SBI Global Asset Management (4765) FY2026 Q3 Earnings Report

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Executive Summary

The Company reported substantial increases in revenue and profit, accompanied by an expansion of the consolidation scope. However, the rate of profit growth was lower than the rate of revenue growth, and profitability declined from the same period of the previous year. Revenue was ¥15.82B (+82.9% YoY), Operating Income was ¥2.84B (+56.9%), Ordinary Income was ¥3.20B (+55.1%), and Net Income was ¥2.06B. The Operating Margin was 17.9%, down approximately 3.0pt from 20.9% in the same period of the previous year, while the gross margin also declined to 41.8% from 50.5%, a decrease of approximately 8.7pt. Expansion of the business scale, including 11 newly consolidated subsidiaries, was the primary driver of revenue growth, with scale expansion contributing more to profit growth than improvements in profitability.

Factors Affecting Financial Performance

【Revenue】Revenue increased to ¥15.82B, up +82.9% YoY. By segment, Asset Management generated ¥14.52B (91.7% of total revenue), while Financial Services generated ¥1.31B (8.3%), making Asset Management the primary driver of revenue expansion. Contributions from 11 newly consolidated subsidiaries were a major factor behind the high growth rate. It should be noted that the results include the effects of the expanded consolidation scope, in addition to changes in assets under management and management fee rates in the existing businesses.

【Profit and Loss】Operating Income increased to ¥2.84B (+56.9%), while Ordinary Income rose to ¥3.20B (+55.1%); both increased at a slower pace than revenue. Cost of sales was ¥9.21B, equivalent to 58.2% of revenue, up from 49.5% in the previous year, causing the gross margin to decline to 41.8% from 50.5%. SG&A expenses were ¥3.78B (+47.3%), increasing at a more restrained pace than revenue, but this was insufficient to offset the decline in the gross margin. Non-operating income of ¥0.37B, including ¥0.10B in interest income and ¥0.04B in dividend income, supplemented Ordinary Income, while extraordinary income of ¥0.02B was small, indicating limited reliance on temporary factors. Net Income was ¥2.06B, including ¥0.30B attributable to non-controlling interests and ¥1.76B attributable to owners of the parent (+35.3% YoY). Excluding net income attributable to non-controlling interests, the rate of profit growth would be even lower. Overall, the Company achieved higher revenue and profit, but there remains room for improvement in the quality of earnings, as the rate of profit growth fell significantly below the rate of revenue growth.

Segment Analysis

Asset Management generated revenue of ¥14.52B and Operating Income of ¥2.77B, representing a 19.1% margin and accounting for 91.7% of total Company revenue. It is the core business. Financial Services generated revenue of ¥1.31B and Operating Income of ¥0.54B, representing a high margin of 41.3%, but its scale remains limited to 8.3% of the Company total. The Company-wide margin of 17.9% is close to the level of Asset Management, resulting in a structure in which the profitability trends of this business largely determine overall performance.

Key Financial Metrics

【Profitability】The Operating Margin of 17.9% and the Net Profit Margin, based on net income attributable to owners of the parent, of 11.1% are both at reasonable levels. However, both declined from the same period of the previous year, when the Operating Margin was 20.9% and the Net Profit Margin was 15.0%, primarily due to the decline in the gross margin and the increase in SG&A expenses.【Cash Quality】Accounts receivable were ¥9.77B, up +274.7% YoY, substantially exceeding revenue growth and indicating a change in the speed of cash conversion. Cash and deposits were ¥20.88B, accounting for 42.0% of total assets, indicating substantial financial capacity.【Investment Efficiency】Annualized ROE was 6.9%. Based on a DuPont-style decomposition into Net Profit Margin, total asset turnover, and financial leverage, the low asset turnover relative to the asset base is a limiting factor. Investment securities of ¥10.09B and goodwill of ¥1.49B, equivalent to 3.8% of net assets, are both at levels that do not appear to represent excessive concentration risk.【Financial Soundness】The Equity Ratio was 79.5%. Current assets of ¥34.93B compared with current liabilities of ¥9.41B indicate strong liquidity and capital foundations, with low dependence on debt.

