Quick View
| Indicator | Current Period | Same Period Last Year | YoY |
|---|---|---|---|
| Revenue | - | - | - |
| Operating Income | ¥6.2B | ¥3.6B | +73.2% |
| Ordinary Income | ¥8.0B | ¥4.8B | +65.7% |
| Net Income | ¥5.7B | ¥3.3B | +73.8% |
| ROE | 6.9% | 4.3% | - |
Executive Summary
Maruhachi Securities’ FY2026 Q3 results (non-consolidated) delivered a sharp profit increase, with Operating Income of ¥6.2B (¥3.6B in the same period last year, +¥2.6B, +73.2%), Ordinary Income of ¥8.0B (¥4.8B, +¥3.2B, +65.7%), and Net Income of ¥5.7B (¥3.3B, +¥2.4B, +73.8%). Non-operating income totaled ¥1.9B, mainly comprising gains on sales of securities of ¥1.6B and dividend income of ¥0.3B. Total assets expanded to ¥140.7B (up ¥41.5B from ¥99.2B a year ago), and net assets increased to ¥81.7B (up ¥5.8B from ¥75.9B).
Key Financial Metrics
[Profitability] ROE 6.9% (annualized basis; Net Income ¥5.7B ÷ Net Assets ¥81.7B; improved from 4.4% in the same period last year). [Cash Quality] Cash and deposits ¥66.0B (+166.2% from ¥24.8B in the same period last year), indicating a significant improvement in short-term liquidity. Short-term liability coverage is 1.1x (cash and deposits ¥66.0B ÷ current liabilities ¥58.2B). [Financial Soundness] Equity Ratio 58.0% (Net Assets ¥81.7B ÷ Total Assets ¥140.7B), Current Ratio 200.7% (current assets ¥116.6B ÷ current liabilities ¥58.2B), Debt-to-Equity Ratio 0.72x (liabilities ¥59.1B ÷ net assets ¥81.7B). Financial leverage stands at 1.72x at a conservative level. Working capital is ample at ¥58.4B.
Cash Flow Analysis
Cash and deposits surged by ¥41.2B year on year to ¥66.0B, materially enhancing short-term liquidity. The main driver is presumed to be monetization of investment-related income, including ¥1.6B in gains on sales of securities. On the working capital front, accrued expenses of ¥1.5B and accrued income of ¥1.2B were recorded, indicating normal operating cash circulation. Investment securities stand at ¥17.2B with limited change from the same period last year, suggesting continued investment holdings alongside partial disposals. Cash coverage of short-term liabilities is 1.1x, securing adequate payment capacity. Non-current liabilities are small at ¥0.8B, implying low maturity mismatch risk. Cash headroom as a source for dividend payments has improved, underpinning near-term dividend sustainability.
Quality of Earnings
Against Ordinary Income of ¥8.0B, Operating Income is ¥6.2B, indicating a net increase of ¥1.9B in non-operating items. The main components of non-operating income are ¥1.6B in gains on sales of securities and ¥0.3B in dividend income, with one-off, investment-related gains contributing to the earnings upside. As gains on sales of securities account for the majority of non-operating income, the contribution is more transitory compared with recurring core business earnings. At the Operating Income level, profit rose +73.2% YoY; however, with SG&A at ¥20.4B, there remains room to improve operating leverage. The significant increase in cash and deposits relative to Net Income of ¥5.7B supports the quality of earnings, but given that the source of the increase is gains on sales of securities, the sustainability of the earnings structure warrants attention.
Risk Factors
- Dependence on gains on sales of securities: The profit increase this period relies heavily on ¥1.6B in gains on sales of securities; if these one-off gains fade, the profit level could fall back to the Operating Income level of ¥6.2B. Verification of sustainability on an operating margin basis is necessary.
- Market volatility risk: The company holds ¥17.2B in investment securities and ¥22.2B in investments and other assets, exposing it to risks of valuation losses or realized losses due to financial market fluctuations. Mark-to-market changes directly affect net assets and profits.
- Uncertainty in core business earning power: Revenue is not explicitly disclosed, making it difficult to quantify trends in brokerage operations and fee income. A decline in client trading volume could compress fee income and reduce core operating profits.
