Nissan Securities Group Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Operating Income: ¥459M
• Net Income: ¥397M
• EPS: ¥7.46

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Nissan Securities Group (TSE: 8705) reported FY2026 Q2 consolidated results under JGAAP with operating income of ¥459 million (-22.3% YoY), ordinary income of ¥607 million, and net income of ¥380 million (-4.2% YoY). Revenue and gross profit were not disclosed in the XBRL for this period, so margin-related line items using revenue are not assessable. Despite weaker operating profit, the smaller decline in net income suggests support from non-operating items, as ordinary income exceeds operating income by ¥148 million (likely investment-related gains or interest income). EPS was ¥7.46 for the period, but share count data were not disclosed. Total assets stood at ¥198.446 billion and total equity at ¥12.259 billion, implying high balance-sheet leverage typical for a securities broker (assets/equity ≈ 16.19x). Current assets were ¥131.382 billion against current liabilities of ¥119.872 billion, yielding a current ratio of 1.10x and working capital of ¥11.51 billion. Operating cash flow was negative ¥3.937 billion, while financing cash flow was a net inflow of ¥1.315 billion; investing cash flow was not disclosed. The negative OCF alongside positive earnings is not unusual for a securities firm given large period-to-period movements in trading assets/liabilities and client-related balances. Interest expense remained very low at ¥81 thousand, consistent with a matched book and/or net interest income predominance on the asset side; interest coverage is therefore very high. The company recorded income tax expense of ¥188.17 million; using ordinary income as a proxy for pre-tax income, the implied effective tax rate is roughly 31%. Equity ratio was reported as 0.0% in the XBRL, but based on disclosed assets and equity, we estimate an equity ratio of approximately 6.2%. Free cash flow cannot be evaluated because investing cash flows were not disclosed; the reported FCF figure of zero should be treated as “not available.” Dividend per share was not disclosed, and payout metrics showing zero are not actual values. Overall, profitability softened at the operating level, but net income resilience points to a larger contribution from non-operating income. Liquidity appears adequate for a broker with a current ratio just above 1x, while structural leverage remains high as expected for the business model. Data gaps around revenue, cash, investing cash flows, and share counts limit the precision of ratio analysis and DuPont decomposition. We therefore focus on the available non-zero data, with appropriate caveats. Near-term performance will depend on trading volumes, client activity, market volatility, and the persistence of non-operating income.

Profitability Analysis

ROE_decomposition: A full DuPont decomposition is not possible because revenue was not disclosed. Using available metrics: half-year ROE proxy = net income / period-end equity ≈ ¥380m / ¥12,259m ≈ 3.1% for H1 (rough annualization ~6.2% if run-rate holds, but this is an assumption). Financial leverage is high at ~16.19x (assets/equity = ¥198.446b / ¥12.259b). Net margin and asset turnover cannot be computed without revenue; reported net margin and asset turnover metrics of 0.00%/0.000 reflect non-disclosure, not actual zero. margin_quality: Operating income decreased 22.3% YoY to ¥459m, while net income declined only 4.2% to ¥380m, indicating margin support from non-operating components (ordinary income exceeds operating income by ¥148m). Income tax expense of ¥188.17m implies an approximate effective tax rate of ~31% if ordinary income is a proxy for pre-tax income. Gross profit and EBITDA margin cannot be assessed due to non-disclosed revenue; the reported 0.0% margins are not meaningful. operating_leverage: The sharper decline in operating income versus net income suggests operating leverage worked against the company in H1, likely reflecting lower commission/trading-related income against a relatively sticky cost base. D&A was modest at ¥53.9m, indicating limited depreciation intensity; cost flexibility likely sits in variable compensation and activity-driven expenses. Without revenue data, elasticity cannot be quantified, but the YoY operating income contraction signals downside operating leverage in the period.

Growth Assessment

revenue_sustainability: Revenue was not disclosed; therefore top-line growth cannot be assessed directly. As a securities broker, revenues are typically sensitive to market volumes, volatility, and client activity. The decline in operating income suggests softer core activity or lower spreads. profit_quality: Net income resilience (−4.2% YoY) relative to operating income (−22.3% YoY) implies a larger non-operating contribution in H1 (ordinary income ¥607m > operating income ¥459m). This mix shift can be less sustainable if driven by market-dependent gains. Effective tax appears normal (~31% proxy), supporting earnings quality from a tax standpoint. outlook: Short-term earnings trajectory will hinge on trading volumes, FX/derivative activity, spreads, and market volatility. If market conditions normalize or improve, operating income could recover; conversely, a decline in client activity would pressure profits given observed operating leverage. Sustaining ordinary income above operating levels may be challenging unless investment-related income remains favorable.

