Fukui Computer Holdings,Inc. FY2027 Q1 Earnings Report

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Executive Summary

The quarter resulted in moderate increases in both revenue and earnings, with Revenue, Operating Income, Ordinary Income, and Net Income all increasing. Revenue was ¥40.8B (¥39.5B in the same period last year, YoY +3.3%), Operating Income was ¥17.1B (up +1.8%), Ordinary Income was ¥17.6B (up +3.1%), and Net Income was ¥12.0B (up +4.5%). The gross profit margin improved from the previous year to 83.1%; however, SG&A expenses increased by +14.6%, outpacing revenue growth, resulting in a slight decline in the Operating Income margin to 41.8%.

Factors Affecting Performance

【Revenue】Revenue was ¥40.8B (YoY +3.3%). By segment, the Architectural Systems Business was ¥20.5B (50.2% of total, YoY +4.9%), serving as the main revenue pillar, followed by the Surveying and Civil Engineering Systems Business at ¥19.9B (48.7% of total, YoY +2.0%). The IT Solutions Business contracted to ¥0.5B (1.1% of total, YoY -9.6%).

【Profit and Loss】Operating Income was ¥17.1B (YoY +1.8%), with growth lagging behind revenue growth. The main earnings contributor was the Surveying and Civil Engineering Systems Business (Operating Income of ¥8.7B, margin of 43.6%), followed by the Architectural Systems Business (¥8.0B, margin of 38.9%). The IT Solutions Business saw its margin decline to 2.1%, slightly diluting the Company-wide profit margin. SG&A expenses increased to ¥16.9B (YoY +14.6%), outpacing revenue growth, and operating leverage declined. Ordinary Income, including ¥0.6B in non-operating income such as interest and dividend income, was ¥17.6B (YoY +3.1%), while Net Income was ¥12.0B (YoY +4.5%). Overall, the Company achieved higher revenue and earnings, although the pace of earnings growth was slightly below the pace of revenue growth.

Segment Analysis

The Architectural Systems Business recorded revenue of ¥20.5B (YoY +4.9%) and Operating Income of ¥8.0B (YoY +1.7%, margin of 38.9%), achieving higher revenue and earnings while serving as the core of the revenue mix. The Surveying and Civil Engineering Systems Business recorded revenue of ¥19.9B (YoY +2.0%) and Operating Income of ¥8.7B (YoY -0.2%), remaining nearly flat while maintaining a margin of 43.6%, the highest level Company-wide, and serving as the main earnings contributor. The IT Solutions Business contracted significantly, with revenue of ¥0.5B (YoY -9.6%) and Operating Income of ¥0.01B (YoY -87.5%), causing its margin to decline to 2.1%. The Investment Business remained near break-even in terms of Operating Income. Overall, the high margin of the Surveying and Civil Engineering Systems Business supports earnings, while the weak performance of the IT Solutions Business puts downward pressure on the Company-wide profit margin.

Key Financial Indicators

【Profitability】The Operating Income margin remained high at 41.8% (42.4% in the previous year), while the Net Income margin remained at a high level of 29.4%; however, both showed a slight declining trend due to higher SG&A expenses. The gross profit margin improved from the previous year to 83.1%. 【Cash Quality】Cash and deposits amounted to ¥211.2B, accounting for 59.0% of total assets, resulting in a cash-rich asset structure including ¥60.2B in investment securities. Advances received increased to ¥34.3B (up +15.2% YoY), with the advance-payment structure supporting liquidity. 【Investment Efficiency】ROE was 4.0%. Based on a DuPont decomposition of a Net Income margin of 29.4%, total asset turnover of 0.114, and financial leverage of 1.19x, the structure is characterized by high margins but low turnover and low leverage, which constrain ROE. 【Financial Soundness】The Equity Ratio was 83.9% (81.7% in the previous year). Against total assets of ¥357.7B, liabilities were relatively small at ¥57.8B, resulting in a conservative capital structure that is effectively close to debt-free.

Cash Flow Analysis

As the cash flow statement has not been disclosed, cash flow trends are analyzed based on changes in the balance sheet. Cash and deposits declined to ¥211.2B from the equivalent of ¥249.9B in the previous year, suggesting that an increased allocation to investment securities (+¥13.3B, +28.4%) absorbed a portion of cash. Advances received increased to ¥34.3B (+15.2%), indicating that advance payments related to orders and maintenance contracts made a positive contribution to short-term liquidity. Meanwhile, taxes payable and other unpaid amounts declined significantly, suggesting that a cash outflow for tax payments occurred during the period. Accounts receivable declined to ¥8.2B, reducing the burden related to billing and collection, although the collection cycle still warrants attention. Overall, the allocation of funds to investment assets and tax payments used cash, while the advance-payment structure supported liquidity.

