Anshin Guarantor Service (7183) FY2026 Q3 Earnings Report

Quick View

Executive Summary

In addition to higher revenue and earnings, each profit level from operating income onward grew faster than the revenue growth rate, resulting in improved profit margins. Revenue was ¥4.55B (+14.5% YoY), operating income was ¥280M (+26.8%), ordinary income was ¥400M (+29.8%), and net income was ¥280M (+41.7%). The expansion in earnings was driven by the rate of increase in operating expenses remaining below the rate of revenue growth, as well as non-operating income boosting ordinary income.

Factors Affecting Business Performance

【Revenue】Revenue was ¥4.552B, an increase of 14.5% from ¥3.977B in the same period of the previous year. The company has maintained double-digit revenue growth, which appears to have been driven primarily by the expansion of its rent debt guarantee business.

【Profit and Loss】Operating expenses were ¥4.275B, representing an increase of only 13.1% YoY and below the 14.5% revenue growth rate. Consequently, operating income increased by more than the revenue growth rate to ¥277M (+26.8% YoY). The operating margin improved by approximately 61bp to 6.1%, from 5.5% in the same period of the previous year. Ordinary income was ¥398M (+29.8% YoY); non-operating income of ¥158M exceeded interest expenses of ¥36M, resulting in an increase in the ordinary income margin to 8.7% from 7.7% in the same period of the previous year. Net income was ¥283M (+41.7% YoY), calculated by deducting income taxes and other taxes of ¥116M (effective tax rate: 29.0%) from pretax income of ¥399M. Revenue and earnings both increased, and the primary factor behind the improved profit margins was the containment of expense growth below the growth rate.

Key Financial Indicators

【Profitability】The operating margin of 6.1% and net margin of 6.2% both improved from the same period of the previous year, primarily because the rate of increase in operating expenses remained below the revenue growth rate.【Cash Flow Quality】Net income was ¥283M after deducting income taxes and other taxes of ¥116M from pretax income of ¥399M, resulting in an effective tax rate of 29.0%, which is not an unusual level.【Investment Efficiency】Annualized ROE was a favorable 14.6%. However, based on a decomposition of net margin of 6.2% × total asset turnover of 0.437 times × financial leverage of 5.36 times, financial leverage made a significant contribution. Accordingly, it should be noted that the high ROE was not driven solely by profitability and asset efficiency.【Financial Soundness】The equity ratio was 18.6%, broadly unchanged from 18.3% in the same period of the previous year. The current ratio was 110.5%, and all liabilities were classified as current liabilities, resulting in a short-term liabilities ratio of 100.0%. Short-term borrowings increased 25.0% YoY to ¥750M, but cash and deposits of ¥824M exceeded this amount.

Cash Flow Analysis

Although a cash flow statement was not disclosed, the balance sheet trends indicate that cash and deposits declined by ¥105M from ¥929M in the same period of the previous year to ¥824M, while short-term borrowings increased by ¥150M from ¥600M to ¥750M, indicating a slight increase in reliance on borrowings. Retained earnings increased by ¥231M from ¥1.402B to ¥1.633B, reflecting the accumulation of net income of ¥283M for the current period. Contract liabilities (advances received) remained broadly flat, increasing from ¥3.322B to ¥3.334B, indicating that the substantial level of cash received in advance from the business has been maintained. Total assets expanded from ¥12.86B to ¥13.90B, primarily due to an increase in current assets.

Quality of Earnings

Of ordinary income of ¥398M, non-operating income of ¥158M exceeded interest expenses of ¥36M, generating a net contribution of ¥122M, equivalent to approximately 31% of ordinary income. Because non-operating income includes items with a high degree of non-recurring nature, such as dividend income and subsidy income, it is appropriate to view operating income of ¥277M as the company’s core earnings power. The difference between pretax income of ¥399M and net income of ¥283M was primarily attributable to income taxes and other taxes of ¥116M (effective tax rate: 29.0%); no extraordinary gains or losses or temporary tax factors were identified. Deferred tax assets amounted to ¥1.142B, equivalent to 44.1% of net assets. The possibility that recoverability may be reassessed depending on future earnings capacity, thereby affecting the valuation of net assets, is a point to consider when evaluating earnings quality.

Earnings Forecast and Guidance

Against the full-year revenue forecast of ¥6.095B, progress through the cumulative Q3 period was 74.7%, a standard level incorporating seasonality. Profit progress, however, was significantly ahead of plan: cumulative operating income of ¥277M reached 231% of the full-year forecast of ¥120M; cumulative ordinary income of ¥398M reached 159% of the full-year forecast of ¥250M; and cumulative net income of ¥283M reached 167% of the full-year forecast of ¥169M. While the revenue plan is progressing broadly as expected, the divergence between the profit plan and recent actual results is extremely large, and attention is focused on whether the company will revise its earnings forecasts.

Shareholder Returns

The Q2 dividend was ¥0 per share, while the full-year dividend forecast is ¥3.00 per share. Based on the average number of shares outstanding during the period of 17.37M shares, total dividends are estimated at ¥52M, resulting in an estimated payout ratio of 30.8% against the full-year net income forecast of ¥169M. Cumulative Q3 net income of ¥283M has already exceeded the full-year forecast, and on an actual-results basis, the dividend burden remains at an even lower level. Retained earnings increased by ¥231M YoY to ¥1.633B, indicating continued accumulation of funds available for dividends. No data concerning share buybacks was identified.

Risk Factors

1. Concentration of Maturities: All liabilities are classified as current liabilities, and the short-term liabilities ratio is 100.0%. Although the current ratio is above 100% at 110.5%, it remains below the 150% level generally considered financially sound, indicating that the liquidity buffer is not substantial.

2. Leverage: The debt-to-equity ratio based on total liabilities/net assets was 4.36 times, with total liabilities of ¥11.31B against equity of ¥2.59B. However, the interest burden is covered by operating income, as indicated by an interest coverage ratio of 7.65 times.

3. Increasing Reliance on Borrowings: Short-term borrowings increased 25.0% YoY to ¥750M. Although cash and deposits of ¥824M exceed this amount, changes in borrowing terms and the refinancing environment could affect funding costs.

Industry Benchmark (For Reference; Company Research)

Industry Benchmark (insurance)

Profitability and Returns

Because median data has not been compiled, the assessment of the company’s relative positioning is limited.

Growth and Capital Efficiency

Similarly, comparative data against the industry median for the revenue growth rate is insufficient, and therefore discussion is limited to the absolute level.

※Source: Company research

Key Points in the Financial Results

1. Progress against the full-year profit forecasts significantly exceeded expectations, at 231% for operating income and 167% for net income. Accordingly, whether the full-year forecasts will be revised and the underlying reasons are the most important points of focus in the financial results data.

2. While revenue progress was at a standard level of 74.7%, the operating margin remained at 6.1%. Whether the structure of keeping the rate of expense growth at or below the revenue growth rate will continue will determine the sustainability of the improvement in profit margins.

3. The capital and maturity structure, characterized by a short-term liabilities ratio of 100.0% and a total liabilities/net assets ratio of 4.36 times, requires monitoring together with the company’s trend of higher revenue and earnings.

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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, after consulting with professionals as necessary.

---End of Report---