[In-Depth Earnings Report] Ligua Co., Ltd. (7090): Q1 FY2027 Results and the Full Scope of the Mid-Term Management Plan

This report provides a comprehensive analysis of the Q1 FY2027 financial results and the new Mid-Term Management Plan for Ligua Co., Ltd. (Securities Code: 7090), examining current performance, segment-specific trends, key KPI trajectories, and the company's mid-to-long-term growth narrative.

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1. Q1 FY2027 Earnings Highlights: Establishing Operating Profitability and Dramatic Earnings Improvement

Ligua’s performance for the first quarter (Q1) of the fiscal year ending March 2027 resulted in net sales of 638 million yen (down 4.3% YoY) , operating profit of 31 million yen (compared to a 10 million yen loss in the same period last year) , ordinary profit of 23 million yen (compared to a 26 million yen loss in the same period last year) , and a quarterly net loss attributable to owners of the parent of 9 million yen (compared to a 65 million yen loss in the same period last year) .

While net sales saw a slight year-on-year decline, the company achieved operating profitability for the second consecutive quarter , marking a significant V-shaped recovery from the losses recorded in the same period last year.

Slide Commentary: Significance of Earnings Highlights and Background Data

The slide above (Page 2) is the most critical sheet illustrating the company's strong start to the current fiscal year.

Of particular note is the Q1 progress rate against the full-year operating profit forecast (71 million yen), which stands at 43.7% , and the progress rate against the full-year ordinary profit forecast (40 million yen), which has reached 57.5% . While the progress rate for net sales is 24.5%, representing a standard cruising speed, the exceptionally high progress in profitability is attributed to the restructuring of the Financial Business and the drastic reduction of company-wide SG&A and fixed costs implemented in the previous fiscal year, which have begun to contribute steadily to the profit structure. Although a slight net loss remains due to the recording of extraordinary losses, the core earning power of the business has clearly reversed.

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2. Results of Cost Structure Reform and Segment Analysis

Breaking down the consolidated statement of income, while cost of sales rose to 271 million yen (up 10.6% YoY) , SG&A expenses decreased significantly to 336 million yen (down 22.1% YoY, a reduction of 95 million yen in monetary terms) . This was the primary factor supporting the rise in the operating profit margin to 4.9% (up 6.4 percentage points YoY) .

The status by segment is as follows:

• Wellness Business
  • Net Sales : 490 million yen (down 6.1% YoY)
  • Operating Profit : 28 million yen (down 54.3% YoY)
  • Commentary : Despite a reactionary decline from the high consulting (M&A advisory) fees recorded in the same period last year, sales of core products such as IFMC.-related products , equipment, and consumables remained steady. The segment maintained solid operating profitability despite the impact of lower gross margins resulting from the decrease in M&A fees.
• Financial Business
  • Net Sales : 148 million yen (up 2.2% YoY)
  • Operating Profit : 2 million yen (compared to a 71 million yen loss in the same period last year)
  • Commentary : Following the restructuring of the Financial Instruments Intermediary (IFA) business in the previous fiscal year, the company consolidated and specialized in the insurance agency business , leading to a dramatic reduction in fixed costs. By maintaining effective sales growth, the segment successfully exited the massive losses of the previous year to achieve operating profitability.

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3. Key KPIs Supporting the Business Foundation and On-Site Support Measures

The company places the highest priority on its customer network, centered on osteopathic clinics, and the adoption base of its functional material, "IFMC.," as its mid-to-long-term recurring revenue foundation.

Slide Commentary: Expansion of the Recurring Revenue Base as Shown by KPI Trends

The slide above (Page 10) presents the three major indicators used to measure the company's long-term growth potential.

1. Number of Osteopathic Clinics with Transaction History : Increased steadily from 4,536 in FY2023 to 5,622 in Q1 FY2027 .
2. Number of Clinics Adopting IFMC. : Grown steadily from 1,163 in FY2023 to 2,094 in Q1 FY2027 (penetrating approximately 37% of all osteopathic clinics).
3. Insurance KPIs : New contracts reached 446, with a new Annualized Premium (ANP) of 214 million yen, maintaining stable acquisition power even after restructuring.

These data points demonstrate that the company has established an overwhelming customer base in the osteopathic industry and is successfully building a platform structure to horizontally deploy high-value-added IFMC. products through that network.

