MIDAC HOLDINGS: Q1 FY2027 Earnings Deep Dive Report

This report provides a detailed analysis of the Q1 FY2027 (ending March 2027) financial results and the mid-to-long-term growth strategy of MIDAC HOLDINGS Corporation (Securities Code: 6564). We provide a comprehensive overview of the company's financial performance, key topics, and future growth strategies, highlighting its industry-leading profitability within the industrial waste disposal sector.

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1. Q1 FY2027 Consolidated Financial Highlights

MIDAC HOLDINGS achieved significant year-on-year growth in both revenue and profit for the first quarter of the fiscal year ending March 2027. Strong demand for waste disposal services and successful business expansion in its core operations have significantly bolstered performance.

• Net Sales : 3,278 million JPY ( +21.3% YoY)
• Operating Profit : 1,360 million JPY ( +18.2% YoY)
• Quarterly Net Profit : 796 million JPY ( +14.2% YoY)

The slide below visualizes the quarterly performance highlights and historical trends.

[Slide Commentary: Background and Characteristics of Performance Highlights]

The most critical takeaway from this slide is that the company has not only achieved growth in revenue and profit but has also maintained an exceptionally high operating profit margin of 41.5% . Compared to the same period last year (42.6%) and the year before (43.5%), the company continues to demonstrate an overwhelming high-profit structure exceeding 40%. The 574 million JPY increase in net sales—from 2,704 million JPY in the same period last year to 3,278 million JPY—was the primary driver pushing operating profit from 1,151 million JPY to 1,360 million JPY.

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2. Segment Analysis and Progress Against Earnings Forecasts

Segment Analysis

The company's business consists of three segments: "Waste Disposal," "Collection and Transportation," and "Intermediary Management." The vast majority of revenue is generated by the Waste Disposal segment.

1. Waste Disposal Business
   • Net Sales : 2,901 million JPY ( +27.7% YoY)
   • Segment Profit : 1,578 million JPY ( +16.0% YoY)
   • Driven by robust landfill demand at final disposal sites, waste acceptance volumes grew steadily. This also includes the impact of integrating the industrial waste collection and transportation business into this segment.
2. Collection and Transportation Business
   • Net Sales : 426 million JPY ( -8.4% YoY)
   • Segment Profit : 128 million JPY ( +26.7% YoY)
   • While an increase in spot projects contributed to performance, the aforementioned business integration resulted in a decrease in reported sales, though actual profit margins have improved.
3. Intermediary Management Business
   • Net Sales : 52 million JPY ( +6.1% YoY)
   • Segment Profit : 24 million JPY ( -17.2% YoY)
   • Business with existing clients and intermediary services for partner companies remain strong.

Progress Against Full-Year Forecasts

The progress of Q1 results against the full-year forecast for FY2027 is as follows, indicating that the company is proceeding steadily according to plan .

• Net Sales : 3,278 million JPY against a full-year forecast of 13,494 million JPY ( 24.3% progress )
• Operating Profit : 1,360 million JPY against a full-year forecast of 5,489 million JPY ( 24.8% progress )
• Ordinary Profit : 1,306 million JPY against a full-year forecast of 5,268 million JPY ( 24.8% progress )
• Net Profit : 796 million JPY against a full-year forecast of 3,340 million JPY ( 23.9% progress )

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3. Key Topics Strengthening the Business Foundation

Several important business developments aimed at future earnings growth were announced during this quarter.

1. Expansion Plan for Otsukayama Clean Center (Final Disposal Site)

Adjustments are underway to increase the landfill capacity at the "Otsukayama Clean Center" (a controlled final disposal site) operated by the group company Taihei Kosan. The company plans an increase of approximately 1.3 million m³ to the existing permitted capacity of 3,030,191 m³, bringing the total permitted capacity to approximately 4.33 million m³ . This will secure long-term disposal capacity and maximize revenue opportunities.

2. Launch of New Water Treatment Facility "Miyakoda Techno Plant"

The "Miyakoda Techno Plant" (Hamamatsu City, Shizuoka Prefecture), constructed to enhance processing capacity and address the aging of existing water treatment facilities, began operations in June 2026. This facility has five times the processing capacity of the existing facility and leverages its prime location near the expressway to accept waste from a wide area.

