Daiwa (8601) AI Stock Analysis

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Daiwa

(8601)

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Outperform 76 (OpenAI - 4o)

Rating:76Outperform

Price Target:

¥1,468.00

▲(13.84% Upside)

Daiwa's stock is supported by strong technical momentum and a reasonable valuation, making it attractive for growth and income-focused investors. However, financial risks due to high leverage and negative cash flow need to be monitored closely.

Positive Factors

Revenue Growth

Significant revenue growth indicates strong market demand and effective business strategies, supporting long-term expansion and competitiveness.

Profitability

Improved net profit margin reflects effective cost management and operational efficiency, contributing to sustainable financial health.

Return on Equity

Higher return on equity indicates better utilization of shareholder funds, enhancing investor confidence and long-term value creation.

Negative Factors

High Leverage

High leverage can increase financial risk, especially in volatile markets, potentially impacting the company's ability to finance future growth.

Negative Cash Flow

Negative cash flow suggests challenges in maintaining liquidity, which could hinder the company's ability to invest in growth opportunities.

Equity Ratio

A low equity ratio suggests vulnerability to financial instability, as the company relies heavily on debt financing, which could be risky in downturns.

Daiwa (8601) vs. iShares MSCI Japan ETF (EWJ)

Market Cap

$1.67T

Dividend Yield4.52%

Average Volume (3M)5.10M

Price to Earnings (P/E)11.2

Beta (1Y)1.46

Revenue Growth-0.87%

EPS Growth6.88%

CountryJP

Employees14,600

SectorFinancial

Sector Strength70

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)34.24

Shares Outstanding1,569,378,800

10 Day Avg. Volume5,656,200

30 Day Avg. Volume5,101,593

Financial Highlights & Ratios

PEG Ratio0.31

Price to Book (P/B)0.85

Price to Sales (P/S)1.02

P/FCF Ratio-2.25

Enterprise Value/Market Cap-7.23

Enterprise Value/Revenue-23.91

Enterprise Value/Gross Profit-23.08

Enterprise Value/Ebitda-109.22

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusHold

Number of Analyst Covering0

EPS Forecast (FY)N/A

Revenue Forecast (FY)N/A

Daiwa Business Overview & Revenue Model

Company DescriptionDaiwa Securities Group Inc., together with its subsidiaries, primarily operates as a securities broker-dealer in Japan and internationally. The company operates through four segments: Retail, Wholesale, Asset management, and Investment. It provides services, such as brokerage, trading, underwriting, strategic advice, product development, and structured finance. The Retail segment offers online and telephone-based securities-related services through a network of 177 branches and sales offices, as well as non-face-to-face channels comprising the Internet and a call center. The Wholesale segment offers sales and trading services of equities and bonds, as well as of foreign exchange and derivative products, primarily for institutional investors and corporations; and investment banking services, such as underwriting of securities, M&A advisory, etc. The Asset Management segment structures and manages investment trusts primarily for individual investors and financial institutions; provides investment advisory services; and manages assets. The Investment segment is involved in the loans, private equity, and real estate, as well as energy, infrastructure, and resource investment activities. It also offers research and consulting, information systems, banking, insurance, wrap account, inheritance-related, and other support services; and engages in the securities-related, investment advisory and agency, and investment management businesses, as well as lending and borrowing of real estate properties. The company was formerly known as Daiwa Securities Co. Ltd. and changed its name to Daiwa Securities Group Inc. in 1999. Daiwa Securities Group Inc. was founded in 1902 and is headquartered in Tokyo, Japan.

How the Company Makes MoneyDaiwa generates revenue through multiple key streams. The primary revenue source is brokerage commissions from trading activities conducted on behalf of clients, both individual and institutional. Additionally, the firm earns fees from asset management services and investment advisory, where it manages investment portfolios for clients and provides strategic advice. The investment banking segment contributes to revenue through underwriting fees and advisory fees related to mergers and acquisitions. Furthermore, Daiwa benefits from proprietary trading and interest income from its financing activities. Strategic partnerships with various financial institutions and technology firms also enhance its service offerings and can lead to additional revenue opportunities.

