Next Generation Technology Group Inc.

Business Details

A single segment engaged in acquiring manufacturing and manufacturing-related businesses and providing management support. The company continuously acquires small and medium-sized manufacturers facing challenges such as successor shortages, labor shortages, and stalled DX (digital transformation) at appropriate valuations, and builds up group-wide cash flow through value-up initiatives via its proprietary management support program. In addition to strong performance among existing subsidiaries driven by demand related to superconductivity (nuclear fusion power generation), semiconductors, and AI data centers, the company newly acquired Horikoshi Seiki in January 2026 and Osaki Dengyosha (its first carve-out deal) in March, continuing its aggressive expansion.

Recent Overview

Q1 revenue surged 136.0% year on year to ¥6,275 million, achieving substantial growth in both revenue and profit

In Q1 of FY2026 (ending December 2026), full-year contributions began from the seven groups acquired since Q2 of the previous fiscal year, combined with strong performance from existing subsidiaries driven by demand related to superconductivity (nuclear fusion power generation), semiconductors, and AI data centers. As a result, the company achieved revenue of ¥6,275 million (up 136.0% year on year), operating profit of ¥906 million (up 212.7% year on year), and net profit attributable to owners of parent of ¥1,081 million (up 491.3% year on year). Extraordinary income included a gain on negative goodwill of ¥450 million and a gain on sale of investment securities of ¥180 million. The company expanded its scope of consolidation by newly acquiring Horikoshi Seiki in January 2026 and Osaki Dengyosha, its first carve-out deal, in March. Goodwill balance increased from ¥3,008 million at the end of the previous fiscal year to ¥4,519 million. The full-year earnings forecast (revenue of ¥23,000 million, adjusted EBITDA of ¥4,000 million) remains unchanged.

Key Products

Growth Drivers

• Expansion of the business succession M&A market driven by successor shortages (also supported by government policies promoting M&A)
• High sourcing capability leveraging deep expertise and advisor networks specialized in manufacturing
• Differentiated appeal to sellers through unique positioning of maintaining each company's independence and not reselling acquired businesses
• Favorable financing terms—low interest rates, long tenors, and generally no financial covenants—based on trusted relationships with regional banks
• Organic growth of acquired companies (improved EBITDA margins) through the NGTG Growth Program
• Exposure of existing subsidiaries to growth areas such as superconductivity (nuclear fusion power generation), semiconductors, and AI data centers
• Diversification of the deal pipeline through expansion into large-company carve-out deals (Osaki Dengyosha being the first case)
• Reduced exposure to fluctuations in any specific industry through diversification across a wide range of end markets

Risks

• Pressure on operating profit and ordinary profit from increased acquisition-related expenses and stock-based compensation expenses
• Increase in interest-bearing debt due to continuous M&A execution (long-term borrowings increased from ¥10,307 million at the end of the previous fiscal year to ¥11,669 million)
• Risk of performance deterioration at acquired small and medium-sized manufacturers due to rising raw material prices and labor shortages
• Risk that goodwill and negative goodwill accounting significantly affects net profit, causing volatility in results (in Q1, a gain on negative goodwill of ¥450 million was recorded as extraordinary income)
• Risk that the development of internal controls and management systems fails to keep pace with the increasing number of acquired companies
• Risk of rising funding costs amid an environment of increasing interest rates
• Risk of future cash outflows due to a sharp increase in the provision for retirement benefits for directors (from ¥755 million at the end of the previous fiscal year to ¥1,582 million)