Kyokuto Securities Co Ltd

Kyokuto Securities maintains a conservative capital structure with a debt-to-equity ratio of 0.28, significantly below the industry median of 0.55, indicating a strong equity base relative to its liabilities. The company's liquidity position is mixed, with a current ratio of 1.65, suggesting adequate short-term liquidity, but net cash is negative after subtracting total debt, signaling potential near-term liquidity constraints.

Profitability metrics show a return on equity (ROE) of 3.16% and a return on assets (ROA) of 1.93%, both below the industry median of 4.2% and 2.8%, respectively. This suggests that Kyokuto Securities is underperforming its peers in terms of capital efficiency and asset utilization.

The company's revenue is concentrated in its core investment banking and brokerage services, with no disclosed geographic diversification beyond Japan. This concentration increases exposure to domestic economic conditions and regulatory changes, which could impact revenue stability.

Outlook data indicates a projected revenue growth of 12.4% for the current fiscal year, driven by increased trading volumes and asset management inflows. However, the next fiscal year is expected to see a moderation in growth to 4.2%, reflecting market saturation and potential regulatory headwinds.

Risk factors include a medium liquidity risk due to the negative net cash position and a low dilution risk, as the company has not issued new shares in the past two years. The risk assessment also notes that the company's capital structure is stable, with long-term debt at 14.72 billion JPY, or 28% of total equity.

Recent events include a Q2 earnings report that exceeded analyst estimates, with actual EPS of 150.37 JPY and revenue of 11.6 billion JPY. The company also announced a strategic review of its asset management division to enhance profitability and expand its product offerings.

Net income grew at a 22.6% CAGR over four years, reaching JPY 4.79 billion in FY2026.

Free cash flow surged 307% year-over-year to JPY 1.23 billion in FY2026.

Revenue expanded 4.1% year-over-year to JPY 8.31 billion, maintaining a 6.4% four-year CAGR.

Return on equity of 3.16% falls below the 4.0% median for 261 investment banking peers.

Long-term debt increased to JPY 13.47 billion in FY2026, up from JPY 10.44 billion in FY2022.

The company faces medium liquidity risk and medium credit risk according to internal risk assessments.

Return on assets of 1.93% indicates modest efficiency in generating profits from total assets.

Revenue ¥1.70B, +15,8% YoY; Operating income +173,1% YoY.

• ▍Revenue ¥1.70B, +15,8% YoY
• ▍Operating income +173,1% YoY
• ▍Net income +401,3% YoY
• ▍Net margin 46.2%

Revenue ¥2.30B, +3,4% YoY; Operating income +15,8% YoY.

• ▍Revenue ¥2.30B, +3,4% YoY
• ▍Operating income +15,8% YoY
• ▍Net income −6,8% YoY
• ▍Net margin 67.6%

Revenue ¥2.55B, +54,2% YoY; Operating income +202,9% YoY.

• ▍Revenue ¥2.55B, +54,2% YoY
• ▍Operating income +202,9% YoY
• ▍Net income +51,2% YoY
• ▍Net margin 56.9%

Revenue ¥1.76B, −33,3% YoY; Operating income −64,1% YoY.

• ▍Revenue ¥1.76B, −33,3% YoY
• ▍Operating income −64,1% YoY
• ▍Net income −40,0% YoY
• ▍Net margin 56.7%

Revenue ¥1.47B; Operating income -¥390.0M.

• ▍Revenue ¥1.47B
• ▍Operating income -¥390.0M
• ▍Net margin 10.7%

Revenue ¥2.22B; Operating income ¥863.0M.

• ▍Revenue ¥2.22B
• ▍Operating income ¥863.0M
• ▍Net margin 74.9%

Revenue ¥1.66B; Operating income ¥413.0M.

• ▍Revenue ¥1.66B
• ▍Operating income ¥413.0M
• ▍Net margin 58.0%

Revenue ¥2.64B; Operating income ¥1.24B.

• ▍Revenue ¥2.64B
• ▍Operating income ¥1.24B
• ▍Net margin 63.1%

Revenue ¥8.31B, +4,1% YoY; Operating income +40,1% YoY.

• ▍Revenue ¥8.31B, +4,1% YoY
• ▍Operating income +40,1% YoY
• ▍Net income +7,7% YoY
• ▍Free cash flow +306,9% YoY
• ▍Net margin 57.6%

Revenue ¥7.99B, +3,4% YoY; Operating income −27,7% YoY.

• ▍Revenue ¥7.99B, +3,4% YoY
• ▍Operating income −27,7% YoY
• ▍Net income +2,4% YoY
• ▍Free cash flow −89,5% YoY
• ▍Net margin 55.7%

Revenue ¥7.73B, +79,2% YoY; Operating income +933,7% YoY.

• ▍Revenue ¥7.73B, +79,2% YoY
• ▍Operating income +933,7% YoY
• ▍Net income +271,4% YoY
• ▍Free cash flow +3 835,6% YoY
• ▍Net margin 56.2%

Revenue ¥4.31B, −33,6% YoY; Operating income −131,3% YoY.

• ▍Revenue ¥4.31B, −33,6% YoY
• ▍Operating income −131,3% YoY
• ▍Net income −44,8% YoY
• ▍Free cash flow −86,3% YoY
• ▍Net margin 27.1%