Cash Flow Analysis

Although a separate disclosure of the statement of cash flows could not be confirmed, cash flow trends can be inferred from changes in the balance sheet. Cash and deposits increased by ¥16.87B (+421.0% YoY) to ¥20.88B, apparently reflecting cash inflows associated with capital procurement and the expansion of the consolidation scope. Meanwhile, accounts receivable increased by ¥7.16B (+274.7% YoY) to ¥9.77B, suggesting that the collection cycle may have lengthened relative to the expansion in revenue. Property, plant and equipment increased to ¥0.83B (+209.7% YoY), indicating expanded investment in the business infrastructure. Retained earnings increased by ¥13.91B (+80.3% YoY), with the accumulation of retained earnings strengthening the capital base. The substantial increase in cash and deposits has enhanced the Company’s financial buffer, but attention is warranted because the accumulation of funds resulting from the increase in accounts receivable could affect future cash generation capacity.

Quality of Earnings

Profit for the current period was primarily generated through operating and ordinary activities. Extraordinary income was ¥0.02B, small relative to Profit Before Tax of ¥3.22B, indicating limited reliance on temporary factors. Non-operating income of ¥0.37B was equivalent to 13.0% of Operating Income, with interest income of ¥0.10B and dividend income of ¥0.04B as its primary components. Comprehensive income was ¥2.37B, comprising ¥2.08B attributable to owners of the parent and ¥0.29B attributable to non-controlling interests. Differences from Net Income attributable to owners of the parent of ¥1.76B included a +¥0.42B valuation difference on securities and a △¥0.11B foreign currency translation adjustment. From an accrual perspective, accounts receivable have increased at a faster pace than revenue, suggesting that cash collections may be lagging recorded earnings. Future collection trends should therefore be monitored when assessing the quality of earnings.

Shareholder Returns

The Q2 dividend was ¥9.00 per share. The payout ratio based solely on dividends, calculated against net income attributable to owners of the parent of ¥1.76B, was in the 70% range, exceeding the general benchmark of 60%. However, the Company has substantial balance sheet buffers, including retained earnings of ¥13.91B and cash and deposits of ¥20.88B, and the payout level based solely on dividends should be evaluated comprehensively. No data on share buybacks was available; therefore, no assessment of the Total Return Ratio was conducted.

Risk Factors

1. Accounts Receivable Collection Risk: Accounts receivable reached ¥9.77B, up +274.7% YoY, increasing at a pace substantially exceeding revenue growth (+82.9%). Although the current ratio of 371.1% indicates strong short-term payment capacity, continued lengthening of the collection cycle could affect capital efficiency.

2. Profitability Decline Risk: The gross margin declined by approximately 8.7pt YoY, while the Operating Margin declined by approximately 3.0pt. Following business expansion that included 11 newly consolidated subsidiaries, the extent to which the profit growth rate relative to revenue growth can improve will depend on the level at which the business mix and cost structure become established.

3. Consolidated Subsidiary Integration Risk: The 11 newly consolidated subsidiaries represent growth opportunities, but the execution of system integration, governance, and cost management will affect future profitability. Goodwill remains limited at ¥1.49B, equivalent to 3.8% of net assets, and the impact of impairment on capital is currently considered limited.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (healthcare)

Profitability and Returns

Both the Operating Margin and Net Profit Margin are substantially above the industry median, placing the Company among the higher-profitability group within the industry.

Growth and Capital Efficiency

The Revenue Growth Rate was substantially above the industry median, representing exceptional growth that includes the effects of the expanded consolidation scope.

※Source: Company analysis

Key Points from the Financial Results

1. Revenue increased +82.9% YoY and Operating Income increased +56.9%, resulting in substantial increases in revenue and profit. However, the rate of profit growth was below the rate of revenue growth, and both the gross margin and Operating Margin declined from the same period of the previous year. The results indicate that changes in the business mix associated with the expanded consolidation scope affected profitability.

2. The fact that accounts receivable increased at a pace exceeding revenue growth should be viewed as a structural change requiring monitoring of future collection trends from the perspective of working capital efficiency.

3. The Company has a strong financial foundation, with an Equity Ratio of 79.5% and a current ratio of 371.1%. The scale of investment securities and goodwill also does not appear to represent excessive concentration relative to total assets and net assets.

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, and you should consult a professional adviser as necessary.

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