Industry Benchmark (Reference; Our Research)
[Position within Industry] (Reference information; our research) Note: While the company is classified under the securities industry, the benchmark data referenced are utilities sector (N=3) 2025-Q3 data. Please note the limitations of direct comparison due to differing industry characteristics. Profitability: The reference Operating Margin median for the sector is 8.6%, while the company’s Operating Income is at ¥6.2B; however, Operating Margin cannot be directly calculated due to lack of Revenue disclosure. The same applies to Net Profit Margin; calculation is not possible without Revenue data. Comparisons with sector medians (Net Profit Margin 6.6%, Operating Margin 8.6%) are limited. Soundness: The Equity Ratio of 58.0% compares favorably with general soundness levels in the sector. Efficiency: While a quantitative comparison of Operating Margin is difficult, the high dependence on investment income leaves room for evaluation of core business efficiency versus the sector. (Industry: utilities, N=3 companies, comparison period: 2025-Q3, source: our compilation)
Key Takeaways from Results
- Sharp profit expansion driven mainly by gains on sales of securities: Operating Income and Net Income both increased by over +73% YoY, with ¥1.6B in gains on sales of securities significantly boosting Ordinary Income. The sustainability of the earnings structure depends on the trajectory of core business earnings. The trend on an Operating Income basis excluding investment gains will be a key focus going forward.
- Significant build-up of cash and deposits and dividend sustainability: Cash and deposits surged to ¥66.0B, improving short-term liquidity. With a Payout Ratio of 42.8% and a year-end dividend of ¥60 currently within a sustainable range given profit levels and cash headroom, the ability to consistently generate operating cash flow remains pivotal to the dividend policy.
This report is an earnings analysis document automatically generated by AI based on XBRL financial summary data. It does not constitute a recommendation to invest in any specific security. The industry benchmark is reference information compiled by our company from publicly available financial data. Investment decisions are your own responsibility; consult a professional as needed before making any decisions.
AI Financial Analysis
Executive Summary
Maruhachi Securities delivered a strong FY2026 Q3 earnings outcome, led by a 73.2% year-on-year increase in operating income to ¥617 million. Ordinary income rose 65.7% year on year to ¥803 million. Net income increased 73.8% to ¥567 million, equivalent to EPS of ¥142.30. SG&A expenses were ¥2,044 million, increasing only 3.1% from ¥1,982 million in the prior-year period. This substantial gap between operating-income growth and SG&A growth indicates favorable operating leverage. Operating profitability improved despite the absence of reported revenue data needed to calculate the operating margin and its year-on-year movement. Non-operating income was ¥189 million, materially exceeding non-operating expenses of ¥3 million. The principal non-operating contributor was a ¥156 million gain on sales of investment securities. Dividend income contributed a further ¥32 million. Consequently, ¥186 million of the ¥803 million ordinary income, or about 23%, was generated below the operating line. The securities-sale gain represented about 28% of reported net income and enhances reported earnings, but is less repeatable than operating earnings. The effective tax rate was 29.3%, producing a normal tax burden factor of 0.706. The balance sheet remains liquid, with cash and deposits of ¥6,603 million representing 46.9% of total assets. Cash and deposits increased 166.2% year on year, while total liabilities also rose substantially to ¥5,907 million. Equity increased to ¥8,168 million from ¥7,593 million, supported by retained earnings growth. The current ratio and quick ratio were both a healthy 200.7%. Financial leverage was moderate at 1.72x, and the reported debt-to-equity ratio of 0.72x remains conservative relative to the 2.0x warning threshold. On an annualized basis, net income and average equity imply ROE of approximately 19.2%, although this return includes the investment-securities gain. The key forward issue is whether operating-income momentum can be sustained without relying on gains from investment-security disposals.
