6862.T

Overall Consolidated Performance

• The second quarter consolidated revenue hit a new all-time high at 12.519 billion yen, up 5.4% year-over-year; operating income reached 700 million yen, up 50.4% year-over-year, approaching the very high 900 million yen level set in 2024 Q2.
• All profit metrics have exceeded 80% progress against the full-year guidance, with revenue progress also above the 50% midpoint benchmark.
• Higher profitability from Digital Engineering and ICT Products, plus falling depreciation for ROM programming assets, drove the large consolidated operating profit gain. Total assets increased after adding the two new consolidated subsidiaries, and the equity ratio remains 32%, above the 30% target.

Core Business Updates

• The ROM programming service business, a core strategic business, has returned to a growth trajectory after a temporary decline in the prior fiscal year driven by lower volumes and higher depreciation. Volume growth has resumed and depreciation is falling as scheduled.
• Explorer (a Digital Engineering segment company) opened a new development center in Utsunomiya to better support medical device and semiconductor manufacturing equipment clients near their locations, strengthening development and design solutions.
• Princeton (the ICT Products segment operator) added CORSAIR gaming products (keyboards, mice, gaming chairs) to its product lineup to reach new customers.

Strategic and Capital Initiatives

• The company is pursuing the Digital Consortium (DC) Vision, which aims to grow the business by inviting digital companies to join the group consortium and pursuing cross-company synergies. Growth has been delivered through M&A and organic expansion since 2013, with annual revenue reaching 24 billion yen.
• The company maintains a three-pillar shareholder return policy: dividends, share repurchases, and shareholder benefits. The full-year dividend is forecast at 15 yen per share, and an ongoing share repurchase program has acquired ~75% of its 125,000 share/150 million yen limit as of the end of October.
• The company conducts active IR for both retail and institutional investors, including in-person and online events and one-on-one meetings with institutional investors.

• Management stated that current results are very likely to exceed the initial full-year guidance given the strong first half progress, with all profit metrics already over 80% of the full-year target. Management is currently reviewing the magnitude of the potential upward revision and aims to announce an update as soon as possible.
• The company maintained its long-term growth guidance centered on the Digital Consortium strategy, targeting continued expansion through M&A, partnerships, and minority investments to add new member companies to the consortium.
• Management expects ROM programming service profit to grow steadily alongside increasing programming volumes going forward, with depreciation expenses trending gradually lower after the 2025 fiscal year peak.

1. Digital Devices: Revenue of approximately 6.3 billion yen, representing a 9.2% year-over-year decrease, which accounts for ~50.3% of total consolidated revenue. The decline came from the reversal of a large one-off spot project in the year-ago period; segment operating profit fell 19% year-over-year but remained at a high level, as memory price gains offset part of the decline, and the segment continues to lead consolidated performance. 2. Digital Engineering: Revenue increased more than 21% year-over-year, driven by rising ROM programming volumes (the core of the segment business). Segment operating profit returned to growth from a very weak year-ago base, on the back of higher volumes and falling depreciation expenses, and is now in a recovery trend. 3. ICT Products: Revenue increased 15.8% year-over-year, driven by solid sales of digital conference systems, PC peripherals, and strong growth from mobile accessories. Segment operating profit reached 210 million yen, a 554.6% year-over-year increase, which is the highest second quarter operating profit in the segment's history, accounting for ~3.6% of total consolidated revenue. 4. Other: Revenue was 824 million yen, a 238.9% year-over-year increase, driven by the consolidation of two newly acquired companies (Blaine and Daiki Sound). The segment turned profitable from a year-ago operating loss, as Daiki Sound performed well and finance-related revenue at Minato Financial Partners increased.

• ROM programming service revenue and orders are dependent on the production trends of a major domestic client, so the business is subject to external demand volatility that the company cannot fully control.
• Memory price trends and memory product supply availability impact Digital Devices segment performance, creating uncertainty for full-year results.
• Global trade policy uncertainty (specifically U.S. tariff policy) created uncertainty when the initial full-year forecast was set, and this uncertainty remains a potential headwind for results.

Q: What impact has rising memory prices had on Sunmax Technology's performance in the Digital Devices segment? / A: Rising memory prices have had a positive impact on results to date. Sunmax has strong long-standing relationships with memory manufacturers and proven sourcing capability for hard-to-obtain memory products. Leveraging this advantage, the company has been able to supply memory products to customers and grow both revenue and profit from the trend. Management expects product access will remain a key strength going forward.

Q: When did the depreciation expense peak for the ROM programming service business, and what is the trend going forward? / A: The depreciation peak for ROM programming assets was the 2025 March fiscal year. The company uses declining-balance depreciation for equipment, so larger expenses are recorded early in the asset life. Building depreciation is straight-line over a long period and has a small impact on results. Depreciation will gradually decline starting from the 2026 March fiscal year.

Q: What synergies have been achieved from adding Blaine and Daiki Sound to the group? / A: First, the parent handles shared administrative, HR, finance, and accounting tasks, allowing the new subsidiaries to focus on their core business. Second, group access to more agile financing has allowed Blaine to pursue new capital investment, supporting sales activity. Third, the group leverages its existing experience in digital promotion and website development to support the new subsidiaries' marketing efforts. Management expects these initiatives to deliver clear results over time.

Q: Will the company revise full-year guidance upward, and what factors are being considered in the review? / A: Management is currently reviewing an upward revision, with two key factors under assessment. First, the company will monitor memory price trends and memory supply stability, as Sunmax's performance is tied to these dynamics. Second, the company will coordinate with Samsung Japan, Tomen Devices, and the major domestic client to confirm ROM programming volume trends, given the business's dependence on the client's production outlook. A revision will be finalized once these factors are assessed. (1887 characters)