JPX Q1 FY2027: Operating profit up 73%, full-year forecast raised

Operating revenue for FY2027 Q1 (April–June 2026) reached ¥65,515 million, a 50.8% increase year-on-year. Operating profit soared 73.3% to ¥43,716 million, boosting the operating margin to 66.7% from 58.1% a year earlier. Pretax profit rose 74.1% to ¥44,062 million, and net income attributable to owners of the parent climbed 73.6% to ¥29,567 million, marking a record high for a first quarter.

The strong performance reflects buoyant equity markets: the Nikkei 225 hit a year-to-date high during the quarter, pushing stock trading value well above the prior-year period. Trading fees consequently jumped 69.9% to ¥24,647 million, while clearing-related revenue nearly doubled, up 88.9% to ¥20,150 million, fueled by active derivatives trading.

Though JPX operates as a single financial instruments exchange segment, it details revenue across five main categories. Trading-related revenue, the largest at 42.5% of the total, surged 60.4% to ¥27,837 million. Within this, cash equity trading fees skyrocketed 86.7% to ¥21,928 million, while financial derivatives trading fees were softer, though long-term government bond futures fees rose 20.8% amid interest-rate shifts. Commodity derivatives, however, fell 49.1%. Access fees also grew a solid 19.2%, reflecting increased usage by high-frequency traders.

Clearing-related revenue, driven by the Japan Securities Clearing Corporation, jumped 88.9% to ¥20,150 million (30.8% of total), boosted by higher clearing volumes in both equities and derivatives. Listing-related revenue advanced 20.2% to ¥4,519 million, with new and additional listing fees doubling to ¥842 million and annual listing fees up 9.9% to ¥3,676 million on market-cap growth.

Information services revenue rose 15.4% to ¥9,311 million, supported by steady market data and index licensing. System-related revenue edged up 2.2% to ¥3,480 million, with colocation service fees up 8.2% but other items declining. Overall, trading and clearing were the twin engines of the surge.

Total assets at quarter-end stood at ¥67,538,582 million, down ¥4,060,984 million from the fiscal year-end, largely due to a decline in clearing-related assets and liabilities at the Japan Securities Clearing Corporation. After stripping out clearing-related items, net assets attributable to owners of the parent were ¥321,138 million, while the adjusted equity ratio was a solid 69.9%.

On shareholder returns, JPX raised its full-year dividend forecast by ¥16 to ¥77 per share (interim ¥38, year-end ¥39), maintaining a target payout ratio of at least 60%. It also executed a share buyback exceeding 1% of outstanding shares, signaling an aggressive shareholder return policy. Cash and equivalents declined to ¥66,297 million from ¥110,471 million at the previous year-end, primarily due to dividend payments (¥37,144 million) and the buyback (¥16,672 million).

Reflecting the strong first quarter, JPX raised its full-year FY2027 forecasts. Operating revenue is now seen at ¥241.5 billion, up 21.5% from the prior year; operating profit is estimated at ¥145.5 billion, up 25.1%; and net income attributable to owners of the parent is forecast at ¥98.5 billion, up 24.5%. These compare with the previous (April) guidance of ¥227.0 billion, ¥132.0 billion, and ¥89.0 billion, respectively.

The underlying assumptions include average daily trading value of ¥10.2 trillion for stocks, and target volumes for derivatives: 51,000 units for long-term JGB futures, 87,000 for TOPIX futures, 136,000 for Nikkei 225 futures, and ¥30.0 billion for Nikkei 225 options. These assume current market trends persist, leaving room for further upside.

JPX's performance is highly sensitive to market conditions. Downside risks include a sharp market downturn triggered by global monetary tightening or geopolitical tensions, leading to a sudden drop in trading volumes. Cybersecurity threats and system failure costs are also persistent risks.

Structurally, digitization and the spread of AI trading offer new investment opportunities, but competition from other exchanges and proprietary trading systems (PTS) is expected to intensify. The company aims to maintain its competitive edge through continuous system upgrades and international partnerships.