SBI Global Asset Management Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

Revenue and profit increased substantially due to the expansion of the asset management business; however, the efficiency of profit allocation to shareholders of the parent company declined somewhat because of increases in profit attributable to non-controlling interests and the tax burden. Revenue was ¥128.2B (¥28.4B in the same period of the previous year, YoY +350.8%), Operating Income was ¥26.6B (¥5.1B, YoY +419.1%), and Ordinary Income was ¥27.0B (¥7.9B, YoY +240.2%). Consolidated Net Income was ¥17.3B (YoY +241.1%), of which Net Income attributable to owners of the parent was limited to ¥13.9B (¥5.0B, YoY +177.2%), with ¥3.4B in profit attributable to non-controlling interests absorbing part of the profit growth.

Factors Affecting Performance

【Revenue】Revenue increased substantially to ¥128.2B, up +350.8% year on year. From Q1 of the current fiscal year, the Group integrated the “Asset Management Business” and “Financial Services Business” and changed its reporting structure to a single “Asset Management Business” segment. Accordingly, a breakdown of changes by segment has not been disclosed. The expansion of the direct investment management business, combined with the integrated operation of financial information data provision and asset management seminars, appears to have driven the increase in revenue scale.

【Profit and Loss】Operating Income increased to ¥26.6B (YoY +419.1%), exceeding the rate of revenue growth, and the Operating Income margin improved to 20.8% from 18.0% in the same period of the previous year, an improvement of 2.7pt. Meanwhile, the gross profit margin declined to 40.7% from 50.0% in the same period of the previous year, a decline of 9.3pt, indicating that part of the revenue increase was accompanied by a relatively lower-margin revenue mix. The SG&A expense ratio declined significantly to 19.9% from 32.0% in the same period of the previous year, and SG&A efficiency gains exceeding the decline in the gross profit margin contributed to the improvement in the Operating Income margin. Ordinary Income of ¥27.0B was only marginally higher than Operating Income, indicating limited dependence on non-operating income. Against consolidated Net Income of ¥17.3B, the portion attributable to owners of the parent was limited to ¥13.9B; together with the effective tax rate of 35.8%, profit attributable to non-controlling interests of ¥3.4B reduced profit conversion efficiency. Overall, the Company recorded higher revenue and higher profit for the quarter.

Segment Analysis

Beginning with the consolidated cumulative Q1 period, the Company abolished the former two segments, the “Asset Management Business” and the “Financial Services Business,” and changed to a single “Asset Management Business” segment. Accordingly, segment-level profit and loss information for both the same period of the previous year and the current period has been omitted, and the factors behind changes by business cannot be confirmed from the earnings summary. The Company cites the expansion of the investment management business and progress in the integrated operation of financial information provision and seminar activities as the reasons for the change.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 20.8% from 18.0% in the same period of the previous year, an improvement of 2.7pt. The Ordinary Income margin was 21.1%, the consolidated Net Income margin was 13.5%, and the Net Income attributable to owners of the parent margin was 10.8% (17.6% in the same period of the previous year). The gross profit margin declined to 40.7% from 50.0% in the same period of the previous year, a decline of 9.3pt, while the improvement in the Operating Income margin was primarily supported by a lower SG&A expense ratio (19.9%, compared with 32.0% in the same period of the previous year).【Cash Flow Quality】Against Profit Before Tax of ¥27.0B, income taxes amounted to ¥9.7B, resulting in an effective tax rate of 35.8%. After additionally deducting ¥3.4B in profit attributable to non-controlling interests, Net Income attributable to owners of the parent was equivalent to only 51.4% of Profit Before Tax, indicating somewhat low conversion efficiency to profit attributable to shareholders of the parent in terms of earnings quality.【Investment Efficiency】ROE (annualized) was 16.5%, basic EPS was ¥10.06 (¥5.59 in the same period of the previous year, YoY +80.0%), and BPS was ¥233.39.【Financial Soundness】The Equity Ratio was high at 77.6%, with total assets of ¥541.4B and net assets of ¥420.1B, indicating a strong capital base. Cash and deposits of ¥237.8B substantially exceeded current liabilities of ¥115.3B, demonstrating strong short-term solvency.

