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MONEX GROUP INC

Company Overview

Monex Group is a Japanese online financial holding company with three economically important assets: the U.S. active-trader broker TradeStation, the Japanese crypto platform Coincheck and related digital-asset businesses, and a growing asset-management platform. It also retains a 51% economic interest in Monex Securities in Japan through Docomo Monex Holdings, which means part of the Japan brokerage business now sits below the equity-method line rather than inside consolidated revenue.

Data freshness matters here. The latest clean official annual base is FY2025. More recent data is partial, delayed, unaudited, or estimated. In practice, that means FY2025 EDINET numbers are the latest audited annual filing, while FY2026 full-year results from the company’s May 12, 2026 earnings release are official company disclosures but not yet audited. I use those FY2026 numbers for TTM earnings and the March 31, 2026 balance-sheet update, and I use a recent market price in the high-¥600s as a market-data estimate. Monex does not provide formal earnings guidance because management views market conditions as too volatile to forecast credibly.

Growth looks strong on a 3-year lens and ordinary on a 5-year lens, which tells you the business mix is cyclical and accounting-noisy. Revenue rose from ¥55.8 billion in FY2023 audited to ¥83.6 billion in FY2026 unaudited, about a 14% 3-year CAGR. Over FY2021 to FY2026, revenue CAGR is only about 1-2%. EPS shows the same pattern: from ¥12.85 in FY2023 audited to ¥43.41 in FY2026 unaudited is roughly 50% CAGR, but the 5-year picture is distorted by the crypto cycle, the Docomo Monex restructuring, and the Coincheck Nasdaq listing charges.

The concrete growth drivers are twofold. First, asset management and wealth management has gone from small to meaningful: segment operating revenue after cost of sales rose from ¥3.5 billion in FY2025 to ¥7.7 billion in FY2026, and Monex Asset Management’s AUM reached roughly ¥1.2 trillion by March-April 2026. Second, the brokerage base keeps expanding through distribution and product depth: Monex Securities’ net operating revenue rose 12.7% year on year in FY2026, while TradeStation’s DARTs rose 5% to 238,365.

This is meaningfully lower than the earnings yield implied by the P/E. The reason is straightforward: software, compliance, and platform investment are real cash costs here, and reported free cash flow is distorted by customer-balance movements and acquisition activity. I therefore use owner earnings only as a rough sanity check, not as a precision instrument.

Capital efficiency is mixed. ROIC is not especially useful for a broker and crypto platform because regulatory capital, customer cash, and equity-method accounting muddy the denominator. ROE is the cleaner guide. Official ROE was -4.0% in audited FY2025 because Coincheck’s de-SPAC charges crushed reported earnings. On FY2026 unaudited results, ROE is back to roughly 8-9% on year-end equity, and low-teens is a fairer normalized range if you strip out fair-value noise and one-offs. Incremental capital looks very good in asset management, acceptable in online brokerage, and still unproven in crypto M&A. This is a good platform collection, not a clean high-return compounder.

How the Company Makes Money

Monex is best understood as three different businesses under one roof.

Profits currently come from online brokerage and, increasingly, asset management. In FY2026 unaudited results, online brokerage contributed ¥9.35 billion of profit attributable to owners. Asset management and wealth management added ¥4.99 billion, though that figure benefited from a Westfield fair-value gain and from performance-fee intensity that will not recur evenly every year. Crypto lost ¥1.39 billion, so it is not today’s profit engine; it is a volatile option on future platform breadth.

The business quality is better than the headline volatility suggests. TradeStation recorded its highest annual revenue in FY2026 and has genuine niche strength with active traders, especially in options and multi-leg workflows. Monex Securities has the trust, tax-wrapper relevance, and distribution leverage of the NTT Docomo relationship. Coincheck remains one of the best-known consumer crypto brands in Japan and still has scale in customer accounts and assets. The moat is real but moderate: licenses, trust, custody, compliance, and embedded assets matter, but switching costs are not absolute and pricing power is limited in brokerage and crypto.

Why the Stock Fell

The shares are near their 52-week low because investors are refusing to capitalize FY2026’s headline rebound at face value. Monex traded around ¥905 at its 52-week high in late August 2025, fell to about ¥658 on March 30, 2026, and recently sat around ¥685, only a few percent above the low. That is a drawdown of roughly 24-27% from the peak.

The market appears to be saying three things. First, FY2026’s swing back to profit is partly optical because FY2025 was hit by Coincheck de-SPAC charges. Second, the two most cyclical pieces of the group both softened into Q4: Coincheck’s marketplace activity cooled and TradeStation’s net-interest tailwind moderated while expenses spiked. Third, Monex still looks like a conglomerate with uneven earnings quality: solid brokerage, promising asset management, but crypto volatility and fair-value noise in the reported numbers.

• FY2025 included ¥13.7 billion of non-cash share-based compensation and ¥4.5 billion of professional fees tied to Coincheck’s Nasdaq listing.
• Q4 FY2026 crypto operating revenue fell 27% quarter on quarter as marketplace trading value fell and there was no IEO revenue.
• Q4 FY2026 online brokerage absorbed a futures-options customer trading loss at TradeStation and migration / compensation costs at Monex Securities.
• Lower U.S. rates reduce the easy part of TradeStation’s earnings, namely interest on customer cash.
• The market does not trust the group structure enough to pay a premium multiple for mixed businesses.

