down -0.4pt from 8.9% prior year). Stable expansion in security demand drove revenue, though margins slightly declined. The Building Management & Real Estate Business posted Revenue ¥6.8B (+3.1%), Operating Income ¥1.2B (+230.1%), and an operating margin of 17.9% (up +12.3pt from 5.6% prior year), showing substantial improvement. The high profitability of this segment contributed to an improved profit mix at the consolidated level. The Security Business accounts for 93.4% of total Operating Income as the core business, and higher margins in the Building Management business helped lift the companywide margin floor.
Profitability: Operating margin of 8.8% was maintained at the prior-year level, with a -0.7pt contraction in gross margin offset by a -0.7pt improvement in SG&A ratio. Net margin was 3.9%, down -2.1pt from 6.0% due mainly to the recording of Special Losses of ¥4.0B. ROE was 2.2% (annualized), low, driven by the decline in Net Margin and a conservative financial leverage of 1.59x. Cash Quality: Accounts receivable was ¥13.2B, down -32.0% from ¥19.4B a year earlier, indicating improved collection cycles. Inventories were ¥18.3B, down -20.1% from ¥22.9B, reflecting improved inventory efficiency. Bonus provisions increased to ¥24.8B from ¥15.6B a year earlier (+¥9.2B), reflecting accruals for future cash outflows. Investment Efficiency: Total asset turnover annualized at ~1.2x, and fixed asset turnover annualized at ~2.7x, reflecting asset efficiency consistent with the labor-intensive nature of the Security Business. Financial Soundness: Equity Ratio was 62.8% (61.5% prior year), indicating a stable financial base. Interest-bearing debt was ¥39.7B (short-term borrowings ¥20.5B, long-term borrowings ¥19.2B, bonds, etc. ¥1.5B), with a D/E ratio of 0.09x and a Net D/E ratio of -0.31x, effectively near net debt-free. Current ratio was 184.8%, and Cash and Deposits were ¥174.8B, indicating very ample liquidity. Interest coverage (Operating Income / interest expense) was approximately 109.6x, showing negligible interest burden.
Operating Cash Flow disclosure is not provided, but balance sheet movements suggest cash generation from working capital due to a ¥-6.2B reduction in accounts receivable and a ¥-4.6B reduction in inventories. Conversely, a ¥+9.2B increase in bonus provisions is an accrual for future payments and a short-term cash retention factor. Cash and Deposits rose to ¥174.8B from ¥166.4B a year earlier (+¥8.4B), strengthening the liquidity position. Operating-level earnings power is solid, and improvements in receivable collection and inventory efficiency underpin substantive cash generation. The Special Loss of ¥4.0B is a one-off cash outflow factor, but ample cash balances provide resilience. There were no significant capital expenditures or M&A-related large outflows during the period, and Free Cash Flow is assessed to be sufficient to cover dividend payments.
Ordinary Income of ¥19.0B is sustained earnings based on operating performance, indicating good quality. Non-operating items were balanced (non-operating income ¥0.3B, non-operating expense ¥0.3B), comprised of routine items such as dividend income ¥0.1B and interest expense ¥0.2B, and do not distort operating economics. However, the booking of Special Losses ¥4.0B (prior year Special Gain ¥2.4B) widened the gap between Ordinary Income and Net Income. Details of the Special Losses are limited in disclosure but appear to be one-off in nature, and operating-level earnings power is intact. Comprehensive income was ¥7.5B, a downside of ¥-2.2B from Net Income ¥9.7B (including non-controlling interests). Components included valuation losses on securities of -¥1.6B and actuarial losses on retirement benefits of -¥0.6B, with valuation changes through Other Comprehensive Income impacting results. On an accrual basis, reductions in accounts receivable and inventories increased coherence between operating profit and cash, indicating good cash-conversion quality.
