9686.T

• Company Overview & Core Strengths
  • Founded 60 years ago in 1966 as a security firm backed by Japanese banks, it is the only listed security company based in the Kansai region, with strong long-standing ties to local financial institutions and listed companies.
  • The group operates 8 companies across three core business lines, and can offer full one-stop service for an entire building covering security, maintenance, cleaning, and management, eliminating the hassle of dealing with multiple separate vendors for building owners.
  • It has maintained consecutive positive operating and recurring profit since founding, and achieved 14 consecutive years of revenue growth through its stable stock-based business model, which avoided large downturns even during the 2008 Lehman Shock and the COVID-19 pandemic.
• 2026 March Term 3rd Quarter Financial Performance
  • Total revenue reached approximately 34.5 billion yen, an increase of 9.5 billion yen year-over-year, driven by large special demand from the Osaka-Kansai Expo and strong performance in overall event security.
  • Operating profit reached 2.768 billion yen, an increase of 2.195 billion yen year-over-year, driven by Expo-related profit and improved margins from systematic price renegotiation with existing clients.
  • The company maintained a strong 56% equity ratio as of FY2025 March term, and its PBR improved to 0.8x to 0.9x as of 2026 from 0.64x in FY2025, following positive market sentiment from Expo-related wins.
• Osaka-Kansai Expo Operational Outcome
  • Toyo Tech acted as the lead managing firm in a 3-party joint venture (JV) with Secom and Shintei Security to handle all security and related cleaning services for the Expo, including gate security, venue security, pavilion and parking lot security, pre/post-construction security, and security at local public transport hubs. The JV deployed over 1,700 security staff per day, with Toyo Tech mobilizing staff from internal sales and admin departments, partner companies, and over 350 daily part-time workers to fulfill requirements.
  • The Expo finished with zero major security incidents, zero staffing shortages (zero unfulfilled deployments), and over 300,000 total security staff mobilized across the 6-month event, even amid higher-than-expected visitor volumes that reached over 200,000 visitors daily in September. This outcome has been called a "gold standard" for the industry, and significantly improved Toyo Tech's brand reputation, operational capability, and recruitment appeal.
• M&A to Strengthen Core Security Business
  • In 2024, Toyo Tech acquired 3 Ams Group companies focused on mechanical security and parking management, and Kansai Unite Protection, a firm with strong expertise in event security, for a total investment of 3.8 billion yen. Two Ams Group companies were merged into Toyo Tech in October 2024.
  • The M&A expands the group's service coverage, adds strength in the high-margin mechanical security segment, and strengthens the group's event security offering to meet broader client demand.
• Service Line Expansion & DX Initiatives
  • Launched TEC-SMART, an affordable, easy-to-use mechanical security service for small retail stores and small businesses that allows operation via smartphone and eliminates the need for traditional security cards, which has received strong market demand.
  • Launched Mimamori-O, a low-cost, simple monitoring service for families looking to check in on single elderly relatives or children, which uses sensors on daily-use doors (refrigerator, bathroom) to detect inactivity and send alerts to relevant contacts.
  • Implemented AI-powered security technology: AI-based intruder detection for mechanical security that only detects humans (no false alerts from animals) to notify the control center; AI anomaly/strange behavior detection for facility security from security camera feeds; and outdoor AI image monitoring service that enables high-security monitoring for outdoor areas with limited traditional security infrastructure, enabling automated alerts, voice warnings, and rapid response to intruders, plus remote image patrol that replaces on-site security patrols to enable labor savings.
• Shareholder Return & Governance Initiatives
  • Introduced a shareholder benefit program starting from the end of March 2024 for shareholders holding 500+ shares, designed to encourage stable long-term shareholding to improve the stock's low liquidity. Points can be rolled over once for shareholders that maintain their holding.
  • Updated dividend policy to set a 3% DOE (dividend on equity) as the lower bound, targeting a 50% payout ratio. For FY2026 March term, the company plans an annual dividend of 65 yen per share, a 25 yen increase year-over-year, with a 32 yen interim dividend (12 yen increase YoY) and 33 yen year-end dividend (13 yen increase YoY).
• 13th Mid-Term Management Plan
  • The 3-year plan runs from FY2026 March term, with the slogan "From volume growth to quality improvement", targeting evolution into a "comprehensive life safety company" centered on security and building management, with entry into new growth areas. The plan allocates 10 billion yen for growth investment over the 3-year period, with quantitative targets of 40 billion yen in total revenue and 2.5 billion yen in EBITDA by FY2028 March term.

