FY2027 plan calls for rapid expansion to ¥9.533 billion in revenue and ¥503 million in operating profit; Q1 focus is on M&A consolidation and the front-loading of expenses

In FY2026, revenue was ¥3,764.455 million, operating profit was ¥100.728 million, ordinary profit was ¥56.744 million and net income attributable to owners of the parent was ¥67.487 million, resulting in a return to operating profitability from the previous fiscal year's operating loss of ¥63.817 million. By comparison, the FY2027 forecast is revenue of ¥9,533 million, operating profit of ¥503 million, ordinary profit of ¥357 million, net income of ¥303 million and EBITDA of ¥892 million, representing planned year-on-year revenue growth of approximately 153% and operating profit of approximately 5 times the previous year's level. As the materials presented this time do not include FY2027 Q1 results, the next earnings release will focus on the first results under this rapid-expansion plan.

The medium-term management plan targets revenue of ¥10 billion and EBITDA of ¥500 million in FY2027. The company's revenue forecast of ¥9.533 billion is ¥467 million, or approximately 4.7%, below the target, while EBITDA of ¥892 million is ¥392 million, or approximately 78%, above it. The key issue is therefore whether the focus has shifted from simply achieving revenue scale to a plan for increasing margins through the Energy business and M&A. Even if the company does not disclose progress against the full-year forecast in Q1, revenue should be compared with the ¥730 million recorded in the year-ago quarter, alongside gross margin, operating profit and EBITDA.

The FY2027 explanation assumes that the 3 new companies consolidated through M&A will contribute approximately ¥4.3 billion in total revenue. The assumptions are revenue of approximately ¥700 million and an EBITDA margin of approximately 15% for Chukyo Electric Power, approximately ¥2.6 billion and approximately 10% for Nakamura Shoji, and approximately ¥1 billion and approximately 9% for Mitowa. At the same time, the materials assume that EBITDA will be reduced in Q1 by acquisition-related costs for 2 M&A transactions. In the next earnings release, the reliability of the forecast will depend on whether the company can disclose separately the consolidation start dates, acquisition-related costs, goodwill and amortization burden, and revenue and profit for each company.

The issue is not simply whether Q1 is profitable. It is necessary to check operating profit on an underlying basis excluding M&A costs, consolidated gross margin, selling, general and administrative expenses, operating cash flow, and management's view of the full-year forecasts of ¥9,533 million, ¥503 million and ¥892 million. In particular, even if revenue exceeds the ¥730 million recorded in the year-ago quarter, if acquisition costs and personnel expenses are incurred ahead of growth and profit does not increase, it will be necessary to distinguish whether the full-year profit forecast is driven by business growth or temporary accounting factors.