Monex Group, Inc. · TSE:8698
Monex — H1 FY2008 Earnings Presentation
47 slides from Monex's earnings presentation, Oct 24, 2007
Slide 1: Financial Results of First Half of Fiscal Year Ending March 31, 2008
October 24, 2007 Financial Results of First Half of Fiscal Year Ending March 31, 2008 This is an English translation of Japanese presentation material prepared for IR conference held on the date above; it includes the information on consolidated financial summary under Japanese GAAP. If there is any
Slide 2: Important Matters concerning Product-related Risks
Important Matters concerning Product-related Risks This material is explanatory material on financial results of Monex Beans Holdings, Inc. (“MBH”). The descriptions herein concerning the products, services, etc. which are handled by Monex, Inc. (“Monex”), which is one of the Company’s subsidiaries,
Slide 3: Our Business Principles
Our Business Principles - PURSUING SPIRIT OF INNOVATION We will constantly strive to pioneer new fields in finance and propose new approaches to managing money. - STAYING CUSTOMER FOCUSED We believe that the best guide to our corporate activities is the voice of our customers. With this guide, we wi
Slide 4: Table of Contents
Table of Contents Important Matters concerning Product-related Risks ･･･ p.1 2. Business Summary Our Business Principles ･･･ p.2 (1) Brokerage Business - Stock Brokerage Business ･･･ p.19 I. Financial Results - Fixed Income Business ･･･ p.20 1. Financial Highlights ･･･ p.5 - Mutual Fund Business ･･･
Slide 5: 1. Financial Results
1. Financial Results 2. Business Strategy and Future Development 3. To our Shareholders 4. Appendix 4
Slide 6: Financial Highlights
Financial Highlights ■2Q of FYE Mar. 31, 2008 Overview of the Japanese Stock Market • Nikkei 225 Average - 7.5% from Jun. 29, 2007 • Trading Value(*1) - 7.5% from 1Q of Mar. 31, 2008 ■2Q of FYE Mar. 31, 2008 Financial Highlights Net operating revenues 7,059 million yen +2.7% over 1Q of FYE Mar. 31
Slide 7: Financial Summary: 1Q vs 2Q of FYE Mar. 31, 2008
Financial Summary : 1Q of FYE Mar. 31, 2008 vs. 2Q of FYE Mar. 31, 2008 (in million yen, %) 1Q of FYE 2Q of FYE Mar. 31, 2008 Mar. 31, 2008 Change (Apr. 2007-Jun. 2007) (Jul. 2007-Sep. 2007) Operating Revenues 8,029 7,716 -3.9% Net Operating Revenues 6,871 7,059 2.7 % SG&A 3,554 3,558 0.1 % Operatin
Slide 8: Financial Summary: 1H FYE Mar. 2007 vs 1H FYE Mar. 2008
Financial Summary : 1st Half of FYE Mar. 31, 2007 vs. 1st Half of FYE Mar. 31, 2008 (in million yen, %) First Half of FYE First Half of FYE Mar. 31, 2007 Mar. 31, 2008 Change (Apr. 2006-Sep. 2006) (Apr. 2007-Sep. 2007) Operating Revenues 16,832 15,746 -6.5 % Net Operating Revenues 16,034 13,931 -13.
