SBI Holdings, Inc. :SBHGF-US: Earnings Analysis: Q3, 2017 By the Numbers : March 14, 2017

SBI Holdings, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of SBI Holdings, Inc. – Matsui Securities Co., Ltd. Unsponsored ADR (MAUSY-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 577.87 million, Net Earnings of USD 99.90 million.
  • Gross margins narrowed from 60.09% to 59.35% compared to the same period last year, operating (EBITDA) margins now 29.10% from 21.78%.
  • Year-on-year change in operating cash flow of -126.25% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 577.87 553.53 619.82 715.76 486.14
Revenue Growth (%YOY) 18.87 13.4 22.12 33.76 -7.31
Earnings (mil) 99.9 63.23 71.56 120.36 58.4
Earnings Growth (%YOY) 71.06 380.7 -24.81 40.19 -31.12
Net Margin (%) 17.29 11.42 11.54 16.82 12.01
EPS 0.45 0.29 0.32 0.52 0.25
Return on Equity (%) 10.86 6.52 7.52 13.35 6.76
Return on Assets (%) 1.31 0.84 1 1.73 0.84

Access our Ratings and Scores for SBI Holdings, Inc.

Market Share Versus Profits

Revenues History
Earnings History

SBHGF-US‘s change in revenue this period compared to the same period last year of 18.87% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that SBHGF-US is holding onto its market share. Also, for comparison purposes, revenues changed by 4.40% and earnings by 58.00% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 21.78% to 29.10%. For comparison, gross margins were 59.79% and EBITDA margins were 15.55% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

SBHGF-US‘s change in operating cash flow of -126.25% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 17.07% to 24.87% and (2) one-time items. The company’s pretax margins are now 24.87% compared to 17.07% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for SBI Holdings, Inc.

Company Profile

SBI Holdings, Inc. engages in the provision of comprehensive financial services. It operates through the following segments: Financial Services, Asset Management, Biotechnology-related, and Others. The Financial Services segment covers finance-related business and the provision of information regarding financial products including securities brokerage, banking services, and life, property and casualty insurance. The Asset Management segment consists of fund management and investment in Internet technology, biotechnology, environmental energy, and finance-related venture companies in Japan and overseas. The Biotechnology-related segment develops, manufactures, and sells pharmaceuticals, cosmetics, and health foods. The Others segment includes housing and real estate business such as the development and trading of investment property and operation of online intermediate services. The company was founded on July 8, 1999 and is headquartered in Tokyo, Japan.

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