Cash Flow Analysis

Because the statement of cash flows has not been disclosed, cash flow trends are analyzed based on changes in the balance sheet. Cash and deposits increased by ¥19.3B (+8.8%) to ¥237.8B from ¥218.5B in the same period of the previous year, suggesting that cash inflows accompanying revenue growth contributed to the accumulation of assets. Although accounts receivable declined year on year to ¥110.7B, other current liabilities increased substantially year on year, potentially indicating that increases in accrued expenses and other items affected short-term cash management. Balances of property, plant and equipment, intangible assets, and goodwill were almost flat, with no evidence of large-scale capital investment or M&A. Overall, despite being in a phase of business expansion, the cash balance has accumulated, and there are no indications of financial strain.

Earnings Quality

The expansion in profit for the quarter was primarily attributable to higher profit at the operating level. Extraordinary income of ¥0.0B and extraordinary losses of ¥0.0B were both virtually absent, indicating a highly recurring earnings composition. Non-operating income was ¥0.4B, primarily consisting of ¥0.3B in interest income, and accounted for only 0.3% of revenue, indicating limited dependence on non-operating income. In the same period of the previous year, Ordinary Income of ¥7.9B was substantially higher than Operating Income of ¥5.1B, reflecting a relatively larger contribution from non-operating income. In the current period, however, the gap between Operating Income of ¥26.6B and Ordinary Income of ¥27.0B narrowed, indicating an improvement in the recurring nature of the earnings composition. On the other hand, the improvement in the Operating Income margin despite a 9.3pt decline in the gross profit margin indicates a high degree of dependence on SG&A efficiency gains, warranting attention regarding the quality of the revenue mix. Furthermore, after the deduction of the effective tax rate of 35.8% and ¥3.4B in profit attributable to non-controlling interests, Net Income attributable to owners of the parent was equivalent to only 51.4% of Profit Before Tax. Of comprehensive income of ¥19.1B, ¥15.1B was attributable to owners of the parent, also indicating a divergence from Net Income.

Shareholder Returns

The year-end dividend forecast for the fiscal year ending March 2027 has not yet been determined, and the Company states that it will disclose the amount once determined after comprehensively considering business performance and other factors. On the same date, a separate notice regarding the interim dividend forecast was announced. While the dividend forecast was revised during the quarter, the earnings forecast was not revised. The full-year Payout Ratio cannot be calculated because the year-end dividend has not been determined; at this stage, only the level of the interim dividend can be confirmed.

Risk Factors

1. Accounts receivable collection and cash conversion risk: Accounts receivable amounted to ¥110.7B, representing 20.4% of total assets. The management of the collection cycle for rapidly expanded revenue will be a key point to monitor when evaluating future cash conversion.

2. Risk of continued decline in the gross profit margin: The gross profit margin declined to 40.7% from 50.0% in the same period of the previous year, a decline of 9.3pt. The improvement in the Operating Income margin was supported by SG&A efficiency gains; if a low-gross-margin revenue mix becomes entrenched, the potential for future margin expansion may narrow.

3. Risk relating to the conversion efficiency of Net Income attributable to owners of the parent: After deducting the effective tax rate of 35.8% and ¥3.4B in profit attributable to non-controlling interests, Net Income attributable to owners of the parent was equivalent to only 51.4% of Profit Before Tax. Compared with the growth rate of consolidated profit, EPS growth for shareholders of the parent (YoY +80.0%) was relatively restrained.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the Operating Income margin and Net Income margin were substantially above the industry median, placing the Company among the top performers in the industry in terms of profitability.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeded the industry median, representing an exceptional rate of growth within the industry.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The improvement in the Operating Income margin to 20.8% (18.0% in the same period of the previous year) reflects the realization of operating leverage through a substantial decline in the SG&A expense ratio (19.9%, compared with 32.0% in the same period of the previous year). On the other hand, the gross profit margin declined by 9.3pt, creating a structure in which changes in the revenue mix will determine the sustainability of the improvement in the Operating Income margin.

2. Against consolidated Net Income of ¥17.3B, Net Income attributable to owners of the parent was limited to ¥13.9B. The effective tax rate of 35.8% and ¥3.4B in profit attributable to non-controlling interests reduced profit conversion efficiency. The gap between the consolidated profit growth rate and EPS growth for shareholders of the parent (YoY +80.0%) is an important consideration in understanding the earnings structure.

3. With an Equity Ratio of 77.6% and cash and deposits of ¥237.8B, the Company maintains a strong financial base even during its business expansion phase. Since the year-end dividend forecast has not yet been determined, the disclosed information should be monitored together with future business performance.

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting professionals as necessary.

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