| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | - | - | - |
| Operating Income | ¥130.1B | ¥86.5B | +50.4% |
| Ordinary Income | ¥135.5B | ¥91.5B | +48.1% |
| Net Income | ¥53.8B | ¥30.1B | +78.6% |
| ROE | 7.2% | 4.5% | - |
The fiscal year ended March 2026 delivered substantial profit growth as brokerage market revitalization drove expansion in securities business fees and trading income. Operating revenue (equivalent to Revenue) was ¥322.6B (YoY +¥65.1B +25.3%), Operating Income was ¥130.1B (YoY +¥43.6B +50.4%), Ordinary Income was ¥135.5B (YoY +¥44.0B +48.1%), and Net Income attributable to owners of parent was ¥104.4B (YoY +¥37.2B +55.3%), registering double-digit increases at each stage. Operating margin improved by 6.7pt to 40.3% (prior year 33.6%), and net margin rose by 6.3pt to 32.4% (prior year 26.1%), indicating marked profitability improvement. ROE improved by 4.7pt to 14.7% (prior year 10.0%), reflecting notable enhancement in capital efficiency. A special gain on sales of investment securities of ¥13.8B was recorded, boosting bottom-line profit.
[Revenue] Operating revenue expanded significantly to ¥322.6B (YoY +¥65.1B +25.3%). The primary segment, Iwai Cosmo Securities, reported external operating revenue of ¥322.3B (prior year ¥257.4B, +¥64.9B +25.2%). Breakdown: brokerage fees (accepted fees) ¥114.4B (prior year ¥97.0B, +¥17.4B +18.0%), trading profit/loss ¥175.6B (prior year ¥134.3B, +¥41.2B +30.7%), and financial income ¥32.4B (prior year ¥26.1B, +¥6.4B +24.6%) — all three pillars grew. Increased stock market volatility and heightened trading by retail investors lifted brokerage fees, while the trading division benefited from wider spreads and gains on position management. Financial income rose mainly due to interest received of ¥23.5B (YoY +¥2.4B), supported by accumulation of investable assets and changes in the interest-rate environment.
[Profitability] Financial costs and selling, general and administrative expenses (costs comparable to cost of sales) rose to ¥188.5B (prior year ¥168.7B, +¥19.8B +11.7%), but this was far below revenue growth (+25.3%), enabling operating leverage. Operating Income reached ¥130.1B (+50.4%), with an operating margin of 40.3%, up 6.7pt from 33.6% prior year. Non-operating income and expenses contributed net +¥5.4B, with non-operating income (interest and similar) of ¥5.9B against non-operating expenses of ¥0.5B including interest paid of ¥2.3B, lifting Ordinary Income to ¥135.5B (+48.1%). A special gain on sales of investment securities of ¥13.8B was recorded while special losses amounted to only ¥0.9B, pushing profit before tax to ¥148.4B (+62.1%). After deducting corporate taxes of ¥44.0B (effective tax rate 29.6%), Net Income was ¥104.4B (+55.3%), with non-recurring items including special gains boosting final profit. In conclusion, fee, trading and financial businesses all contributed to revenue and profit growth.
The core Iwai Cosmo Securities segment recorded external operating revenue of ¥322.3B (prior year ¥257.4B) and segment profit of ¥132.2B (prior year ¥88.2B, +¥44.0B +49.9%), delivering sizable profit growth. Brokerage fees ¥114.4B (+18.0%) benefited from retail trading activity; trading profit/loss ¥175.6B (+30.7%) was driven by higher market volatility and successful position management; financial income ¥32.4B (+24.6%) was supported by higher interest receipts. The holding company segment, Iwai Cosmo Holdings segment, reported external operating revenue of ¥0.1B and segment profit of ¥45.0B (prior year ¥30.8B, +¥14.2B +46.1%), driven primarily by group dividends and management income. Other (back-office business) recorded operating revenue of ¥2.6B and segment profit of ¥0.3B, providing a small but stable contribution. Consolidated Ordinary Income after elimination of intersegment transactions was ¥135.5B, underscoring that the high profitability of the securities segment is driving group-level profits.
