| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥18966.1B | ¥14437.3B | +31.4% |
| Operating Income | ¥-177.1B | ¥1312.6B | +195.1% |
| Profit Before Tax | ¥5166.7B | ¥2822.9B | +83.0% |
| Net Income | ¥4305.4B | ¥1891.6B | +127.6% |
| ROE | 17.8% | 10.7% | - |
FY2026 results settled at Revenue ¥18966.1B (YoY +¥4529B +31.4%), Operating loss ¥-177.1B (YoY -¥1490B; prior year Operating Income ¥131.26B), Ordinary loss ¥-38.3B (YoY -¥151.1B; prior year Ordinary Income ¥11.3B), and Net Income ¥4305.4B (YoY +¥2414B +127.6%). Despite top-line growth, the operating and ordinary stages turned to losses, while net income more than doubled due to a large positive swing in non-operating areas that transformed the profit structure. Profit Before Tax expanded substantially to ¥5166.7B (from ¥2822.9B +83.0%), implying non-operating items contributed approximately ¥5550B of additional profit. Operating margin deteriorated 10.0pt from 9.1% to -0.9%, while Net Profit Margin improved 9.6pt from 13.1% to 22.7%, highlighting a clear shift of profit drivers from core operations to investment/evaluation-related activities.
[Revenue] Revenue grew sharply to ¥18966.1B (+31.4%). As a financial holding company, expansion of subsidiary customer bases, increased trading income and fee income amid higher market volatility, and accumulation of asset balances likely supported revenue growth. Total assets expanded from ¥321000B to ¥383000B (+19.2%), indicating asset scale expansion drove the top line. Asset turnover remained low at 0.05x, reflecting the low-turnover, high-leverage business model characteristic of financial firms.
[Profitability] At the operating level, the Company swung to an operating loss of ¥-177.1B, worsening ¥1309.0B from operating income ¥131.26B in the prior year. Despite Revenue growth of +31.4%, the shift to operating loss implies Cost of Sales or SG&A increased faster than revenue. Market-related valuation losses, increased credit costs, and expense pressures from personnel and system investments for business expansion are probable drivers. Ordinary loss was ¥-38.3B (worsened ¥151.1B from prior year Ordinary Income ¥11.3B), likely reflecting increased non-operating expenses such as interest burden and foreign exchange losses. Conversely, Profit Before Tax reached ¥5166.7B (from ¥2822.9B +83.0%), indicating approximately ¥5550B of positive contribution from non-operating income and special gains. Equity-method investments expanded sharply to ¥955B from ¥295B (YoY +¥660B, +224%), suggesting large increases in equity-method income and gains on investment securities valuation/sales materially contributed to non-operating income. Net Income reached a record ¥4305.4B (+127.6%), resulting in overall revenue and profit growth, but the profit-generating structure has shifted significantly toward investment and valuation-related sources from core operations.
[Profitability] ROE 28.0% improved significantly by +15.2pt from 12.8% a year ago, reaching historically high levels. Operating margin is negative at -0.9%, deteriorating 10.0pt from 9.1% last year, while Net Profit Margin improved markedly to 22.7% (from 13.1% +9.6pt), reflecting the change in earnings structure driven by non-operating income. ROA (on an Ordinary Income basis) improved to 1.5% from 1.0% (+0.5pt). [Cash Quality] Operating Cash Flow (OCF) of ¥16948B is 3.9x Net Income ¥4305.4B, indicating very strong cash backing for profits. Free Cash Flow (FCF) is ¥5592B, ample and absorbing Investment Cash Flow outflows of ¥-11356B while strengthening liquidity. The accrual ratio (Net Income - OCF) / Total Assets is -3.3%, negative, showing cash generation significantly exceeds accounting profit. [Investment Efficiency] Total asset turnover is 0.05x, and financial leverage is 15.87x (Total Assets / Equity), reflecting a high-leverage capital structure. Equity-method investments rose substantially to ¥955B, raising expectations for increased contribution from affiliates but also increasing valuation swing risk. [Financial Soundness] Equity Ratio is 4.7% (up +0.8pt from 3.9%), low but within acceptable range for a financial holding company. Capital adequacy ratio is 28.0% (up from 25.8% +2.2pt). Cash and cash equivalents increased to ¥64006B from ¥55005B (+16.4%), strengthening liquidity. Payout Ratio is 31.7%, maintained at the prior year level, and the ability to cover dividends with cash is sufficient.