Daiwa Earnings Call Summary

Earnings Call Date:Jan 31, 2025

(Q3-2024)

% Change Since: |

Next Earnings Date:Jan 30, 2026

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with strong performance in asset-based revenue, overseas operations, and the investment division, but faced challenges in global markets, profit reduction, and wholesale division performance. Despite these challenges, the company shows resilience and potential for growth, particularly in the Retail Division.

Q3-2024 Updates

Positive Updates

Record High Asset-Based Revenue in Retail Division

Daiwa Securities Group posted record high asset-based revenue in the Retail Division due to increased sales of equity investment trusts and a high level of wrap account contracts.

Positive Performance in Overseas Operations

Ordinary income from overseas operations was JPY 6.4 billion, up 67.1% from the previous quarter, driven by revenue growth in Europe and strong performance in the Americas.

Significant Increase in Investment Division Revenue

Net operating revenues in the Investment Division were JPY 8.3 billion, up 83.1%, with ordinary income up 12.8%.

Retail Division's Strong Start in January

In January, Retail Division's performance expanded significantly with an approximately 40% increase in income from equity transactions and investment trust sales compared to Q3.

Negative Updates

Decline in Global Markets Revenue

Global Markets saw a decline in net operating revenues by 8.6% and ordinary income by 44.4% due to lower customer flows and a decrease in trading of Japanese equities.

Decrease in Profit Attributable to Owners

Profit attributable to owners of the parent company was JPY 28.4 billion, down 4.5% from the previous quarter.

Challenges in Wholesale Division

The Wholesale Division reported a decrease in revenues from the debt underwriting business due to a rise in interest rates and a reduced number of long-term bond issuances.

Company Guidance

During the third quarter of fiscal year 2023, Daiwa Securities Group Inc. reported net operating revenues of JPY 147.8 billion, a 2.5% increase from the previous quarter, and ordinary income of JPY 40.8 billion, reflecting a marginal 0.1% rise. However, profit attributable to owners of the parent company decreased by 4.5% to JPY 28.4 billion, leading to an annualized ROE of 7.7%. The Retail Division saw a 1% increase in net operating revenues to JPY 49.8 billion, with ordinary income rising 4.6% to JPY 12.5 billion, driven by high wrap account contracts and investment trust sales. Meanwhile, the Wholesale Division experienced an 8.6% decline in net operating revenues, totaling JPY 33.7 billion, and a 44.4% drop in ordinary income to JPY 5 billion, attributed to reduced customer flows and interest rate hikes. The Asset Management Division reported a 3.3% increase in net operating revenues, reaching JPY 18.6 billion, and ordinary income rose by 0.8% to JPY 11.6 billion. The company noted strong performance in overseas operations, especially in the Americas and Europe, with a remarkable 67.1% increase in ordinary income to JPY 6.4 billion. The group continues to focus on improving its income structure's sustainability and diversity, with a strategic emphasis on wealth management and expanding its business portfolio. Looking ahead, Daiwa aims to achieve an ROE exceeding its 8% to 9% cost of capital by the end of the fiscal year and is optimistic about maintaining growth in its Retail and Wholesale Divisions under favorable market conditions.

Daiwa Financial Statement Overview

Summary

Daiwa exhibits strong revenue growth and improved profitability, which are positive signs of business expansion. However, high leverage and negative cash flow reflect potential financial risk. While the company is on a growth trajectory, it must carefully manage its debt and improve cash flow to sustain long-term financial health.

Income Statement

Positive

Daiwa has shown substantial revenue growth over the past year, increasing from 773 billion to 1.37 trillion yen, representing a significant growth trajectory. The gross profit margin improved to 52.8%, indicating efficient cost management. The net profit margin also increased to 11.2%, showcasing enhanced profitability. However, the EBIT margin decreased slightly, suggesting potential pressure on operating efficiency.

Balance Sheet

Positive

The debt-to-equity ratio is notably high, reflecting considerable leverage which poses a risk if not managed well. However, the return on equity has improved to 9.4%, signifying improved profitability for shareholders. The equity ratio remains low at 4.6%, indicating heavy reliance on debt to finance assets, which could be a concern if market conditions worsen.

