| Metric | Current | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | - | - | - |
| Operating Income | ¥31.5B | ¥18.6B | +69.3% |
| Ordinary Income | ¥36.0B | ¥23.3B | +54.5% |
| Net Income | ¥30.9B | ¥24.2B | +27.9% |
| ROE | 7.2% | 6.0% | - |
For the fiscal year ended March 2026, operating revenue (equivalent to Revenue) was ¥154.4B (¥139.3B prior year, +¥15.1B +10.8%), Operating Income was ¥31.5B (¥18.6B prior year, +¥12.9B +69.3%), Ordinary Income was ¥36.0B (¥23.3B prior year, +¥12.7B +54.5%), and Net Income was ¥30.9B (¥24.2B prior year, +¥6.7B +27.9%), delivering revenue growth and substantial profit expansion. SG&A was ¥128.5B, up only +6.5% year-on-year, allowing operating leverage to work materially. Non-operating items included dividend income received of ¥3.4B contributing to ¥5.2B of non-operating income, which netted to a ¥4.5B increase to profit, and special gains included ¥6.7B of gains on sales of investment securities. The total of non-operating and special factors of ¥11.2B represents about 26% of pretax profit of ¥42.6B. ROE improved to 7.2% from 5.8% prior year (+1.4pt), and ROA (on an Ordinary Income basis) rose to 5.3% from 3.4% prior year (+1.9pt), indicating improved asset efficiency.
[Revenue] Operating revenue reached ¥154.4B (¥139.3B prior year, +¥15.1B +10.8%), achieving double-digit growth. As typical in the securities business, revenue is primarily comprised of client transaction-related fees such as commission fees and underwriting/secondary offering fees, and proprietary trading gains/losses; in this fiscal year, improvements in market conditions and an expanded client base likely contributed to revenue growth. By geography, domestic sales account for over 90%, with limited overseas revenue. SG&A was ¥128.5B (¥120.7B prior year, +¥7.8B +6.5%), with bonus reserves increasing substantially to ¥8.5B (¥5.9B prior year, +¥2.6B +45%), indicating performance-linked personnel cost increases. Depreciation was ¥3.6B (¥3.3B prior year, +¥0.3B) reflecting higher amortization burden from IT investments; overall SG&A growth remained below revenue growth, enabling effective operating leverage.
[Profitability] Operating Income increased materially to ¥31.5B (¥18.6B prior year, +¥12.9B +69.3%), and the operating margin rose to 20.4% (13.3% prior year, +7.1pt). Non-operating income was ¥5.2B (including dividend income received of ¥3.4B) against non-operating expenses of ¥0.7B, yielding a net non-operating contribution of ¥4.5B that lifted Ordinary Income to ¥36.0B (¥23.3B prior year, +¥12.7B +54.5%). Special gains included ¥6.7B of gains on sales of investment securities, bringing pretax profit to ¥42.6B (¥31.9B prior year, +¥10.7B +33.9%). Income taxes amounted to ¥11.7B (effective tax rate 27.4%), resulting in Net Income of ¥30.9B (¥24.2B prior year, +¥6.7B +27.9%). The total of non-operating and special factors of ¥11.2B accounts for roughly 26% of pretax profit, indicating a high dependence on one-off factors. In conclusion, this is a strong result of revenue growth and large profit expansion, but the significant contribution from non-operating and special items means reproducibility next fiscal year will depend on market conditions.
[Profitability] Operating margin improved to 20.4% from 13.3% prior year (+7.1pt), reaching a healthy level for a securities firm. ROE was 7.2% (5.8% prior year), up +1.4pt, but remains in single digits. ROA (Ordinary Income basis) improved to 5.3% (3.4% prior year) +1.9pt, confirming improved asset efficiency. [Cash Quality] Operating Cash Flow / Net Income was 1.27x, and Operating Cash Flow / EBITDA (EBIT + Depreciation) was 1.12x, indicating good cash backing of profits. [Investment Efficiency] Capital expenditure / Depreciation was 0.82x, reflecting a conservative refresh investment pace; intangible fixed assets were ¥3.9B (¥1.4B prior year, +173% increase) showing accumulation of IT investment. [Financial Soundness] Equity Ratio was 58.5% (63.2% prior year), a slight decline but still high. Current ratio was 207.7%; cash and deposits of ¥259.9B represent 9.45x short-term borrowings of ¥27.5B, indicating very ample liquidity. Debt/EBITDA (short-term borrowings / EBIT + Depreciation) was 0.78x, and interest coverage (EBIT / Interest Expense) was about 41x, showing low debt burden.
Operating Cash Flow was ¥39.3B (¥-4.7B prior year, +¥44.0B), a substantial improvement and equivalent to 1.27x Net Income of ¥30.9B. In the prior year, corporate tax payments of ¥17.8B were a drag, but in the current period they normalized to ¥6.3B, improving the quality of cash generation. Operating CF subtotal (before working capital changes) was ¥38.8B, and after working capital movements such as an increase in bonus reserves of ¥2.6B and a decrease in retirement benefit reserves of ¥1.4B, Operating CF was secured. Investing CF was ¥0.9B (¥9.6B prior year) and modest, with capital expenditures of ¥3.0B being offset by proceeds from sales of investment securities of ¥6.7B. Free Cash Flow was ¥40.2B (Operating CF + Investing CF), and Financing CF was -¥29.6B (including dividends of ¥18.5B and share buybacks of ¥11.0B). Even after shareholder returns, cash and deposits increased to ¥259.9B (¥247.9B prior year, +¥12.0B +4.8%), indicating ample financial capacity.
