The Point for Japan

Research evidence excerpt

The Point for Japan

¥13bn or so gain on a Kawasaki land sale is excluded. Hardware solutions earnings

declined due to hits from memory components (c¥2.5bn), but this was no surprise.

We believe the +1.5ppt YoY gross margin improvement in the core services

solutions business was already priced in, while orders encouragingly grew

YoY+10% chiefly in manufacturing, public sector, and defense areas. Responding

to concerns about soaring memory prices, the company explained that price pass-

throughs are progressing from Q2, which is positive. Overall, we appreciate the

reduced uncertainty about the outlook.

Masahiro Shibano | Moriya Koketsu

TISI (3626.T) - Q1 results positive, as OP beat consensus even excluding one-

time gains, orders also strong

Results exceeded consensus even excluding one-time factors, and order volume

was strong, leaving a positive impression. April-June OP was ¥18.3bn (+12% YoY),

beating consensus (¥17.3bn) even after excluding one-time gains (approximately

¥600mn). Order volume was also stronger than expected, at ¥111.7bn (+11%),

driven by offering services (YoY +42%) which saw strong orders from card-related

customers, and by industrial IT (+15%) with strong modernization demand for

SAP-related projects. Overall, these were solid results, in our opinion. However,

given the limited improvement in gross margin (+0.1ppt YoY) and the continued

lack of significant progress in AI utilization, the content was not enough to change

our big-picture view.

Moriya Koketsu

Nomura Research Institute (4307.T) - Q1 in line - security stronger than

expected but consulting and industrial IT weaker

While results ended up in line with consensus, the business environment for

consulting and industrial IT, which we expected to perform strongly, has softened