Financial Health

liquidity: Current assets ¥131.382b vs current liabilities ¥119.872b yields a current ratio of 1.10x and working capital of ¥11.51b. For a broker-dealer, this is broadly adequate given matched books and access to secured funding. Cash and equivalents were not disclosed. solvency: Total liabilities ¥124.695b and equity ¥12.259b imply liabilities/equity ≈ 10.2x and assets/equity ≈ 16.19x, consistent with a leveraged brokerage balance sheet. Based on assets and equity, the inferred equity ratio is ~6.2% (not the 0.0% shown in the metadata). Interest expense is minimal (¥81k), and implied coverage is very high, indicating limited interest burden at present. capital_structure: High reliance on liabilities is inherent to the business model. Financing cash inflow of ¥1.315b suggests active balance-sheet funding during the period. Absent details on the composition (repo, margin payables, short-term borrowings), we assume predominance of short-term, collateralized funding typical for securities firms.

Cash Flow Quality

earnings_quality: Positive net income (¥380m) contrasts with negative operating cash flow (−¥3.937b); the OCF/NI ratio of −10.36 reflects timing and working capital swings common in broker-dealers (e.g., changes in trading assets, receivables/payables, and client margin balances). This divergence does not, by itself, signal low earnings quality in this sector. FCF_analysis: Investing cash flow was not disclosed; thus free cash flow cannot be determined. The reported FCF of 0 should be treated as ‘not available.’ D&A is modest (¥53.9m), suggesting low capital intensity ex-regulatory capital, but investment in systems and regulatory capital needs are not captured in the current disclosure. working_capital: Current assets increased relative to current liabilities by ¥11.51b (working capital). The negative OCF likely reflects net increases in trading-related current assets or reductions in trading liabilities; exact drivers cannot be identified without the detailed CF breakdown.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout ratio were not disclosed; reported zeros are placeholders. With net income of ¥380m in H1 and no visible dividend data, payout capacity cannot be quantified from the period alone. FCF_coverage: Free cash flow was not available due to missing investing CF; hence FCF coverage of dividends cannot be assessed. For brokers, FCF can be volatile due to working capital movements and is an imperfect measure of distributable capacity absent regulatory capital context. policy_outlook: Without stated policy or historical DPS, we cannot infer distribution trends. Dividend decisions will likely balance earnings stability, capital adequacy requirements, and market conditions affecting risk-weighted assets and liquidity.

Risk Assessment

Business Risks:

• Revenue cyclicality tied to market volumes, client trading activity, and volatility
• Dependence on non-operating income to support earnings in the period
• Regulatory and capital adequacy constraints applicable to securities firms
• Competition in brokerage, FX, and derivatives services compressing spreads
• Operational and systems risk, including cybersecurity and trading platform stability
• Product concentration in market-sensitive instruments (e.g., futures/FX/CFD)
• Legal/compliance risk from evolving investor protection and suitability rules

Financial Risks:

• High balance-sheet leverage (assets/equity ≈ 16.19x) inherent to the model
• Volatile operating cash flows driven by trading asset/liability swings
• Liquidity risk if market stress impairs secured funding or client flows
• Earnings mix risk from non-operating items that may not be recurring
• Potential margin calls and counterparty exposure during market shocks
• Tax rate variability versus ordinary income proxy

Key Concerns:

• Operating income decline of 22.3% YoY indicating pressure on core operations
• Negative OCF of ¥3.94b in the half versus positive earnings
• Limited disclosure on revenue, investing cash flows, cash balances, and share counts
• Equity ratio effectively ~6.2%, offering limited loss-absorption capacity in severe stress

Investment Implications

Key Takeaways:

• Operating income weakened materially, while net income held up due to non-operating support
• Balance sheet leverage is high but consistent with a broker-dealer; liquidity appears adequate (current ratio ~1.10x)
• Operating cash flow turned negative, likely reflecting working capital movements typical for the sector
• Effective tax rate appears normal (~31% proxy), supporting earnings normalization
• Data gaps limit precision of margin and DuPont analysis; caution in interpreting reported 0.0% ratios

Metrics to Watch:

• Ordinary income versus operating income (sustainability of non-operating gains)
• Client assets, trading volume, and volatility proxies (top-line drivers)
• Capital adequacy ratio and equity/asset ratio (loss-absorption capacity)
• Operating cash flow trends and drivers (trading receivables/payables, margin balances)
• Cost-to-income ratio once revenue is disclosed
• Working capital and short-term funding mix
• ROE trajectory based on net income and equity

Relative Positioning: Within Japan’s securities brokers, the company shows typical structural leverage and liquidity characteristics, but H1 profitability indicates pressure on the core operating engine with greater reliance on non-operating contributions; relative standing will hinge on recovery in client activity and the durability of ordinary income.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis