Sobal Corporation

Business Details

The Sobal Group is a single-segment engineering company that provides WEB/application development, business systems development, embedded development, and development support (manual production, etc.). Its main customers are major manufacturers, led by Sony Corporation (15.5% of revenue) and Fujitsu Limited (13.5% of revenue). The company's strengths include one-stop capability across apps, WEB, and cloud, as well as image processing technology in the embedded field, and it is advancing engineer training and proposal capability strengthening with AI positioned as a pillar of growth. From FY2027 (ending February 2027), Precise Inc. has newly joined as a consolidated subsidiary, expanding the group structure.

Recent Overview

Revenue rose 13.9% year-on-year to ¥2,502 million, but net income fell 8.8% due to M&A costs and goodwill amortization

In Q1 of FY2027 (ending February 2027) (March-May 2026), the WEB/application and business systems development field grew approximately 21% year-on-year due to the effects of newly consolidating Precise Inc. and the group participation of Risoh Co., Ltd., resulting in revenue of ¥2,502 million (up 13.9% year-on-year). On the other hand, acquisition costs and goodwill amortization (¥10 million this quarter) associated with the subsidiarization of both companies caused SG&A expenses to increase by ¥68 million year-on-year, limiting operating profit to ¥168 million (up 1.7% year-on-year). Combined with a ¥14 million year-on-year increase in corporate taxes, quarterly net income attributable to owners of parent came to ¥101 million (down 8.8% year-on-year). The full-year earnings forecast (revenue of ¥10,000 million, operating profit of ¥650 million) remains unchanged, and Q1 results are considered to be broadly in line with plan.

Key Products

Growth Drivers

• Solid IT demand underpinned by continued R&D investment from major manufacturing customers (Sony, Fujitsu, etc.)
• Expansion of technical domains and high growth in the WEB/application field (up approximately 21% year-on-year) through M&A of Risoh Co., Ltd. and Precise Inc.
• Steady IT investment driven by expanding DX-related demand from companies and government agencies, and growing needs for generative AI adoption
• Strengthened training of engineers skilled in AI utilization and DX promotion, and expanded participation in upstream processes and proposal activities
• Continued promotion of contract unit price revisions and strengthened acquisition of bulk contract projects to improve profit structure
• Stable growth in the embedded field driven by steady logistics system-related orders

Risks

• Risk of revenue concentration among key customers (Sony and Fujitsu), which together account for approximately 29% of revenue
• Increased caution in investment decisions by major manufacturing customers amid U.S. trade policy and geopolitical risks
• Impact on the embedded field from strategic reviews by various automotive OEMs
• Risk of rising recruitment costs and declining utilization rates due to worsening shortage of IT engineers
• Risk of structural changes in the engineering labor market due to the spread of generative AI, and decline in simple tasks such as manual production
• Integration risks from M&A (Risoh and Precise) and goodwill amortization burden (goodwill balance of ¥260 million, with ¥10 million amortized this quarter)
• Risk of unprofitable projects in the WEB/application field and fluctuations in large-scale project orders