First-half upward revision driven by data center construction, with H1 results confirming sustainability

For the first quarter of the fiscal year ending March 2027, revenue was ¥16.077 billion, operating profit was ¥958 million, ordinary profit was ¥1.156 billion, and profit attributable to owners of the parent was ¥875 million. Revenue increased 15.1% year on year and operating profit rose 252.3%. On a simple quarterly progress basis, revenue represented 21.7% of the full-year forecast of ¥74.0 billion, while operating profit represented 35.5% of the ¥2.7 billion forecast. The fact that profit progress is substantially ahead of revenue progress will be the first point to confirm at the next results announcement.

In the revision to the first-half outlook announced on 28 October, revenue was raised from the previous forecast of ¥32.0 billion to the ¥34.9 billion range, operating profit from ¥1.0 billion to ¥2.38 billion, and ordinary profit from ¥1.3 billion to ¥2.67 billion. The reasons for the revision were higher-than-planned growth in electrical equipment construction for data centers in Malaysia, an increase in gross profit, and an expected decline in selling, general and administrative expenses. However, these are first-half forecasts, not actual results through the end of September. At the next results announcement, it will be necessary to assess what percentage of the revised forecasts for first-half revenue and operating profit has been achieved, together with construction progress and revenue by region.

If first-half operating profit reaches ¥2.38 billion, the difference from the full-year operating profit forecast of ¥2.7 billion would be only ¥320 million on a simple calculation. This is consistent with the company's outlook that profit from large projects will be concentrated in the first half and that the second half does not include profit growth from the completion of large construction projects. At the same time, it indicates that the scope for a further upward revision to the full-year forecast may be limited even if first-half results exceed expectations. Conversely, if first-half profit falls short of ¥2.38 billion, more than ¥320 million would need to be generated in the second half, reducing the likelihood of achieving the full-year forecast.

At the next results announcement, it will be important to see whether the company discloses, to the extent possible, a breakdown of orders received, revenue recognized, construction progress, and gross profit margin for the Malaysian data center construction projects. It will also be necessary to confirm the contribution from the resumption of large construction projects in Indonesia, progress on major transmission-line construction in the power construction segment, and whether the company maintains its full-year forecasts of ¥74.0 billion in revenue and ¥2.7 billion in operating profit despite the first-half upward revision.