Can high-growth revenue be converted into profit in FY2027-H1?

FY2025 revenue was ¥13,274 million and operating profit was ¥1,229 million, while FY2026 revenue rose to ¥16,232 million and operating profit to ¥1,859 million, representing year-on-year increases of 22.3% and 51.3%, respectively. Strong demand in the prize game market, the expansion of standard and new character merchandise, and growth in the overseas business supported the increase in revenue and profit. However, the company’s FY2027 forecast is revenue of ¥17,000 million, operating profit of ¥1,950 million, ordinary profit of ¥1,960 million and profit attributable to owners of the parent of ¥1,370 million, with year-on-year growth slowing to 4.7% for revenue, 4.8% for operating profit and 2.7% for net profit. The first issue is whether the company can transition from the previous period’s high growth rate to stable growth.

FY2026-H1 results were revenue of ¥7,601 million and operating profit of ¥1,007 million, up 20.2% and 72.1%, respectively, year on year. If 50% of the full-year forecast is used mechanically as a benchmark for interim progress, the FY2027-H1 reference points would be revenue of ¥8,500 million and operating profit of ¥975 million. This is not a company plan adjusted for seasonality, however, but simply a mechanical progress benchmark. Even if interim operating profit exceeds this level, the scope to achieve the full-year forecast would narrow if deterioration in product mix or logistics costs were concentrated in the second half. It is therefore necessary to review not only the profit progress rate but also the second-half profitability assumptions.

FY2026’s operating profit margin was approximately 11.5%, calculated by dividing operating profit of ¥1,859 million by revenue of ¥16,232 million. In FY2027-H1, we want to focus not only on revenue growth but also on the extent to which the operating profit margin deviates from this level. The disclosures currently available do not provide a quarterly breakdown of the full-year plan, gross margins by product, orders received and order backlog, or a quantitative breakdown of the impact on profit from foreign exchange and packaging and transportation costs. Accordingly, at the results announcement, it will be important to see whether the company provides additional details on product mix, purchase costs, logistics costs and the contribution of overseas sales, which underpin its second-half assumptions.