The full-year plan remains unchanged: Revenue ¥780.0B (YoY -0.9%), Operating Income ¥35.0B (-22.2%), Ordinary Income ¥36.0B (-23.4%), Net Income ¥23.0B, EPS ¥163.90. Q1 progress rates were Revenue 27.6%, Operating Income 54.3%, Ordinary Income 52.8%, Net Income 36.7%, well above the standard Q1 pacing (Q1 = 25%). Operating and Ordinary Income are running about +28–29pt ahead, and even accounting for the first-half skew typical of the business, there is considerable headroom. Net Income declined YoY due to Special Losses, but the 36.7% progress rate is consistent with achieving the full-year plan. The dividend forecast was revised to an annual ¥40.00 (interim: ordinary ¥30.00 + commemorative ¥10.00). Given the advanced profit progress and strong cash position, the probability of achieving the full-year plan is assessed as high.
The full-year dividend forecast is ¥40.00 (interim dividend: ordinary ¥30.00 + commemorative ¥10.00; year-end dividend undecided), implying a Payout Ratio of approximately 24.4% against company-forecast EPS of ¥163.90, a conservative level. This represents an increase of ¥10.00 from the prior year interim dividend of ¥30.00, with the ¥10.00 increase comprising the commemorative dividend. The rationale for the commemorative dividend is not disclosed but is presumed to be a one-off return tied to a specific milestone. Assuming Cash and Deposits of ¥174.8B and shares outstanding of 14,817 thousand shares (14,002 thousand shares excluding treasury stock), the annual dividend payout is approximately ¥560M, equivalent to 3.2% of cash balances, indicating sufficient payment capacity. No share buyback was disclosed, and Total Return Ratio assessment based on payout ratio is judged sustainable. Over the mid-term, assuming improvement in ROE and continued stable Operating Cash Flow generation, there is scope for sustained growth in ordinary dividends.
Gross Margin Pressure Risk: Gross margin was 23.5%, down -0.7pt from 24.3% a year earlier. The labor-intensive nature of the Security Business means wage inflation and difficulties in securing personnel can push up cost of sales. While SG&A reductions supported operating margin, delayed price revisions or contract renewals could further erode margins.
Volatility of Special Items Risk: This period recorded a Special Loss of ¥4.0B, reversing from a Special Gain of ¥2.4B in the prior year. The lack of transparency on the contents and frequency of special items increases Net Income volatility. Stability at the pre-tax profit level may not translate to stable Net Income.
Segment Concentration Risk: The Security Business accounts for 97.5% of Revenue and 93.4% of Operating Income, a highly concentrated structure where demand fluctuations or contract renewal trends in this segment can materially affect consolidated performance. Although the Building Management business is improving profitability, its scale is small and offers limited diversification benefits.
Revenue & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.8% | 8.0% (2.2%–15.8%) | +0.8pt |
| Net Margin | 4.5% | 5.8% (1.5%–10.7%) | -1.2pt |
Operating margin is +0.8pt above the industry median, a relatively favorable level. Net margin trails the median by -1.2pt due to the impact of Special Losses, but operating-stage profitability remains stable.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.4% | 9.3% (0.2%–16.9%) | -2.9pt |
Revenue growth of +6.4% lags the industry median +9.3% by -2.9pt but represents stable growth.
※ Source: Company compilation
Operating-stage earnings power is solid, maintaining a trend of revenue and operating income growth. A -0.7pt contraction in gross margin was offset by SG&A efficiency, keeping operating margin stable at 8.8%. Profit progress vs. full-year plan is markedly above expectations (Operating Income 54.3%, Ordinary Income 52.8%), supporting a high probability of achieving the plan.
Net Income fell -30.3% YoY due to a Special Loss of ¥4.0B, but this is a one-off factor and operating-level earnings power is sustained. Liquidity is very ample with Cash and Deposits ¥174.8B, Current Ratio 184.8%, and Net D/E Ratio -0.31x, indicating high financial safety. A Payout Ratio of 24.4% is sustainable, and the annual dividend plan of ¥40.00 (including commemorative ¥10.00) appears feasible.
Medium-term focus areas are improving gross margin and capital efficiency. ROE of 2.2% is low; price revisions, expansion of high value-added services, and scale expansion of the Building Management business to improve mix are key levers to lift margins and ROE. Flattening special-item volatility and correcting tax burden will help restore Net Margin.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your responsibility; please consult a professional if necessary.