Fukui Computer Holdings (9790) FY2026 Q3 Earnings Report

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Executive Summary

Although the Company recorded higher revenue and operating and ordinary income, net income declined due to the recognition of an impairment loss on investment securities. Revenue was ¥12.30B (+9.3% YoY), operating income was ¥5.46B (+9.2%), and ordinary income was ¥5.60B (+10.4%), securing growth in both revenue and income, while net income attributable to owners of the parent was limited to ¥3.05B (-10.7% YoY). The primary factors were the recognition of ¥0.83B in impairment loss on investment securities as an extraordinary loss and an increase in the effective tax rate; these effects should be evaluated separately from operating earnings power.

Factors Affecting Performance

【Revenue】Revenue was ¥12.30B, representing a +9.3% increase YoY. By segment, the Architectural Systems Business posted the strongest growth at ¥6.03B (49.0% of total, +17.3% YoY), while the Surveying and Civil Engineering Systems Business remained solid at ¥5.91B (48.0% of total, +7.1% YoY). Meanwhile, the IT Solutions Business declined significantly to ¥0.37B (3.0% of total, -39.3% YoY), becoming a drag on overall Company growth.

【Profit and Loss】Operating income increased to ¥5.46B (+9.2% YoY), and ordinary income increased to ¥5.60B (+10.4% YoY). However, SG&A expenses were ¥4.58B, up +14.7% YoY and exceeding the revenue growth rate, and the improvement in gross margin (81.6%, approximately +1.7pt YoY) could not be translated into an expansion of the operating margin (operating margin of 44.4%, largely flat from the same period of the previous year). Against ordinary income of ¥5.60B, a gain on sale of investment securities of ¥0.16B was recorded as an extraordinary gain, while an impairment loss on investment securities of ¥0.83B was recorded as an extraordinary loss (temporary factors), reducing profit before tax to ¥4.93B. The effective tax rate increased to 38.2% from 32.7% in the same period of the previous year, causing net income of ¥3.05B (-10.7% YoY) to diverge from the growth in ordinary income. In conclusion, the Company recorded higher revenue and operating and ordinary income, while net income declined due to extraordinary gains and losses.

Segment Analysis

The Architectural Systems Business recorded revenue of ¥6.03B (+17.3% YoY), segment income of ¥2.46B (+25.6%), and a margin of 40.7% (approximately +2.7pt YoY), achieving simultaneous growth in revenue, income, and margin improvement and serving as the growth driver for the period. The Surveying and Civil Engineering Systems Business recorded revenue of ¥5.91B (+7.1% YoY) and segment income of ¥2.82B (+2.0%), making it the largest contributor to profit; however, its margin declined to 47.7% from 50.1% in the previous year, indicating a slight softening in profitability. The IT Solutions Business experienced a substantial decline in both revenue and income, with revenue of ¥0.37B (-39.3% YoY) and segment income of ¥0.24B (-51.4%), while its margin also declined to 64.1% from 80.2% in the previous year. The Investment Business had virtually no impact, with segment income of △¥0.002B.

Key Financial Indicators

【Profitability】The Company maintained a high level of profitability, with an operating margin of 44.4% and a gross margin of 81.6% (approximately +1.7pt YoY). However, the net profit margin declined to 24.8% from 30.3% in the previous year, a decrease of approximately 5.5pt, as extraordinary gains and losses weighed down profitability indicators.【Cash Quality】Cash and deposits were ¥19.90B, accounting for 56.5% of total assets, and no accounting treatment detached from operating fundamentals was observed.【Investment Efficiency】ROE (annualized) was 14.0%, reflecting a structure led by the high net profit margin. With total asset turnover of 0.465x and financial leverage of 1.22x, the Company has a low degree of reliance on leverage.【Financial Soundness】The equity ratio was 82.2%, and the current ratio was approximately 376%, calculated as current assets of ¥22.30B divided by current liabilities of ¥5.92B. The debt-to-equity ratio was equivalent to 0.22x, indicating an extremely conservative financial foundation.

Cash Flow Analysis

Although individual disclosures in the cash flow statement are limited, changes in the balance sheet indicate that cash and deposits declined by ¥1.28B to ¥19.90B from ¥21.17B at the end of the previous fiscal year, suggesting a shift of funds toward investment securities (+¥0.74B) and investments and other assets (+¥3.08B). Net assets increased to ¥28.97B (+¥1.87B YoY), supported not only by the accumulation of retained earnings but also by an increase in valuation difference on available-for-sale securities (+¥0.27B). Advances received increased to ¥3.11B (+¥0.42B YoY), supporting cash generation through the advance receipt of contractual consideration. Overall, although cash declined, this was attributable to a transfer into investment assets, and liquidity remains ample, with cash equivalent to 3.4x current liabilities.

