Syncray Co., Ltd. (Securities Code: 1724) delivered a highly robust performance in its interim results for the fiscal year ending December 2026. In contrast to a slight decline in net sales, the company achieved significant profit growth across all stages. A qualitative transformation of its business structure is underway, characterized by improved profitability and inventory optimization in the Equipment segment, alongside the acquisition of large-scale orders that secure future revenue.

This report provides a multi-faceted analysis of the company's interim financial results, covering performance highlights, segment trends, financial health, and the progress of its medium-term management plan, "PLAN2026."

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1. FY2026 Interim Performance Highlights: Achieving Significant Profit Growth

For the first half of the fiscal year, net sales were ¥4,646 million (down 5.9% YoY) . Conversely, the company recorded substantial profit growth: operating profit reached ¥223 million (up 43.3% YoY) , ordinary profit hit ¥220 million (up 123.9% YoY) , and net income for the interim period was ¥146 million (up 160.6% YoY) .

As shown in the slide above, the company has achieved profit growth that more than compensates for the slight dip in sales. The primary drivers behind this significant profit increase include:

• Improved Gross Profit Margin : Driven by optimized inventory management and enhanced product profitability within the Equipment Integration segment.
• Reduction in Foreign Exchange Losses : A decrease in foreign exchange losses compared to the same period last year served as a major tailwind for ordinary profit.
• Significant EPS Growth : Earnings per share (EPS) rose sharply to ¥32.57 (an increase of ¥20.53 from ¥12.04 in the same period last year).

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2. Segment Trends: Total Integration Segment

Syncray’s business is composed of two main pillars: the "Total Integration Segment" and the "Equipment Integration Segment."

The Total Integration segment is the core business providing end-to-end services, including the design of broadcasting and communication center facilities, optical fiber network construction, project management, and maintenance.

• Net Sales : Remained solid at ¥2,690 million (up 13.9% YoY) . This was supported by the steady completion of large-scale projects carried over from the previous term, as well as the recognition of revenue from short-term projects.
• Orders Received and Order Backlog : Orders received totaled ¥2,677 million (down 8.6% YoY) , and the order backlog stood at ¥2,207 million (down 19.3% YoY) . While project execution outpaced new orders, the company continues to steadily accumulate orders for FTTH (fiber-optic) area expansion and core network construction projects.

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3. Segment Trends: Equipment Integration Segment (Order Backlog Doubles)

The Equipment Integration segment functions as a manufacturer, developing, producing, and selling cutting-edge hardware such as optical terminals for broadcasting and communications and center facility equipment.

This slide is critical for gauging the company's future performance momentum. Net sales for the period were ¥1,956 million (down 24.0% YoY) , primarily due to the delivery of certain booked orders shifting to the second half of the fiscal year and beyond.

What warrants attention is the explosive growth in order indicators:

• Orders Received : ¥3,002 million (up 53.1% YoY)
• Order Backlog : ¥2,756 million (up 120.6% YoY)

The acquisition of large-scale orders for products aligned with market demand—such as optical terminals for broadcasting/communications and compact broadcasting/communication facilities for utility poles (mini-subcenters)—has pushed the order backlog to 2.2 times the level of the same period last year. These serve as robust drivers for sales and profit from the second half onward.

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4. Financial Health and Cash Flow Status

The company maintains a strong balance sheet and healthy cash-generating capabilities.

• Equity Ratio : Increased from 63.2% at the end of the previous fiscal year to 64.7% (+1.5pt) , boasting a solid financial foundation with an equity ratio exceeding 60%.
• Net Assets and BPS : Total net assets reached ¥6,245 million , and book value per share (BPS) rose to ¥1,394.38 (up ¥32.94 from the end of the previous term).
• Cash Flow (CF) : Operating cash flow increased due to the collection of trade receivables, such as construction work in progress, and combined with disciplined capital and development investment, the company has secured positive free cash flow (FCF) .

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5. Progress Toward Full-Year Earnings Forecasts

The full-year consolidated earnings forecast for the fiscal year ending December 2026 remains unchanged:

• Net Sales : ¥11,500 million (Interim progress rate: 40.4% )
• Ordinary Profit : ¥510 million (Interim progress rate: 44.1% )

Due to the nature of the company’s business, project completions and equipment deliveries tend to concentrate in the second half (particularly the fourth quarter). Compared to the 26.1% progress rate for ordinary profit in the same period last year (FY2025 interim), the current 44.1% progress rate is exceptionally smooth. Combined with the abundant order backlog in the Equipment segment that shifted to the second half, the probability of achieving the plan is high.

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6. Medium-Term Management Plan "PLAN2026" and Future Growth Strategy

Syncray is promoting a medium-term plan targeting fiscal year 2026 under the theme "Paving the Way for the Future: Three Pillars for Continuous Growth."

This slide clearly outlines the company's sustainable growth story and medium-to-long-term financial goals. The strategic core of the "Three Pillars" is as follows:

1. Deepening Existing Technologies and Customer Relationships

   • Expanding domestic market share in FTTH-related equipment and construction.
   • Strengthening capabilities for cutting-edge technologies, such as demand for area expansion of next-generation 10Gbps services and Japan's first "50G-PON" demonstration experiment.
   • Expanding service areas by leveraging the "SYNC Labo" research and development facility.

2. Exploring New Areas for Sustainable Growth

   • Developing solutions for regional issues such as "Regional DX," "Disaster Prevention/Mitigation," and "Monitoring Services."
   • Deploying "Denpa de Miteru-kun" (Wi-Fi sensing), a non-contact, privacy-conscious solution for preventing solitary deaths.
   • Cultivating new customer segments and sales channels through participation in municipal and rental housing trade fairs.

3. Organizational/HR Reform and Digital Utilization

   • Improving operational efficiency through core system replacement and active use of digital technology.
   • Implementing modern HR system reforms and active investment in human capital.
   • Optimizing resource reallocation through business selection and concentration.

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7. Summary and Outlook

Syncray's interim results for the fiscal year ending December 2026 demonstrated two clear positive factors: significant profit growth driven by improved gross margins and a substantial accumulation of order backlogs, particularly in the Equipment segment (+120.6% YoY) .

Key points to watch moving forward include the smooth conversion of this high-level order backlog into revenue from the third quarter onward, as well as progress in new business development in high-speed communication infrastructure (10G/50G-PON) and the regional DX sector (monitoring, disaster prevention, etc.).