| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥467.4B | ¥419.8B | +11.3% |
| Operating Income / Operating Profit | ¥31.1B | ¥18.9B | +64.7% |
| Ordinary Income | ¥29.1B | ¥17.5B | +66.0% |
| Net Income / Net Profit | ¥38.3B | ¥6.2B | +513.5% |
| ROE | 14.1% | 2.4% | - |
For the fiscal year ended March 2026, Revenue was ¥467.4B (YoY +¥47.6B +11.3%), Operating Income was ¥31.1B (YoY +¥12.2B +64.7%), Ordinary Income was ¥29.1B (YoY +¥11.6B +66.0%), and Net Income attributable to owners of the parent was ¥41.1B (YoY +¥29.9B +242.6%), resulting in revenue growth and significant profit increases. Revenue increased for the third consecutive year, and the operating margin improved by 2.1pts to 6.6% (prior year 4.5%). The unusually large increase in Net Income is primarily due to recognition of Special Gains of ¥33.5B (gain on sale of fixed assets ¥29.1B; gain on sale of investment securities ¥4.4B), a substantial one-off factor. Gross margin improved 0.4pts to 30.5% (prior year 30.1%), and SG&A ratio fell 1.8pts to 23.8% (prior year 25.6%), producing operating leverage. ROE rose sharply to 14.1% from 4.8% last year, but about 70% of Net Income is attributable to one-off gains, so this should be distinguished from sustainable earning power.
[Revenue] Revenue was ¥467.4B (YoY +11.3%), achieving double-digit growth. By segment, Test Solution Business ¥184.6B (+23.2%) led growth; Semiconductor Design Related Business ¥137.3B (+5.7%); and System & Service Business ¥146.4B (+4.2%) also increased. The expansion in Test Solution was driven mainly by increased demand for in-house test systems and probe cards. Cost of sales was ¥324.9B, gross profit ¥142.5B, and gross margin improved 0.4pts to 30.5% (prior year 30.1%).
[Profitability] SG&A was ¥111.4B (prior year ¥107.6B +3.5%), growing less than revenue (+11.3%), resulting in an SG&A ratio of 23.8% (prior year 25.6%) — a 1.8pt decrease. Operating Income was ¥31.1B (+64.7%), with operating margin improving 2.1pts to 6.6% (prior year 4.5%). Non-operating income totaled ¥7.0B and non-operating expenses ¥8.9B, netting ▲¥1.97B. Equity-method losses were ▲¥1.7B and net foreign exchange loss ▲¥0.4B as main items. Ordinary Income was ¥29.1B (+66.0%). Special gains were ¥33.5B (gain on sale of fixed assets ¥29.1B; gain on sale of investment securities ¥4.4B) and special losses ¥1.1B (loss on disposal of fixed assets ¥1.1B; valuation loss on investment securities ¥0.8B), resulting in profit before tax of ¥61.5B. After deducting corporate income taxes of ¥19.6B, Net Income attributable to owners of the parent was ¥41.1B (+242.6%). Net margin rose significantly to 8.8% from 2.9% last year, but approximately ¥33.5B of that is special gains (about 71.7%), indicating a large one-off contribution. In conclusion, the revenue increase, improvement in core earnings (operating margin +2.1pts), and recognition of one-off gains drove the significant profit expansion.
The Test Solution Business had Revenue of ¥184.6B (YoY +23.2%) and Operating Income of ¥11.9B (YoY +481.1%), with a margin of 6.5%. This represents a sharp recovery from an operating loss of ▲¥3.1B in the prior year, led by Testers ¥42.5B and STAr Technologies ¥142.1B. The Semiconductor Design Related Business posted Revenue ¥137.3B (+5.7%) and Operating Income ¥6.6B (+43.6%), with a margin of 4.8%; composed of EDA, San-ei Hightex, and Modec, maintaining steady demand. The System & Service Business recorded Revenue ¥146.4B (+4.2%) and Operating Income ¥17.5B (▲2.8%), with the highest margin at 11.9%, a slight decrease from ¥18.0B in the prior year. This segment comprises Embedded Systems, IT Access, Gaio Technology, and Reglas. Corporate expenses were ▲¥4.9B (prior year ▲¥0.6B), widening adjustment and bringing consolidated Operating Income to ¥31.1B. High growth in Test Solution and high margins in System & Service support overall profitability.
