SEIWA HOLDINGS FY2026 Earnings Deep Dive Report

SEIWA HOLDINGS Co., Ltd. operates as a manufacturing-specialized business succession platformer targeting small and medium-sized enterprises (SMEs) facing succession issues. The company continuously engages in M&A activities and employs a unique mechanism to enhance the value of acquired companies. Its main business areas consist of metal products, manufacturing of transportation machinery and equipment, and manufacturing of production machinery, catering to a wide range of clients including those in semiconductors, automotive, machine tools, shipbuilding, plant engineering, and medical sectors.

The company's business environment is favorable, driven by the structural aging problem among SME managers , with the average age reaching 63.6 years (as of FY2024), creating a strong demand for business succession. In this environment, SEIWA HOLDINGS has established a competitive advantage through its perpetual ownership model and built a rich M&A pipeline. The company maintains disciplined acquisition pricing, based on an EV/EBITDA multiple of within 5x, and strict financial discipline while pursuing business expansion.

FY2026 Consolidated Financial Highlights and Growth Drivers

Fiscal year 2026 was a period of significant growth and profitability improvement for SEIWA HOLDINGS. According to the consolidated financial highlights, net sales reached 8,011 million yen (up 3.1% year-on-year), adjusted operating profit was 1,741 million yen (up 115.1%), adjusted EBITDA was 2,055 million yen (up 91.5%), and net profit was 1,080 million yen (up 229.8%). All these key profit indicators surpassed the initial budget. Notably, increased demand for semiconductors and robust demand from the automotive and shipbuilding industries drove sales, while improved business profitability contributed significantly to the substantial increase in profits.

Looking at the historical performance trends, the positive effects of the Seiwa Platform are clearly evident. The following graph illustrates the consolidated performance over the past three fiscal years.

This graph clearly demonstrates consistent growth across all key metrics : net sales, adjusted operating profit, adjusted EBITDA, and net profit. Specifically, adjusted operating profit and adjusted EBITDA more than doubled from FY2024 to FY2026, indicating that the company's value-up strategy is a major contributor to profit growth. This is attributed to the company's approach of investing management resources into acquired SMEs, strengthening various functions such as manufacturing, development, sales, procurement, recruitment and training, and management, thereby enhancing the profitability of individual companies.

The effectiveness of the company's value-up strategy is further confirmed by comparing the performance of group companies before and after their integration.

This slide illustrates how the sales and operating profit of each company significantly improved after joining the group . For instance, the simple aggregate sales before group entry were 6,991 million yen, and operating profit was 672 million yen. By FY2026, these figures rose to 8,957 million yen (approximately 28% increase) for sales and 1,184 million yen (approximately 76% increase) for operating profit. This demonstrates that SEIWA HOLDINGS does not merely engage in capital alliances but provides management know-how and resources to acquired companies, achieving substantial business improvements . Specific examples include Tama Chemical, which saw its operating profit increase by approximately 458%, and Fuji Kinzoku Kogyo, which achieved an approximate 9% increase in operating profit in a short period. These improvements are the result of multifaceted initiatives such as new customer acquisition, productivity enhancement, and rationalization of unprofitable businesses.

Furthermore, the penetration of disciplined management processes has led to a significant improvement in the group's overall profitability indicators. In FY2026, the gross profit margin reached 35.6% (compared to the manufacturing industry average of 19.5%), and the operating profit margin was 16.4% (compared to the manufacturing industry average of 5.2%) , both significantly exceeding the manufacturing industry average. This is a testament to the continuous profitability improvement activities driven by members with deep expertise in the manufacturing sector.

M&A Strategy and Financial Foundation

SEIWA HOLDINGS positions M&A as the core of its growth strategy, with a clear investment policy. Investment criteria prioritize companies with an EV/EBITDA multiple of within 5x , primarily targeting niche manufacturing companies with an EBITDA of approximately 100-300 million yen. Target companies are those with a competitive advantage in niche areas, high affinity with existing focus areas, and those that possess manufacturing complementary functions such as specialized personnel dispatch, systems, rental, and installation services. The company also maintains a unique positioning by assuming perpetual ownership and not acquiring companies with the intent to sell.

The financial foundation to continuously execute M&A has also been strengthened. The company now discloses new profit indicators such as "Adjusted Operating Profit," "Adjusted EBITDA," and "Adjusted Net Profit," which adjust for M&A-related expenses and one-off gains/losses, to more clearly represent the true underlying performance of the business.

Notably, the capital raised through the IPO has significantly improved the balance sheet, providing a strong foundation for future M&A strategies.

This slide provides a detailed overview of the balance sheet improvement from May 2025 to May 2026. Particularly noteworthy is the substantial increase in cash and cash equivalents from 2,903 million yen to 6,170 million yen (an increase of 3,266 million yen) , leading to a significant rise in total current assets. Concurrently, interest-bearing debt decreased by 2,469 million yen, from 6,406 million yen to 3,936 million yen. As a result, net assets dramatically increased from 842 million yen to 6,266 million yen (an increase of 5,423 million yen) . One of the most critical financial health indicators, Net Debt/EBITDA, improved dramatically from 4.6x to 0.1x , signifying a substantial expansion of the company's M&A investment capacity. As of July 15, 2026, the available investment capacity stands at a very robust 6,385 to 8,590 million yen , establishing a strong financial base that enables aggressive M&A activities going forward.

Recent M&A examples include the acquisition of Mitaka Kinzoku Kogyo and Oba Tosou Kogyo in FY2027. Mitaka Kinzoku Kogyo specializes in metal surface treatment (plating), and this M&A aims to increase manufacturing capacity by approximately 35%, particularly to strengthen its ability to meet semiconductor demand. Oba Tosou Kogyo is a specialized manufacturer of metal product painting and assembly, possessing diverse painting technologies such as cationic electrodeposition coating. This acquisition is expected to expand the business area and create synergies within the group. These M&A activities align with the company's growth strategy, aiming for synergy effects with existing businesses and strengthening responsiveness to market needs.

FY2027 Earnings Outlook

For the consolidated earnings forecast for FY2027, assuming no undisclosed M&A, the company anticipates continued significant revenue and profit growth . Net sales are projected to be 9,800 million yen (up 22.3% year-on-year), adjusted operating profit 1,800 million yen (up 25.8%), adjusted EBITDA 2,100 million yen (up 20.4%), and adjusted net profit 1,221 million yen (up 26.1%). This plan incorporates the steady growth of existing group companies and the contributions from already announced M&A deals. The company states that the number of M&A opportunities under consideration has doubled year-on-year, and it aims to further accumulate earnings through additional M&A.

Conclusion

SEIWA HOLDINGS is addressing the social challenge of business succession for SMEs in Japan while achieving sustainable growth through its manufacturing-specialized M&A and unique value-up platform . In FY2026, the company recorded record-high figures for key profit indicators, achieving substantial profit growth. The IPO has solidified its financial foundation, securing ample M&A investment capacity. The company's strategy indicates a continued focus on expanding its business scale while maintaining high profitability through disciplined M&A and thorough post-acquisition value enhancement, making its future developments noteworthy.