| Metric | Current Period | Previous-Year Period | YoY |
|---|---|---|---|
| Revenue | ¥193.9B | ¥186.8B | +3.8% |
| Operating Income | - | - | - |
| Profit Before Tax | ¥22.8B | ¥29.4B | -22.4% |
| Net Income | ¥17.5B | ¥16.1B | +8.5% |
| ROE | 1.3% | 1.2% | - |
Although Profit Before Tax declined as SG&A expenses grew faster than revenue, Net Income increased as a result of higher equity-method investment income and a lower tax burden. Revenue (operating revenue) was ¥193.9B, representing a +3.8% YoY increase. Profit Before Tax was ¥22.8B, down 22.4% YoY; however, as income taxes and other taxes decreased to ¥5.3B (¥13.2B in the previous-year period), Net Income (consolidated quarterly profit) increased 8.5% YoY to ¥17.5B, while quarterly net income attributable to owners of the parent increased 3.6% YoY to ¥19.2B. The primary factor behind the decline in profit was the 10.2% YoY increase in SG&A expenses to ¥166.6B, which exceeded the pace of revenue growth. The increase in profit was supported by the expansion of equity-method investment income to ¥14.9B (+55.2% YoY) and the decline in the effective tax rate.
【Revenue】Revenue was ¥193.9B, representing a +3.8% YoY increase. By segment, the Securities Business grew to ¥138.4B (+7.9% YoY), while the Asset Management and Wealth Management Business increased to ¥14.6B (+13.4% YoY), driving overall growth. In contrast, the Digital Asset Business declined to ¥32.0B (-6.1% YoY). The overall structure was one in which revenue growth in the Securities Business and the AM and WM Business offset the decline in the Digital Asset Business.
【Profit and Loss】SG&A expenses increased to ¥166.6B (+10.2% YoY), and the SG&A ratio deteriorated to 85.9% from 80.9% in the previous-year period, a deterioration of approximately 5.0pt. Meanwhile, financial expenses decreased to ¥24.2B (-11.8% YoY), reducing the burden. Equity-method investment income expanded to ¥14.9B (+55.2% YoY), accounting for approximately 65.5% of Profit Before Tax of ¥22.8B. As a result, Profit Before Tax declined 22.4% YoY to ¥22.8B, and the Profit Before Tax margin decreased to 11.8% from 15.7% in the previous-year period, a decline of approximately 4.0pt. Nevertheless, in addition to income taxes and other taxes declining significantly to ¥5.3B (¥13.2B in the previous-year period; effective tax rate of 23.1% versus 45.0% in the previous-year period), losses attributable to non-controlling interests also narrowed (▲¥1.7B in the current period versus ▲¥2.4B in the previous-year period). Consequently, Net Income increased 8.5% YoY to ¥17.5B, and net income attributable to owners of the parent increased 3.6% YoY to ¥19.2B. The defining feature of this earnings period was the stepwise divergence whereby revenue increased, Profit Before Tax declined, and final profit increased due to the lower tax burden. Core earnings power, or earning capacity after SG&A expenses, has weakened slightly.
Segment profit is disclosed on a Profit Before Tax basis. The core Securities Business recorded revenue of ¥138.4B (+7.9% YoY) but segment profit declined 21.1% YoY to ¥29.7B. Although financial expenses decreased and equity-method investment income increased, the rise in SG&A expenses was greater. The Digital Asset Business recorded revenue of ¥32.0B (-6.1% YoY), while its segment loss widened to ¥12.1B, compared with ▲¥11.6B in the previous-year period. The Asset Management and Wealth Management Business increased revenue 13.4% YoY to ¥14.6B, but segment profit declined 25.8% YoY to ¥6.5B. The Investment Business recorded revenue of ▲¥1.3B and a segment loss of ¥1.7B, compared with ▲¥1.5B in the previous-year period. The Securities Business remains the largest source of profit, but profit declined, while the widening loss in the Digital Asset Business is weighing on total segment profit.
【Profitability】The Net Income margin, based on consolidated quarterly profit, was 9.0%, showing a slight improvement from 8.6% in the previous-year period. However, the Profit Before Tax margin was 11.8%, down approximately 4.0pt from 15.7% in the previous-year period, indicating stagnant profitability growth due to higher costs. ROE was 1.3%, remaining at approximately the same level as the previous-year period on a quarterly basis. 【Cash Flow Quality】Depreciation and amortization increased 18.9% YoY to ¥14.2B, consistent with progress in investment in property, plant and equipment. 【Investment Efficiency】Investments in equity-method affiliates amounted to ¥681.6B, while equity-method investment income expanded 55.2% YoY to ¥14.9B, increasing its contribution to profit. 【Financial Soundness】The Equity Ratio was 16.7%, declining slightly from 16.9% in the previous-year period. Total assets were ¥7788.3B, and net assets were ¥1392.9B. Loans secured by securities increased 38.3% YoY to ¥788.7B, while the corresponding borrowings secured by securities increased 33.1% YoY to ¥725.0B. Both expanded in parallel, indicating that the matching of assets and liabilities has generally been maintained.
