27/3 Q1 results: Steady contributions to profit growth from IT services in Japan and defense: Quick Note

Research evidence excerpt

27/3 Q1 results: Steady contributions to profit growth from IT services in Japan and defense: Quick Note

Global Markets Research

29 July 2026NEC

6701.T 6701 JP / EQUITY: JAPAN INDUSTRIAL ELECTRONICS

27/3 Q1 results: Steady contributions to profit Rating Buygrowth from IT services in Japan and defense

Target price JPY 6,000Quick Note

Closing price

29 July 2026 JPY 4,613First impression slightly positive: Profits up sharply despite fallback in major

projects (Note: Quick Note reports are not a

In Q1, non-GAAP operating profits (operating profits) came in at ¥74.7bn (¥58.8bn), up vehicle for changes to ratings, target

¥34.7bn y-y (up ¥23.4bn) and above our forecast of ¥43.0bn (¥35.0bn; 29 July QUICK prices, or earnings forecasts)

consensus forecast: ¥35.6bn). The company raised its 27/3 non-GAAP operating profit

guidance by ¥10.0bn, from ¥420.0bn to ¥430.0bn, versus our forecast of ¥440.0bn, on

which basis our impression is slightly positive. Parts shortages and other negatives had

almost no impact in Q1 thanks to cost pass-throughs and changes in the model mix.

Research Analysts

First, we attribute the outperformance to a greater-than-expected improvement in margins Japan industrial electronics

on IT services in Japan and steady sales bookings from Q1 as a result of moves to even

Masaya Yamasaki, CFA - NSCout aerospace & defense operations across the year. The ¥34.7bn rise in non-GAAP masaya.yamasaki@nomura.com

operating profits in Q1 breaks down as ¥7.6bn at BluStellar (IT services in Japan), ¥5.7bn +81 3 6703 1190

at base businesses in Japan, ¥3.6bn at the international IT services business, ¥9.2bn at

the aerospace & defense business, ¥4.2bn at the submarine systems business, etc.

Second, in Q1, orders at the IT services Japan business rose 3%, and the effective order