[Profitability] Operating margin improved to 40.3% (prior year 33.6%), up 6.7pt, and net margin rose to 32.4% (prior year 26.1%), up 6.3pt. ROE improved to 14.7% (prior year 10.0%), up 4.7pt, indicating marked improvement in capital efficiency. Interest received of ¥23.5B versus interest paid of ¥2.3B resulted in a net positive interest margin, with non-operating income offsetting increases in financial costs. EBIT on an operating-income basis was ¥130.1B, profit before tax was ¥148.4B, and the effective tax rate was 29.6%, a standard level. [Cash Quality] Operating Cash Flow (OCF) was ¥23.1B, yielding an OCF/NI ratio of 0.22x against Net Income of ¥104.4B, indicating challenges in cash conversion of earnings. Operating CF subtotal (before working capital changes) was ¥21.0B, while corporate tax payments of ¥24.2B and increases in bonus reserves of ¥9.1B drove cash outflows. Free Cash Flow (FCF) was ¥16.1B (Operating CF ¥23.1B − Investing CF ¥7.0B including capital expenditures of ¥0.5B), but FCF coverage of dividend payments of ¥43.2B was only 0.29x, meaning shareholder returns exceeded internally generated cash this period. [Investment Efficiency] Capital expenditure was minimal at ¥0.5B, maintaining a light-asset business model. Intangible fixed assets decreased to ¥0.2B due to software amortization. [Financial Soundness] Equity Ratio was 34.9% (prior year 36.5%), a slight decrease viewed as temporary given total assets expanded to ¥2,130.3B (YoY +14.9%). Debt/EBITDA was 0.40x, and Interest Coverage was approximately 60x, indicating very strong debt-servicing ability. Current Ratio was 147.3% and Quick Ratio also 147.3%, showing good liquidity: cash and deposits of ¥81.6B plus current assets of ¥1,952.4B substantially exceed current liabilities of ¥1,325.2B. Short-term borrowings increased to ¥54.0B (prior year ¥35.0B, +54.3%) to meet working capital needs and expand market positions. Interest-bearing debt totaled ¥74.0B including corporate bonds of ¥20.0B (scheduled for redemption within one year), and the debt-to-equity ratio was 1.87x — appropriate given the characteristics of the securities industry.
Operating CF was ¥23.1B (prior year ¥31.3B, -26.4%). Against an operating CF subtotal of ¥21.0B, corporate tax payments of ¥24.2B were a major outflow; interest and dividends received totaling ¥30.2B contributed positively, but overall OCF/NI remained low at 0.22x relative to Net Income of ¥104.4B. Increases in bonus reserves of ¥9.1B and working capital movements delayed cash realization. Investing CF was an outflow of ¥7.0B, comprising capital expenditures of ¥0.5B, purchases of investment securities ¥1.2B, and proceeds from sales of investment securities ¥14.7B, resulting in a modest net investment. Free Cash Flow was ¥16.1B (Operating CF ¥23.1B − Investing CF ¥7.0B), while Financing CF was an outflow of ¥44.2B, primarily due to dividend payments of ¥43.2B. Corporate bond redemptions of ¥20.0B and a net increase in short-term borrowings of ¥19.0B reflected a partial reshaping of funding composition. Cash and cash equivalents decreased by ¥21.6B from ¥77.2B at the beginning of the period to ¥55.6B at the end, with dividend payments compressing on-hand cash. FCF coverage (FCF/dividend payments) was 0.29x, indicating shareholder returns exceeded internally generated cash; recovering OCF is a key issue for the coming term.
Overall quality of earnings is sound, but attention is warranted regarding non-recurring factors. Recurring revenues — brokerage fees, trading profit/loss, and financial income — all increased by double digits YoY, confirming expansion of core business. Non-operating income of ¥5.9B was mainly interest received and substantially exceeded non-operating expenses of ¥0.5B (including interest paid ¥2.3B), contributing positively at the ordinary-income stage. A special gain on sales of investment securities of ¥13.8B was recorded, accounting for approximately 9.3% of profit before tax of ¥148.4B. Special losses were limited to ¥0.9B, resulting in net special-item income of +¥12.9B. The difference between Ordinary Income of ¥135.5B and Net Income of ¥104.4B is mainly corporate taxes of ¥44.0B; excluding special items, divergence between ordinary and final stages is limited. The accrual ratio ((Net Income − Operating CF)/Total Assets) is approximately 3.8%, low and indicating high quality of accounting profits. However, Operating CF ¥23.1B is substantially below Net Income ¥104.4B, showing weak cash conversion driven by tax payments and working capital movements. Comprehensive income was ¥109.4B (Net Income ¥104.4B + Other Comprehensive Income ¥5.0B), with unrealized gains on securities of ¥5.0B boosting net assets. In sum, while the recurring revenue base is solid, dependence on the special gain of ¥13.8B is notable and warrants caution for the next fiscal year.
