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Omega Investment Co., Ltd.

Itoki (Company note – 1Q update)

Coverage
Share price (5/27) ￥2,713 Dividend Yield (26/12 CE) 3.32 %
52weeks high/low ￥3,695/1,973 ROE(25/12 act) 17.7 %
Avg Vol (3 month)  221 thou shrs Operating margin (25/12 act) 8.9 %
Market Cap ￥144.8 bn Beta (5Y Monthly) 0.35
Enterprise Value ￥153.1 bn Shares Outstanding 53.38 mn shrs
PER (26/12 CE) 11.97 X Listed market TSE Prime
PBR (25/12 act) 2.27 X    
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1Q results were another strong start this fiscal year. Both core businesses performed well.

◇ FY12/2026 1Q results highlights: both businesses performed well

The FY12/2026 1Q results announced by Itoki on May 7, 2026, showed that both the Workplace Business and the Equipment & Public Works-Related Business performed well, resulting in increases in both revenue and profit. Net sales were 47.22 billion yen (+11% YoY), operating profit was 8.09 billion yen (+9% YoY), ordinary profit was 8.09 billion yen (+11% YoY), and quarterly profit attributable to owners of parent was 5.54 billion yen (+13% YoY). Performance has been favorable as expected by the Company.

Looking at results by business, the Workplace Business posted net sales of 36.4 billion yen (+1.8 billion yen), operating profit of 7.06 billion yen (+45 million yen), and an operating profit margin of 19.4% (-0.9 points). With demand for office space renewal increasing as one of the pillars of customers’ investment in human capital (specifically, a means of recruiting and retaining human resources and improving productivity), the Company is deploying nationwide, not limited to the Tokyo metropolitan area, a one-stop integrated sales strategy that specs in from design and also undertakes construction [Office 2.0 domain (comprehensive spatial proposals)], and this is reflected in results. The operating profit margin declined because personnel and IT-related expenses increased as planned; the underlying profitability trend has not changed.

The Equipment & Public Works-Related Business posted net sales of 10.3 billion yen (+2.6 billion yen), operating profit of 1.0 billion yen (+0.6 billion yen), and an operating profit margin of 9.7% (+4.9 points). Equipment for research facilities handled by subsidiary Dalton has been steady.

There are no noteworthy changes in the balance sheet.

◇ FY12/2026 full-year earnings forecast: no change to the forecast of increases in both revenue and profit; progress is steady

There is no change to the full-year earnings forecast, and the Company aims for consecutive record-high profit updates by increasing both revenue and profit. Specifically, net sales are forecast at 167.5 billion yen (+4% YoY), operating profit at 16.0 billion yen (+14% YoY), ordinary profit at 16.0 billion yen (+14% YoY), profit attributable to owners of parent at 11.2 billion yen (+11% YoY), and dividends per share at 90 yen (a 15 yen increase; forecast payout ratio of 40%).

Confidence in achieving this full-year earnings forecast is considered sufficiently high.

First, progress in 1Q is steady. Progress was 28.2% for net sales and 50.6% for operating profit, with operating profit exceeding half of the full-year forecast. The progress rate for operating profit is slightly slower YoY, but this appears to be largely due to strategic expense investments, and we expect the effects of these investments to emerge steadily going forward.

Second, the deal pipeline is steadily accumulating. The business base is expanding to include demand for the renewal of regional and factory offices, and, in addition, the timing of business talks is becoming more evenly distributed throughout the year. The deal pipeline for the second half is also growing, and it is assumed that performance will steadily improve quarter by quarter going forward.

Third, responses to rising inflation and geopolitical risks are progressing. In addition to the higher added value of business talks progressing through the expansion of the Office 2.0 domain, procurement of materials for the time being has been secured, and taking into account cost increases due to inflation, the Company plans a product price revision of 3% to 8% on July 1, 2026.

◇ Topics

The Company is sequentially renewing its own offices and has customers tour them to proceed with business talks. The schedule for renewal openings going forward is Tokyo in June 2026, Shanghai in autumn 2026, Fukuoka in December 2026, and Osaka in May 2027.

Also, in May 2026, a book edited and written by Toshiya Shimizu, the Company’s executive officer and director of the Central Research Institute, titled “Strengthen your company in the office: when the ‘working space’ changes, the ‘working people’ also change,” is scheduled to be published.

