FY3/27 expected to be a transitional year – AS ONE delivered full year operating profit growth ahead of revenue growth in FY3/26, demonstrating the operating leverage in its model. The FY3/27 financial guidance points to a year of growth investments, which should translate to profitability improvement in future years. We note that AS ONE has maintained a strong track record of cost discipline, which makes us believe the elevated SG&A spend in FY3/27 is expected to generate meaningful returns. Further, top line growth outlook is positive and shows signs of increasing wallet share. Although ROE reached a record 13.3% and exceeded the FY3/28 MTP target ahead of schedule, we believe AS ONE will continue to incrementally improve its ROE and ROA.
FY3/26 was a record year
Record results across both top and bottom line – AS ONE delivered FY3/26 consolidated net sales of ¥110.7bn (+6.7% YoY, +1.7% vs guidance), operating profit of ¥12.8bn (+10.7% YoY, +2.6% vs guidance) and EPS of ¥128.35 (+11.7% YoY), driven by a combination of solid revenue growth and strict cost discipline. FY3/26 ROE of 13.3% is also a new record high, with AS ONE delivering on its 13% ROE target under its current MTP well ahead of schedule.
FY3/27 guidance points to steady revenue growth but earnings impacted by growth investments – AS ONE guided for FY3/27 net sales of ¥117.9bn (+6.5% YoY) and operating profit of ¥12.9bn (+0.5% YoY), with reported EPS declining -1.9% YoY to ¥125.86. The margin compression is driven by a +10.4% YoY growth in SG&A, reflecting the opening of a new Rental & Calibration Center in November 2026, logistics investments (Smart DC expansion), and costs driven by publication of the Company’s signature general catalogue. However, we believe the guidance is conservative as it does not reflect the impact of the Middle East tension, which drove a significant YoY jump in demand for oil-derived consumable products.
Valuations – On our earnings estimates, the shares are trading on an estimated PER FY3/27 of 16.6x (on -2.0% EPS growth YoY) and a free cash flow yield of 7.7%.
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