Profitability Analysis
FY2026 Q3 profitability strengthened materially: operating income rose to ¥617 million from ¥356 million, ordinary income rose to ¥803 million from ¥484 million, and net income rose to ¥567 million from ¥326 million. The available DuPont components show financial leverage of 1.72x and a tax burden of 0.706, consistent with the reported 29.3% effective tax rate. The stated interest burden of 1.302x is above 1.0x because non-operating income exceeded non-operating expenses, rather than because of a financing benefit. Using cumulative Q3 net income annualized by 4/3 and average opening/current equity, annualized ROE is approximately 19.2%. This compares favorably with the 15% benchmark for excellent ROE, but the annualized figure should not be treated as a full-year forecast. A full net-margin or asset-turnover decomposition cannot be calculated from the available figures. The strongest identifiable DuPont-related improvement is profit generation relative to the equity base, as earnings growth materially exceeded the 7.6% increase in equity. Operating leverage was favorable: SG&A rose approximately 3.1% year on year while operating income rose 73.2%. SG&A was ¥2,044 million, including depreciation expense of ¥38 million, indicating that depreciation is not a major determinant of current operating earnings. Earnings below the operating line were meaningful, with investment-security disposal gains of ¥156 million and dividend income of ¥32 million. The investment-security gain is not assumed to be recurring and should be separated from the assessment of underlying operating profitability. The ¥186 million gap between operating and ordinary income means ordinary-income growth somewhat overstates pure operating momentum.
Growth Assessment
The principal confirmed growth driver was operating-income expansion, with operating income increasing ¥261 million year on year. Net income increased by ¥241 million, broadly tracking the operating improvement after tax. Cost discipline supported this outcome, as SG&A increased by only about ¥62 million year on year. Retained earnings increased to ¥4,189 million from ¥3,860 million, reinforcing internal capital generation. Investment securities remained broadly stable at ¥1,721 million versus ¥1,719 million in the prior-year period, while the company realized ¥156 million in gains on securities sales. This indicates that a meaningful portion of period earnings benefited from monetization of the investment portfolio rather than an increase in the reported carrying value of that portfolio. Dividend income was essentially stable at ¥32 million. Future profit growth will depend primarily on sustaining the higher operating-income base and on maintaining expense discipline. Reported net-income growth should not be extrapolated mechanically because securities-sale gains can vary significantly by period. The balance-sheet cash increase provides financial flexibility, but its relationship to the concurrent increase in current liabilities should be monitored.
Financial Health
Liquidity is strong on the reported balance sheet. The current ratio was 200.7% and the quick ratio was also 200.7%, both well above conventional minimum thresholds. Working capital was ¥5,840 million. Current assets of ¥11,641 million exceeded current liabilities of ¥5,800 million by a substantial margin. Cash and deposits were ¥6,603 million, accounting for 46.9% of total assets and covering current liabilities by approximately 1.14x. Total equity was ¥8,168 million, or 58.0% of total assets, providing a meaningful equity cushion. Financial leverage was 1.72x. The reported debt-to-equity ratio was 0.72x, below the 1.0x conservative benchmark and well below the 2.0x level that would indicate aggressive leverage. No current-ratio or debt-to-equity warning is triggered. Cash and deposits increased by ¥4,123 million, or 166.2%, year on year. Total liabilities increased by ¥3,583 million over the same comparison, principally reflected in current liabilities, which rose to ¥5,800 million from ¥2,218 million. This concurrent expansion means the cash build should be assessed alongside the composition and stability of short-term liabilities rather than viewed solely as surplus liquidity. Guarantee deposits were ¥420 million and noncurrent liabilities were limited at ¥83 million, including asset-retirement obligations of ¥82 million. Investment securities were ¥1,721 million, equal to 12.2% of assets, creating some exposure to market-value and realization-gain volatility. Intangible assets were only ¥9 million, or 0.1% of assets, and therefore do not create a material acquisition-related asset concentration.
Notable B/S Changes
Cash and deposits: +¥4,123 million (+166.2%) to ¥6,603 million - materially strengthened reported liquidity, but occurred alongside a large increase in current liabilities and should be assessed in conjunction with funding composition. Current liabilities: +¥3,583 million to ¥5,800 million - the principal driver of the increase in total liabilities; monitoring of the maturity profile and underlying liability categories is important. Total equity: +¥575 million (+7.6%) to ¥8,168 million - reflects earnings retention and supports the company's 58.0% equity-to-assets position. Accumulated other comprehensive income: improved from a ¥241 million deficit to a ¥5 million surplus - indicates a favorable reversal in valuation differences on securities, though exposure to market-price movements remains.
