Hybrid Technologies Co., Ltd.

Business Details

Following an organizational restructuring in January 2026, the Group reorganized from the former single segment of "Hybrid-type Services" into three segments: "Development Domain – Japan Business," "Development Domain – Overseas Business," and "Human Resources Domain." Development Domain – Japan Business provides Japan-Vietnam Integrated Development Services to domestic Japanese customers; Development Domain – Overseas Business (newly established through the consolidation of NGSC) provides IT solutions such as ERP and other core systems to customers within Vietnam; and Human Resources Domain provides staffing and SES services involving highly skilled engineers and consultants.

Recent Overview

Revenue surged to 2.05 times the prior-year level due to the consolidation of three companies through M&A, though the loss attributable to owners of parent continued to expand

In January 2026, the company made MCP35 Co., Ltd. (core subsidiary: Groove System Co., Ltd.) a wholly owned subsidiary for ¥195,000 thousand, strengthening the Human Resources Domain. With the new consolidation of three companies—NGSC, MCP35, and Groove System—revenue for the current interim period improved substantially to ¥3,200 million (up 105.0% year on year), and operating profit rose to ¥124 million (up 345.9% year on year). On the other hand, financial expenses surged to ¥62,009 thousand (from ¥15,640 thousand in the prior-year period), limiting profit before tax to ¥67 million, and with a large allocation of profit to non-controlling interests (¥85,330 thousand), the interim loss attributable to owners of parent expanded to ¥42 million from a loss of ¥26 million in the prior-year period. Total liabilities surged to ¥5,064 million (from ¥1,720 million at the end of the prior fiscal year), and the ratio of equity attributable to owners of parent declined to 28.6% (from 54.8% at the end of the prior fiscal year). Reported segments were changed to three categories through the segment reorganization, with Development Domain – Overseas Business becoming the largest segment in both revenue and profit. There has been no change to the full-year earnings forecast, which remains at revenue of ¥5,119 million and operating profit of ¥165 million.

Key Products

Growth Drivers

• Growth of the information services industry market driven by the continued expansion of corporate DX initiatives and IT investment appetite
• Expansion of addressable domains, solutions, and markets through an aggressive M&A strategy (consolidation of three companies including NGSC and Groove System)
• Full-scale launch of market development within Vietnam (establishment of the Development Domain – Overseas Business through the consolidation of NGSC, with revenue of ¥1,463 million and segment profit of ¥220 million in the current interim period)
• Expansion of the Human Resources Domain through the acquisition of Groove System (leveraging a client base centered on major SIers, and strengthening mutual engineer supply and recruitment/training systems)
• Top-line growth through cross-selling among group companies and steady progress in PMI
• Subsiding of the factor depressing performance associated with the closure of the Da Nang site (impact became minimal by the end of the prior fiscal year)
• Progress in operational efficiency through appropriate verification and introduction of generative AI technology into development operations and administrative work

Risks

• Increase in goodwill balance (¥1,515 million) due to active M&A expansion, and pressure on profit from goodwill impairment risk and rising acquisition-related expenses (¥36,210 thousand in MCP35 acquisition-related expenses recorded as SG&A)
• Risk of profit attributable to owners of parent being significantly squeezed by large profit allocation to non-controlling interests (in the current interim period: ¥85,330 thousand in profit attributable to non-controlling interests versus a loss attributable to owners of parent of ¥41,710 thousand)
• Risk of a sharp increase in interest-bearing debt and rising financial leverage associated with M&A expansion (total borrowings of ¥1,878 million; ratio of equity attributable to owners of parent declined to 28.6%)
• Risk of a sharp rise in financial expenses (¥62,009 thousand in the current interim period, roughly four times the prior-year period) squeezing profit before tax
• Year-on-year decline in revenue and segment profit for the Development Domain – Japan Business (revenue of ¥1,160 million, down from ¥1,431 million; segment profit of ¥162 million, down from ¥235 million)
• Rising costs of recruiting and retaining engineers amid the worsening shortage of IT talent
• Risk of provisions for losses on contracts due to man-hour estimation errors as Flow Services expand
• Foreign exchange risk (gains/losses from fluctuations between the Vietnamese dong and the yen affecting financial income and expenses)
• Risk of figures fluctuating due to provisional accounting treatment, as the allocation of MCP35's acquisition cost remained incomplete as of the end of the current interim period
• Continued negative operating cash flow (△¥254 million in the current interim period versus △¥55 million in the prior-year period)