Dividends were significantly increased to an interim dividend of ¥60 and a year-end dividend of ¥165, totaling ¥225 (prior year ¥20). Based on issued shares of 25,013 thousand shares minus treasury stock of 1,524 thousand shares at fiscal year-end, the dividend payout on a fiscal year-end share count basis is approximately ¥5,290M (≈¥52.9B), and on an average share count during the period of 23,489 thousand shares is approximately ¥5,280M (≈¥52.8B). The payout ratio relative to Net Income (attributable to owners of parent) of ¥104.4B is approximately 50.6%, consistent with the company’s disclosed figure. The prior year payout ratio was also 50.6%, indicating a continued return policy aligned with profit levels. However, dividend payments of ¥43.2B (per Financing CF details) relative to FCF ¥16.1B yield an FCF coverage of 0.29x, meaning returns exceeded internally generated cash this period. That said, with cash and deposits of ¥81.6B, current assets of ¥1,952.4B, and Debt/EBITDA of 0.40x, financial capacity is ample and there is no immediate issue with short-term dividend sustainability. No share buybacks were executed (treasury stock acquisitions ¥0), maintaining a dividend-centric shareholder return policy. From a sustainability perspective, recovery of Operating CF (normalization of OCF/NI ratio) and flexibility in return policy during market slowdowns will be key for the next fiscal year.
Market Fluctuation Risk: Trading profit/loss accounts for approximately 54% of operating revenue, so stock market volatility and trading volume directly affect performance. This period saw a significant rise in trading profit/loss to ¥175.6B (YoY +30.7%), but in a market downturn profit pressure would be substantial. Brokerage fees of ¥114.4B are also highly dependent on retail investor flows, and fee revenue would decline in stagnant markets.
Cash Flow Quality Risk: Operating CF of ¥23.1B versus Net Income of ¥104.4B yields an OCF/NI ratio of 0.22x, indicating weak cash conversion. Corporate tax payments of ¥24.2B and working capital movements are factors; FCF coverage of dividend payments is low at 0.29x, reflecting returns exceeding internally generated cash. Recovery of OCF in subsequent periods is a prerequisite for dividend sustainability.
Short-term Funding Dependence Risk: Short-term borrowings increased to ¥54.0B (YoY +54.3%), making short-term funding dependence material. Including corporate bonds of ¥20.0B maturing within one year, rollover management is important. In a rising interest-rate environment, funding costs could increase; however, current Interest Coverage of approximately 60x and Debt/EBITDA of 0.40x provide sufficient headroom and do not immediately pressure finances.
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Market revitalization produced concurrent revenue increases across the three securities divisions (fees, trading, financial), improving operating margin by 6.7pt and lifting ROE to 14.7% (+4.7pt). Operating leverage enabled operating income growth (+50.4%) to far outpace SG&A growth (+11.7%), suggesting structural improvement in profitability. Because results include a special gain of ¥13.8B, a rebound effect should be monitored next term, but if double-digit core revenue growth continues, maintaining ROE in double digits is possible.
Dividends were substantially increased year-on-year (annual ¥225, payout ratio 50.6%), but dividend payments of ¥43.2B relative to FCF ¥16.1B produced an FCF coverage of 0.29x, indicating returns exceeded internally generated cash this term. Operating CF was ¥23.1B (OCF/NI ratio 0.22x), and cash conversion remains weak due to corporate tax payments and working capital movements. Financial capacity (cash ¥81.6B, Debt/EBITDA 0.40x) is sufficient, but sustained returns depend on OCF recovery in subsequent terms. Flexibility in dividend policy during market slowdowns and management of increased short-term borrowings (+54.3%) are monitoring points.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings flash report data. It does not constitute a recommendation to invest in any particular security. Industry benchmark data are compiled by the firm as reference information based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as necessary before making investment decisions.