O.B.System Inc.

Business Details

OBIC Business Consultants Co., Ltd. (OB System) operates system integration services across four service lines: Financial Business, Industrial & Distribution Business, Public & Social Infrastructure Business, and IT Innovation Business. Its major customers are Hitachi, Ltd. (approximately 44% of net sales) and Mitsubishi Electric Software Co., Ltd., with a business relationship spanning over 40 years. Centered on contracted development and operation/maintenance, the company positions DX, cloud, and generative AI-related projects as growth areas, and is also pursuing business expansion through M&A. Consolidated net sales for FY2026 (ending March 2026) were ¥8,655 million (up 12.6% year on year).

Recent Overview

Figures in the earnings report disclosed on April 22 were revised downward on May 12, including ordinary profit and net profit

Regarding the earnings report for FY2026 (ending March 2026), an error was discovered during the process of finalizing the financial results and was subsequently corrected. The revised key figures are: ordinary profit of ¥727 million (versus ¥728 million before correction), profit attributable to owners of parent of ¥599 million (versus ¥601 million), comprehensive income of ¥741 million (versus ¥742 million), and earnings per share of ¥258.81 (versus ¥259.43). On a non-consolidated basis, ordinary profit was revised downward to ¥663 million (versus ¥664 million) and net profit to ¥578 million (versus ¥580 million). The year-on-year change rate for ordinary profit in the FY2027 (ending March 2027) forecast was also revised from 23.5% to 23.8%. Separately, the company made Green Cat Co., Ltd. a subsidiary effective May 1, 2025 (acquisition cost of ¥700 million, goodwill of ¥494 million, amortized equally over 9 years), adding it to the scope of consolidation. Based on its policy of reducing cross-shareholdings, the company recorded a gain on sale of investment securities of ¥118 million. The consolidated business forecast for FY2027 (ending March 2027) is net sales of ¥10,000 million (up 15.5% year on year), operating profit of ¥835 million (up 24.2% year on year), ordinary profit of ¥900 million (up 23.8% year on year), and net profit of ¥720 million (up 20.1% year on year).

Key Products

Growth Drivers

• Steady growth in demand for information services underpinned by the continued expansion of DX, cloud, and generative AI-related investment
• Synergies from making Green Cat Co., Ltd. a subsidiary, including customer diversification, strengthened financial-sector development capabilities, and shared personnel know-how
• Strengthened development capabilities in the social infrastructure field within the Public & Social Infrastructure Business and expansion of projects related to municipal standardization and government cloud initiatives
• Expansion of projects utilizing Microsoft Azure and strengthened generative AI proposal activities in the IT Innovation Business
• Expansion of development personnel through active mid-career hiring and continued new graduate recruitment (40-50 people per year)
• Continued pursuit of M&A strategy based on the medium-term management plan (final year FY2027, ending March 2027) and the target of ¥10,000 million in consolidated net sales
• Continued recording of extraordinary gains through the planned reduction of cross-shareholdings (¥118 million in FY2026, ending March 2026)

Risks

• Chronic shortage of IT personnel (systems engineers) leading to increased recruitment costs and difficulty securing development staff
• Risk of dependence on a specific customer due to sales concentration in Hitachi, Ltd. (approximately 44%)
• Increased amortization burden on goodwill and customer-related assets associated with M&A (goodwill balance of ¥615 million and customer-related assets of ¥411 million as of FY2026, ending March 2026)
• Decline in orders in the automotive and microcontroller fields due to geopolitical risks such as U.S. tariff policy
• Short-term pressure on profit margins from proactive upfront investment in personnel and training costs
• Rising financial leverage due to a decline in the equity ratio (from 79.0% to 74.8%) and the incurrence of borrowings (long-term borrowings of ¥173 million, with ¥98 million due within one year)
• Decline in operating cash flow (from ¥461 million to ¥329 million) and a significant increase in income tax payments (from ¥32 million to ¥332 million)
• Concerns over disclosure quality due to the occurrence of a numerical correction in the earnings finalization process (correction dated May 12, 2026)