Against Operating Income of ¥31.5B, net non-operating income of ¥4.5B (dividend income received ¥3.4B, other income ¥1.8B less non-operating expenses ¥0.7B) and special gains of ¥6.7B (gains on sales of investment securities) combined to add ¥11.2B to pretax profit, representing about 26% of pretax profit of ¥42.6B. Non-operating income is driven by dividend receipts and financial results and is sensitive to market conditions. Special gains depend on the timing of sales of held securities and are therefore uncertain for replication next year. On the other hand, Operating CF is 1.27x Net Income and Operating CF/EBITDA is 1.12x, indicating good cash backing; accruals (Net Income - Operating CF) are -¥8.3B (negative), reflecting high quality of cash generation. Increases in bonus reserves and deferred tax liabilities (¥26.9B, ¥18.2B prior year, +¥8.7B +48% increase), as well as increases in valuation differences, show accruals related to performance and ensure accounting transparency. Overall, operating profitability improvement and cash generation are strong, but dependence on non-operating and special items is high, so sustainability next year will depend on expansion of recurring operating performance.
For the fiscal year ended March 2026, the annual dividend was ¥43 per share (interim ¥15, year-end ¥28, including a ¥3 commemorative dividend for the 105th anniversary). The payout ratio to Net Income of ¥30.9B was 78.0% (company disclosure). Total dividends amounted to ¥18.5B (company disclosure); including share buybacks of ¥11.0B, total shareholder returns were ¥29.5B and the total return ratio was about 95%, representing a high level of shareholder returns. Coverage of total returns by Free Cash Flow of ¥40.2B was 1.36x, indicating cash sustainability. The management policy sets a baseline payout ratio of around 50%, and for the Seventh Medium-Term Management Plan period (FY2026–2030) commits to a minimum annual dividend of ¥30 for the five years, reflecting a strong commitment to shareholder returns. Next fiscal year’s dividend forecast is undecided; considering the reversal effect of the ¥3 commemorative dividend and room to adjust toward the normal dividend range (minimum ¥30 to baseline policy ~50%), dividend sustainability will depend on the certainty of FCF and recurring operating profits. Share buybacks can be executed flexibly, but smoothing total returns is desirable.
Market Environment Risk: A decline in equity market trading value or price levels could worsen commission income and proprietary trading results. Non-operating income (dividend income received ¥3.4B) and special gains (gains on sales of investment securities ¥6.7B) are market-sensitive, and the reproducibility of non-operating and special factors representing about 26% of pretax profit is uncertain. A slowdown in capital markets transactions such as IPOs/POs would also impact underwriting fee income.
Financial and Valuation Volatility Risk: Price fluctuations in investment securities of ¥154.9B (¥126.0B prior year, +¥28.9B +22.9%) could cause volatility in valuation differences and deferred tax liabilities. Valuation differences on other securities were ¥7.9B (¥5.8B prior year, +¥2.1B +35% increase), and deferred tax liabilities were ¥26.9B (¥18.2B prior year, +¥8.7B +48% increase), both expanding; a market downturn could increase volatility in net assets. Short-term debt ratio is 100%, but cash / short-term debt at 9.45x means practical refinancing risk is low.
Cost Inflation Risk: Bonus reserves increased substantially to ¥8.5B (¥5.9B prior year, +¥2.6B +45%), indicating rising performance-linked personnel costs. Intangible fixed assets were ¥3.9B (¥1.4B prior year, +173% increase), reflecting accumulated IT investment; delays or cost overruns in IT investment could postpone efficiency gains and increase fixed cost burden. If SG&A growth exceeds revenue growth, operating leverage could reverse and profitability may decline.
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The operating margin improvement to 20.4% (+7.1pt year-on-year) with clear operating leverage is commendable. Revenue growth of +10.8% outpaced SG&A growth of +6.5%, resulting in improved ROE of 7.2% (5.8% prior year) and ROA (Ordinary Income basis) of 5.3% (3.4% prior year). Operating CF / Net Income of 1.27x and Operating CF / EBITDA of 1.12x demonstrate good cash backing of profits, and Free Cash Flow of ¥40.2B covers total returns of ¥29.5B, leaving ample financial capacity.
About 26% of pretax profit depends on non-operating and special factors (net non-operating ¥4.5B + special gains ¥6.7B), so reproducibility next year will depend on market conditions. With a payout ratio of 78.0% and total return ratio around 95% including a ¥3 commemorative dividend, shareholder returns are high; considering the commemorative dividend reversal and potential adjustment toward the normal dividend range (minimum ¥30 ~ baseline policy ~50%), dividend sustainability depends on the certainty of recurring operating profits. Increases in bonus reserves (+45%) and intangible fixed assets (+173%) indicate rising personnel and IT investments, making cost control and sustaining operating leverage key monitoring points.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are compiled by the Company as reference information based on public financial statements. Investment decisions are your responsibility; please consult a professional if necessary before making investment decisions.