What the Market Is Assuming

(a) One-time, cyclical, or sentiment-driven factors.

• FY2026 profit recovery is mostly the reversal of FY2025 de-SPAC charges.
• Crypto volumes are rolling over with risk appetite.
• TradeStation’s rate-driven earnings have peaked.
• Q4 one-offs are evidence of worsening controls.
• Retail activity in Japan and the U.S. will stay soft.

(b) Medium-term business headwinds.

• Brokerage earnings will flatten as acquisition costs rise and net-interest income normalizes.
• Coincheck will remain burdened by public-company costs and RSU expense.
• Asset-management earnings are flattered by performance fees and fair-value items.
• The group structure will keep a conglomerate discount in place.

(c) Potential long-term structural threats.

• Brokerage economics may keep commoditizing.
• A major cyber or regulatory event could permanently damage Coincheck’s trust.
• Management may not earn attractive returns on further crypto or asset-management acquisitions.

Reality check versus the market narrative.

FY2025 and FY2026 crypto and asset-management segment comparisons above use management’s restated basis after 3iQ was moved into the crypto segment.

Temporary or Structural?

Most of what pushed the shares down looks like time, not essence. The structural questions are narrower. I do not see clear evidence that Monex’s current earnings base has been permanently impaired. I do see several structural risks worth underwriting explicitly.

Observed issues today do not qualify as clear (a) real structural damage. The market is reacting to volatility, noisy accounting, and mix uncertainty. Those are real, but they are not the same as permanent franchise erosion.

Is the Market Wrong? By How Much?

Time-as-a-moat test.

• 2 years: No. You could build software, but not the licenses, compliance stack, customer trust, custody credibility, and distribution behind the existing franchise.
• 5 years: You could probably rebuild one vertical, not the whole group. A rival could build a niche broker or a crypto app, but not a cross-border brokerage-plus-crypto-plus-asset-management bundle with roughly ¥13.6 trillion of customer assets and live partnerships with NTT Docomo and KDDI.
• 10 years: You could recreate pieces, but regulation, brand trust, tax-account friction, client asset migration, and cyber reputation would still block an easy copy.

Moat & mispricing score: 6/10. The moat is real but moderate. The market is right that Monex is not a pristine compounder and that FY2026 headline earnings flatter the underlying improvement versus FY2025. The market is wrong, in my view, if it treats Monex as nothing more than a plain cyclical broker. Online brokerage still earned real money, asset management is becoming a genuine fee engine, and the KDDI transaction gives an external mark to the crypto platform that the market only partly credits. That said, the rough owner-earnings yield is only mid-single digits, so this is a measured mispricing, not a fat pitch.

Using rough FY2026 owner earnings of about ¥7 billion, the current share price implies an owner-earnings yield of roughly 4%. For a plain broker with crypto exposure, I would normally want 6% or more. The reason I still see some undervaluation is that near-term owner earnings do not capture two things well: the faster-growing, lower-capital-intensity asset-management platform, and the externally validated value of Coincheck Group after KDDI’s announced investment. I do not add back stock-based compensation in this view; Coincheck RSU expense is treated as a real cost.

Valuation basis. This is a FY2026 earnings-release-based valuation adjusted with management’s March 31, 2026 balance-sheet update, the announced KDDI transaction, and my own normalized earnings estimates. I value the online brokerage and asset-management businesses off normalized equity earnings and required equity yields, then add a separate value for the crypto business anchored partly to KDDI’s planned ¥10 billion investment for 14.9% of Coincheck Group. I assume investment assets and residual corporate overhead roughly offset outside the holdco net debt figure.

The base case says the market cap is low by roughly ¥13 billion, or about ¥50 per share. That is enough to keep the name interesting, not enough to call it an obvious bargain. If you give no credit to Coincheck’s externally marked value or to the asset-management mix shift, the shares are around fair. If those two pieces compound, there is real upside.

Key Facts, Estimates, and Judgments

• Hard facts. FY2025 is the latest audited annual base. FY2026 full-year revenue was ¥83.6 billion and net income was ¥10.9 billion in the May 12, 2026 earnings release, which is official but unaudited. Online brokerage generated ¥9.35 billion of profit attributable to owners in FY2026. Asset management and wealth management generated ¥4.99 billion. Crypto lost ¥1.39 billion. Holdco net debt was about ¥9.8 billion at March 31, 2026. KDDI agreed to invest about ¥10 billion for 14.9% of Coincheck Group, implying a post-money value of roughly ¥67 billion for that business. Monex does not provide formal earnings guidance.
• Market-data estimates. I use a recent share price of roughly ¥685 and a market capitalization of about ¥172 billion based on 251.65 million shares outstanding.
• Own estimates. Normalized EPS is about ¥42-50. Sustaining capex is roughly ¥4 billion. Rough owner earnings are about ¥7 billion. Intrinsic value is about ¥135-235 billion, with a base case near ¥185 billion.
• Judgments. The recent share weakness is mostly a time problem, not an essence problem. The core business engine is still intact. The market is too skeptical about the durability of brokerage earnings and too slow to credit the asset-management mix shift and the KDDI mark on Coincheck. The market is not wrong enough, however, to make this a slam-dunk; today it looks like a moderately undervalued, still-cyclical platform group rather than a deeply mispriced franchise.

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