OHBA (9765) FY2027 Q1 Earnings Report

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Executive Summary

Revenue increased in Q1, while higher SG&A expenses outpaced the improvement in gross margin, limiting operating income growth. Revenue was ¥3.12B (+5.9% YoY), and operating income was ¥0.18B (+2.2%). Ordinary income was ¥0.19B (+0.6%), while net income attributable to owners of the parent was ¥0.12B (-1.5%). Gross margin improved from 32.9% to 33.5%, but SG&A expenses increased approximately 9.3% YoY, exceeding revenue growth. As a result, the operating margin was 5.7%, down from 5.9% in the prior-year period.

Factors Affecting Financial Performance

【Revenue】Revenue was ¥3.12B, up 5.9% YoY. The Company omits segment information because it operates as a single-business corporate group, providing integrated services in geospatial information, environmental services, urban development, design, and business solutions.

【Income and Expenses】Gross profit was ¥1.05B, with a gross margin of 33.5%, an improvement of approximately 0.6pt from 32.9% in the prior-year period. SG&A expenses were ¥0.87B, and the SG&A ratio was 27.8%, up approximately 0.9pt from 26.9% in the prior-year period. The increase in the SG&A ratio exceeded the improvement in gross margin, and the operating margin declined by approximately 0.2pt. Extraordinary income was limited to ¥0B in gain on sale of property, plant and equipment, so the impact of one-off factors was limited. The effective tax rate was approximately 34.1%; despite a slight increase in ordinary income, net income declined. In summary, revenue and operating income increased, although net income decreased, and profit growth trailed revenue growth.

Key Financial Indicators

【Profitability】The operating margin was 5.7%, and the net profit margin was 3.9%. Annualized ROE was 3.4%, corresponding to a DuPont breakdown of a 3.9% net profit margin, total asset turnover of 0.638x, and financial leverage of 1.35x. Total asset turnover improved from approximately 0.568x in the prior-year period, reflecting revenue growth and a decrease in total assets, but this was offset by a lower net profit margin and reduced leverage.【Cash Flow Quality】A cash flow statement has not been disclosed. On the balance sheet, accounts receivable of ¥7.31B account for approximately 79% of current assets and approximately 37% of total assets. Annualized days sales outstanding are approximately 214 days, down from an estimated approximately 236 days in the prior-year period. The timing of collections determines how earnings are converted into cash.【Investment Efficiency】Annualized ROIC was 3.4%, at the same level as ROE.【Financial Soundness】The equity ratio was 73.9%, and the current ratio was approximately 300.8%. Interest-bearing debt of ¥1B consists entirely of short-term borrowings, while cash and deposits of ¥1.64B represent approximately 1.64x that amount.

Cash Flow Analysis

Based on balance sheet movements, cash and deposits decreased by approximately ¥1.17B, from ¥2.81B in the prior-year period to ¥1.64B. Over the same period, accounts payable declined by approximately ¥0.79B, from ¥1.09B to ¥0.3B, and the provision for bonuses also decreased from approximately ¥0.7B to approximately ¥0.07B. The timing of payments may have contributed to the decline in cash, although these factors cannot be identified as the sole causes. Accounts receivable decreased by approximately ¥0.3B, from ¥7.62B to ¥7.31B. Total assets contracted from ¥20.72B to ¥19.56B, and total liabilities also declined from ¥5.97B to ¥5.11B. Although cash decreased, short-term borrowings of ¥1B remain within the amount covered by cash and deposits.

Earnings Quality

Operating income of ¥0.18B accounted for most of ordinary income of ¥0.19B, while non-operating income of ¥0.01B and non-operating expenses of ¥0B made only a small contribution. Extraordinary income consisted solely of ¥0B in gain on sale of property, plant and equipment, indicating that earnings were primarily generated by the core business. Comprehensive income was ¥0.16B, exceeding net income of ¥0.12B. Its components included a ¥0.09B increase in valuation difference on available-for-sale securities and a △¥0.05B adjustment related to retirement benefits. Comprehensive income declined approximately 31% from ¥0.24B in the prior-year period. As the conversion of earnings into cash depends on collections of accounts receivable, quarterly collection trends are a key focus in assessing earnings quality.

