eGuarantee,Inc.

Business Details

A business model in which the company undertakes the risk of non-collection of various receivables that operating companies and financial institutions bear in inter-company transactions, and receives guarantee fees in return. The credit risk assumed is screened and quantified using the company's proprietary Corporate Credit Information Database, and the company functions as a market maker by securitizing such risk to funds, financial institutions, and others. Leveraging a sales alliance network with regional banks, major financial institutions, trading companies, leasing companies, credit unions (shinkin banks), and others, the company undertakes credit risk for companies nationwide. It offers two service lines: Guarantee Services for Corporations and Guarantee Services for Financial Institutions (RMS).

Recent Overview

Both net sales and profit increased, but the profit margin declined due to an increase in guarantee performance

In FY2026 (ending March 2026), net sales reached ¥11,029 million (up 7.9% year on year) and operating profit reached ¥5,201 million (up 1.9% year on year), achieving both higher sales and higher profit. The period-end guarantee liability balance was ¥911,349 million (up 10.3% year on year), and the guarantee balance expanded sharply, up 40.3% year on year. On the other hand, as guarantee performance increased mainly in the first half due to a rise in the number of corporate bankruptcies, cost of sales expanded, and as a result the operating profit margin declined to 47.2% (from 49.9% in the prior period). On the financial front, net assets decreased substantially due to the acquisition of treasury shares (approximately ¥6,000 million), and the equity ratio declined to 68.8% (from 73.3% in the prior period). The dividend policy was changed from a "payout ratio of 50% or more" to a "payout ratio of approximately 100%," and for FY2027 (ending March 2027) an annual dividend of ¥84 (more than double the prior period) is planned. The company has disclosed that the performance targets of its medium-term management plan "Accelerate2028" (consolidated net sales of ¥20.0 billion and ordinary profit of ¥10.0 billion) are currently significantly behind schedule.

Key Products

Growth Drivers

• Expanding demand for guarantees driven by the upward trend in the number of corporate bankruptcies (10,425 cases in FY2026, ending March 2026, up 3.5% year on year, exceeding 10,000 cases annually for the second consecutive year)
• Increased thickness of the stock-type revenue base accompanying the sharp expansion of the guarantee balance (up 40.3% year on year)
• Improved contract renewal rate driven by steady growth in new contracts and increased guarantee usage by existing clients (addition of guaranteed companies and increases in guarantee limits)
• Strengthened acquisition of new clients through expansion of sales alliance partners such as tax accountant corporations and insurance agencies
• Improved efficiency in screening and sales activities through the use of AI
• Strengthened sales capabilities through continued expansion of human capital investment and enhanced sales support operations
• Enhanced corporate value through strengthened shareholder returns resulting from the policy change to a target payout ratio of 100%

Risks

• Guarantee performance exceeding expectations due to a sharp increase in the number of corporate bankruptcies (increase in cost of sales and decline in gross profit margin)
• Deterioration of the economic environment and rising credit risk among small and medium-sized enterprises due to high prices, rising labor costs, increased interest burden, and U.S. trade policy, among other factors
• Risk of economic deterioration associated with geopolitical uncertainty such as the situation in the Middle East
• Pressure on profit margin from increased selling, general and administrative expenses accompanying continued expansion of human capital investment
• Decline in net assets and equity ratio (68.8%) due to the acquisition of treasury shares (approximately ¥6,000 million)
• Constraints on the risk transfer function due to reduced investment appetite among securitization destination funds and financial institutions
• Estimation uncertainty related to the accuracy and screening logic of the Corporate Credit Information Database (allowance for guarantee performance balance of ¥562 million)
• Risk that the performance targets of the medium-term management plan "Accelerate2028" (net sales of ¥20.0 billion and ordinary profit of ¥10.0 billion) will be significantly delayed in being achieved