3. Financial Foundation and M&A Strategy (Consolidation of "Enoken Kogyo")

Following the acquisition of Enoken Kogyo Co., Ltd. (which operates a stable final disposal site in Makinohara City, Shizuoka Prefecture) in April 2026, intangible fixed assets such as "goodwill" and liabilities increased on the balance sheet. Total assets expanded to 36,204 million JPY, while the equity ratio remains sound at 45.6% .

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4. Mid-to-Long-Term Growth Strategy and Progress of "Challenge 80th"

The company has set forth a 10-year vision titled "Challenge 80th" , aiming for dramatic scale-up.

[Slide Commentary: Growth Roadmap and Mid-to-Long-Term Goals]

The slide above illustrates the overall picture of the company's mid-term management plan and 10-year vision. The company is currently executing its "First Mid-Term Management Plan," and with top-line (net sales) already surpassing the 10 billion JPY milestone , it is moving into the next phase of growth.

• FY2027 (Final Year of the First Mid-Term Management Plan) :
  • Net Sales : 11.8 billion JPY (10 billion JPY organic + 1.8 billion JPY M&A)
  • Ordinary Profit : 5.0 billion JPY (4.5 billion JPY organic + 0.5 billion JPY M&A)
• FY2032 (Challenge Goal "Challenge 80th") :
  • Net Sales : 40.0 billion JPY (including M&A)
  • Ordinary Profit : 12.0 billion JPY (including M&A)

The core of this strategy is the fusion of "organic growth" through in-house development and speedy "M&A." In particular, through what it calls "Support-type M&A," the company acquires operators facing chronic shortages of final disposal sites or challenges in management and maintenance, thereby simultaneously extending the lifespan of disposal sites and expanding the group's network.

Furthermore, the company is focusing on expansion into the Kanto region, steadily promoting the acquisition of permits and development of new controlled final disposal sites across the country, including Nasushiobara City in Tochigi Prefecture (approx. 2.3 million m³), Misato-cho in Shimane Prefecture (approx. 4.0 million m³), and Koriyama City in Fukushima Prefecture (1.61 million m³).

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5. Industry Environment and Competitive Advantage

The market environment surrounding the company shows that the remaining years for final disposal sites nationwide are 20.3 years, and in the Tokyo metropolitan area, it is as tight as 10.4 years . Because the hurdles for establishing new final disposal sites (such as obtaining permits and coordinating with local residents) are extremely high, the possession of existing facilities and permits acts as a significant moat (barrier to entry) .

The slide below is a positioning map comparing "sales scale" and "operating profit margin" with industry peers.

[Slide Commentary: Overwhelming Profitability in Competitive Comparison]

This positioning map proves the robust business model of MIDAC HOLDINGS. While the operating profit margins of industry peers (Companies A through G) generally range from 5% to 25%, MIDAC HOLDINGS has recorded an exceptional operating profit margin of 39.9% (FY2026 results) .

This extraordinary high-profit margin is made possible by the following factors:

1. Establishment of an Integrated Processing System : By completing everything from collection and transportation to intermediate processing and final disposal within the group, intermediate costs are drastically reduced.
2. Possession of Rare Assets (Final Disposal Sites) : A structure that allows the company to maintain strong pricing power against tight landfill demand.
3. Capturing Broad Demand : A sales foundation capable of stably accepting waste from diverse industries, including waste disposal, construction, and manufacturing.

Moving forward, the company plans to maintain this overwhelming profitability while simultaneously pursuing the expansion of its "sales scale" through large-scale M&A and site development, primarily in the Kanto area.

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6. Summary and Future Focus Points

MIDAC HOLDINGS' Q1 FY2027 financial results were very solid, showing both revenue and profit growth and a high rate of progress. The following points are important for monitoring future performance trends:

• The pace of increase in water treatment acceptance volumes following the full-scale operation of the Miyakoda Techno Plant
• Progress on the application for capacity expansion at the Otsukayama Clean Center
• Progress on new final disposal site development projects in Tochigi, Shimane, Fukushima, etc.
• Acquisition of new bases and synergy creation through "Support-type M&A"

Supported by the structural shortage of final disposal sites and armed with an integrated processing system and overwhelming profitability, the company's growth story toward its 40 billion JPY sales target for FY2032 will be a key point of interest.