Earnings Forecast and Guidance

The full-year forecast is revenue of ¥17.5B (+2.9% YoY), operating income of ¥2.05B (+4.3%), ordinary income of ¥2.1B (△1.9%), and net income of ¥1.45B (△1.3%), with no revisions this quarter. Q1 progress rates were 17.8% for revenue, 8.7% for operating income, and 8.4% for net income, below the 25% expected under an even progression. The operating income required over the remaining period is approximately ¥1.87B, representing a required operating margin of approximately 13.0%, significantly above Q1’s 5.7%. Whether revenue recognition is concentrated in particular periods will be a key factor in assessing the likelihood of achieving the forecast.

Shareholder Returns

The full-year dividend forecast is ¥44 per share, implying an estimated payout ratio of approximately 48.0% based on forecast EPS of ¥91.64. The estimated annual dividend total, based on approximately 15.766 million shares excluding treasury stock, is approximately ¥0.694B, within the forecast net income of ¥1.45B. No share buybacks have been identified, so they are not included in the total return ratio. Cash and deposits available to fund dividends amount to ¥1.64B; their adequacy should be assessed alongside the payout ratio and accounts receivable collection trends.

Risk Factors

1. Revenue Recognition Timing and Progress Risk: Progress toward the full-year operating income forecast was only 8.7%. An operating margin of approximately 13.0% is required over the remaining period, a substantial gap from Q1’s 5.7%. Quarterly results are susceptible to fluctuations depending on the timing of project acceptance.

2. Risk of Higher SG&A Expenses: SG&A expenses increased approximately 9.3% YoY, outpacing revenue growth of +5.9%. If this trend continues, improvements in gross margin may not be fully reflected in earnings.

3. Accounts Receivable Collection and Short-Term Liabilities: Accounts receivable of ¥7.31B account for approximately 37% of total assets, and annualized days sales outstanding are approximately 214 days. Interest-bearing debt of ¥1B consists entirely of short-term borrowings, while cash and deposits are approximately 1.64x that amount. Delayed collections could affect liquidity.

Industry Benchmarks (For Reference; Compiled by the Company)

Profitability and Returns

Both the operating margin and net profit margin are below the industry median but within the IQR.

Growth and Capital Efficiency

Revenue growth is below the median but within the IQR.

Source: Company compilation

Key Takeaways from the Results

1. Revenue growth and gross margin improvement (from 32.9% to 33.5%) are evident. However, the SG&A ratio rose from 26.9% to 27.8%, and the operating margin declined from 5.9% to 5.7%.

2. Financially, the Company has a low dependence on debt, with an equity ratio of 73.9% and a current ratio of approximately 300.8%. However, assets are concentrated in accounts receivable, with annualized days sales outstanding of approximately 214 days, while ROE remains at 3.4%.

3. Progress toward the full-year operating income forecast was 8.7%, while an operating margin of approximately 13.0% is required over the remaining period. Operating margins and SG&A trends from Q2 onward will be key items to monitor.

Theoretical Share Value (Reference)

Sensitivity: ¥880 to ¥929 for cost of equity ±1%; ¥903 to ¥904 for ω ±0.1.

Notes:

• Forecast ROE is below the cost of equity, so the estimate falls below book value per share.
• Net assets are taken at the quarter end (there is a timing gap with the full-year forecast).
• Net assets include non-controlling interests, so the estimate may be somewhat high.

(Model: residual income model (Ohlson-type, explicit 5-year fade) / rate reference month: 2026-09 / a mechanical estimate from public data only; it is not a forecast of the market price or a recommendation of any investment action, and it does not predict or guarantee future share prices)

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This report is an earnings analysis document automatically generated by AI from XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility and, where appropriate, after consulting a professional.

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