[Profitability] Operating margin improved 2.1pts to 6.6% (prior year 4.5%), supported by both a gross margin of 30.5% (prior year 30.1%) and an SG&A ratio of 23.8% (prior year 25.6%). ROE rose to 14.1% (prior year 4.8%), but about 70% of Net Income is from one-off gains, so sustainable earning power is estimated at ROE in the 5% range. [Cash Quality] Operating Cash Flow (OCF) was ¥40.6B / Net Income ¥41.1B = 0.99x, indicating good cash conversion. The accrual ratio is 0.1% and quality is high, but increases in accounts receivable ▲¥22.3B and increases in advance receipts +¥20.4B offset each other, and the Cash Conversion Cycle (CCC) is long at 174 days. [Investment Efficiency] CapEx ¥8.4B / Depreciation ¥12.9B = 0.65x, indicating a modest renewal investment level. DSO 103 days, DIO 74 days, DPO 3 days yield CCC 174 days, reflecting substantial working capital tied up. Total asset turnover improved to 0.97x (prior year 0.89x). [Financial Soundness] Equity Ratio 56.4% (prior year 55.6%), Debt/EBITDA 0.97x, Interest Coverage 19.7x indicate strong financial health. Current Ratio 182.7%, Quick Ratio 148.1%, Cash/Short-term Borrowings 2.73x show solid short-term liquidity. Short-term debt ratio is relatively high at 73.1%, but short-term borrowings were reduced from ¥83.7B to ¥31.2B (▲¥52.5B), improving maturity profile.
Operating Cash Flow was ¥40.6B (YoY +137.2%). Starting from profit before tax ¥61.5B, after adjustments including depreciation ¥12.9B, goodwill amortization ¥1.3B, equity-method losses ¥1.7B, gain on sale of fixed assets ▲¥28.0B, and foreign exchange gains ¥3.0B, working capital movements were accounts receivable increase ▲¥22.3B, accounts payable increase ¥2.7B, advance receipts increase ¥20.4B, and inventories change ¥0.5B, netting a cash outflow of ¥1.3B. After corporate tax payments ▲¥7.3B, cash was generated. Investing Cash Flow was +¥57.9B (prior year ▲¥4.1B), a large positive driven by proceeds from sale of fixed assets ¥71.7B and proceeds from business transfer ¥15.8B (temporary asset replacement). Capital expenditure ▲¥8.4B, intangible asset investment ▲¥5.9B, purchase of investment securities ▲¥1.8B and sale proceeds ¥5.6B were normal investing activities. Free Cash Flow was ¥98.5B, largely due to asset sale proceeds. Financing Cash Flow was ▲¥79.5B, comprised of net short-term borrowings decrease ▲¥53.6B, long-term borrowings raised ¥10.0B and repaid ▲¥5.0B, dividends paid ▲¥9.2B, and treasury stock acquisition ▲¥21.2B. Cash and cash equivalents increased by ¥19.4B from ¥63.4B at the beginning of the period to ¥82.8B at the end. OCF/Net Income 0.99x reflects good cash quality, but excluding one-off investing inflows, sustainable FCF is estimated around the OCF level of approximately ¥40B.
