Naigai Tec Q1 FY2027 Earnings Analysis and Growth Strategy: Capitalizing on the AI Demand Surge and Upward Revisions

Naigai Tec Co., Ltd. (Securities Code: 3374) , which operates dual pillars of semiconductor manufacturing equipment component procurement/sales and contract manufacturing, achieved significant year-on-year growth in both revenue and profit for the first quarter of the fiscal year ending March 2027 (April 1, 2026 – June 30, 2026), driven by robust demand in the semiconductor market, particularly in AI-related sectors . Furthermore, reflecting the favorable order environment, the company has announced an upward revision to its full-year consolidated earnings forecast and a significant dividend increase.

This report provides a detailed analysis of the company's performance highlights, segment-specific status, progress on its medium-term management plan, and shareholder return policies, based on 10 key topics extracted from the earnings presentation materials.

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1. Q1 Consolidated Earnings Highlights: Dramatic Growth in Revenue and Profit

Consolidated performance in the first quarter was driven by the completion of inventory adjustments among customers and expanded orders from major clients, primarily for AI applications .

• Net Sales : 11,536 million yen (up 59.9% YoY)
• Operating Profit : 590 million yen (up 7.1x YoY)
• Ordinary Profit : 597 million yen (up 7.1x YoY)
• Quarterly Net Income Attributable to Owners of Parent : 363 million yen (up 7.7x YoY)

The following slide illustrates the strong progress made in the first quarter relative to the initial interim forecast.

Slide Commentary (PAGE_4):

This slide compares Q1 results against the previous year and the progress rate relative to the initial H1 (interim) forecast. The progress rate for net sales reached 60.7% , while operating profit reached 107.0% , exceeding the interim profit target in just three months. The structure behind the sharp 7.1x increase in operating profit is evident: the SG&A expense ratio improved from 10.4% in the same period last year to 7.5% , coupled with an increase in gross profit resulting from higher sales.

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2. Quarterly Performance Trends and Profit Margin Dynamics

Looking at quarterly trends, net sales accelerated from 9,600 million yen in the previous Q4 to reach a record high of 11,536 million yen in the current Q1. Regarding operating profit, the company maintains extremely high profitability, excluding the impact of temporary sales incentives recorded in the previous Q4 (617 million yen).

Gross profit margin stood at 12.6% . While this is a slight cooling from the 15.3% recorded in the previous Q4 (which included incentive factors), it remains firmly within the normal range (11%–13%). Meanwhile, the dilution of fixed costs due to the expansion of sales volume led to a significant decline in the SG&A ratio to 7.5% .

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3. Segment Performance: Sales Business and Contract Manufacturing Business

The company's business is divided into two main segments: "Sales Business" and "Contract Manufacturing Business."

1. Sales Business

   • Segment Sales : 10,299 million yen (up 65.1% YoY)
   • Segment Profit : 368 million yen (a significant turnaround from a 26 million yen loss in the same period last year)
   • Driven by the vibrant semiconductor market, customer inventory adjustments have concluded, leading to a rapid increase in orders.

2. Contract Manufacturing Business

   • Segment Sales : 1,967 million yen (up 33.7% YoY)
   • Segment Profit : 179 million yen (up 171.2% YoY)
   • Orders from major customers remained solid. While profit decreased slightly compared to the previous Q4 (202 million yen), this is due to upfront investment costs incurred to secure capacity for future production increases.

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4. Detailed Sales Trends by Business Portfolio

The status of more granular business divisions (by solution) is as follows:

• Supply Chain Solutions (SS Business) : Sales of 7,628 million yen (Significant growth both QoQ and YoY; the group's primary earnings driver)
• Manufacturing Solutions (MS Business) : Sales of 2,310 million yen (Continued upward growth)
• Field Solutions (FS Business) : Sales of 902 million yen (Steady upward trend)
• Technical Solutions (TS Business) : Sales of 205 million yen
• Precision Machining Solutions (PS Business) : Sales of 489 million yen

The core SS and MS businesses are acting as the primary drivers, strongly supporting the growth of the entire group.

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5. Trends in Orders Received and Order Backlog: High Levels Supporting Future Sales

Order status, a leading indicator of performance, remains extremely favorable.

• Sales Business : Orders Received 12,687 million yen , Order Backlog 11,561 million yen (up 28.1% from the end of the previous fiscal year)
• Contract Manufacturing Business : Orders Received 1,497 million yen , Order Backlog 387 million yen (up 40.4% from the end of the previous fiscal year)

In both segments, orders are outpacing sales, leading to an accumulation of order backlogs. This high backlog provides strong support for performance from Q2 onwards.

