| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | - | - | - |
| Operating Income | ¥234.6B | ¥156.4B | +50.1% |
| Ordinary Income | ¥238.1B | ¥152.9B | +55.7% |
| Net Income | ¥154.8B | ¥105.0B | +47.4% |
| ROE | 18.8% | 13.7% | - |
The FY2026 results delivered Operating Income of ¥234.6B (YoY +¥78.2B +50.1%), Ordinary Income of ¥238.1B (YoY +¥85.2B +55.7%), and Net Income of ¥154.8B (YoY +¥49.8B +47.4%), achieving double-digit increases across major profit layers. Improvement in market conditions contributed to expansion of commission fees and financial income, and revenue growth far outpaced an increase in SG&A of ¥256.2B (YoY +¥41.3B +19.2%), resulting in positive operating leverage. Non-operating items contributed net +¥3.5B, and extraordinary items produced a net loss of ¥16.6B, which was absorbed by the strength of core earnings. Total assets expanded to ¥13,540.6B (YoY +¥2,322.3B +20.7%), and total equity increased to ¥823.5B (YoY +¥57.5B +7.5%), with ROE remaining at a high level of 18.8%.
[Revenue / Net Sales]
As a securities firm, there is no disclosure equivalent to net sales, but achieving Operating Income of ¥234.6B (YoY +50.1%) suggests substantial increases in primary revenue items such as commission fees and financial income. Investment securities expanded to ¥110.4B (YoY +43.5%), recording dividend income of ¥0.1B and private equity fund gains of ¥6.1B, indicating diversification of investment income. Cash flow data shows interest and dividend receipts of ¥203.6B, indicating that interest and dividend income are core components of financial income. Non-operating income was limited at ¥6.7B but included contributions from private equity fund gains.
[Profit / Loss]
SG&A rose to ¥256.2B (YoY +¥41.3B +19.2%), including depreciation of ¥37.4B (YoY +¥1.0B +2.8%) and provision for doubtful accounts of ¥0.1B. The rise in SG&A ratio suggests accelerated cost investment, but revenue growth of +50.1% far outpaced expense growth of +19.2%, producing positive operating leverage. Non-operating income was ¥6.7B and non-operating expenses were ¥3.2B, generating a net +¥3.5B uplift to Ordinary Income. Extraordinary items comprised extraordinary gains of ¥2.1B (insurance proceeds ¥2.1B) and extraordinary losses of ¥18.7B (loss on disposal of fixed assets ¥0.2B, etc.), resulting in a net extraordinary loss of ¥16.6B and reducing pre-tax income from Ordinary Income of ¥238.1B to ¥221.5B, a 7.0% decline. Income taxes amounted to ¥66.7B (effective tax rate 30.1%), yielding Net Income of ¥154.8B (YoY +47.4%). In conclusion, the company achieved higher revenue and higher profits (top-line and bottom-line expansion).
[Profitability] Since specific Revenue disclosure is absent, Operating Margin cannot be calculated, but ROA calculated as Ordinary Income of ¥238.1B divided by Total Assets of ¥13,540.6B is 1.8%, and ROA based on Net Income of ¥154.8B is 1.1%. ROE is 18.8%, improving 5.0pt from 13.8% the prior year, reflecting a notable increase in return on equity. EBITDA (Operating Income + Depreciation) is ¥272.0B; EBITDA margin cannot be computed, but capacity to cover fixed costs including Depreciation of ¥37.4B is strong. [Cash Quality] Operating Cash Flow / Net Income is low at 0.22x, indicating issues in cash conversion of profits. OCF / EBITDA is 0.13x, primarily due to expansion in working capital and timing differences in receipts and payments. The accrual ratio (Net Income - Operating CF) / Total Assets is 0.9%, a low level indicating limited accrual bias. [Investment Efficiency] Total asset turnover is not computable, but with asset growth of +20.7% versus Net Income growth of +47.4%, asset efficiency is improving. Capital expenditures were ¥4.3B and software investments ¥35.9B, indicating continued IT platform investment. [Financial Soundness] Equity Ratio is low at 6.1%, reflecting the high-leverage structure typical of securities firms. D/E ratio is 15.44x and Debt/Capital 79.4%, indicating very high leverage, though much of short-term borrowings of ¥3,169.0B are operational/settlement funds reflecting business characteristics. Current Ratio is 104.9%, Quick Ratio 104.9%, indicating short-term assets and liabilities are tightly balanced, and Cash/Short-term Debt is 0.24x, indicating limited liquidity buffer.
Operating Cash Flow improved to ¥34.7B (YoY +108.0%), but remained low at 0.22x relative to Net Income of ¥154.8B. The main cause was working capital expansion: subtotal of Operating CF (before working capital changes) was a large negative at -¥83.5B, and payments of income taxes of -¥51.6B further constrained cash generation. Interest and dividend receipts of ¥203.6B and interest payments of -¥33.8B were recorded in the cash flow statement, reflecting large cash inflows and outflows from financial income/expenses. Investing CF was -¥63.2B, mainly due to software investments of ¥35.9B (prior year ¥32.4B), capital expenditures of ¥4.3B, and acquisition of investment securities of ¥16.6B. Free Cash Flow was negative at -¥28.5B, with investment outlays exceeding Operating CF. Financing CF was positive at ¥28.8B, with a net increase in short-term borrowings of ¥140.0B offsetting dividend payments of -¥110.7B to secure funds. Cash and deposits at period-end were ¥761.5B, and cash balances including cash equivalents were ¥817.5B, a slight increase of ¥0.3B YoY.
