Electronic & Communications Equipment drove operating income +453.7%; full-year operating income plan already exceeded at the 3Q stage. Monetization of the grid-scale battery storage facility is the next focus.

Key Positives From The 3Q Results

The core Electronic & Communications Equipment business captured government/public-sector demand and expanding infrastructure-sharing activity, delivering revenue of JPY 5,302M (+35.8% YoY) and operating income of JPY 928M (+453.7% YoY). Gross profit margin improved to 40.6% (30.2% a year earlier, +10.4pt), as the build-out of production capacity for full-scale mass production of government contracts and the start-up of the new Vietnam plant established a low-cost manufacturing base and lifted profitability. The full-year operating income plan of JPY 820M has already been exceeded on a nine-month cumulative basis.

• Electronic & Communications Equipment revenue of JPY 4,912M (+40.8% YoY) and segment profit of JPY 1,173M (+215.1% YoY) — growth in both volume and quality
• Gross profit rose to JPY 2,153M (+82.7% YoY) while SG&A was contained at JPY 1,217M (+20.5% YoY), bringing operating leverage to the surface
• Orders received of JPY 5,743M (of which Electronic & Communications Equipment JPY 5,083M) exceeded revenue of JPY 5,302M, adding to the order backlog
• Share acquisition rights exercises added JPY 977M to capital stock and JPY 937M to capital surplus. The ratio of equity attributable to owners of the parent rose to 57.8% (47.1% at the prior fiscal year-end)
• Cash and cash equivalents of JPY 4,747M (+288.6% vs. prior fiscal year-end) leave net cash of JPY 436M, securing funding for battery storage investment

Key Concerns From The 3Q Results

Of the JPY 2,452M in profit before tax, JPY 1,581M was financial income, the bulk of which was valuation gains on shares held by an overseas subsidiary. The company explicitly states that these will be re-measured through valuation gains/losses each quarter, meaning the JPY 1,950M quarterly profit level is structurally exposed to share price swings.

• Financial income of JPY 1,581M (+1,444.8% YoY) includes non-cash valuation gains that are re-measured quarterly; earnings quality needs to be assessed carefully
• On a standalone quarterly basis, revenue was JPY 1,560M and operating income JPY 177M, down sequentially from 1Q (JPY 2,051M / JPY 496M) (our estimates)
• Renewable Energy revenue declined to JPY 389M (-6.2% YoY); timing shifts in power plant sales are a source of earnings volatility
• Shares outstanding rose from 6,584,900 to 9,182,700 (+39.5%). Diluted EPS of JPY 229.76 is 7.5% below basic EPS of JPY 248.33
• Corporate expenses (adjustments) of -JPY 333M were up 21.2% from -JPY 275M a year earlier; headquarters costs continue to rise alongside business expansion

Focus Areas / Items To Monitor Going Forward

• Nine-month cumulative operating income of JPY 928M already exceeds the full-year plan of JPY 820M. Key questions are the assumed scale of timing shifts and R&D expenses, and the direction of the 4Q landing point
• Timing of entry into the supply-demand adjustment market for the grid-scale battery storage facility in Miyama City, Fukuoka (acquisition completed August 2026), and validation of the assumed 10%+ IRR
• Construction progress on the second plant at headquarters and the impact of the Vietnam plant expansion. The balance between production capacity needed to work down the backlog and rising fixed costs

Key Financial Highlights

Gross profit margin, operating income margin and the respective YoY changes are our estimates (amounts based on figures disclosed in the earnings release). The 453.7% operating income growth rate is company-disclosed. The company adopted IFRS from 1Q FY10/2026, with prior-year and prior-period figures also restated under IFRS.

Performance By Business Segment

Electronic & Communications Equipment accounted for 92.7% of consolidated revenue, with demand growth underpinned by increased national budget allocations for government/public-sector projects and stronger proposals for proprietary products driving both revenue and profit growth. In Renewable Energy, electricity sales revenue held steady; revenue declined on the timing of power plant construction and sale transactions, but profit increased.