Slide 9: Financial Highlights (Quarterly Trend)
Financial Summary：Financial Highlights (Quarterly Trend) ■Net operating revenues and Operating Income ■SG&A million yen Total Trading Value billion yen million yen of Individual Investors 20,000 1,600 10,000 in 3 major stock exchanges and JASDAQ (Average per business day)(right) 7,500 18,000 1,400 5
Slide 10: Profit Margin and Cost Structure
Financial Summary：Profit Margin and Cost Structure ■Profit Margin ■Cost Structure (Jun. 2007 - Sep. 2007) (Operating income/ Net Operating revenues)* 60% Strategically Fixed costs and costs controllable costs 53% correlated to the number of 51% accounts 50% 50% Commission to 50% 48% stock exchange e
Slide 11: Quarterly Trends in Income Statement
Financial Summary：Quarterly Trends in Income Statement (in million yen) FYE Mar.31, 2006 FYE Mar.31, 2007 FYE Mar.31, 2008 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Brokerage commissions 3,988 6,064 8,587 8,667 6,023 4,687 4,504 5,395 4,228 4,160 Underwriting and distribution commissions 105 227 234 239 61 58 2
Slide 12: Quarterly Trends in SG&A
Financial Summary：Quarterly Trends in SG&A (in million yen) FYE Mar.31, 2006 FYE Mar.31, 2007 FYE Mar.31, 2008 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Transaction-related expenses 886 1,121 1,540 1,710 1,661 1,551 1,482 1,532 1,361 1,310 Commissions paid 159 224 239 212 237 219 214 217 231 248 Exchange and as
Slide 13: Revenues/SG&A per Customers' Assets in Custody
Comparison Analysis : Revenues/SG&A per Customers’ Assets in Custody (Annualized) Direction : Low cost / portfolio management-oriented business Matsui 2.5% 1. Revenues per customers’ assets in custody (Consolidated) Continue to grow equity brokerage business, and intensively 1Q of Mar. 2008 strength
Slide 14: 2. Business Strategy and Future Development
1. Financial Results 2. Business Strategy and Future Development 3. To our Shareholders 4. Appendix 13
Slide 15: Mission Statement
Mission Statement Take position as a total financial service provider, not just as an online brokerage firm Offer comprehensive products and service line-ups with “World Class Quality” Support non-active investors to efficiently manage his/her financial assets Strengthen “Products Originatio
Slide 16: Current Environment Recognition
Current Environment Recognition ■ Increasing Asset Management by Individuals Financial Assets Held by Households (End of June 2007) Mutual ◆ With Japanese population having started to decline Bonds Funds Equities Others 2.2 5.1 5.1 and economic growth slowing down, people trust less in 4.2 Insurance
Slide 17: Monex's Business Model
Monex’s Business Model Asset management business shall be a major growth field rather than stock Aspect of an Investment Bank brokerage services Originating unique original products Gain competitive advantages by not only distributing investment products online by highly-skilled professionals at l
Slide 18: Priority Policies
Priority Policies ■Three Strategies and Investment Education to Pursue Monex’s Business Model Three Strategies Recent Priority Policies 1. Product Strategy Differentiation by diversifying products Strengthen lineup of mutual funds Strengthen lineup of and providing original products and alternative
Slide 19: Current and Future Structure of Revenues and Customers' Assets by Product
Current and Future Structure of Revenues and Customers’ Assets by Product ■Resetting a new mid/long-term business goal. Strengthen mutual fund business and diversify revenue sources 【Current Structure (2Q of FYE Mar. 2008)】 Direction of Each Business Line 【Future Structure】 Investment Banking Underw
Slide 20: Stock Brokerage Business: Increase in market share and expansion of services
Stock Brokerage Business：Increase in market share and expansion of services ■Increase in Market Share ■Improvement and Enhancement of Existing Services ◆Market share exceeded 8%, the highest in the last 2 years ◆Increase of original trading tool “Monex Trader” users ・Strong trading volume even in ma
Slide 21: Fixed Income Business
Fixed Income Business ： Bringing fixed income investments closer to customers by providing unique products ■Products that Match Market Trends ■Growth in the Number of Bond Investors Developing products that match customer’s short-term ◆Total Sales of Foreign Bonds asset management needs through ori
Slide 22: Mutual Fund Business: Record-high sales performance
