| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥502.6B | ¥440.8B | +14.0% |
| Operating Income | ¥187.6B | ¥167.2B | +12.2% |
| Ordinary Income | ¥191.5B | ¥169.2B | +13.2% |
| Net Income | ¥120.0B | ¥83.9B | +43.0% |
| ROE | 23.7% | 17.6% | - |
For the fiscal year ended March 2026, Revenue was ¥502.6B (YoY +¥61.8B +14.0%), Operating Income was ¥187.6B (YoY +¥20.5B +12.2%), Ordinary Income was ¥191.5B (YoY +¥22.4B +13.2%), and Net Income attributable to owners of the parent was ¥120.0B (YoY +¥36.1B +43.0%), achieving double-digit growth at all profit levels. Gross margin of 60.2% declined by 40bp from 60.6% a year earlier, but SG&A ratio of 22.9% (prior year 22.7%) was disciplinarily managed, and Operating Margin of 37.3% (prior year 37.9%) fell 60bp while remaining at top industry levels. Net Income growth (+43.0%) significantly outpaced operating profit growth, aided by a lower tax burden (prior year 35.2% → current period 34.7%).
[Revenue] Revenue of ¥502.6B (+14.0%) achieved double-digit growth due to an increase in completed M&A transactions and higher transaction yields. Non-operating revenue expanded, with operating revenue of ¥136.2B (prior year ¥93.7B) recording a +45.4% increase. Accounts receivable decreased to ¥8.1B (prior year ¥26.3B), down 69.3%, and working capital efficiency improved markedly due to accelerated collections and a shortened cash conversion cycle. Total asset turnover improved to 0.76x (approximately 0.71x prior year), with revenue growth outpacing total asset growth (+7.2%).
[Profitability] Operating Income of ¥187.6B (+12.2%) grew somewhat more moderately than revenue growth of +14.0%, indicating limited operating leverage. SG&A of ¥115.2B rose from ¥99.9B the prior year (+15.3%), with increases in personnel costs and outsourcing fees pressuring margins. Non-operating income of ¥4.5B (prior year ¥3.3B) included ¥0.9B foreign exchange gains and ¥0.4B gains from investment partnership operations, and Ordinary Income of ¥191.5B (+13.2%) achieved a growth rate 1.0 percentage point above Operating Income growth. Extraordinary items were nearly neutral, including ¥0.2B gain on sale of investment securities, resulting in Pre-tax Income of ¥191.7B (+13.2%). Income taxes of ¥66.5B (effective tax rate 34.7%) decreased slightly from ¥59.6B (35.2% prior year), contributing to Net Income attributable to owners of the parent of ¥120.0B (+43.0%), which significantly exceeded ordinary income growth. In conclusion, both revenue and profit increased.
No segment information provided as the company operates a single segment (M&A Consulting Business only).
[Profitability] Operating Margin of 37.3% (prior year 37.9%) declined 60bp but remained high due to disciplined SG&A control. ROE of 23.7% declined 40bp from 24.1% prior year but remains industry-leading, driven by improved Net Profit Margin of 23.9% (prior year 19.0% +4.9pt), Total Asset Turnover of 0.76x (prior year 0.71x), and Financial Leverage of 1.31x (prior year 1.30x). [Cash Quality] Operating Cash Flow (OCF) was ¥155.5B, 1.30x Net Income of ¥120.0B, supported by accounts receivable compression (¥18.4B monetized) and working capital improvement. OCF/EBITDA ratio of 0.82x was somewhat constrained by tax payments of ¥63.1B and an increase in directors’ bonus provisions (+¥4.8B), dampening cash conversion. [Investment Efficiency] Total Asset Turnover of 0.76x improved +7.0% YoY, reflecting the synergy of accounts receivable compression and revenue growth. Investment securities were ¥164.9B (24.9% of total assets), which carries market volatility risk, but a thick liquidity cushion of cash ¥404.5B (61.1% of total) mitigates valuation risk. [Financial Soundness] Equity Ratio was 76.5% (prior year 77.0%) and remains high, with a current ratio of 333% and Debt/EBITDA of 0.11x, reflecting an effectively near net-cash conservative structure. Long-term borrowings of ¥21.0B (prior year ¥40.0B) decreased 47.5% due to repayments, and interest coverage was 354x, indicating minimal interest burden risk.
Operating Cash Flow was ¥155.5B (prior year ¥131.2B, +18.6%), maintaining high quality at 1.30x relative to Net Income of ¥120.0B. The primary driver was a reduction in trade receivables of ¥18.4B (prior year -¥0.3B) accelerating collections, contributing to an increase in OCF subtotal to ¥217.0B (prior year ¥167.7B). Directors’ bonus provisions increased by ¥4.8B, accelerating cash outflows that had already been expensed and supporting earlier cash generation. Conversely, accounts payable decreased by ¥3.5B (prior year +¥1.6B), and some normalization of working capital acted as a headwind. Corporate tax payments of ¥63.1B (prior year ¥37.7B) increased 67.5% with higher profits, contributing to an OCF/EBITDA ratio of 0.82x, below the benchmark of 0.9x. Investing Cash Flow was -¥43.1B, centered on acquisition of investment securities -¥21.6B and execution of long-term loans -¥8.0B. Capital expenditures were restrained at ¥2.5B, indicating low capital intensity. Financing Cash Flow was -¥105.9B, mainly due to dividend payments of ¥92.0B and long-term borrowings repayment of ¥14.0B. Free Cash Flow (FCF) was ¥112.4B, sufficient to cover dividends and capex, with FCF coverage of 1.22x. Cash and deposits increased to ¥404.5B (prior year ¥392.1B), maintaining ample liquidity.