Furthermore, in the "IFMC. On-Site Support Project" currently being prioritized, company staff visit clinics directly to support the visualization of patient experiences using blood flow scopes and to improve the proposal skills of clinic staff. This has led to a product sales conversion rate of approximately 30%, boosting the company's reputation on the ground and creating a virtuous cycle that leads to repeat orders and automated re-purchases via e-commerce (recurring revenue) for products like "Dr. Supporter."

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4. Full-Year FY2027 Earnings Forecast and Outlook for Profitability

The consolidated earnings forecast for the full year ending March 2027 remains unchanged as follows:

• Net Sales : 2.68 billion yen (up 8.0% YoY)
• Operating Profit : 71 million yen (compared to a 123 million yen loss in the previous year)
• Ordinary Profit : 40 million yen (compared to a 160 million yen loss in the previous year)
• Net Income Attributable to Owners of the Parent : 12 million yen (compared to a 241 million yen loss in the previous year)

With the reduction in fixed cost burdens following the completion of structural reforms at the end of the previous fiscal year, combined with the recovery of IFMC.-related sales in the Wellness Business and stable growth in the insurance agency business, the company expects to achieve company-wide operating profitability and a turnaround to net profit .

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5. Growth Story of the New Mid-Term Management Plan (FY2027–FY2029)

The company has announced a new Mid-Term Management Plan covering the three years starting from FY2027. The theme is a three-stage process: "Reconstruction," "Deepening," and "Expansion."

Slide Commentary: Roadmap for Operating Profit Accumulation in the Mid-Term Management Plan

The slide above (Page 17) provides a quantitative roadmap showing how the company will re-expand its profits.

Looking at past performance, after recording a record-high operating profit of 247 million yen in FY2021, the company experienced a "business restructuring period" with consecutive losses from FY2024 to FY2026 due to restructuring and upfront investments.

This Mid-Term Management Plan declares an exit from this tunnel and an entry into a "Re-growth Period."

• FY2027 (Reconstruction) : Operating Profit of 71 million yen (Return to basics and profitability)
• FY2028 (Deepening) : Operating Profit of 130 million yen (Deepening existing customers and strengthening D2C)
• FY2029 (Expansion) : Operating Profit of 290 million yen (Expansion into the preventive field and renewal of record-high profits)

The sales plan is also set to expand from 2.68 billion yen in FY2027 to 2.76 billion yen in FY2028, and 3.16 billion yen in FY2029, with a target operating profit margin of 9.2% in the final year .

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6. Uniqueness of IFMC. Technology and Diversification Strategy (D2C, Overseas, and Collaborations)

The growth engine, IFMC. (Integrated Functional Mineral Crystal) , is a highly unique functional material that has obtained a patent (Patent No. 6557442) for increasing blood nitric oxide (NO) levels, vasodilation, and improving balance capabilities , based on joint research and development with Teikoku Seiyaku Co., Ltd.

While the company has primarily focused on BtoB for osteopathic clinics (e.g., "Dr. Supporter"), it will promote the following diversification strategies during the mid-term plan period:

1. Development of E-commerce and D2C for Osteopathic Clinics Establishing a "BtoBtoC recurring model" where patients who experience the benefits of treatment at clinics continue to purchase products for home care via a dedicated e-commerce site.
2. Collaborations with Other Brands and Industries (Apparel/Healthcare) Through collaborations with "WWS Health+" and apparel brands (e.g., doublet, O0u), the company will supply processed materials and products, creating new revenue streams and expanding brand awareness.
3. Global Expansion (Full-scale entry into the Vietnam market) The company has signed a three-way alliance with TBM Co., Ltd. and the major Vietnamese distributor "GREEN HOLDING SPORT." By building a sales structure for sports supporters and healthcare products locally, the company aims to capture demand in the Southeast Asian market.

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7. Conclusion

Ligua’s Q1 FY2027 financial results represent a strong start, with the fruits of the structural reforms implemented through the previous fiscal year clearly reflected in the figures, leaving a strong impression of established operating profitability .

By leveraging its robust business foundation—the osteopathic clinic network (5,622 clinics) and the patented IFMC. material (adopted by 2,094 clinics)—and pushing forward with recurring revenue through on-site support, external collaborations, and overseas expansion, it can be said that the "Re-growth Story" leading to the final year of the Mid-Term Management Plan in FY2029 has officially begun.