Soliton Systems

3040.TMEDIUMScore: 35.8

Government Network Access Control · Weight: 5%· Data as of 2026-05-03

Investment Thesis

Japan's dominant zero-trust NAC (Network Access Control) provider for government and public sector. NetAttest EPS (IEEE 802.1X) is the standard authentication gateway across Japanese government networks. FY2025 earnings recovery: OP ¥2.8B (+39.2% YoY), revenue ¥19.8B (+6.2%), dividend hiked to ¥54/share. FY2026 guidance: revenue ¥21.2B (+7.1%), OP ¥3.15B (+12.5%). PE 14.55x at trough buying with D/E 1.31% (debt-free balance sheet). Active Cyber Defense Law enforcement (Oct 2026) mandates zero-trust implementation across 15 critical sectors — Soliton's NetAttest is the go-to refresh target for every public agency upgrade cycle.

Risk

1) Small cap (¥32.8B) — illiquid, wide bid-ask spreads. 2) Video Communication segment (Smart-telecaster) declining — watch segment mix drift. 3) Government procurement concentration — lumpy budget cycles can cause quarterly misses. 4) Microsoft Azure AD / Cisco ISE cloud-based NAC gaining enterprise adoption — may reduce on-premise NetAttest over 5-year horizon.

Monitoring Trigger

FY2026 Q1 results (May 11, 2026 announced). If IT Security revenue growth below 10% or OP margin drops below 12%, TRIM. If government zero-trust contracts citing Active Cyber Defense Law compliance accelerate, ADD to 8%. Watch Video Communication revenue trend — if >50% of total, thesis concentration risk.

Key Dates

2026-05-11earningsFY2026 Q1 results — watch IT Security revenue growth rate

2026-10-01catalystActive Cyber Defense Law enforcement — government zero-trust NAC refresh cycle accelerates

Key Metrics

14.55

N/A

Fwd PE

~2.9

P/B

~20%

ROE

14.1%

Op Margin

1.31%

D/E

~4.3%

Div Yield

N/A

FCF

¥32.8B

Mkt Cap

Business Segments

Segment	Revenue	Share	Description
IT Security	~¥13B	~65%	NetAttest EPS NAC, Smart-PT secure remote access, authentication products for government/enterprise
Video Communication	~¥5B	~25%	Smart-telecaster real-time video transmission — news/broadcasting niche, flat/declining
Eco / Embedded	~¥2B	~10%	Specialty board products and embedded systems

Supply Chain Evidence

Evidence	Customer	Product	Detail
probable	Japanese government agencies / public sector	NetAttest EPS — zero-trust network access control	Dominant NAC solution for Japanese public sector based on IEEE 802.1X standard. Active Cyber Defense Law implementation requires zero-trust architecture — NetAttest is the government-grade solution. Multiple public procurement records in TDnet.
confirmed	Japan broadcasting / news media	Smart-telecaster video transmission systems	High-quality real-time video over mobile networks for news organizations — niche product with stable customer base.
probable	Japan enterprise (zero-trust migration)	Smart-PT secure remote access	Secure remote access solution for enterprise zero-trust compliance — growing demand from Work-From-Home normalization and Active Cyber Defense Law.

Sources & References

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