Of Ordinary Income of ¥238.1B, Operating Income accounted for ¥234.6B, and net contribution from non-operating items was limited at +¥3.5B, indicating most income derived from core business. Non-operating income of ¥6.7B included private equity fund gains of ¥6.1B, so investment income contributed partially, but primary drivers are presumed to be commission and financial income at the operating level. Extraordinary items resulted in a net loss of ¥16.6B, with extraordinary losses of ¥18.7B (including loss on disposal of fixed assets ¥0.2B, details not disclosed) outweighing insurance proceeds of ¥2.1B, and temporarily pressured Net Income. The divergence from Ordinary Income of ¥238.1B to Net Income of ¥154.8B was mainly due to tax burden of ¥66.7B (effective tax rate 30.1%) and extraordinary losses, while underlying recurring earning power remained solid. An accrual ratio of 0.9% indicates limited accrual bias, but Operating CF/Net Income 0.22x and OCF/EBITDA 0.13x suggest weak cash conversion, and working capital expansion and timing differences in receipts/payments are affecting earnings quality.
Annual dividend is ¥50 per share (interim ¥25; year-end ¥25), a large increase from prior year annual dividend of ¥22 (interim unknown; assumed year-end ¥25). Payout Ratio is very high at 98.0%, allocating almost the entire Net Income to shareholder returns. Total dividends were ¥110.7B (interim dividend on an actuals basis), equivalent to approximately 71.5% of Net Income of ¥154.8B (the Payout Ratio 98.0% is the XBRL disclosed figure; deviation between actual total dividends / Net Income is due to in-period share movements). Relative to Free Cash Flow of -¥28.5B, total dividends of ¥110.7B represent a large excess of -3.9x, indicating dividends were funded by earnings and net increase in short-term borrowings rather than cash. No share buybacks were disclosed; shareholder returns are focused on dividends. Dividend forecast is undecided, and given the market-dependent revenue structure, the company is presumed to maintain a flexible dividend policy. While the high payout ratio demonstrates a shareholder-focused stance, improvements in cash generation and market conditions are key to sustainability.
Market Sensitivity Risk: The large increase in Operating Income to ¥234.6B (YoY +50.1%) depends on improved equity markets and higher commission trading value. Monthly disclosures of commission revenue and trading value will heavily influence profits; during market downturns there is a high risk of sharp revenue declines. Fair value fluctuations of investment securities of ¥110.4B (YoY +43.5%) can also impact earnings.
Liquidity / Refinancing Risk: Dependence on short-term borrowings of ¥3,169.0B (YoY +4.6%) and a short-term liabilities ratio of 100% with Cash/Short-term Debt of 0.24x indicate limited liquidity buffer. Under high leverage (D/E 15.44x, Debt/EBITDA 11.65x), funding market stress or widening credit spreads could impair rollovers. Operating CF of ¥34.7B equals only 0.22x of Net Income of ¥154.8B, indicating limited internal funding capacity.
Working Capital & Cash Conversion Risk: Operating CF subtotal was -¥83.5B and OCF/EBITDA 0.13x, showing working capital expansion absorbed cash. Accounts receivable ¥87.6B (prior year ¥75.8B) and accounts payable ¥64.7B (prior year ¥40.0B) have grown, and timing differences between receipts and payments create divergence between profit and cash. In market downturns, reversal of working capital could tighten liquidity.
No industry benchmark data available
※Source: Company aggregation
Sustainability of Revenue Momentum: Double-digit increases were achieved across major profit layers: Operating Income +50.1%, Ordinary Income +55.7%, Net Income +47.4%, and ROE improved to 18.8% (prior year 13.8%). While improved market conditions are the primary driver, revenue growth significantly outpaced SG&A growth of ¥256.2B (+19.2%), producing positive operating leverage. Monthly disclosures of commission trading value and fee revenue are important indicators to assess future revenue trends.
Cash Generation and Dividend Sustainability: With Operating CF of ¥34.7B (Operating CF / Net Income 0.22x) and Free CF of -¥28.5B, the company paid total dividends of ¥110.7B, resulting in a very high Payout Ratio of 98.0%. Dividend funding relied on earnings and increased short-term borrowings, and sustainability on a cash basis is challenging. Operating CF subtotal of -¥83.5B shows working capital expansion absorbed cash; therefore, managing working capital and improving Operating CF are prerequisites for continued dividends.
Financial Structure and Refinancing Environment: Short-term borrowings of ¥3,169.0B, D/E 15.44x, and a short-term liabilities ratio of 100% indicate dependence on short-term funding and high sensitivity to changes in rollover conditions. Cash/Short-term Debt of 0.24x implies limited liquidity buffer, though this is typical of the securities industry’s short-term funding circulations. Changes in interest rates, widening credit spreads, and liquidity in funding markets will affect financial stability.
This report is an automatically generated financial analysis produced 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 publicly disclosed financial data. Investment decisions are your own responsibility; please consult a professional advisor as needed.