Business overview

• Toumei sells office services to small and medium-sized companies and sole proprietors nationwide. Its two core products are its own brands: Office Hikari 119, which resells NTT East and NTT West fiber lines bundled with its own IT support services, and Office Denki 119, a retail electricity service sourced mainly from the Japan Electric Power Exchange (JEPX) and sold mainly by telemarketing.
• The third segment, Office Solutions, sells business phones, UTM security devices, PCs, multifunction printers, LED lighting, commercial air conditioners, solar systems and batteries, and rental corporate websites. It also includes six franchised walk-in insurance shops in Aichi and Shizuoka.
• The company runs its own call center, customer center and billing and collection functions, and draws on a customer database of more than 130,000 companies built since 2015. It operates 15 locations, and its fiscal year ends in August.
• In the year to August 2025, Office Denki 119 became a separate reporting segment and the former Financial Planning segment was folded into Office Solutions, with the prior year restated. After a subsidiary merger in September 2025, the group has four subsidiaries, including a web-advertising company set up in 2024 and a telemarketing company set up in 2025.

Investment case

1. Segment notes in the annual securities report show that most revenue is stock revenue, which is recognized over the period of service from fiber lines and electricity contracts, rather than one-off product sales. The company names new-customer acquisition and churn on contracted lines as its key operating metrics.
2. According to the earnings release for the year to August 2026, Office Denki 119 reached its target of 71,000 contracts, and its churn rate was well below the prior year's level. Segment revenue and profit both rose (see Performance & Balance).
3. The forecast for the year to August 2027 is set at the revenue and operating profit targets for the final year of the NEXT GROWTH 2027 medium-term plan. The company forecasts a higher annual dividend per share than in the year to August 2026, and on October 15, 2026 it decided to expand its shareholder benefit program from once a year to four times a year.
4. At August 31, 2026, cash and deposits exceeded short- and long-term borrowings, and the equity ratio rose during the year (see Performance & Balance). The board's slate approved at the November 2025 annual meeting set the board at six directors, three of them outside directors. All three corporate auditors are outside auditors, and an independent outside director chairs the nomination and compensation committee.

Bear case

1. Operating cash flow was negative in the year to August 2026 because receivables rose sharply and tax payments increased. Cash fell during the year, while the company acquired investment securities and long-term prepaid expenses grew (see Performance & Balance).
2. Office Hikari 119 missed its contract targets two years running: 136,000 for the year to August 2025 and 148,000 for the year to August 2026. Its segment profit declined in the latter year, Office Solutions revenue fell, and net income growth slowed after an impairment loss.
3. The company states that Office Hikari 119 and Office Denki 119 account for most group revenue. All fiber lines are bought from NTT East and NTT West under open-ended contracts that either side can end with 90 days' written notice.
4. The president and two other directors have pledged part of their shares to San ju San Bank, a lender to the company, as collateral for personal loans. The company states that the bank may sell the pledged shares if defined events occur, and that an actual or potential sale could affect the share price.

Catalysts

• The year-end dividend is scheduled for payment on November 12, 2026. The annual securities report for the year to August 2026 is due on November 24, 2026, and the annual shareholders' meeting is set for November 26, 2026.
• First-half results for the six months to February 2027 will show progress against the company's first-half forecast. The full year to August 2027 is the final year of NEXT GROWTH 2027, which also sets EPS and ROE targets.
• The company did not open any new locations in the year to August 2026, citing a reallocation of resources. Watch whether openings resume, and whether the M&A and alliances named in the plan as the route to new businesses take place.

Key risks

• Office Denki 119 buys power mainly from JEPX. The company states that prolonged high procurement prices could raise cancellations, and that under the rule requiring planned and actual demand to match every 30 minutes, large imbalances would result in imbalance charges. Supply-demand management is outsourced.
• The company describes competition in fiber reselling, electricity retail and office equipment as involving many companies and relatively easy entry. It also notes that its small-business customers are sensitive to economic conditions and that its receivables consist of many small accounts.
• The company lists dependence on the chairman and the president, both representative directors and both among the major shareholders (see Shareholders). It also lists risks around hiring and training staff and around keeping internal controls in step with growth.
• Hikari Tsushin, Inc. does not hold voting rights directly, but it is the parent of several major shareholders and their joint holders, including Hikari Tsushin KK, FT Group, and the UH Partners and SIL entities. It is therefore classed as an other related company with substantive influence (see Shareholders). The articles allow dividends and share buybacks by board resolution and reduce the quorum for special shareholder resolutions to one third of voting rights.

Trading liquidity

2025-10-02 to 2026-10-20 (250 trading days). Trading value is daily closing price × daily volume on the Tokyo Stock Exchange.

Assumptions

• Financial figures on this page come from beluuga.ai's daily data set; trading liquidity is measured over the period shown. We do not use consensus estimates.
• A two-for-one stock split took effect on September 1, 2025, and per-share figures are restated as if it occurred at the start of the year to August 2025. Average share counts for the year to August 2026 exclude shares held by a share supply-demand buffer trust, which had sold all its shares in the market by the year end.
• The governance, risk and segment descriptions come from the annual securities report for the year to August 2025. The results and outlook come from the later earnings release for the year to August 2026, and the annual report for that year is due in November 2026.
• Qualitative statements are taken from the annual securities report for the year to August 2025 and the full-year earnings release for the year to August 2026.