Cash and cash equivalents amounted to ¥463.7B, decreasing by ¥64.2B (-12.2%) from ¥527.9B at the end of the previous fiscal year. Meanwhile, money trusts increased from ¥3785.6B to ¥3896.6B. Loans secured by securities expanded +38.3% from ¥570.4B to ¥788.7B, and the corresponding borrowings secured by securities also expanded +33.1% from ¥544.7B to ¥725.0B, suggesting an expansion in working capital accompanying the growth of transactions in the Securities and Digital Asset Businesses. Retained earnings declined from ¥455.5B to ¥436.1B, apparently reflecting dividend payments. Property, plant and equipment increased 25.4% to ¥85.5B from ¥68.2B at the end of the previous fiscal year, indicating that progress in investments in facilities and systems accounted for part of the use of funds. No share repurchases were conducted during the current period (¥10.5B in the previous-year period), helping to limit cash outflows.
The recurring earnings pillars are financial revenue and commission income from the Securities Business. In this earnings period, however, the contribution of equity-method investment income expanded to ¥14.9B (¥9.6B in the previous-year period, +55.2% YoY), accounting for approximately 65.5% of Profit Before Tax of ¥22.8B. This increased weighting indicates greater dependence on factors that are susceptible to the performance of investee companies and market conditions, resulting in a profit structure that cannot be fully explained by core earnings alone, such as commission and asset management revenue from the Securities and AM Businesses. Other income of ¥3.8B and other expenses of ¥0.2B were relatively small, limiting their impact as sudden or temporary factors. Comprehensive income was ¥26.9B, including ¥28.7B attributable to owners of the parent, exceeding Net Income of ¥17.5B by ¥9.4B. The primary factor was the fluctuation in foreign exchange valuation resulting from the improvement in translation adjustments of foreign operations from ▲¥14.0B in the previous-year period to +¥10.3B in the current period. This divergence reflects valuation-related factors that do not appear in Net Income on the income statement and fluctuate independently of sustainable earnings power.
The dividend policy adopts an earnings-linked approach under which the annual dividend per share has a floor of ¥30, and dividends equivalent to 50% of profit attributable to owners of the parent are paid when that amount exceeds the floor. The dividend forecast for the current fiscal year is ¥30.8 per share, with no revision. Dividend payments during Q1 amounted to ¥38.7B (¥63.7B in the previous-year period); however, a simple comparison is not possible due to differences in payment timing. No treasury share acquisitions were conducted during the current period (¥10.5B in the previous-year period), and the Company has indicated a policy of implementing them flexibly depending on the circumstances. As returns are provided solely through dividends, the Payout Ratio is the appropriate return metric. However, as the full-year earnings forecast has not been disclosed, the Payout Ratio has not been calculated.
Digital Asset Business earnings volatility risk: Revenue declined to ¥32.0B (-6.1% YoY), while the segment loss widened to ¥12.1B (from ¥11.6B in the previous-year period), indicating a structure in which fluctuations in cryptocurrency market conditions directly affect earnings.
Highly leveraged financial structure: The Equity Ratio remains low at 16.7%, while loans and borrowings secured by securities expanded in parallel to ¥788.7B (+38.3% YoY) and ¥725.0B (+33.1% YoY), respectively. During periods of market stress, fluctuations in collateral values could affect liquidity and funding.
Dependence on equity-method investment income: Equity-method investment income of ¥14.9B accounted for approximately 65.5% of Profit Before Tax of ¥22.8B, meaning that the performance of investee companies and fluctuations in foreign exchange rates and market conditions have a relatively significant impact on consolidated profit.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Net Income Margin | 9.0% | 8.3% (3.4%–32.0%) | +0.7pt |
The Company's Net Income margin is slightly above the industry median.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.8% | 6.4% (-2.5%–14.4%) | -2.6pt |
The Revenue growth rate is below the industry median, indicating relatively moderate growth within the industry.
※Source: Compiled by the Company
SG&A expenses increased at a faster pace (+10.2%) than revenue growth (+3.8%), causing the Profit Before Tax margin to decline to 11.8% from 15.7% in the previous-year period, a decrease of approximately 4.0pt. The trend in cost efficiency warrants monitoring as a factor that will influence future profitability.
Equity-method investment income accounts for approximately 65.5% of Profit Before Tax, making the performance of businesses outside the scope of consolidation and market fluctuations more influential on overall profit.
The loss in the Digital Asset Business widened to ¥12.1B, and the profitability gap between the Securities Business and the AM/WM Business has persisted across segments.
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 available earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with professionals as necessary.
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