Cash Flow Quality
Cash-flow quality cannot be quantified because operating cash flow, investing cash flow, financing cash flow and capital expenditure were not reported. Accordingly, OCF/net income, free cash flow, cash conversion and accruals measures cannot be assessed. Reported net income was ¥567 million, while the balance-sheet cash position increased by ¥4,123 million year on year. That cash movement cannot be attributed to operating performance without the cash-flow statement. The large increase in cash coincided with a ¥3,583 million increase in total liabilities, particularly current liabilities, so the balance-sheet movement does not by itself demonstrate strong operating cash conversion. Earnings quality is also affected by the ¥156 million gain on sales of investment securities, which is cash-generative upon settlement but is not equivalent to recurring operating cash generation. The modest depreciation charge of ¥38 million relative to operating income means non-cash depreciation is not a major source of divergence between operating earnings and potential cash flow.
Dividend Sustainability
A current-period dividend amount, dividend per share and payout ratio are not reported, so dividend coverage cannot be calculated. The prior-period dividend per share was ¥60.00. Current-period EPS was ¥142.30, and book value per share was ¥2,046.58. The company has a substantial reported equity base of ¥8,168 million and cash and deposits of ¥6,603 million, which provide balance-sheet capacity. However, dividend sustainability should be evaluated against recurring earnings rather than the current period's reported net income because ¥156 million of investment-security disposal gains contributed to profit. Free-cash-flow coverage cannot be assessed from the available data.
Risk Assessment
Business risks include Capital-markets activity risk: as a securities company, operating earnings are likely sensitive to investor sentiment, trading activity, market levels and transaction volumes., Investment-market risk: investment securities were ¥1,721 million, or 12.2% of total assets, and realized gains from their sale materially supported ordinary income., Earnings-repeatability risk: the ¥156 million gain on sales of investment securities accounted for about 19% of ordinary income and about 28% of net income..
Financial risks include Short-term liability monitoring risk: current liabilities increased to ¥5,800 million from ¥2,218 million, broadly alongside the increase in cash; the composition and duration of these liabilities are important for liquidity assessment., Market valuation risk: securities holdings and related gains can be volatile as market prices change., Return normalization risk: annualized ROE of approximately 19.2% includes non-operating investment-security gains and may normalize lower if such gains do not recur..
Key concerns include Operating income improved strongly, but revenue data is not reported, preventing assessment of revenue growth, operating margin and the durability of operating leverage., Cash-flow metrics are unavailable, preventing confirmation that accounting earnings are supported by operating cash generation., The increase in liquidity is positive, but should be interpreted together with the sizeable rise in current liabilities..
Investment Implications
Key takeaways include Operating income increased 73.2% year on year to ¥617 million while SG&A rose only about 3.1%, evidencing strong period operating leverage., Net income rose 73.8% to ¥567 million and annualized ROE was approximately 19.2% based on average equity., A ¥156 million gain on sales of investment securities was a material contributor to reported earnings and should be distinguished from recurring operating performance., Liquidity was strong, with current and quick ratios of 200.7%, cash and deposits of ¥6,603 million, and reported debt-to-equity of 0.72x., The simultaneous increases in cash and current liabilities warrant monitoring of liability composition and funding stability..
Metrics to watch include Operating-income progression and SG&A growth, Realized and unrealized investment-security gains or losses, Cash and deposits relative to current liabilities, Composition of current liabilities and guarantee deposits, Recurring earnings excluding investment-security disposal gains, Operating cash flow, free cash flow and dividend payout once reported.
Regarding relative positioning, The company presents a liquid and conservatively leveraged balance sheet, with annualized return generation that is strong relative to standard ROE benchmarks. However, period earnings contain a meaningful contribution from investment-security sales, making the quality and repeatability of core operating earnings more important than the headline net-income growth rate.