Operating leverage does the work
SEC Co., Ltd. (TSE: 3741) published non-consolidated first-quarter results for FY3/2027 on August 10, 2026, covering April 1 to June 30, 2026 under Japanese GAAP. Revenue rose 20.5% to ¥2,772 million, and because the cost base moved much less, operating profit jumped 51.6% to ¥440 million — two and a half times the revenue growth rate. Ordinary profit rose 60.6% to ¥517 million and net profit 58.9% to ¥353 million, for earnings per share of ¥34.59 against ¥21.78, restated for the two-for-one share split of October 1, 2025.
That is a sharp turn: a year earlier the same quarter had seen operating profit fall 18.6% and net profit 15.7% on revenue growth of just 5.6%. The company frames the shift as demand structure changing in its favour — public-sector development remains strong, while research-and-development work on autonomous vehicles and space systems is increasing.
Two business fields carry the quarter
Social infrastructure systems, already the largest business field, grew revenue 33.7% to ¥1,363 million and now supplies 49.2% of the company's total. Government work — SEC singles out the judicial field — remained strong. Space and advanced systems, the second-largest at 29.5% of revenue, grew 22.2% to ¥819 million on steady autonomous-driving research contracts and space-related development.
Mobile network revenue grew 20.4% to ¥221 million: the field is shrinking overall, but a large project for one of the major carriers lifted the quarter. The internet field was the only one to fall, down 13.4% to ¥370 million, as DX work for private-sector clients grew but could not offset the passing of the peak in contactless-IC development. Its share of revenue dropped from 18.6% to 13.3%.
Orders down a third — and why that is less alarming than it looks
Order intake for the quarter was ¥1,718 million, just 66.4% of the year-earlier figure. The fall is concentrated in one place: social infrastructure booked orders of ¥348 million, only 28.8% of the prior year's intake, because a large multi-year contract had landed in that field a year earlier. Space and advanced systems took ¥838 million (115.4%), the internet field ¥383 million (79.3%) and mobile networks ¥149 million (87.7%).
The backlog tells the more useful story. At ¥8,011 million it stands 22.3% above a year ago, with social infrastructure alone carrying ¥6,232 million (124.1% of the prior year) and space and advanced systems ¥1,054 million (120.3%). Set against full-year revenue guidance of ¥11,800 million, that backlog already covers roughly two-thirds of the year's target.
A very light balance sheet
Total assets fell ¥443 million to ¥11,991 million as cash and deposits rose ¥2,787 million while notes, accounts receivable and contract assets fell ¥3,387 million — the ordinary post-year-end collection cycle. Liabilities fell ¥187 million to ¥1,934 million, chiefly on a ¥231 million reduction in the bonus provision, ¥202 million in income taxes payable and ¥141 million in trade payables. Net assets fell ¥256 million to ¥10,056 million after the dividend payment, and the equity ratio rose to 83.9% from 82.9%.
SEC said the quarter ran broadly to plan and left the guidance published on May 12, 2026 in place. For the six months to September it expects revenue of ¥5,350 million (+0.6%), operating profit of ¥880 million (+6.4%), ordinary profit of ¥1,040 million (+17.0%) and net profit of ¥710 million (+13.9%). For the full year it expects revenue of ¥11,800 million (+5.2%), operating profit of ¥1,980 million (+5.3%), ordinary profit of ¥2,300 million (+11.5%) and net profit of ¥1,575 million (+4.3%), for earnings per share of ¥154.27. The dividend forecast is ¥62.00 per share, paid entirely at the year-end, against ¥60.00 for FY3/2026.
| Metric | Q1 FY3/2027 | Q1 FY3/2026 | Change |
|---|---|---|---|
| Net sales (¥ million) | 2,772 | 2,300 | +20.5% |
| Operating profit (¥ million) | 440 | 290 | +51.6% |
| Ordinary profit (¥ million) | 517 | 322 | +60.6% |
| Net profit (¥ million) | 353 | 222 | +58.9% |
| EPS (¥) | 34.59 | 21.78 | +58.8% |
| Mobile network — revenue (¥ million) | 221 | 184 | +20.4% |
| Internet — revenue (¥ million) | 370 | 427 | -13.4% |
| Social infrastructure systems — revenue (¥ million) | 1,363 | 1,020 | +33.7% |
| Space & advanced systems — revenue (¥ million) | 819 | 670 | +22.2% |
| Orders received (¥ million) | 1,718 | — | -33.6% |
| Order backlog (¥ million) | 8,011 | — | +22.3% |
| Total assets (¥ million) | 11,991 | 12,435 | -3.6% |
| Net assets (¥ million) | 10,056 | 10,313 | -2.5% |
| Equity ratio | 83.9% | 82.9% | +1.0 pt |
| FY3/2027 guidance — revenue (¥ million) | 11,800 | — | +5.2% |
| FY3/2027 guidance — operating profit (¥ million) | 1,980 | — | +5.3% |
| FY3/2027 guidance — ordinary profit (¥ million) | 2,300 | — | +11.5% |
| FY3/2027 guidance — net profit (¥ million) | 1,575 | — | +4.3% |
| FY3/2027 guidance — EPS (¥) | 154.27 | — | — |
| Annual dividend per share (¥) | 62.00 | 60.00 | +3.3% |
JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.