◇ Share price trends and future points of interest

The Company’s share price has been steadily rising since 2022 and surged to 3,695 yen (a year-to-date high), triggered by the announcement of the FY12/2025 full-year results. However, the share price has since adjusted gradually and is currently at roughly the same level as around the time of the announcement of the FY12/2025 full-year results.

This share price trend is thought to reflect that while the current strong performance supports the downside of the share price, the rate of increases in both revenue and profit for FY12/2026 is likely to slow compared with FY12/2025, and the share price has entered an interval between catalysts, reducing clues for further upside.

Given that there is no marked overheating in indicators such as PER and PBR, it is assumed that as the interval between share price catalysts ends and clues about the next medium-term management plan become available, upside pursuit will resume. The Company’s all-time high since listing was 3,800 yen in 1990, and if developments exceed this level, market attention should increase further. The next-largest catalyst is the next medium-term management plan, but, with this in mind, organizing the points of interest for the time being yields the following.

  • From 2Q onward, performance continues to expand steadily, and confidence in the FY12/2026 earnings forecast increases further.
  • In the Office 2.0 domain of the Workplace Business, the Company further captures demand for renewal of regional offices and factory offices.
  • The services in the Office 3.0 domain gain greater customer support, and the picture becomes clearer of how they contribute to net sales and profit.
  • The business potential of subsidiary Dalton’s LAB 1.0/LAB 2.0/LAB 3.0 strategy, which applies the successful model of the Workplace Business to the Equipment & Public Works-Related Business, becomes more concrete.
  • In the Equipment & Public Works-Related Business, special doors and maintenance services also expand.
  • A path is shown for strengthening proposal capabilities and improving productivity through the utilization of AI.
  • Concretization of overseas expansion.
  • As a result of these, the expansion of the customer base and the uplift of recurring revenue progress, and the Company moves up to the next stage of a stable growth trajectory in the medium to long term.
  • As a result of the above, the equity spread expands further.
  • The long-term outlook for financial targets and the Company’s views on M&A are clearly indicated.

Company profile

Itoki Corporation (hereinafter, the “Company”) is an office furniture manufacturer that designs tomorrow’s “work.” Founded in 1890. In addition to manufacturing office furniture, it engages in architecture, interior design, and related fields. Since 2022, Koji Minato has served as president, and under his leadership, the transformation of the corporate constitution is progressing. The Company advocates office DX and Office 3.0 and aims to raise added value. In the three-year medium-term management plan “RISE TO GROWTH 2026,” whose final year is FY12/2026, under the theme of “enhancing sustainable growth,” it promotes the priority strategy “7 Flags” and ESG strategies, aiming to achieve net sales of 150.0 billion yen, operating profit of 14.0 billion yen, and ROE of 15% in FY12/2026, and it almost achieved this ahead of schedule in December 2025. Expectations are rising for further evolution of Office 3.0 and the next medium-term management plan.

Key financial data

Unit: million yen 2021 2022 2023 2024 2025 2026
CE
Sales 115,905 123,324 132,985 138,460 153,682 167,500
EBIT (Operating Income) 2,561 4,582 8,524 10,078 13,686 16,000
Pretax Income 1,523 8,372 8,378 10,071 14,099  
Net Profit Attributable to Owner of Parent 1,166 5,294 5,905 7,183 9,382 11,200
Cash & Short-Term Investments 17,451 26,976 24,795 22,482 21,629  
Total assets 103,898 115,288 117,437 120,521 130,724  
Total Debt 20,091 19,487 17,308 37,924 34,627  
Net Debt 2,640 -7,489 -7,487 15,442 12,998  
Total liabilities 58,818 65,374 62,434 71,174 73,908  
Total Shareholders’ Equity 44,931 49,871 54,960 49,260 56,709  
Net Operating Cash Flow 2,774 5,804 6,321 -1,000 8,942  
Capital Expenditure 2,110 4,145 3,316 6,036 6,017  
Net Investing Cash Flow -1,170 4,923 -4,012 -7,107 -3,847  
Net Financing Cash Flow -2,658 -1,426 -4,148 5,905 -5,941  
Free Cash Flow 664 1,659 3,005 -4,146 5,193  
ROA (%) 1.12 4.83 5.08 6.04 7.47  
ROE (%) 2.63 11.17 11.27 13.79 17.71  
EPS (Yen) 25.8 117.0 130.3 147.0 190.2 226.7
BPS (Yen) 993.9 1,101.3 1,212.0 1,001.1 1,147.8  
Dividend per Share (Yen) 15.00 37.00 42.00 55.00 75.00 90.00
Shares Outstanding (Million shares) 45.66 45.66 45.66 53.38 53.38  