Earnings Quality

Ordinary income of ¥5.60B reflects recurring earnings power based on operating activities. However, in the transition to profit before tax of ¥4.93B, temporary extraordinary gains and losses totaling a net ¥0.67B—comprising a gain on sale of investment securities of ¥0.16B and an impairment loss of ¥0.83B—had an impact, and these effects should be evaluated separately from recurring earnings power. Non-operating income consisted of interest income of ¥0.08B, dividend income of ¥0.04B, and other items, all of which are recurring in nature. The effective tax rate rose to 38.2% from 32.7% in the previous year, and the increase in the tax burden amplified the decline in the net profit margin (24.8%, compared with 30.3% in the previous year). Comprehensive income was ¥3.32B, exceeding net income of ¥3.05B, with the increase in valuation difference on available-for-sale securities (+¥0.27B) contributing to the difference. This is also a non-recurring item subject to market fluctuations; from an accrual perspective, greater emphasis should be placed on the levels of ordinary income and operating income that are supported by operating cash flow.

Earnings Forecast and Guidance

The cumulative Q3 progress rates against the full-year plan were 74.1% for revenue, 74.1% for operating income, and 74.2% for ordinary income, tracking near the standard 75% level at the nine-month mark. To achieve the full-year plan, revenue of ¥4.296B and operating income of ¥1.906B will be required in Q4, implying a plan that incorporates growth above the level achieved in the same period of the previous year. The Company expects full-year revenue growth of +12.8% and operating income growth of +21.0%. In light of the revision to the earnings forecast during the current quarter, Q4 performance will be the key focus in determining whether the plan is achieved.

Shareholder Returns

The full-year dividend forecast is ¥73.0 per share. Based on the full-year EPS forecast of ¥208.46, the forecast payout ratio is 35.0%, a conservative level relative to earnings. The Q2 dividend was ¥0, with the dividend structure placing emphasis on the year-end dividend. Given retained earnings of ¥25.00B and cash and deposits of ¥19.90B, there is little concern regarding the sustainability of the announced dividend level. No revision was made to the dividend forecast during the current quarter.

Risk Factors

1. Sensitivity to the construction and surveying/civil engineering markets: The core Surveying and Civil Engineering Systems Business accounts for 51.2% of segment income, and fluctuations in construction investment and public works execution have a significant impact on Company-wide earnings. The segment margin declined to 47.7% from 50.1% in the previous year, requiring continued monitoring of profitability.

2. Decline in revenue and income in the IT Solutions Business: Revenue declined -39.3% YoY, while segment income contracted -51.4%, significantly weighing on the Company-wide growth rate. The margin also declined to 64.1% from 80.2% in the previous year, requiring close attention to whether changes in project composition will continue.

3. Risk of fluctuations in the valuation of investment securities: Investment securities totaled ¥5.43B, accounting for 15.4% of total assets, and an impairment loss of ¥0.83B was recorded as an extraordinary loss during the period. The effective tax rate also increased to 38.2%, and the impact of market fluctuations on net income remains significant.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the operating margin and net profit margin are significantly above the industry median, highlighting the Company’s highly profitable business structure.

Growth and Capital Efficiency

The revenue growth rate is slightly below the industry median, placing the Company’s growth pace around the industry average.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The high levels of profitability, with an operating margin of 44.4% and a gross margin of 81.6%, form the core of the annualized ROE of 14.0%. Growth in revenue and income and margin improvement in the Architectural Systems Business have been the primary drivers.

2. The impairment loss on investment securities of ¥0.83B caused ordinary income growth (+10.4%) and net income growth (-10.7%) to diverge, making it necessary to distinguish between the two when assessing performance.

3. The conservative financial foundation—an equity ratio of 82.2%, a debt-to-equity ratio of 0.22x, and cash and deposits of ¥19.90B—demonstrates resilience to performance fluctuations. At the same time, the decline in the margin of the Surveying and Civil Engineering Systems Business and the downward trend in revenue in the IT Solutions Business require monitoring as potential structural changes.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,597–¥1,691 at ±1% for the cost of equity, and ¥1,637–¥1,651 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• Because 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 solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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 responsibility, after consulting experts as necessary.

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