The difference +¥12.0B between Ordinary Income ¥29.1B and Net Income ¥41.1B is mainly due to Special Gains ¥33.5B (gain on sale of fixed assets ¥29.1B; gain on sale of investment securities ¥4.4B), meaning one-off factors account for approximately 71.7% of Net Income. Non-operating income ¥7.0B comprises foreign exchange gains ¥1.0B and other ¥1.1B; non-operating expenses ¥8.9B include interest expense ¥1.6B, foreign exchange losses ¥1.5B, and equity-method losses ¥1.7B. Net non-operating result was ▲¥1.97B, slightly reducing recurring income. OCF ¥40.6B / Net Income ¥41.1B = 0.99x and accrual ratio 0.1% (=(Net Income ▲ OCF)/Total Assets) indicate high cash backing of earnings. Goodwill amortization ¥1.3B is limited (4.3% of Operating Income) and causes minimal profit distortion. Comprehensive income ¥39.8B vs Net Income ¥41.1B difference ▲¥1.3B is due to FX translation adjustments ▲¥0.3B; valuation differences on securities ▲¥2.9B; deferred hedge gains/losses ▲¥0.1B; and retirement benefit adjustments +¥1.0B. The structure of OCF begins with a large profit before tax ¥61.5B but adjusts with non-cash gains on sale of fixed assets ▲¥28.0B; after working capital outflows around ▲¥20B, ¥40.6B is generated, suggesting recurring OCF in the low ¥30Bs. After the drop-off of one-off gains, sustainable earning power is expected at ROE 5–7% and operating margin in the 6% range, so monitoring profit levels and CF generation in the next fiscal year as core business normalization occurs is necessary.
For FY March 2027, management forecasts Revenue ¥500.0B (YoY +7.0%), Operating Income ¥37.0B (YoY +19.0%), Ordinary Income ¥37.0B (YoY +27.0%), Net Income attributable to owners of the parent ¥48.5B, EPS ¥398.37, and dividend ¥90. The forecast assumes the prior year special gains of ¥33.5B will not recur and incorporates expectations for core business profit growth. Operating margin is assumed to improve to 7.4% (prior year 6.6% +0.8pts), premised on continued SG&A ratio reduction and improved segment mix. Revenue growth of +7% decelerates from +11% last year, but steady demand is expected in Test Solution and System & Service. Dividend ¥90 is centered on ordinary dividend, excluding special dividends for smoothing. Progress evaluation by progress rate is inapplicable to year-end figures, but H1 operating income progression and advance receipt trends are monitoring metrics for guidance attainment. The forecast of equal Operating Income and Ordinary Income ¥37.0B assumes net non-operating items of ±0 and stable FX/interest conditions. A post-period event to acquire additional treasury shares increases flexibility in total returns, but payout ratio is conservative at 22.6% (¥90/¥398), implying high sustainability.
Annual dividend is ¥125 (interim ¥35, year-end ¥90), of which the year-end dividend comprises ordinary ¥40 + special ¥50. Payout ratio is 41.7% (dividends paid ¥0.934B / Net Income ¥41.1B × adjustment for shares after treasury stock) with an effective ratio around 39%. Share buybacks totaled ¥21.2B, and Total Return Ratio is 74.3% (dividends ¥0.934B + share buybacks ¥21.2B / Net Income ¥41.1B), indicating generous returns. Against Free Cash Flow ¥98.5B, total returns ¥30.5B yield an FCF coverage of 3.23x, indicating room for returns, but much of FCF was from asset sale proceeds; on sustainable FCF (OCF ¥40.6B basis), total return coverage is 1.33x, an appropriate level. Next fiscal year’s forecast dividend is ¥90 (ordinary-focused) with payout ratio 22.6% vs forecast EPS ¥398. Additional treasury share acquisition has been resolved as a subsequent event, and Total Return Ratio is expected to remain in the 50–60% range. With cash and deposits ¥85.3B and OCF ¥40.6B, total returns around ¥30B are within sustainable bounds, but considering heavy working capital (CCC 174 days) and suppressed CapEx (CapEx/Depreciation 0.65x), balancing medium-to-long-term growth investment capacity is a key consideration.
