Will the sharp Q1 recovery continue into FY2027-H1? The focus is on whether market trading volumes are sustainable

In FY2027-Q1, operating revenue increased 51.7% year on year to ¥1.107 billion, operating profit rose 274.9% to ¥320 million, ordinary profit rose 420.5% to ¥567 million, and net income rose 314.9% to ¥385 million. The operating margin was approximately 28.9%, up approximately 17.2 percentage points from approximately 11.7% in the year-earlier quarter, indicating a substantial improvement in profit leverage as well as simple revenue growth.

However, the primary driver was not a company-specific new business but an improvement in the equity market and trading volumes. Average daily trading value on the TSE Prime Market was ¥11.3404 trillion in FY2027-Q1, a substantial increase from ¥5.2744 trillion in the year-earlier quarter. Stock brokerage commissions consequently rose 90.6% year on year to ¥666 million, while total commissions received increased 69.1% to ¥943 million. H1 performance should therefore be assessed not only by profit but also by whether the relationship between trading value and stock brokerage commissions remained intact.

In the comparable interim periods, operating revenue and operating profit increased from ¥1.474 billion and ¥159 million, respectively, in FY2025-H1 to ¥1.721 billion and ¥381 million in FY2026-H1. The FY2026-H1 operating margin was approximately 22.1%. If FY2027-H1 exceeds this level, it will be easier to conclude that Q1's high profitability was sustained through the interim period. Conversely, if trading value slowed and operating profit fell below ¥381 million, the sharp increase in Q1 profit would more likely have been a temporary result of market conditions.

The company states that its financial instruments business is heavily affected by economic conditions and the market environment, making it extremely difficult to disclose an appropriate full-year earnings forecast. Accordingly, FY2027-H1 should be read by comparing year-on-year operating revenue, operating profit, stock brokerage commissions, and average trading value on the TSE Prime Market, rather than by focusing on progress against forecasts. Whether the company can exceed both operating profit of ¥381 million and an operating margin of 22.1% will be a practical benchmark for assessing the quality of first-half performance.