Kohsai Co.,Ltd.

Business Details

The Company operates in the single segment of "Jewelry Business," manufacturing, processing, and selling precious metal accessories using gold, platinum, gemstones, and other materials as primary raw materials. Its mainstay operations consist of two divisions: the Jewelry Parts Division, which handles semi-finished products such as earring parts and clasps, and the Jewelry Division, which handles jewelry accessories such as rings and pendants. The Company holds approximately 50% share of the domestic jewelry parts market (approximately 70% for earring fittings), and also offers bridal jewelry specializing in forging technology. It sells to jewelry manufacturers and retailers both domestically and internationally.

Recent Overview

Q1 profit margin surged sharply due to temporary effects such as inventory valuation gains associated with rising raw material prices

In Q1 of FY2027 (ending January 2027) (February to April 2026), the Company achieved significant increases in both revenue and profit, with net sales of ¥1,588 million (up 55.1% year-on-year), operating profit of ¥361 million (up 435.6% year-on-year), and quarterly net profit of ¥251 million (up 560.4% year-on-year). In addition to steady order trends both domestically and internationally, the profit margin reached a high level due to temporary effects such as inventory valuation gains associated with the rapid rise in raw material prices. Inventory assets expanded to ¥1,857 million, an increase of ¥343 million from the end of the previous fiscal year, and short-term borrowings also increased by ¥100 million to ¥1,240 million. There has been no change to the full-year earnings forecast (net sales of ¥5,000 million, operating profit of ¥400 million), and as of Q1, the Company has already achieved approximately 90% of the full-year operating profit forecast.

Key Products

Growth Drivers

• Rising unit sales prices accompanying the surge in bullion prices, and the temporary profit-boosting effect of inventory valuation gains and similar factors
• Promotion of product proposals emphasizing functionality and added value, such as ultra-lightweight products and asset-value products
• Improvement in labor productivity per hour through capital investment and efficiency improvements in each process
• Development of new customers and expansion of sales channels both domestically and internationally, as well as expansion of transactions with existing customers
• Steady growth in overseas orders against the backdrop of exchange rate trends
• Cost containment through thorough cost management and optimization of transaction terms

Risks

• Cost pressure from sustained high prices of raw materials (gold, platinum, and other bullion) and energy
• Risk of profit margin normalization if temporary profit factors such as inventory valuation gains dissipate
• Risk of expanded working capital and cash flow pressure due to a significant increase in inventory assets (up ¥343 million from the end of the previous fiscal year)
• Increasing reliance on short-term borrowings (¥1,240 million) and a declining trend in the equity ratio
• Risk of sluggish jewelry demand due to increasingly cautious consumer purchasing sentiment
• Impact on overseas sales from US trade policy and exchange rate fluctuations, among other factors
• Risk of economic downturn due to heightened geopolitical risks and volatility in financial and capital markets