[In-Depth Analysis] Aizawa Securities Group Q1 FY2027 Earnings: Significant Profit Growth Driven by Successful Shift to GBA-Model Operations and Established Recurring Revenue Structure

Aizawa Securities Group (Securities Code: 8708) has delivered a robust performance in its Q1 FY2027 earnings , demonstrating significant progress in both consolidated results and key performance indicators (KPIs). This success is attributed to a dramatic structural transformation from a traditional, transaction-fee-dependent business model to a "Goal-Based Approach (GBA) model" that prioritizes the long-term life plans of its clients.

This report provides a detailed analysis of the company's earnings highlights, the progress of its business model transformation, key KPI trends, shareholder return policies, and long-term corporate value enhancement strategies, based on the official financial disclosures.

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1. Earnings Highlights: Return to Profitability and Substantial Growth in Net Income

In Q1 FY2027, the group’s consolidated performance significantly outperformed the same period last year, with operating profit and ordinary profit achieving a dramatic turnaround from losses to profits .

• Operating Revenue : ¥5.812 billion (+37.0% YoY)
• Operating Profit : ¥238 million (compared to an operating loss of ¥576 million in the same period last year)
• Ordinary Profit : ¥447 million (compared to an ordinary loss of ¥337 million in the same period last year)
• Net Income Attributable to Owners of Parent : ¥1.054 billion (+730.4% YoY)
• Quarterly Earnings Per Share (EPS) : ¥33.82

The primary drivers of this growth include an increase in stock brokerage commissions, alongside a rise in stable recurring revenue such as trust fees and performance-based fees from wrap accounts . Furthermore, the expansion of the platform business boosted operating revenue, while the sale of strategic shareholdings (recording a gain on sale of investment securities of ¥542 million) in the investment and holding company segments contributed significantly to the bottom line.

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2. Core Growth Strategy: Full-Scale Rollout of the Goal-Based Approach (GBA)

Under its current Medium-Term Management Plan (April 2025 – March 2028), Aizawa Securities Group is undergoing a fundamental transformation of its securities business to become a "partner in asset management and wealth formation for clients and their families." The cornerstone of this strategy is the GBA (Goal-Based Approach) model .

By shifting from a focus on individual stock recommendations to proposing portfolios tailored to each client's life goals, the company has deepened client trust and expanded assets under management (AUM).

【Significance and Context of Slide 6】 This slide is critical as it clearly illustrates the transformation process of the sales structure and its tangible results . The GBA model, piloted in select branches starting in April 2025, was fully deployed as the "standard" across all branches in April 2026. As shown in the chart on the right, the number of "consultation sessions" aimed at deepening client understanding reached 6,005 in Q1 FY2027 , and the number of "closed deals" following rigorous screening surged to 1,563 , significantly outpacing the previous year. With 100% of branches now promoting the GBA model, this confirms that the "quality and quantity" of frontline sales activities have undergone a dramatic shift.

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3. Segment Trends: Two Pillars of the Securities Business Driving Growth

By business segment, the core Securities Business led the performance.

(1) Securities Business

• Operating Revenue : ¥5.660 billion (+38.9% YoY)
• Pre-tax Profit : ¥474 million (compared to a loss of ¥227 million in the same period last year)

Within the securities business, both divisions showed strong growth:

• Financial Advisor Division : Operating revenue of ¥3.488 billion (+22.4% YoY). Driven by the GBA model, AUM and recurring products (investment trusts and wrap accounts) increased, leading to growth in trust and wrap fees.
• Platform Business Division (IFA/Financial Institution Partnerships) : Operating revenue of ¥1.882 billion (+80.4% YoY). Transaction mediation through partner Independent Financial Advisors (IFAs) and deposit-taking financial institutions is expanding rapidly, establishing itself as a new growth foundation.

Notably, the flagship GBA-based wrap service, "Smile Goal," has seen remarkable growth, with contract assets reaching ¥55.042 billion (+136.2% YoY) and the number of accounts reaching 6,355 (+114.5% YoY) by the end of Q1 FY2027, more than doubling from the same period last year.

(2) Investment and Asset Management Businesses

• Investment Business : Operating revenue of ¥150 million (-10.6% YoY), pre-tax profit of ¥574 million (-23.0% YoY). Despite a decline in revenue due to the timing of fund income recognition, the segment contributed to group profits through steady gains from the sale of securities in its proprietary investment portfolio.
• Asset Management Business : Operating revenue of ¥40 million (-5.6% YoY), pre-tax loss of ¥65 million . The company is currently implementing structural reforms to further expand assets under management.

