First-quarter profit is ahead of plan, but the first half will test the sustainability of the full-year outlook

In the first quarter of the fiscal year ending March 2027, revenue rose 17.0% year on year to ¥25.883 billion, while operating profit increased 125.7% to ¥3.868 billion. Ordinary profit was ¥3.822 billion and profit attributable to owners of the parent was ¥2.636 billion, up 133.2% and 125.9%, respectively, from the prior-year period. The full-year forecasts are revenue of ¥100 billion, operating profit of ¥9 billion, ordinary profit of ¥8.9 billion and net profit of ¥6.5 billion. On a simple progress basis, operating profit was at 43.0% of its forecast versus 25.9% for revenue, putting profit progress 17.1 percentage points ahead of revenue progress.

Even so, given first-half seasonality and the timing of project recognition, it is too early to judge the potential for a full-year upside based solely on the strong first-quarter profit progress. In the prior-year FY2026 first half, revenue was ¥45.648 billion and operating profit was ¥4.822 billion. The next results for FY2027-H1 should therefore be assessed at least against these levels to determine whether revenue and profit growth is continuing. The first-quarter operating margin was approximately 14.9%, up about 7.2 percentage points from approximately 7.7% in the prior-year period, but it has not yet been disclosed whether a double-digit margin can be maintained through the first half.

The Medium-Term Management Plan for FY2025-FY2027 targets operating profit of at least ¥10 billion and ROE of at least 9.3% in the fiscal year ending March 2028, as well as revenue CAGR of 6-8% over the plan period. FY2026 results were revenue of ¥94.906 billion, operating profit of ¥8.315 billion, an operating margin of 8.8%, ROE of 8.4% and ROIC of 5.8%. Revenue growth of 7.3% was within the CAGR target range, while ROIC was below the 9.4% WACC. In FY2027-H1, the focus should be not only on revenue growth but also on whether the operating margin and capital efficiency are moving toward the plan targets.

The first-quarter materials did not disclose a separate first-half earnings forecast, segment-level first-half profit plans or the seasonal allocation of profit against the full-year forecast. Accordingly, the next results should be assessed for actual first-half revenue and operating profit, whether the full-year forecast is maintained or revised, the sustainability of margin improvement and the timing of project recognition in the semiconductor-related and automotive-related businesses. In particular, whether first-half operating profit exceeds ¥4.822 billion and progress toward the ¥9 billion full-year target is maintained will be the basis for determining whether the result reflects more than a one-quarter rebound.