Semiconductor market cyclicality risk: The Test Solution Business (Revenue ¥185B, contribution 39.5%) is correlated to semiconductor supply-demand cycles. Customer CapEx timing and inventory adjustments can cause rapid swings in orders and revenue. Although the business returned from an operating loss of ▲¥3.1B to profitability last year, a macro downturn could again pressure earnings. With DSO 103 days and long receivable collection periods, risks of bad debts and collection delays increase during customer investment pullbacks.
Working capital intensity and liquidity risk: CCC 174 days (DSO 103 days + DIO 74 days ▲ DPO 3 days) exceeds industry norms, implying substantial working capital needs with revenue growth. High levels of receivables ¥132B and inventories ¥66B can result in inventory valuation losses and collection delays when demand shifts, pressuring OCF. Advance receipts ¥61.6B provide a buffer, but their cushioning effect weakens if order volumes decline.
One-off gains lapse and profit volatility risk: Of Net Income ¥41.1B, Special Gains ¥33.5B (approx. 71.7%) are one-off and next year may revert to core business levels. Recurring operating margin improved to 6.6% year-on-year, but non-operating items ▲¥2.0B, suppressed CapEx (CapEx/Depreciation 0.65x) may challenge medium-term competitiveness. FX/interest rate volatility and fluctuations in equity-method earnings can swing non-operating items, amplifying ROE and EPS volatility. A short-term debt ratio of 73% leaves refinancing risk, and rising interest rates could increase funding costs and compress profits.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.6% | 7.8% (4.6%–12.3%) | -1.1pt |
| Net Margin | 8.2% | 5.2% (2.3%–8.2%) | +3.0pt |
Operating margin is 1.1pts below the industry median, but Net Margin exceeds median by 3.0pts due to contribution from special gains. Overall profitability is mid-range in the industry but highly dependent on one-off gains.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 11.3% | 3.7% (-0.4%–9.3%) | +7.6pt |
Revenue growth of +11.3% significantly exceeds the industry median +3.7%, placing growth performance in the upper tier within the industry.
※Source: Company compilation
Distinguish core earnings improvement and one-off gains: Operating margin improved to 6.6% (prior year 4.5% +2.1pts) due to lower SG&A ratio and high growth in Test Solution, confirming a structural improvement trend. However, about 70% of Net Income ¥41.1B is Special Gains (gain on sale of fixed assets ¥29.1B, etc.), so next year the lapse of one-off gains will make core business profit level (Operating Income plan ¥37.0B) the focus. Improvements in non-operating items (▲¥2.0B) and maintenance of segment margins are key to assessing sustainability of ROE and EPS.
Room to improve working capital efficiency: DSO 103 days and CCC 174 days exceed industry norms, indicating heavy working capital tied to revenue growth. Although OCF/Net Income is 0.99x and of high quality, accounts receivable increase ▲¥22.3B and advance receipts increase +¥20.4B offset each other, and autonomous CF generation is at the level of OCF ¥40B. Under the next fiscal year’s +7% revenue plan, achieving DSO shortening (<80 days target) and CCC improvement (<120 days target) would enhance FCF generation and ROE sustainability. Monitoring quarterly DSO and CCC trends and advance receipts is important.
Financial soundness and capital allocation flexibility: Equity Ratio 56.4%, Debt/EBITDA 0.97x, Current Ratio 182.7% indicate a robust financial position. Short-term borrowings were reduced from ¥83.7B to ¥31.2B (▲¥52.5B), improving maturity composition. Total Return Ratio 74.3% (dividends + buybacks) reflects generous shareholder returns, but CapEx ¥8.4B / Depreciation ¥12.9B = 0.65x shows conservative renewal investment. In the next fiscal year’s core-business-normalization phase, maintaining operating margin in the 7% range, stabilizing payout ratio in the 20–30% range, and returning CapEx/Depreciation >1.0x would signal balance between securing medium-term competitiveness and capital efficiency.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company from public financial statement data. Investment decisions are your responsibility; please consult a professional advisor as necessary.