Cash Flow

Neutral

The free cash flow has turned negative, indicating potential liquidity issues. The operating cash flow to net income ratio is negative due to significant outflows, suggesting cash management challenges. However, the company has managed its investing and financing activities to support strategic initiatives.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	505.59B	1.39T	1.30T	876.88B	632.52B	582.16B
Gross Profit	523.74B	780.06B	773.02B	606.48B	585.97B	527.05B
EBITDA	110.69B	264.85B	227.15B	142.54B	187.82B	186.90B
Net Income	76.58B	154.37B	121.56B	63.88B	94.89B	108.40B
Balance Sheet
Total Assets	34.62T	36.02T	32.03T	26.41T	27.53T	26.10T
Cash, Cash Equivalents and Short-Term Investments	19.29T	20.72T	4.96T	3.87T	4.59T	4.76T
Total Debt	3.17T	5.39T	5.17T	5.05T	5.52T	5.04T
Total Liabilities	32.72T	34.10T	30.24T	24.74T	25.89T	24.51T
Stockholders Equity	1.62T	1.65T	1.53T	1.42T	1.38T	1.34T
Cash Flow
Free Cash Flow	-622.91B	-622.91B	640.63B	-264.99B	-439.05B	332.38B
Operating Cash Flow	-576.09B	-576.09B	705.12B	-183.75B	-353.47B	390.98B
Investing Cash Flow	-353.44B	-353.44B	-223.99B	7.46B	-218.53B	-91.64B
Financing Cash Flow	199.02B	199.02B	-2.85B	-565.88B	377.09B	438.07B

Daiwa Technical Analysis

Technical Analysis Sentiment

Positive

Last Price1289.50

Price Trends

50DMA

1207.42

Positive

100DMA

1138.81

Positive

200DMA

1047.53

Positive

Market Momentum

MACD

25.41

Negative

RSI

61.77

Neutral

STOCH

91.57

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:8601, the sentiment is Positive. The current price of 1289.5 is above the 20-day moving average (MA) of 1255.43, above the 50-day MA of 1207.42, and above the 200-day MA of 1047.53, indicating a bullish trend. The MACD of 25.41 indicates Negative momentum. The RSI at 61.77 is Neutral, neither overbought nor oversold. The STOCH value of 91.57 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:8601.

Daiwa Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
8707	81 Outperform	¥67.27B	8.24	―	5.89%	10.85%	30.77%
8609	78 Outperform	¥158.90B	12.92	―	4.12%	-2.39%	-4.54%
8601	76 Outperform	$1.67T	11.16	9.37%	4.52%	-0.87%	6.88%
8604	76 Outperform	¥3.48T	9.73	10.65%	4.33%	-2.45%	35.60%
8628	69 Neutral	¥211.56B	19.37	14.00%	5.22%	3.27%	-1.81%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
8698	43 Neutral	¥184.56B	-42.18	-3.97%	4.39%	14.69%	-114.36%

* Financial Sector Average

Performance Comparison

JP:8601

Daiwa

1,289.50

310.98

31.78%

JP:8698

Monex Group

731.00

-360.01

-33.00%

JP:8628

Matsui Securities Co

823.00

41.95

5.37%

JP:8604

Nomura Holdings

1,176.50

291.80

32.98%

JP:8609

Okasan Securities Group Inc.

728.00

103.50

16.57%

JP:8707

IwaiCosmo Holdings, Inc.

3,145.00

1,011.80

47.43%

Daiwa Corporate Events

Daiwa Securities Reports Mixed Earnings for 2025

Nov 4, 2025

Daiwa Securities Group Inc. is a prominent player in the financial sector, primarily engaged in securities-related business, with its operations significantly influenced by the economic and market environment. In its latest earnings report for the six months ending September 30, 2025, Daiwa Inc. reported a modest increase in operating revenue, reaching 701,750 million yen, a 1.7% rise from the previous year. The company’s net operating revenue also saw a 5.7% increase, totaling 327,880 million yen, while operating income rose by 12% to 86,020 million yen.

Daiwa Securities Reports 2Q FY2025 Financial Results

Nov 4, 2025

Daiwa Securities Group Inc. announced its financial results for the second quarter of FY2025, highlighting its performance in various segments including wealth management and global markets. The announcement provides insights into the company’s financial management and operations, indicating a strategic focus on asset-based revenues and overseas operations, which may impact its market positioning and stakeholder interests.