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4. Key KPI Trends: Early Achievement of AUM Targets and Accumulation of Recurring Assets

Progress toward the quantitative goals (KPIs) set in the Medium-Term Management Plan is highly favorable.

【Significance and Context of Slide 18】 This slide provides essential data proving the "structural change in AUM," which dictates the company's long-term corporate value. Total AUM reached ¥2.617 trillion , achieving the FY2028 target of "¥2.5 trillion or more" ahead of schedule (+¥520.8 billion, +24.8% YoY). Even more significant is the chart on the right: AUM in recurring products (investment trusts and wrap accounts) , which provide stable revenue less susceptible to market fluctuations, grew to ¥679.2 billion , an impressive +45.2% (+¥211.3 billion) YoY . This visualizes the steady accumulation toward the medium-term target of "¥800 billion or more."

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5. Evolution of Revenue Structure: Building a Robust Foundation Where Recurring Revenue Covers SG&A Expenses

Historically, securities business performance was volatile, heavily dependent on market trading volume and stock price trends. However, Aizawa Securities Group is successfully transitioning to a market-resilient business foundation through the accumulation of recurring revenue.

【Significance and Context of Slide 19】 This slide tracks the "Net Recurring Revenue to Net SG&A Expense Coverage Ratio," one of the most important KPIs proving the strengthening of the company's management structure. "Net recurring revenue" (trust fees + wrap fees minus brokerage commissions, etc.) surged to ¥1.513 billion in Q1 FY2027 (+¥624 million YoY). Consequently, the coverage ratio against net SG&A expenses (¥3.804 billion) rose to 39.8% , bringing the medium-term target of "40% or more" within reach . This is a sharp 14.7-point improvement from 25.1% in the same period last year, clearly indicating that the company's revenue structure has become structurally stable by covering basic fixed costs with recurring revenue.

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6. Capital-Efficient Management and Enhanced Shareholder Returns

The company has presented clear management goals and shareholder return policies aimed at improving capital efficiency and maximizing shareholder value.

(1) ROE and PBR Status

• ROE (Return on Equity) : Recorded 8.8% (annualized), achieving the target level of "8% or more."
• PBR (Price-to-Book Ratio) : 0.97x as of the end of June 2026 (based on a book value per share of ¥1,534.71 and a stock price of ¥1,495). The company aims to further enhance corporate value by resolving the sub-1x PBR through business structural reforms and thorough shareholder returns.

(2) Shareholder Return Policy

The company has announced a plan to provide total shareholder returns of ¥20 billion or more over the four-year period from FY2025 to FY2028 .

• Ordinary Dividends and Share Buybacks : The basic policy is a consolidated total return ratio of 50% or more and a Dividend on Equity (DOE) ratio exceeding approximately 2% .
• Special Dividends : The company plans to continuously implement a special dividend of ¥70 per share annually from FY2025 through FY2028.
• FY2026 Annual Dividend (Reference) : ¥117 per share (¥47 ordinary dividend + ¥70 special dividend). A special dividend of ¥70 is also planned for FY2027.

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7. Foundation for Growth: Human Capital Investment and Brand Building

Active investment in human capital continues as the foundation for sustainable corporate value enhancement.

• Wage Increases (Base-up) : A wage revision averaging 5.3% was implemented for all employees starting in April 2026. This marks the third consecutive year of base-up increases , with a cumulative increase of 18.1% over three years, strongly promoting the retention of top talent and increased engagement.
• Brand Awareness Initiatives : TV commercials began airing in select regions in April 2026, followed by YouTube advertisements in July, to establish the brand image as a "life partner" and cultivate new customer segments.

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Conclusion

The Q1 FY2027 earnings of Aizawa Securities Group demonstrate that the company's performance improvement is not merely due to a market recovery, but is a result of the fundamental structural reform of shifting to GBA-model operations .

• Strong earnings recovery with +37.0% in operating revenue and +730.4% in net income .
• Early achievement of the medium-term target for total AUM (¥2.61 trillion) and rapid growth in recurring AUM (¥679.2 billion) .
• Establishment of a stable revenue base with the net recurring revenue to SG&A coverage ratio rising to 39.8% .
• Promotion of shareholder value enhancement through achieving 8.8% ROE and a ¥20 billion total shareholder return program .

As Aizawa Securities Group evolves from a traditional flow-dependent securities business into a stock-focused "partner in wealth formation," we look forward to the acceleration of its transformation and the continued enhancement of its long-term corporate value.