| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | - | - | - |
| Operating Income | ¥0.3B | ¥18.9B | -98.6% |
| Ordinary Income | ¥6.7B | ¥25.7B | -74.1% |
| Net Income | ¥3.7B | ¥17.5B | -78.7% |
| ROE | 0.7% | 3.7% | - |
For the fiscal year ended March 2026, Revenue was ¥209.73B (YoY +¥3.86B +1.9%), a modest increase, but Operating Income was ¥0.26B (YoY -¥18.60B -98.6%), Ordinary Income was ¥6.66B (YoY -¥19.04B -74.1%), and Net Income was ¥3.72B (YoY -¥13.78B -78.7%), representing a sharp decline in profitability. Operating-stage profit generation capacity deteriorated markedly: Operating margin plunged to 0.1% (down -9.1pt from 9.2% a year earlier), and Ordinary margin fell to 3.2% (down -9.3pt from 12.5%). Net Income was underpinned by a non-recurring gain on sale of investment securities of ¥38.65B, but the results highlight weakness in core earnings. The Securities Business posted a strong Operating Income of ¥10.54B (+313.3%), but losses in the Asset Management Business of -¥3.64B (prior -¥1.16B) and the Investment Business of -¥7.22B (prior ¥15.39B) pressured consolidated Operating Income.
【Revenue】 Revenue was ¥209.73B (YoY +1.9%), a slight increase. External client revenue in the Securities Business expanded to ¥199.86B (prior ¥178.03B) (+12.3%), supported by market environment recovery and increased retail flows. In contrast, the Asset Management Business declined to ¥1.74B (prior ¥4.02B, -56.7%) and the Investment Business to ¥8.10B (prior ¥23.82B, -66.0%), reflecting a pronounced deterioration in non-securities segment earning power. After intersegment adjustments, consolidated Revenue only edged up, with strong performance in Securities offset by weakness in Asset Management and Investment.
【Profitability】 SG&A expenses were ¥198.79B (YoY +9.6%), rising well above Revenue growth and causing Operating Income to collapse to ¥0.26B. While the Securities Business’ Operating Income of ¥10.54B (+313.3%) is commendable, the Asset Management Business loss of -¥3.64B (widening loss) and Investment Business loss of -¥7.22B (turned negative from prior profit) weighed heavily on consolidated results. Non-operating income of ¥9.01B (dividends received ¥4.86B, interest received ¥1.03B, etc.) supported Ordinary Income of ¥6.66B (-74.1%). A special gain of ¥38.65B (gain on sale of investment securities) lifted profit before tax to ¥41.56B; after income taxes of ¥15.33B, Net Income attributable to owners of parent was ¥27.52B, but this reflects high reliance on one-off items. In summary, the company reported revenue growth but declines across Operating, Ordinary, and Net Income.
The Securities Business achieved a substantial increase in Operating Income to ¥10.54B (prior ¥2.55B, +313.3%), driven by improved market conditions and higher fee income. The Asset Management Business posted an operating loss of -¥3.64B (prior -¥1.16B, loss widened 213.8%), weighed down by performance variability and client asset declines. The Investment Business suffered the largest deterioration, with an operating loss of -¥7.22B (prior ¥15.39B profit, turned negative 146.9%), reflecting valuation losses and market volatility. Gains in the Securities Business were offset by deficits in non-securities segments, leaving consolidated Operating Income at a minimal ¥0.26B.
【Profitability】Operating margin 0.1% (prior 9.2%), Ordinary margin 3.2% (prior 12.5%), Net margin 1.8% (prior 15.4%)—sharp deterioration across all stages. ROE 0.7% (prior 6.3%) is well below cost of capital, indicating a significant decline in shareholder value creation. Non-operating income ¥9.01B equals 4.3% of Revenue and is not an excessive reliance by itself, but relative to Operating Income of ¥0.26B it is materially large and compensates for weak core earnings. 【Cash Quality】Operating Cash Flow (OCF) ¥45.03B is 12.1x Net Income ¥3.72B and OCF/Revenue is 21.5%, indicating strong cash backing of profits and high accrual quality. 【Investment Efficiency】Total asset turnover 0.169x/year (prior 0.188x/year) declined somewhat, indicating stagnant asset efficiency. Depreciation ¥4.01B versus capital expenditures ¥1.98B suggests restrained capex, which could constrain future revenue opportunities. 【Financial Soundness】Equity Ratio 40.6% (prior 43.5%) remains solid but declined slightly as Total Assets expanded to ¥1,243.2B (prior ¥1,095.3B). Cash and deposits increased to ¥242.4B (prior ¥144.1B, +68.3%), improving liquidity, but short-term corporate bonds increased to ¥120.85B (prior ¥60.0B, +101.4%), heightening short-term refinancing risk.
OCF was an inflow of ¥45.03B (prior year outflow ¥-57.59B), a substantial improvement driven by working capital improvement in customer deposits and inflows of interest and dividends received totaling ¥15.51B. Investing Cash Flow was an inflow of ¥34.70B (prior inflow ¥11.80B), as proceeds from sale of investment securities ¥52.33B exceeded capital expenditures ¥1.98B and securities purchases ¥32.32B. Financing Cash Flow was an inflow of ¥11.56B (prior outflow ¥-48.86B); the company repaid short-term borrowings ¥-16.60B and long-term borrowings ¥-16.43B, while increases in customer deposits ¥70.37B supported funding. Share buybacks of ¥107.75B were executed (same as prior year), demonstrating continued shareholder returns. Free Cash Flow (OCF + Investing CF) was generous at ¥79.73B, providing 2.60x coverage for dividends of ¥30.59B; overall CF balance including capex is healthy. Cash and deposits increased to ¥242.39B, leaving ample liquidity.
