MIC CO.,LTD. Accelerates Its Shift Into Promotional Infrastructure With First Co.HUB Deployment in Supermarkets and a Joint In-Store Installation Service; Targets OPM Above 15% Over the Medium to Long Term

Summary

2Q FY3/27 (Jul–Sep) revenue and operating income were both the highest ever for a second quarter. Excluding DM postage, underlying revenue growth was in the 17% range. Manufacturers and retailers face rising costs and labor shortages. Management said customers are choosing MIC CO.,LTD. because it removes the resulting inefficiencies by consolidating information (PromOS) and logistics (Co.HUB). 1H profit growth was limited by shareholder benefit program costs and upfront investment in facilities and systems. Even so, management expects to meet its initial full-year plan, which already assumed a 2H-weighted seasonal profile. The company also announced a series of initiatives aimed at becoming an infrastructure company. These include its first deployment in the supermarket industry, a joint installation service and an expansion of its flagship center.

Key Points

• Management Strategy and Market View
  • Management sees responses to rising costs and labor shortages as essential for both retailers and brand manufacturers. It frames "super-optimization" through consolidated information and logistics as the reason customers choose MIC CO.,LTD.
  • Targets are sustained revenue CAGR above 10% and OPM above 15%. Management said the 15%+ OPM target is now firmly within sight
  • The company will keep investing aggressively this year, next year and beyond. Management views a data platform as one of the most important assets in an AI-driven society
• Current Business Progress and Drivers
  • 2Q (Jul–Sep) revenue was JPY 3,913M (+17.3% YoY) and operating income was JPY 505M (+3.3% YoY). Both were record highs for a second quarter
  • Expanded business with existing customers and new deal wins added approx. JPY 97M to 2Q operating income. This absorbed shareholder benefit costs of approx. JPY 40M (2Q only) and approx. JPY 19M each for the Sapporo site, PromOS development and AI capex
  • Outsourced processing costs rose +28.7% YoY. Drivers were higher volumes with external partners as the business scaled and more projects with a high mix of IP and novelty items
  • Higher manufacturing overhead included an approx. JPY 26M brokerage fee for the new fulfillment center lease. Management described this as a one-off
• Key Strategic Initiatives and Inflection Points
  • Co.HUB will be deployed in the supermarket industry for the first time, with launch scheduled for January 2027. The customer's name will be disclosed later
  • A joint promotional material installation program is slated to launch in 2027. It extends MIC CO.,LTD.'s role beyond delivery to cross-manufacturer in-store installation
  • The flagship center expansion is scheduled to begin full operation in January 2027. Floor space will grow by more than 30%, and facility operating costs are expected to fall by approx. JPY 100M. On October 27, the company announced the opening of a new logistics center, Akitama Cross (Akiruno City)
  • WONDER ROOM, an immersive virtual store studio, is scheduled to open in spring 2027. A data platform for retail promotion is also planned for 2027

Outlook

• The full-year plan is unchanged: revenue of JPY 15,400M (+16.7% underlying) and operating income of JPY 2,040M (+21.0%). 2H is expected to account for 52.7% of revenue. Management expects both revenue and profit to come in line with the initial plan
• Higher procurement and freight costs stemming from the Middle East situation are expected to be recovered in 2H through price pass-through. An extraordinary loss of approx. JPY 100M tied to the facility relocation is already built into the plan
• The proprietary metric V/(BI+SR) rose to 1.23 for 1H (1Q: 1.19). The company aims to reach 1.30 over time
• PromOS contracts with 41 companies have been secured through end-FY3/27. Management indicated it expects further contracts with high-quality customers
• The annual dividend is planned at JPY 77 (+JPY 7 YoY; target payout ratio of 40%). Combined with the new shareholder benefit program (record date end-September 2026), this broadens shareholder returns through both dividends and benefits

Positive Factors

• Co.HUB covers 13,208 of 20,373 drugstores nationwide (65% penetration). As the industry's only shared delivery network, it creates high barriers to entry
• Value added in the Manufacturer segment grew +28.9% YoY, showing that cross-selling built on shared delivery is gaining traction. IT & Services rose +18.2%
• Tutoring company Try Group will adopt PromOS from November 2026. Its fit with nationwide multi-site operators was cited as the reason
• Business platform costs grew +15.4%, below revenue growth (+17.2%). Digital and creative operating costs fell 12.2% YoY on AI utilization
• ROE rose to 14.0% in FY3/26, well above the company's cost of capital benchmark of 8%

Concerns

• In 1H, operating income growth (+5.3%) lagged underlying revenue growth, and OPM fell to 11.7% (13.0% a year earlier). The key question is how far the higher strategic division operating costs (+25.7%) can be recouped
• Outsourced processing costs are sensitive to project mix. The share of IP and novelty projects drives the cost ratio
• Rising procurement and freight costs linked to the Middle East situation could weigh on 2H margins, depending on how pass-through progresses
• The center expansion lifted short-term borrowings from JPY 710M to JPY 1,714M, and the net assets ratio fell to 71.3% at end-September. Absorbing start-up costs ahead of full operation in January 2027 remains a challenge
• From FY3/27, DM postage is booked as advances paid. As a result, the gap between reported revenue growth (+4.4%) and underlying growth will persist for some time

Performance Highlights

For 1H FY3/27 (2Q cumulative), revenue was JPY 7,287M (+4.4% YoY; +17.2% underlying, excluding postage). Operating income was JPY 854M (+5.3%) and EBITDA was JPY 995M (+7.4%). Revenue grew across all customer groups, and value added expanded to JPY 4,507M (+14.1%). The company grew profit while absorbing upfront investment and 2Q-only shareholder benefit costs.

Segment Performance

*1H (2Q cumulative). Prior-year figures are on a like-for-like basis excluding postage. Segment YoY figures are estimates by this report (company materials show Manufacturer 126%, Retail 109%, IT & Services 120%).

• PromOS Client Companies: 37 (+32% YoY)
• Co.HUB Contracted Manufacturers: 737 (YoY: –)
• On-Site Staff at Client Locations: 107 (+7% YoY)
• Fulfillment Labor Cost-to-Revenue Ratio (2Q): 9.0% (-0.2pt YoY)
• Strategic Division Operating Costs: JPY 596M (+25.7% YoY)

Q&A List

• Q

  A

  This briefing did not include a Q&A session. The appendix to the earnings materials includes an FAQ covering six topics: the shareholder benefit program, revenue growth drivers, profit growth, the accounting change, the full-year outlook and V/(BI+SR)