6298.T

• TOPIX Compliance Priority: The company's top near-term priority is meeting the higher TOPIX inclusion criteria to be finalized in August 2025, after successfully passing all prior Tokyo Stock Exchange market transition requirements. Management has mobilized the entire company to achieve this goal, which will serve as a foundation for hitting the 2030 100 billion yen revenue target.
• Overall Financial Performance: The midterm results were very strong, with profit growth expanding as it moves to the bottom line. The 10 billion yen-plus increase in profit recovered the Q1 deficit, with particularly strong improvement in Q2 (July-September). Gross profit margin improved from 20% to 27.6%, increasing the quality of earnings. The six-month midterm period already exceeded the cumulative nine-month earnings of the prior year. Operating cash flow remained positive, though working capital impacts (higher receivables, lower inventory) partially offset the profit benefit. Equity capital ratio recovered to 40.5%, up from 38.6% in Q1.
• M&A Updates: The two-step acquisition of Techno Optis (previously a Topcon subsidiary) was accelerated from the original plan, bringing the company into the group earlier than scheduled due to its expected positive earnings contribution. CEO Momose has joined the board of Linus Bio, and the first board meeting was held recently.
• Bio Business Progress: YAC Bio launched the ClearStrand-ASD hair-based autism spectrum disorder screening service in July 2025, with 96% sensitivity and 80% specificity. A joint venture with Linus Bio is progressing, though contract finalization is slightly delayed. The platform build-out for the end-to-end free diagnostic service is ongoing, with current analysis conducted in the US, and partnerships with medical institutions, universities, and private companies already established. The high-sensitivity KIZASHI digital immunoassay device for dementia biomarkers (capable of measuring pTau217 and mid-pTau at femtogram-level sensitivity) will be unveiled at the Japanese Dementia Society meeting. Development of a norovirus detector with AIST is on track for commercial launch in summer 2026, with potential application to other pathogens.
• 2030 Growth Strategy: The 100 billion yen revenue target is planned to be achieved through 10% annual growth from existing businesses (10% contribution), 60% from new mass-produced products centered on the medical business, and 30% from M&A. Thirteen core subsidiaries have developed individual growth strategies, with seven targeting over 10 billion yen in revenue and six targeting over 5 billion yen. The company is implementing five core reforms, led by sales reform to increase customer count, contact rates, and revenue per employee, alongside gross margin improvement, financial health improvement, and participatory company-wide management.
• Shareholder Return: Two new return policies were approved: a 1 billion yen, 1.4 million share buyback (equivalent to ~7.6% of outstanding shares post-split) to be completed by the end of May 2026, and a switch from a 30% target payout ratio to a progressive dividend policy, with a base annual dividend of 40 yen per share (representing a 5 yen increase pre-split) going forward, with commitments to maintain or increase the dividend annually.

• Full-year 2026 (March-ending) guidance is maintained with no changes, at 30 billion yen total revenue, 2 billion yen operating profit, 1.8 billion yen ordinary profit, 1.2 billion yen net income attributable to parent shareholders, and a full-year dividend of 40 yen per share.
• Management has explicitly stated that the official 2 billion yen operating profit guidance is not sufficient to meet TOPIX inclusion criteria, and the company is fully committed to delivering results above this guidance.
• The ASD screening joint venture with Linus Bio is expected to be finalized after ongoing contract review. The 100 billion yen 2030 revenue target is maintained as the company's core long-term goal.
• The dialyzer product transition at YAC Erex is expected to return to a steady state in coming quarters after the temporary drop in order backlog during the transition.

1. Semiconductor and Mechatronics Related Business: Reported a slight decrease in revenue and profit year-over-year, maintaining an almost flat operating profit margin of 15% (down from 16% in the prior year midterm). Clean conveyors for semiconductor front-end processes, electronic component taping equipment, carrier tape, and SiC-related processing equipment all saw strong performance during the period.
2. Environment and Social Infrastructure Related Business: Revenue reached 5.094 billion yen, representing a 1.483 billion yen year-over-year increase. This segment contributed 95% of the company's total midterm revenue growth. Operating profit reached 303 million yen, a 236 million yen year-over-year increase. Growth was driven by recovering display-related demand in China and the accretive contribution of the newly acquired Techno Optis's optical measurement business.
3. Medical and Healthcare Related Business: Revenue grew slightly from 2.692 billion yen to 2.779 billion yen year-over-year, while operating profit edged up from 149 million yen to 151 million yen, achieving a small increase in both revenue and profit. This segment includes YAC Bio's new diagnostic service operations, in addition to established medical device manufacturing.

• Global EV adoption growth has slowed significantly, pushing out domestic automotive power semiconductor SiC-related investments by 2 to 10 years, creating near-term demand uncertainty for SiC-related equipment. Chinese SiC wafer manufacturing is growing extremely rapidly driven by government subsidies, but this rapid expansion could lead to overcapacity in the next few years.
• 70% of Okura Electric's revenue in the Environment and Social Infrastructure segment is concentrated in Q4, leading to very low upper half revenue recognition and results volatility year-over-year. EC logistics equipment sales and optical inspection equipment expansion are both currently delayed in the upper half.
• The joint venture for ASD screening services with Linus Bio is experiencing slight delays due to the volume of contract documentation requiring review.
• The company's current balance sheet has a temporary imbalance from short-term funding of fixed assets at midterm, though this is expected to be resolved by year-end with the introduction of long-term working capital.
• The company does not currently meet the TOPIX inclusion criteria, creating operational and strategic urgency to improve results and share price to meet the requirements.

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