Can the high growth following the Houston Metro project be replicated in FY2027-H1?

FY2027-Q1 revenue was ¥6,091 million, up ¥2,581 million, or 73.5%, from ¥3,509 million in the year-ago quarter. Operating profit turned from a ¥409 million loss in the year-ago quarter to a ¥547 million profit, ordinary profit turned from a ¥545 million loss to a ¥612 million profit, and quarterly net profit attributable to owners of the parent turned from a ¥400 million loss to a ¥600 million profit. The short-term recovery is clear, but because the year-ago period was at a low level, it would be premature to judge sustainable earnings power based solely on the rate of profit growth.

The main driver of revenue growth was the completion during the quarter of local acceptance testing for the AFC systems supplied in the previous fiscal year to Houston Metro in North America, resulting in the recognition of a large project-related revenue contribution. Accordingly, Q1 revenue growth reflects not only normal sales expansion but also project-specific factors, including the timing of acceptance and revenue recognition. Q1 revenue represented approximately 23.0% of the full-year revenue forecast of ¥26,500 million, while operating profit represented approximately 28.8% of the ¥1,900 million forecast. Although profit progress is ahead of schedule, achieving the full-year forecast will require an additional ¥20,409 million in revenue and ¥1,353 million in operating profit after Q1.

The key issue in FY2027-H1 is whether the completion of acceptance testing in Q1 was a one-off peak, or whether additional U.S. AFC orders and deliveries, O&M contracts, and expanded domestic sales of cashless-payment products and railway lighting will continue. The company has long identified annual sales fluctuations caused by regional and project concentration in demand from public transport operators as a risk, and volatility depending on whether large projects are present remains a major issue in its earnings structure.

At the next earnings announcement, the first points to check will be whether H1 revenue exceeds the ¥8,286 million recorded in the year-ago period and whether operating profit turns from the ¥245 million loss recorded in the year-ago period to a profit. In addition, disclosure of the additional Houston Metro project contribution, cumulative U.S. AFC orders and deliveries, and the presence or absence of recurring revenue from O&M contracts would allow a more precise assessment of whether Q1's large revenue contribution was temporary or marked progress toward establishing an earnings base for the overseas business.