Mutual Fund Business： Record-high sales performance ■Enhancing Services to Expand Mutual Fund Balance ■Top-class Online Mutual Fund Sales ◆Strong results of sales volume and outstanding balance ◆Top ranked online mutual fund sales performance Sales amount of equity mutual funds (Jul.-Sep. 2007) ： （b
Slide 23: FX Business: Volatile currency market stimulated transactions
FX Business：Volatile currency market stimulated transactions ■Limited Impact by Sub-Prime Loan Problem ◆The impact of sub-prime loan problem on FX business ◆Number of new accounts opened over the past year • Japanese yen sharply appreciated in mid-August in • The number of new accounts has been incr
Slide 24: Alternative Investment Business
Alternative Investment Business : Entry into the discretionary investment management business ■Expansion of Investment Management Business ■Alternative Investment Activity and Products ◆Premium Hybrid 2007 ◆AUM Growth of Investment Trusts under MAI’s Advisory ・Hybrid of private equity funds (PEF) an
Slide 25: Investment Banking Business 1: Chinese companies listing in Japan
Investment Banking Business 1： New initiative intended for Chinese companies seeking to list on Japanese stock exchanges ■Supporting Chinese Companies’ Listing in Japan ■ Track Records ◆IPO Track Records Number of IPOs Value of IPO Deals 120 (hundred million yen) Name Underwriting Share New Stock Li
Slide 26: Investment Banking Business 2: Entry into the M&A advisory business
Investment Banking Business 2 : Entry into the M&A advisory business ■Developing the M&A Advisory Business ◆Reinforcing the management of WRH Japan by inviting http://www.wrh.co.jp/ professional with expertise in M&As ◆MBH accepted a part of the third party share allocation by WRH Japan ＜Main Board
Slide 27: Banking and Insurance Related Businesses
Banking and Insurance Related Businesses ■Alliance with eBANK ■Life Insurance Business ◆Financial instruments intermediary http://www.netseiho.com/ ・ Started financial instruments intermediary by eBANK for Monex, Inc. (“Monex”) on Sep. 15, 2007 ◆ Planning to establish a life insurance company Aims t
Slide 28: Investor Education
Investor Education: Providing appropriate investment educational opportunities for more people ■2 reasons why we provide investor education ■Activities ◆Continuously holding seminars Enhancing the return of Developing infrastructure our customer of our growth ・ From April to September 2007 - Off-lin
Slide 29: Contact Center: Staying customer focused
Contact Center : Staying customer focused for the convenience of our customers ■Award-Winning Service ■Extended Customer Dial Business Hours ◆Awarded the Highest 3 star Rating ◆Extended customer dial business hours Monex was awarded the highest 3 star rating from Help Desk Until September 3, 2007 8
Slide 30: Marketing Strategy: Focusing on acquiring investment beginners
Marketing Strategy : Focusing on acquiring investment beginners ■ Sales Promotion ◆Support for investment beginners ◆Active promotion to increase balance in mutual funds ・Newly placed contents for beginners ・Summer bonus campaign ・Abundant contents on rankings and Q&As The mutual fund sales commissi
Slide 31: Preparation towards the Enactment of the Financial Instruments and Exchange Law
Preparation towards the Enactment of the Financial Instruments and Exchange Law ■Financial Instruments and Exchange Law ■After the enactment (From September 30, 2007) Establishing cross-sectional framework of a wide range of Reconfirmation on website financial instruments and services to ensure in
Slide 32: 3. To our Shareholders
1. Financial Results 2. Business Strategy and Future Development 3. To our Shareholders 4. Appendix 31
Slide 33: ROE and Dividend
ROE and Dividend ■Pursuing Investment Return to Our Shareholders ◆Dividend Payout Policy ◆ROE ・Calculation formula (from FYE March, 2008) ROE Consolidated net income of MBH’s current fiscal year 50% ・Interim dividends to be paid out as of current fiscal term ◆Dividend Payout Ratio 40% ・Aiming for ap
Slide 34: Disclosure and Major Shareholders
Disclosure ■Clear and Timely Disclosure Clearest disclosure among the industry Major shareholders and share distribution (Recorded as of the end of September 2007) Disclosure Frequency Language Started Accounts, etc. Weekly/Monthly English 1999 Major shareholders Top 3 shareholders Japanese Financ
Slide 35: 4. Appendix