Of Ordinary Income ¥191.5B, Operating Income ¥187.6B was generated from core operations, and non-operating income ¥4.5B (0.9% of revenue) consisted of relatively transient/minor items such as equity-method investment income ¥0.7B, foreign exchange gains ¥0.9B, and investment partnership operation gains ¥0.4B. Extraordinary profit ¥0.2B was a one-off gain on sale of investment securities. Despite Ordinary Income ¥191.5B, Net Income attributable to owners of the parent was ¥120.0B (-37.3%), with the principal reason being structural tax burden of ¥66.5B (effective tax rate 34.7%); effects from extraordinary items and non-operating expenses were minor (non-operating expenses ¥0.5B). The accrual ratio was -4.6%, negative, indicating Operating Cash Flow exceeded Net Income and reflecting high quality of earnings. Comprehensive income was ¥121.7B, ¥1.7B above Net Income ¥120.0B, aided by ¥0.6B improvement from translation adjustments, while valuation differences on available-for-sale securities of -¥4.2B compressed Other Comprehensive Income. Overall, core earning power is concentrated in the core business and the reproducibility of recurring earnings is high.
Full year guidance forecasts Revenue ¥528.0B (vs. this period +5.1%), Operating Income ¥193.0B (+2.9%), Ordinary Income ¥193.0B (+0.8%), Net Income attributable to owners of the parent ¥134.0B (+11.7%), and EPS ¥41.91 (this period ¥39.36). Top-line growth is expected to decelerate to +5.1% from +14.0% this period, and the modest operating income increase of +2.9% suggests limited room for margin expansion in this conservative plan. Dividend forecast is annual ¥14 (down from ¥29 this period), but this period included a special dividend of ¥6, so on a normal dividend basis the level is maintained. Progress rates are Revenue 95.2% and Operating Income 97.2%, close to year-end, indicating high probability of achieving full-year targets.
Annual dividend was ¥29 (interim ¥14, year-end ¥15), including a special dividend totaling ¥6 (interim ¥3, year-end ¥3). Payout Ratio was 84.0%, high, but ample cash of ¥404.5B and FCF of ¥112.4B cover this, supporting near-term sustainability. Share repurchases were minimal, with only ¥5.9M of dispositions, so returns are dividend-centric. Next fiscal year forecast dividend is annual ¥14 (including ¥4 special dividend), implying a normal dividend base around ¥10. High payout ratio could constrain growth investment capacity, but the company has sufficient financial flexibility to both acquire investment securities and pay dividends.
Market condition risk: Sourcing and closing M&A deals is subject to economic cycles and financial conditions, introducing revenue volatility. While the company achieved +14.0% growth this period, next period guidance of +5.1% assumes market normalization, and deterioration in deal flow could pressure margins.
Investment securities valuation risk: Investment securities of ¥164.9B (24.9% of total assets) are exposed to market volatility; this period valuation differences on securities of -¥4.2B compressed comprehensive income. Further market deterioration could generate valuation losses or negative OCI, impacting equity.
Dividend sustainability risk: Payout Ratio of 84.0% is high; excluding the special dividend of ¥6, the ordinary payout still likely exceeds 60%. Slower earnings growth or lower transaction yields may necessitate revising the dividend policy or drawing down cash.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 37.3% | 8.1% (3.6%–16.0%) | +29.2pt |
| Net Profit Margin | 23.9% | 5.8% (1.2%–11.6%) | +18.0pt |
Within the IT & Communications sector, the company significantly outperforms the median in both Operating Margin and Net Profit Margin, ranking among the top in profitability.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 14.0% | 10.1% (1.7%–20.2%) | +3.9pt |
Revenue growth outpaced the sector median by 3.9pt, indicating a steady expansion trend.
※Source: Company compilation
Sustainability of a high-margin, core-business-driven model: Operating Margin 37.3% and ROE 23.7% are industry-leading, and accounts receivable compression plus improved asset turnover (0.76x) enhanced efficiency. Although next period guidance is conservative, the high margin structure and ample liquidity (¥404.5B) provide a foundation for stable growth.
Quality of cash generation and dividend sustainability: OCF/NI ratio of 1.30x and FCF ¥112.4B indicate financial capacity to support both dividends and investments. While the Payout Ratio of 84.0% is high, inclusion of the ¥6 special dividend and accumulated cash suggest near-term sustainability. However, in phases of slower profit growth, flexibility in dividend policy will be a focal point.
Valuation volatility of investment securities and impact on OCI: Investment securities ¥164.9B (24.9% of total assets) carry market risk; this period valuation differences on securities of -¥4.2B compressed comprehensive income. The thick equity cushion (Equity Ratio 76.5%) is a buffer, but sustained market deterioration warrants monitoring as a potential source of equity volatility.
This report is an AI-generated earnings analysis document created from XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions should be made at your own responsibility, and you should consult a professional advisor as needed.