Recurring earnings are very weak with Operating Income ¥0.26B; non-operating income ¥9.01B (dividends received ¥4.86B, interest received ¥1.03B) provided support but Ordinary Income ¥6.66B fell -74.1% YoY. A special gain of ¥38.65B (gain on sale of investment securities) boosted profit before tax to ¥41.56B, meaning most of the final profit stems from one-off items. Non-operating income at 4.3% of Revenue is below 5% and not excessive, but its relative importance has risen because Operating Income is very small. OCF substantially exceeds Net Income, indicating good accrual quality and no evident signs of cash manipulation. The divergence between Ordinary Income ¥6.66B and Net Income ¥27.52B (Net Income attributable to owners of parent) is +313.3%, underscoring dependence on special gains. Going forward, the removal of one-off gains could expose the weakness of core earnings.
Dividends comprised an interim dividend of ¥48 (ordinary ¥13 + special ¥35) and a year-end dividend of ¥69 (ordinary ¥34 + special ¥35), totaling ¥117 for the Full Year. Total dividends of ¥30.59B against Net Income attributable to owners of parent ¥27.52B imply a Payout Ratio of 111.2% (disclosed figure 95.8% is presumed to be based on average shares outstanding during the period), a payout exceeding profits. Share buybacks of ¥107.75B (same as prior year) were implemented, bringing Total Return Amount to ¥138.34B, or 5.03x Net Income. Coverage of total returns by Free Cash Flow is 1.74x, indicating some financial headroom, but sustainability depends on cash on hand and the reproducibility of one-off gains. The dividend policy continues to feature flexible shareholder returns including special dividends (interim and year-end ¥35 each), but high payout amid weak core earnings raises questions about dividend quality (profit linkage) and sustainability. Cash and deposits ¥242.4B are adequate to fund dividends and buybacks in the near term, but if OCF generation does not recover, sustainment of total returns may be constrained over the medium term.
Segment revenue mix deterioration risk: Non-securities segments posted large deficits (Asset Management -¥3.64B, Investment -¥7.22B), offsetting Securities Business profit of ¥10.54B. If investment valuation losses and weak asset management performance persist, recovery of consolidated Operating Income will be difficult. SG&A of ¥198.79B (YoY +9.6%) increased faster than Revenue, reducing cost absorption capacity and reversing operating leverage.
Low EBITDA and leverage resilience risk: Operating Income ¥0.26B plus Depreciation ¥4.01B yields EBITDA of approximately ¥4.27B, a very small cushion relative to interest-bearing liabilities (short-term corporate bonds ¥120.85B + short-term borrowings ¥75.12B + long-term borrowings ¥53.15B = ¥249.12B equivalent). Short-term debt ratio of 58.6% is high, exposing the company to refinancing cost increases and rollover risk in adverse market conditions.
Special gain dependence and earnings sustainability risk: Net Income ¥27.52B is largely composed of gain on sale of investment securities ¥38.65B, while Ordinary Income ¥6.66B fell -74.1% YoY. The removal of one-off gains could lead to earnings decline next fiscal year; absent recovery in core earnings (reduction of non-securities segment deficits, SG&A control), sustainability of ROE and dividends will be constrained.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 0.1% | 19.9% (6.5%–38.3%) | -19.8pt |
| Net Margin | 1.8% | 5.6% (3.8%–22.2%) | -3.9pt |
Operating margin 0.1% is -19.8pt below the industry median of 19.9%, placing the company at the bottom of the peer group on profitability. Net margin 1.8% is -3.9pt below the median of 5.6%; even after special gains, the company lags industry averages. Improving cost efficiency and segment revenue mix as a securities group is urgent.
※Source: company aggregation
Core operating earnings capacity has deteriorated drastically; priority actions are reducing deficits in non-securities segments (Asset Management -¥3.64B, Investment -¥7.22B) and improving efficiency of SG&A ¥198.79B. The Securities Business Operating Income ¥10.54B (+313.3%) may include temporary tailwinds from market recovery, and sustainability depends on cost control and profit improvements in non-securities segments.
Net Income ¥27.52B is supported by gain on sale of investment securities ¥38.65B; without this one-off item a profit decline is expected next year. Payout Ratio 111.2% (Total Return Ratio 503%) is very high; if core earnings do not recover, dividend quality and sustainability will be questioned. Cash on hand ¥242.4B and OCF ¥45.03B provide some capacity for returns, but medium-term sustainability depends on restoring profit generation.
Increase in short-term corporate bonds to ¥120.85B (YoY +101.4%) raises short-term refinancing risk; while cash and deposits ¥242.4B support liquidity, low Operating Income ¥0.26B and EBITDA approx ¥4.27B mean credit cushions are thinner than they appear. ROE 0.7% is well below cost of capital; reconstruction of non-securities segments and cost optimization are essential to restore shareholder value.
This report is an AI-generated financial analysis document based on 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 from public financial statements. Investment decisions are the responsibility of the investor; please consult a professional advisor as needed.