(4442) Baltes Holdings - New Analyst Report 7/5

◆ Company Overview
・As a “total support company for quality improvement,” Valtes Holdings is an enterprise that provides services centered on software testing.

◆ Financial results for the fiscal year ending March 24
・The financial results for the 24/3 fiscal year were net sales of 10,362 million yen (up 14.4% from the previous fiscal year) and operating profit of 840 million yen (down 13.3% from the same period). The achievement rate for the initial company plan remained at 92.7% of sales and 68.5% of operating profit. Project managers and sales expansion could not keep up with business expansion, and profit declined because growth was sluggish mainly in the software testing service business, and costs were spent on countermeasures.

◆ Earnings forecast for the fiscal year ending 25/3
・Regarding financial results for the 25/3 fiscal year, Valtes Holdings plans sales of 11,500 million yen (up 11.0% from the previous fiscal year) and operating profit of 980 million yen (up 16.6% from the same period).
・The Securities Research Center (hereafter, the Center) predicted earnings forecasts for the 25/3 fiscal year as sales of 11,619 million yen (up 12.1% from the previous fiscal year) and operating profit of 987 million yen (up 17.5% from the same period). Assuming that efforts aimed at overcoming bottlenecks revealed in the previous fiscal year would be successful, it was predicted that an increase in engineers in the main software testing service business and an increase in engineer unit prices would return to developments leading business results.

◆ Future highlights
・Our center predicted a 16.5% increase in sales compared to the previous fiscal year for the 26/3 fiscal year, a 12.8% increase in sales for the 27/3 fiscal year, and an operating margin of 9.9% for the 27/3 fiscal year.
・Valtes Holdings has announced a medium-term management plan targeting sales of 15,739 million yen and operating profit of 1,679 million yen for the 27/3 fiscal year of the final year. Since the company's competitive advantage has not been impaired, I would like to first focus on how to overcome the situation where operational responses were not keeping up with business expansion.