First-half forecast raised, full-year forecast unchanged; focus shifts to the sustainability of the pull-forward effect

FY2027-Q1 revenue was ¥4.406 billion and operating profit was ¥422 million, representing year-on-year increases of 4.0% and 411.9%, respectively. By contrast, the revised FY2027-H1 forecasts are revenue of ¥8.57 billion, operating profit of ¥820 million and profit attributable to owners of the parent of ¥590 million. After deducting 1Q results, approximately ¥4.17 billion in revenue and ¥400 million in operating profit will be required in 2Q alone, making the amount of project revenue expected to be recorded during the remaining first-half period the first point to confirm.

1Q progress against the full-year forecasts was approximately 18.7% for revenue and 17.1% for operating profit. Against the revised H1 forecasts, approximately 51.4% of both revenue and operating profit had already been recorded, indicating broadly consistent progress when viewed solely in terms of achieving the H1 forecasts. The full-year forecasts, however, are ¥23.5 billion in revenue and ¥2.465 billion in operating profit, leaving approximately ¥14.93 billion in second-half revenue and ¥1.645 billion in operating profit after H1. The greater the extent to which projects are brought forward into H1, the more important it becomes to assess whether the required volume of second-half projects is realistic.

The explanation for the upward revision includes new projects arising from legislative and regulatory changes, such as responses in the public sector to child and child-rearing support payments, some projects originally scheduled for second-half revenue recognition brought forward, and lower outsourcing costs from bringing certain operations in-house. These factors combine increased project orders with cost improvements. The key point at the next results announcement will be whether the company can separately explain the amount of revenue recognized early, the contribution from projects related to legislative and regulatory changes, and the reduction in outsourcing costs.

The operating margin in the revised H1 forecast is approximately 9.6%, almost the same as the approximately 9.6% recorded in 1Q. The plan therefore does not assume a sharp improvement in the 2Q margin. However, the full-year operating margin forecast is approximately 10.5%, meaning that a certain level of profitability must be maintained after H1 as well. At the H1 results announcement, it will be important to obtain specific details on the order backlog supporting the full-year forecast, the timing of project revenue recognition, and whether projects remain for the second half after the pull-forward.