1. Financial Results 2. Business Strategy and Future Development 3. To our Shareholders 4. Appendix 34
Slide 36: Customer Portfolio (as of September 30, 2007)
Customer Portfolio (as of September 30, 2007) ■ Gender ■ Location Others Female 24.4% 24.5% Tokyo Metropolitan District Nagoya District 53.7% Male 8.9% 75.5% Osaka District 19.0% ■ Age ■ Occupation Company Employee 48.0% Over 70 3.1% Unemployed 16.7% 60s 10.9% Self-employed 9.6% 50s 17.8% Housewife
Slide 37: Competitive Services and Products
Competitive Services and Products: For all customers’ satisfaction (As of October 22, 2007) Fixed Mutual Other Equity Alternative Income Funds s Small Stock Night China/ Credit Stop Chinese U.S Time Unit Program Lending JGB/ Monthly India High Low Settle-ment Loss Trading Trading Foreign Auction Pur
Slide 38: The Monex Group
The Monex Group ■Group Companies （as of October 24, 2007） Investment Education for all Individual Investors Providing the Best Alternative Investment Products to Individual Investors （Investment Ratio） MBH : 70% Monex, Inc. (Investment Ratio) MBH : 55% Premium Online Financial Institution : 45% 10%
Slide 39: Risks and Fees Related to Monex's Products: Share Transactions
Risks and Fees Related to Monex’s Products Described Herein Details of Monex, Inc. (our subsidiary) Company name (trade name): Monex, Inc. Financial instrument firm Registration number: Director of Kanto Local Finance Bureau (Kinsho) No. 165 Industry organization membership: Japan Securities Dealers
Slide 40: Risks and Fees Related to Monex's Products: Stock Lending
Risks and Fees Related to Monex’s Products Described Herein Important Matters concerning Stock Lending Services ▪ Risks Credit risk: Since the investors execute unsecured loan agreement for the stock lending services, the investors will be exposed to credit risk of the Company and the Company’s borr
Slide 41: Risks and Fees Related to Monex's Products: Investment Trust
Risks and Fees Related to Monex’s Products Described Herein Important Matters concerning Investment Trust ▪ Risks The base value of the investment trust may rise or fall since the investment trust substantially invests in securities with fluctuating prices. Therefore, the invested principal and inte
Slide 42: Risks and Fees Related to Monex's Products: Monex Asset Planning Fund
Risks and Fees Related to Monex’s Products Described Herein Important Matters concerning Monex Asset Planning Fund ▪ Risks The base value of the Fund (including the Mother Fund) is subject to change since the Fund substantially invests in securities with fluctuating price such as bonds, shares and R
Slide 43: Risks and Fees Related to Monex's Products: Premium Hybrid 2007
Risks and Fees Related to Monex’s Products Described Herein Important Matters concerning [Premium Hybrid 2007] ▪ Risks Price fluctuation risk: The Fund invests in domestic and foreign shares, bonds, exchanges, futures, derivatives and other instruments via investments in Private Equity Funds and Hed
Slide 44: Risks and Fees Related to Monex's Products Described Herein
Risks and Fees Related to Monex’s Products Described Herein ▪ Investment Advisory Fee The Investment advisory company will receive from the Investment Management Company a fee of at the rate of 0.25% per annum of the Net Asset Value of the Fund, the source of which will be Investment Performance Fee
Slide 45: Risks and Fees Related to Monex's Products: Bonds for Individual Investors
Risks and Fees Related to Monex’s Products Described Herein Important Matters concerning [Monex Bonds for Individual Investors] ▪ Risks Basically, the market price of yen-denominated bonds fluctuates in accordance with the changes in the base interest rate of the market. The price of bonds will fall
Slide 46: Risks and Fees Related to Monex's Products: World Bank Notes
Risks and Fees Related to Monex’s Products Described Herein Important Matters concerning World Bank Notes ▪ Risks Price fluctuation risk: Basically, the market price of the World Bank Notes fluctuates in accordance with the changes in the base interest rate of the market. The price of bonds will fal
Slide 47: Risks and Fees Related to Monex's Products: FX
Risks and Fees Related to Monex’s Products Described Herein Important Matters concerning “FX” ▪ Risks Price fluctuation risk: If the foreign exchange rate fluctuates in a direction that is reverse to the investor's anticipation due to fluctuation in the price of the traded currency (exchange rate) a