Segment Performance Table

Margins and the growth rates for total reportable segments and adjustments are our estimates.

Progress Versus Full-Year Guidance

Revenue reached 76.3% of the full-year plan of JPY 6,950M, while operating income stood at 113.2% of the JPY 820M plan and profit attributable to owners of the parent at 106.3% of the JPY 1,835M plan — with both profit lines already above the full-year plan. The company has left the forecasts published on June 15, 2026 unchanged, citing the possibility of revenue timing shifts in both the Electronic & Communications Equipment and Renewable Energy businesses and the potential for lumpy R&D and similar expenses; 4Q cost recognition will therefore determine the landing point.

Progress rates are our estimates. The company notes that full-year EPS is calculated using shares outstanding as of the end of July 2026.

• Not applicable

Changes To Guidance

The full-year forecasts announced on June 15, 2026 (revenue JPY 6,950M, operating income JPY 820M, profit attributable to owners of the parent JPY 1,835M) were left unchanged, with no revision this time. The reasons cited for maintaining guidance are the possibility of revenue timing shifts in both segments and the potential recognition of lumpy R&D and similar expenses.

Commentary On Shareholder Returns

The FY10/2026 annual dividend forecast is JPY 10.00 paid at year-end (versus JPY 5.00 actual in FY10/2025), unchanged from the most recently announced forecast. Treasury shares stood at 61,508 shares, flat versus the prior fiscal year-end, with no new policy disclosed regarding buybacks or cancellation.

Financial Position

Capital strengthening from share acquisition rights exercises and retained earnings lifted the ratio of equity attributable to owners of the parent by 10.7pt to 57.8%. Cash and cash equivalents of JPY 4,747M exceed interest-bearing debt of JPY 4,311M, leaving the company in a net cash position. Financial soundness is improving while capacity is preserved for investment in grid-scale battery storage and the second plant.

Disclosures Released Alongside The Earnings Announcement

Not applicable

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• Cantor Fitzgerald Europe: 15.89%→14.68% (2026/03/23) - Pure investment; no material proposal activity
  Change Report No.4
• Cantor Fitzgerald Europe: 14.68%→12.92% (2026/03/23) - Pure investment; reduced holding ratio
  Change Report No.5
• Cantor Fitzgerald Europe: 12.92%→11.85% (2026/03/25) - Pure investment; reduced holding ratio
  Change Report No.6
• Cantor Fitzgerald Europe: 11.85%→10.66% (2026/03/30) - Pure investment; reduced holding ratio
  Change Report No.7
• Cantor Fitzgerald Europe: 10.66%→9.58% (2026/04/02) - Pure investment; short-term bulk transfer
  Change Report No.8 (Short-Term Bulk Transfer)
• Cantor Fitzgerald Europe: 9.58%→8.17% (2026/04/07) - Pure investment; short-term bulk transfer
  Change Report No.9 (Short-Term Bulk Transfer)
• Cantor Fitzgerald Europe: 8.17%→7.00% (2026/04/14) - Pure investment; short-term bulk transfer
  Change Report No.10 (Short-Term Bulk Transfer)
• Cantor Fitzgerald Europe: 7.00%→5.92% (2026/04/21) - Pure investment; short-term bulk transfer
  Change Report No.11 (Short-Term Bulk Transfer)
• Cantor Fitzgerald Europe: 5.92%→4.82% (2026/04/21) - Pure investment; fell below 5% via short-term bulk transfer
  Change Report No.12 (Short-Term Bulk Transfer)
• By way of background, on December 4, 2025 the company resolved to issue the 15th, 16th and 17th series of share acquisition rights (1,626,700 potential shares) with Cantor Fitzgerald Europe as the planned allottee; the allotment date was December 26, 2025
  Notice Regarding Issuance of the 15th, 16th and 17th Series of Share Acquisition Rights via Third-Party Allotment