Source: Omega Investment from company materials

Share price

Quarterly topics

【 Financial highlights 】

Source: Company material

【 Analysis of changes in operating profits 】

Source: Company material

Quarterly topics

【 Performance in each segment 】

Source: Company material

【 Financial forecast for FY ending December 2026 】

Source: Company material

【Situation of order pipeline for FY2026】

Source: Company material

Financial data (quarterly basis)

Unit: million yen 2024/12 2025/12 2026/12
  1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
(Income Statement)                  
Sales 40,918 31,592 29,613 36,337 42,744 36,500 33,214 41,224 47,224
Year-on-year 10.7% 1.2% 3.3% 0.6% 4.5% 15.5% 12.2% 13.4% 10.5%
Cost of Goods Sold (COGS) 24,545 19,888 17,644 21,182 23,993 21,381 19,671 23,825 26,255
Gross Income 16,373 11,704 11,969 15,155 18,751 15,119 13,543 17,399 20,969
Gross Income Margin 40.0% 37.0% 40.4% 41.7% 43.9% 41.4% 40.8% 42.2% 44.4%
SG&A Expense 10,333 10,878 11,029 12,883 11,328 11,915 12,556 15,327 12,879
EBIT (Operating Income) 6,040 826 940 2,272 7,423 3,204 987 2,072 8,090
Year-on-year 26.4% -62.8% 428.1% 69.0% 22.9% 287.9% 5.0% -8.8% 9.0%
Operating Income Margin 14.8% 2.6% 3.2% 6.3% 17.4% 8.8% 3.0% 5.0% 17.1%
EBITDA 6,753 1,582 1,684 3,166 8,189 4,055 2,373 3,236 9,193
Pretax Income 6,006 1,328 1,035 1,702 7,257 3,208 1,132 2,502 8,063
Consolidated Net Income 4,104 985 725 1,409 4,910 2,045 711 1,734 5,537
Minority Interest 2 1 11 25 -6 2 10 11 -1
Net Income ATOP 4,101 985 714 1,383 4,916 2,044 699 1,723 5,538
Year-on-year 24.4% -30.2% 253.5% 38.9% 19.9% 107.5% -2.1% 24.6% 12.7%
Net Income Margin 10.0% 3.1% 2.4% 3.8% 11.5% 5.6% 2.1% 4.2% 11.7%
                   
(Balance Sheet)                  
Cash & Short-Term Investments 24,751 28,513 30,536 22,482 24,296 25,288 21,847 21,629 21,128
Total assets 127,459 120,701 120,935 120,521 132,329 126,248 123,538 130,724 137,216
Total Debt 38,662 41,566 42,881 37,924 44,114 41,268 37,467 35,063 42,072
Net Debt 13,911 13,053 12,345 15,442 19,818 15,980 15,620 13,434 20,944
Total liabilities 81,595 73,584 73,305 71,174 80,689 72,262 68,583 73,908 78,052
Total Shareholders’ Equity 45,818 47,068 47,571 49,260 51,562 53,908 54,864 56,709 59,060
                   
(Profitability %)                  
ROA 5.52 5.41 5.85 6.04 6.16 7.34 7.40 7.47 7.42
ROE 13.76 12.51 13.41 13.79 16.43 17.94 17.66 17.71 18.09
(Per-share) Unit: JPY                  
EPS 85.7 20.0 14.5 28.1 99.9 41.4 14.1 34.9 112.1
BPS 933.1 956.6 966.8 1,001.1 1,047.9 1,091.1 1,110.4 1,147.8 1,195.4
Dividend per Share 0.00 0.00 0.00 55.00 0.00 0.00 0.00 75.00 0.00
Shares Outstanding (million shares) 53.38 53.38 53.38 53.38 53.38 53.38 53.38 53.38 53.38

Source: Omega Investment from company materials

Financial data (full-year basis)