Operating Cash Flow was ¥16948B (YoY +12.3%), 3.9x Net Income ¥4305.4B, confirming very strong cash backing for profits. Given the financial business nature, OCF includes fluctuations in customer deposits and trading asset/liability positions, but stable cash circulation is observable. Investment Cash Flow was an outflow of ¥-11356B (prior year ¥-10605B), expanding outflows driven mainly by increased equity-method investments (+¥660B) and increased investment in securities. FCF stood at ¥5592B, a substantial positive figure supporting growth investment from internal funds. Financing Cash Flow was +¥4427B (prior year +¥4459B), indicating continued funding and a strategy of accelerating growth via debt financing. Dividend payments of ¥515B (9.2% of FCF) were comfortably covered. Cash and cash equivalents increased by ¥9003B to year-end ¥64006B, further strengthening liquidity. The relationship OCF > Net Income indicates high accrual quality, and despite a profit structure led by non-operating income, cash generation functions healthily.
High profits this period are highly dependent on non-operating income; the Ordinary Income stage showed a loss of ¥-38.3B, so persistence is limited. The ¥5166.7B Profit Before Tax versus ¥-38.3B Ordinary loss yields a ¥5550B gap attributable to non-operating and special items, with equity-method income, valuation/sale gains on securities, and derivative valuation gains likely comprising the bulk of the profit and being one-off in nature. Comprehensive Income ¥5111B versus Net Income ¥4305.4B difference of ¥806B is attributable to Other Comprehensive Income (valuation differences, etc.), indicating valuation elements of securities and FX introduce volatility to profit. The fact that OCF is 3.9x Net Income and accrual ratio is -3.3% shows strong cash generation quality, but the non-operating-driven profit structure is sensitive to market, interest rate, and valuation environments, so reproducibility in subsequent periods warrants caution. Recovery of recurring revenue base (operating stage) is key for sustainable profit growth.
Annual dividend comprised interim ¥40 and year-end ¥75, totaling ¥115, with Payout Ratio 31.7% maintained at prior-year level. Total dividends amounted to ¥515B, representing 9.2% of FCF ¥5592B, and dividend coverage by cash flow is 6.1x, which is very healthy. With Cash and Cash Equivalents ¥64006B and OCF ¥16948B providing ample liquidity, dividend sustainability is high. Dividends per share increased substantially from ¥30 in the prior year to ¥115, but Payout Ratio remains 31.7% unchanged, indicating a policy of raising dividends in line with higher earnings. No share buyback was disclosed; shareholder returns are dividend-centric. Future return capacity will depend on the sustainability of non-operating income and regulatory capital requirements, but given cash generation and liquidity, scope for further dividend increases appears adequate.
Market Volatility Risk: A large portion of this period’s profit depends on non-operating income (gains on investment securities valuation/sales, equity-method income, etc.), making earnings structurally sensitive to market price changes and interest rate environments. With operating-stage losses, adverse market conditions could rapidly deteriorate final results.
Increased Interest Burden Risk: The emergence of operating and ordinary losses suggests vulnerability to higher interest payments and rising financing costs in an interest rate upcycle. Given high leverage (financial leverage 15.87x), rising interest burden could further compress profitability.
Equity-Method Investment Valuation Risk: Equity-method investments rose sharply to ¥955B (+224% YoY), so deterioration in affiliate performance or impairment could substantially impact consolidated earnings. Performance and valuation at investees increase volatility of the Company’s profit.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 28.0% | 8.0% (2.9%–10.0%) | +20.0pt |
| Operating Margin | -0.9% | 19.9% (6.5%–38.3%) | -20.9pt |
| Net Profit Margin | 22.7% | 5.6% (3.8%–22.2%) | +17.1pt |
ROE is well above the industry median and profitability ranks highly, but Operating Margin is well below the industry median, indicating inferior core operational earning power. Net Profit Margin exceeds the median, with final profit levels supported by non-operating income.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 31.4% | -0.5% (-0.9%–13.1%) | +31.9pt |
Revenue growth rate is well above the industry median, placing the Company among the leaders in top-line expansion.
※ Source: Company compilation
High profit structure driven by non-operating income: Despite an operating-stage loss, Net Income reached ¥4305.4B (+127.6%), but the majority of profit depends on non-operating items such as equity-method income and valuation/sale gains on securities. These are sensitive to market and interest rate environments, so sustainability in subsequent periods requires caution. Recovery of operating-stage earning power is key to medium-term profit stabilization.
Strong cash generation and liquidity: OCF ¥16948B is 3.9x Net Income, FCF ¥5592B, and Cash and Cash Equivalents rose to ¥64006B. Dividend coverage 6.1x and Payout Ratio 31.7% indicate ample shareholder return capacity and high dividend sustainability. From a cash flow perspective, financial health is confirmed and the Company is in a position to balance investment and returns.
This report was automatically generated by AI analyzing 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 based on public financial statements. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.