TOYO SECURITIES CO.,LTD.

Business Details

The TOYO SECURITIES Group consists of the Company and one consolidated subsidiary (Toyo Securities Asia Limited), and operates a financial instruments business including trading and brokerage of securities, underwriting and secondary distribution, and handling of public offerings and secondary offerings. The Group operates sales branches centered on the domestic financial instruments market, and proposes asset formation strategies to individual customers combining domestic equities, investment trusts, Chinese equities, US equities, and other foreign equities. Leveraging the TOYO brand's strength as a pioneer in Chinese equities, the Group aims to build a stable earnings base through the expansion of assets under custody.

Recent Overview

Commissions received increased 32.8% year on year, and operating income achieved a large increase of 306%

In FY2026 (ending March 2026), investment trust sales commissions, agency fees, domestic equity brokerage commissions, Chinese equity commissions, and solutions business-related revenue all increased, resulting in operating revenue of ¥13,576 million (up 20.2% year on year) and ordinary income of ¥3,259 million (up 214.3% year on year), a significant increase in both revenue and profit. On the other hand, because gains on sales of investment securities (extraordinary income) decreased to ¥1,429 million (down 36.4% year on year), the growth rate of net income was limited to 48.3%. ROE, the KGI of the Medium-Term Management Plan, stood at 12.9%, already exceeding the 8% target. Assets under custody reached ¥1,574.0 billion, achieving the target of ¥1,500.0 billion, but the equity investment trust balance of ¥401.8 billion and NISA account balance of ¥98.7 billion fell short of their targets. The Company maintains its policy of a ¥50 per share dividend (ordinary dividend plus special dividend) for FY2027 (ending March 2027) as well.

Key Products

Growth Drivers

• Increase in agency fees (stable revenue) due to expansion of assets under custody in investment trusts: achieved agency fees of ¥3,290 million (up 19.9% year on year) against the backdrop of average assets under custody for equity investment trusts of ¥386.8 billion (up 13.9% year on year)
• Increase in domestic equity market trading value: brokerage commissions expanded to ¥5,104 million (up 41.2% year on year) against the backdrop of TSE average daily trading value of ¥7,101.8 billion (up 33.1% year on year)
• Recovery in the China and Hong Kong equity markets: the Hang Seng Index recorded its highest level in roughly four and a half years at 28,056 points during the period, against the backdrop of Chinese government stimulus measures and re-evaluation of Chinese tech companies, leading to an increase in commissions on Chinese equities
• Increase in solutions business-related revenue: gains from investment partnership operations expanded to ¥183 million (up 297.8% year on year), and non-operating income increased to ¥473 million (up 25.5% year on year)
• Effects of cost structure reform (Project EST): increase in SG&A expenses was contained to 0.8%, minimizing cost increases relative to revenue expansion
• Expansion of customer base utilizing NISA: NISA account balance steadily expanded to ¥98.7 billion (target: ¥104.0 billion or more), contributing to long-term growth in assets under custody

Risks

• Market environment dependency risk: as the core business is financial instruments trading, performance may fluctuate sharply in a short period due to changes in stock prices, interest rates, exchange rates, and the economic environment (the reason for not disclosing earnings forecasts)
• Volatility risk in trading gains/losses: trading gains/losses in FY2026 (ending March 2026) decreased significantly to ¥1,309 million (down 33.4% year on year) due to a decline in over-the-counter trading value of US equities and other factors, representing a source of earnings instability
• Geopolitical and trade policy risk: the Trump administration's reciprocal tariff policy has had a major impact on the Japanese, US, and Chinese equity markets, with the Nikkei Average plunging to ¥30,792 on April 7. Deteriorating conditions in the Middle East also weighed on stock prices toward the end of the period
• Risk of decline in extraordinary income (gains on sales of investment securities): gains on sales of investment securities in FY2026 (ending March 2026) decreased significantly to ¥1,411 million (down 37.2% year on year), and the room for future recognition of such gains has diminished due to the reduction in the holding balance to ¥5,397 million (down 23.4% year on year)
• Decline in capital adequacy ratio: the non-consolidated capital adequacy ratio has been on a declining trend at 388.6% (394.7% in the prior period), requiring continued monitoring
• Risk of failing to achieve Medium-Term Management Plan KPIs: the equity investment trust balance of ¥401.8 billion (target: ¥500.0 billion or more) and NISA account balance of ¥98.7 billion (target: ¥104.0 billion or more) have fallen short of their targets, requiring strengthened efforts toward achievement by FY2028 (ending March 2028)
• Risk of rising personnel expenses: personnel expenses increased to ¥5,182 million (up 4.6% year on year) in line with the recovery in performance, and the cost burden could become heavier in the event of a future deterioration in the earnings environment