Unit: million yen 2016/12 2017/12 2018/12 2019/12 2020/12 2021/12 2022/12 2023/12 2024/12 2025/12
(Income Statement)                    
Sales 101,684 108,684 118,700 122,174 116,210 115,905 123,324 132,985 138,460 153,682
Year-on-year -4.5% 6.9% 9.2% 2.9% -4.9% -0.3% 6.4% 7.8% 4.1% 11.0%
Cost of Goods Sold 65,071 70,012 77,479 80,712 74,536 74,186 77,575 80,744 83,259 88,870
Gross Income 36,613 38,672 41,221 41,462 41,674 41,719 45,749 52,241 55,201 64,812
Gross Income Margin 36.0% 35.6% 34.7% 33.9% 35.9% 36.0% 37.1% 39.3% 39.9% 42.2%
SG&A Expense 33,862 35,761 39,336 40,776 40,089 39,158 41,167 43,717 45,123 51,126
EBIT (Operating Income) 2,751 2,911 1,885 686 1,585 2,561 4,582 8,524 10,078 13,686
Year-on-year -33.6% 5.8% -35.2% -63.6% 131.0% 61.6% 78.9% 86.0% 18.2% 35.8%
Operating Income Margin 2.7% 2.7% 1.6% 0.6% 1.4% 2.2% 3.7% 6.4% 7.3% 8.9%
EBITDA 5,316 5,551 4,615 4,436 5,603 6,148 7,821 11,417 13,185 17,853
Pretax Income 2,918 3,401 3,083 938 1,277 1,523 8,372 8,378 10,071 14,099
Consolidated Net Income 1,850 2,442 1,744 -579 -355 933 5,181 5,907 7,223 9,400
Minority Interest -56 40 19 -28 -119 -233 -113 1 39 17
Net Income ATOP 1,907 2,402 1,725 -550 -235 1,166 5,294 5,905 7,183 9,382
Year-on-year -57.9% 26.0% -28.2% -131.9% -57.3% -596.2% 354.0% 11.5% 21.6% 30.6%
Net Income Margin 1.9% 2.2% 1.5% -0.5% -0.2% 1.0% 4.3% 4.4% 5.2% 6.1%
                     
(Balance Sheet)                    
Cash & Short-Term Investments 19,839 19,977 16,529 17,030 18,246 17,451 26,976 24,795 22,482 21,629
Total assets 95,681 102,451 108,710 108,778 105,096 103,898 115,288 117,437 120,521 130,724
Total Debt 19,931 17,892 16,834 22,166 21,742 20,091 19,487 17,308 37,924 34,627
Net Debt 92 -2,085 305 5,136 3,496 2,640 -7,489 -7,487 15,442 12,998
Total liabilities 50,275 54,997 61,200 62,940 60,901 58,818 65,374 62,434 71,174 73,908
Total Shareholders’ Equity 44,949 46,863 46,857 45,370 43,812 44,931 49,871 54,960 49,260 56,709
                     
(Cash Flow)                    
Net Operating Cash Flow 5,072 3,565 1,384 3,586 4,561 2,774 5,804 6,321 -1,000 8,942
Capital Expenditure 1,641 1,333 3,477 3,226 1,729 2,110 4,145 3,316 6,036 6,017
Net Investing Cash Flow -4,044 -2,971 -3,094 -3,221 -1,152 -1,170 4,923 -4,012 -7,107 -3,847
Net Financing Cash Flow -2,571 -706 -2,463 0 -2,267 -2,658 -1,426 -4,148 5,905 -5,941
Free Cash Flow 3,663 2,342 -1,924 635 2,832 664 1,659 3,005 -4,146 5,193
                     
(Profitability )                    
ROA (%) 1.97 2.42 1.63 -0.51 -0.22 1.12 4.83 5.08 6.04 7.47
ROE (%) 4.21 5.23 3.68 -1.19 -0.53 2.63 11.17 11.27 13.79 17.71
Net Margin (%) 1.87 2.21 1.45 -0.45 -0.20 1.01 4.29 4.44 5.19 6.11
Asset Turn 1.05 1.10 1.12 1.12 1.09 1.11 1.13 1.14 1.16 1.22
Assets/Equity 2.14 2.16 2.25 2.36 2.40 2.36 2.31 2.22 2.28 2.37
(Per-share) Unit: JPY                    
EPS 40.1 52.7 37.8 -12.1 -5.2 25.8 117.0 130.3 147.0 190.2
BPS 986.8 1,028.9 1,027.4 995.8 970.4 993.9 1,101.3 1,212.0 1,001.1 1,147.8
Dividend per Share 13.00 13.00 13.00 13.00 13.00 15.00 37.00 42.00 55.00 75.00
Shares Outstanding (million shares) 52.14 52.14 45.61 45.66 45.66 45.66 45.66 45.66 53.38 53.38

Source: Omega Investment from company materials

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