MEDIA LINKS CO.,LTD.

Business Details

The Group is a fabless manufacturer that develops and sells equipment and systems forming broadcast network infrastructure. It develops and sells equipment and systems for transmitting high-quality video material used in television broadcasting over IP, and in addition to standalone equipment sales, it also operates a System Integration Business that combines software, installation work, and maintenance services. Major customers include AT&T Corporation, UNIADEX, Ltd., Telstra Corporation Limited, and other telecommunications carriers and broadcasters in Japan and overseas. The company operates globally, centered on the United States, Japan, and Australia, and has a track record of its new product Xscend® being adopted for the Paris 2024 Olympic and Paralympic Games.

Recent Overview

Recorded an inventory valuation loss of ¥503 million, expanding the net loss to 2.6 times the prior year; order backlog increased 111.5%

In FY2026 (ending March 2026), net sales were ¥2,337 million (down 16.2% year on year). In the EMEA market, several large projects were postponed due to the impact of military actions by Israel and the United States against Iran, resulting in a significant decline in revenue. Following the decision to discontinue sales of older products due to model changes, the company recorded an inventory valuation loss of ¥502 million as an extraordinary loss, expanding the net loss to ¥1,454 million. On the other hand, leading indicators improved, with orders received up 7.2% year on year and order backlog up 111.5%. Proceeds from stock issuance of ¥1,425 million secured positive cash flow from financing activities of ¥867 million. Material doubt about the company's ability to continue as a going concern persists due to seven consecutive fiscal years of operating losses. For FY2027 (ending March 2027), the company forecasts net sales of ¥3,690 million and a return to operating profit of ¥20 million (assumed exchange rates: 1 USD = ¥150, 1 AUD = ¥105).

Key Products

Growth Drivers

• Developing new customers in the Americas and EMEA markets by leveraging the track record of the new product Xscend® being adopted for the Paris 2024 Olympics
• Order backlog has expanded significantly, up 111.5% year on year, raising expectations for conversion into sales in the following fiscal year
• Orders and sales recognition expected in the following fiscal year for Middle East network renewal projects in the EMEA market (realization of postponed projects)
• Equipment replacement demand from existing customers (telecommunications carriers and broadcasters) amid an equipment renewal cycle of over 10 years since installation
• Continued sales to existing networks of major North American customers (major telecommunications carriers) and proposals for new projects
• Capturing demand for new transmission service networks for broadcasters in the Japanese market through a business alliance with NTT SmartConnect Corporation
• Securing working capital and accelerating additional Xscend® development through exercise of the 18th series stock acquisition rights
• Improvement in profit and loss through continued reduction of SG&A expenses (down 7.5% in the current fiscal year)
• Market expansion through new sales activities in the Latin America region

Risks

• Material doubt about the company's ability to continue as a going concern persists due to seven consecutive fiscal years of operating losses, ordinary losses, and net losses
• Financial institutions have indicated that new financing will be difficult until performance stabilizes, effectively limiting fundraising means to stock acquisition rights
• Risk of share dilution from continued exercise of stock acquisition rights (shares outstanding increased from 46,695,300 at the prior fiscal year end to 75,495,300 at the current fiscal year end)
• Geopolitical risk in the EMEA market (Middle East situation) leading to risk of postponement or cancellation of large projects
• Risk of delayed or frozen capital expenditure decisions by customers due to U.S. trade policy (tariffs, etc.)
• High dependence on sales to major customers, creating risk that performance is affected by the progress of individual projects
• Risk of additional inventory valuation losses on older products and raw materials due to model changes
• Risk of declining profitability due to a rising cost of sales ratio (gross profit margin deteriorated from 56.0% in the prior year to 45.1% in the current year)
• Foreign exchange risk (overseas sales ratio rose to 69.0% in the current year)
• Uncertainty regarding the supply situation of semiconductors and other components, and risk of rising raw material prices
• Whether the company can achieve its forecast of a return to profitability in FY2027 (ending March 2027) is key to resolving the going concern doubt, but uncertainty remains high