Quality of Earnings

The Company’s earnings for the period were primarily generated from operating activities, and no temporary factors such as extraordinary gains or losses were identified. Non-operating income of ¥0.6B consisted of ¥0.4B in interest income and ¥0.2B in dividend income. Both represent stable financial income generated from abundant cash and investment securities and have recurring characteristics. The difference between Ordinary Income and Net Income was mainly attributable to ¥5.7B in income taxes and other taxes, resulting in an effective tax rate of approximately 32%, with no unusual fluctuations observed. Comprehensive Income was ¥14.2B, comprising Net Income of ¥12.0B plus ¥2.3B in valuation difference on securities. Valuation gains arising from market conditions created a divergence from Net Income. As this divergence depends on market fluctuations in the assets held, it should be noted that it could reverse depending on future market conditions.

Earnings Forecast and Guidance

The full-year plan calls for Revenue of ¥166.4B (YoY -0.1%), Operating Income of ¥69.0B (YoY -5.1%), and Ordinary Income of ¥71.0B (YoY -5.2%), representing planned declines in both revenue and earnings year on year. Against this plan, the progress rates for the quarter were 24.5% for Revenue, 24.8% for Operating Income, and 26.4% for Net Income (against the Company’s forecast Net Income of ¥45.4B), broadly in line with a simple one-quarter (25%) progression. No revisions were made to the earnings or dividend forecasts during the quarter. While the full-year plan conservatively anticipates year-on-year declines, Q1 started with higher revenue and earnings than in the previous year, indicating progress generally in line with the plan.

Shareholder Returns

The Company forecasts an annual dividend of ¥77.00 per share. Based on forecast EPS of ¥219.54, the Payout Ratio is approximately 35.1%. There is no disclosure regarding share repurchases, suggesting that the shareholder return policy is centered on dividends. Given the financial foundation of ¥211.2B in cash and deposits and an Equity Ratio of 83.9%, the Company is in a stable position in terms of securing funds for dividends.

Risk Factors

1. Segment concentration risk: The Architectural Systems Business accounts for 50.2% of revenue, creating a structure in which performance is susceptible to the cycle of public- and private-sector construction investment and policy trends related to surveying and BIM/CIM.

2. Monitoring of the collection cycle: Although accounts receivable declined to ¥8.2B, variability in the timing of billing and collection has been noted, requiring continued monitoring of credit management and collection processes.

3. Risk of fluctuations in securities valuations: Investment securities increased to ¥60.2B (+28.4% YoY), while Comprehensive Income was boosted by ¥2.3B in valuation difference on securities. During market fluctuations, this may become a factor that puts downward pressure on net assets and Comprehensive Income.

Industry Benchmark (For Reference; Based on Company Research)

Key Points from the Earnings Results

1. The Company secured higher revenue and earnings while maintaining a high gross profit margin of 83.1% and Operating Income margin of 41.8%, reflecting a high-margin business structure. However, SG&A expenses increased at a pace (+14.6% versus +3.3%) exceeding revenue growth, and the scale benefits of the investment phase will determine future trends in profit margins.

2. By segment, the Surveying and Civil Engineering Systems Business is the main earnings contributor, with a margin of 43.6%, while the Architectural Systems Business is the main revenue contributor, accounting for 50.2% of the revenue mix. The respective roles of the two businesses are clearly differentiated. Meanwhile, the margin of the IT Solutions Business declined to 2.1%, diluting the Company-wide profit margin.

3. The capital structure is conservative, with an Equity Ratio of 83.9% and cash and deposits of ¥211.2B. The increase in advances received (+15.2%) provides support for future revenue. Full-year progress is generally in line with the plan, and the potential for improved operating leverage as revenue accumulates from Q2 onward will be a key point to monitor.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly available data using a residual income model (Ohlson-type model with an explicit 5-year fade period). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,665–¥1,763 at cost of equity ±1%; ¥1,706–¥1,722 at ω ±0.1.

Notes:

• Net assets as of the quarter-end were used (there is a timing gap relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual income model / Interest rate reference month: 2026-07 / This value 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 summary data. It does not recommend investment in any specific issue. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

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