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6. Significant Upward Revision to Full-Year Consolidated Earnings Forecast

Given that Q1 progress significantly exceeded expectations, the company has substantially revised its full-year earnings forecast for the fiscal year ending March 2027.

Slide Commentary (PAGE_14):

This slide compares the FY2026 results, the initial forecast (disclosed May 15), and the current revised forecast . Full-year net sales have been raised from the initial 40,600 million yen to 50,900 million yen (up 56.1% YoY) , and operating profit from 1,500 million yen to 2,560 million yen (up 82.5% YoY) . The forecast indicates that the significant revenue growth effect will absorb cost increases , including rising raw material prices, labor costs, and upfront investment expenses.

In the segment-specific forecasts, sales for the Sales Business have been revised upward from 35,783 million yen to 44,550 million yen , and the Contract Manufacturing Business from 7,053 million yen to 9,320 million yen .

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7. Financial Position and Changes in the Balance Sheet (B/S)

With the rapid expansion of sales, the scale of assets and liabilities has also increased.

• Total Assets : Increased from 25,010 million yen at the end of the previous fiscal year to 28,141 million yen .
• Main Factors : Increase in cash and deposits and trade receivables due to higher sales, and increase in inventories to meet robust orders.
• Liabilities : Trade payables increased in line with sales expansion.
• Net Assets : Although net assets increased to 13,165 million yen, the equity ratio declined from 50.9% to 46.5% due to the expansion of total assets, including trade payables.

While the absolute amount of equity is accumulating, the expansion of working capital associated with increased business activity is reflected in the B/S structure.

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8. Progress of Medium-Term Management Plan "MIRAI 2030" and Capital Investment

The company is ambitiously pursuing the strengthening of production and logistics capacity and the promotion of technological development for medium- to long-term growth.

Slide Commentary (PAGE_18):

This slide outlines specific measures (site expansion and capital investment) to solidify the foundation for medium- to long-term growth. The company is rapidly implementing the following upfront investments:

1. Relocation and Expansion of Miyagi Logistics Center (May 7) : Logistics capacity increased by 1.5x . This builds a structure capable of responding in a timely manner to the expected increase in AI-related investments from FY2027 onwards.
2. Establishment of Sendai Second Factory (June 1) : Production capacity doubled to 2x to meet increased demand for assembly of maintenance and modified semiconductor manufacturing equipment.
3. Opening of Sendai Development Center Research Building (Scheduled for November 2026) : Enhancing development capabilities in thermal technology to increase value-added as a technology-proposal-based trading company.

These investments are structural initiatives not only to capture current robust demand but also to ensure the company captures the future growth of the semiconductor market.

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9. Strategic M&A: Acquisition of OMT Co., Ltd. and Strengthening of FS Business

As another pillar of its growth strategy, the company acquired shares of OMT Co., Ltd. on August 1, 2026, making it a consolidated subsidiary .

• Background : Driven by the Japanese government's over 10 trillion yen in public support for the domestic semiconductor industry and economic security, domestic factory reshoring is progressing. Demand for maintenance of semiconductor manufacturing equipment is expected to grow by 15–20% annually from FY2026 onwards.
• Purpose : By integrating OMT's strengths, the company aims to significantly expand its semiconductor manufacturing equipment maintenance (Field Solutions) business , thereby stabilizing the group's earnings base and maximizing its industry position.

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10. Shareholder Return Policy: Significant Dividend Increase Following Strong Performance

The company's basic policy is a "consolidated dividend payout ratio of 30% or more" and a "consolidated dividend on equity (DOE) of 3% or more."

In line with the upward revision of earnings, the annual dividend forecast for the fiscal year ending March 2027 has been significantly raised from the initial 110 yen to 144 yen (previous year's result was 105 yen). The revised dividend payout ratio is expected to be 30.0% .

This clearly demonstrates the company's stance of promptly reflecting improved performance in shareholder returns while simultaneously executing aggressive growth investments (M&A and new factory construction).

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Conclusion

Naigai Tec's Q1 FY2027 earnings results show remarkable growth in both sales and profit, capturing the semiconductor market boom driven by accelerating AI demand . Beyond mere temporary performance expansion, the company is actively promoting upfront investments for future capacity expansion and service area diversification (strengthening the maintenance business) , such as the development of the Miyagi Logistics Center and Sendai Second Factory, and the acquisition of OMT. With a high order backlog and an expanded production and logistics base, the company is well-positioned to achieve significant year-on-year growth in both revenue and profit for the full fiscal year.