• The company maintained its originally published full-year FY2026 March term guidance unchanged at the time of the 3rd quarter earnings release, as it was still carefully evaluating the scale of 60th anniversary initiatives and future investments for coming fiscal years.
  • The company aims to offset the 8 billion yen in one-time Expo-related revenue that will disappear after FY2026, through M&A activity and profit quality improvement, and still hit the mid-term plan's 2028 targets. The company acknowledges it may be difficult to fully offset this revenue loss in FY2027 (the second year of the mid-term plan).
  • Management is targeting an early exit from the sub-1x PBR valuation through consistent corporate value improvement, and will continue working to improve PBR over time.
  • For the ongoing 4th quarter of FY2026 March term, the company is continuing price renegotiation to offset rising personnel costs, strengthening sales activity for new contracts, and targeting further profit accumulation to close out the full year.

1. Security Business: Accounts for approximately 2/3 (≈67%) of total group revenue. Within the security business, mechanical security makes up ~40% of segment revenue, and stationary/on-site security (including event security) makes up ~30% of segment revenue, with the remainder consisting of transportation security for valuables and ATM management services. For the 3rd quarter of FY2026 March term, Osaka-Kansai Expo-related security contributed 8.378 billion yen in revenue and 1.247 billion yen in operating profit, which exceeded the full-year operating profit of 1.049 billion yen posted in FY2025 March term. M&A completed in 2024 added ~2 billion yen in projected annual revenue and 0.3 billion to 0.5 billion yen in projected annual operating profit from acquired entities, with the acquired event security firm Kansai Unite Protection already exceeding initial contribution expectations in FY2026. 2. Building Management Business: Accounts for approximately 1/3 (≈33%) of total group revenue. It provides full end-to-end building services including large-scale repairs, equipment inspection and maintenance, and regular cleaning. 3. Real Estate Business: Accounts for the remaining small share of total group revenue. It currently holds 6 income-producing properties for stable rental revenue, and added indirect investments in real estate REITs and private funds starting in FY2026 March term to improve asset efficiency.

• There is projected to be a material decline in revenue in FY2027 following the end of the one-time special demand from the Osaka-Kansai Expo, though the company is implementing strategies to mitigate this decline through M&A and organic growth. Overall business has a natural seasonal skew toward the second half of the fiscal year, due to higher mechanical equipment sales driven by corporate budget cycles and more active real estate and building management transactions toward period-end. The company's listed stock has relatively low trading volume and low liquidity, which the company has attempted to address through its shareholder benefit program for long-term holders.

Q: The 3rd quarter results are already above the original plan, will you be revising full-year guidance?

A: At the time of the 3rd quarter earnings release, we were still carefully evaluating the scope of 60th anniversary initiatives and the level of active investment we will implement in coming fiscal years, so we have kept our originally published full-year numbers unchanged at this point.

Q: Excluding the special Expo demand, does the core business have seasonal volatility?

A: While security and building management are mostly stable stock businesses, mechanical equipment sales within the security business tend to increase in the second half due to corporate budget cycles, and building management transactions and real estate deals also tend to pick up toward period-end. As a result, overall business has a natural skew toward the second half of the fiscal year.

Q: Why is the shareholder benefit program only available to holders of 500+ shares?

A: As our stock is listed on the Tokyo Standard market, it has relatively low trading volume and low liquidity, which we recognize as an issue. We designed the program this way to encourage more shareholders to hold a stable block of shares long-term.

Q: Do the shareholder benefit points have an expiration date?

A: For shareholders that continuously hold 500+ shares under the same shareholder number, points can be rolled over once for future use under the program design.

Q: What risks exist for revenue after the Expo special demand ends, and what countermeasures do you have?

A: [Note: Full answer text not included in the provided transcript, but management acknowledged the potential revenue decline and noted M&A, organic growth and price improvement would offset it over the mid-term.]

Q: What is your strategy after the end of Expo special demand?

A: [Note: Full answer text not included in the provided transcript.]

Q: What is the balance strategy between mechanical security and stationary security?

A: [Note: Full answer text not included in the provided transcript.]

Q: What positive long-term impacts will the Expo success have?

A: [Note: Full answer text not included in the provided transcript, but management noted it proved the group's operational capability, improved brand reputation, and will support future recruitment and new client wins.]

Q: What is your personnel securing strategy and what is the progress on the FY2026 March term hiring plan?

A: [Note: Full answer text not included in the provided transcript.]