Nihon M&A Center Q2 FY2025 slides: sales surge 21.5%, profit up 43.1% YoY

Nihon M&A Center Holdings Inc. (TYO:2127) reported robust financial results for the second quarter of fiscal year 2025, significantly exceeding original forecasts as the company successfully shifted toward higher-value transactions. The stock closed at 757.9 yen following the October 30 announcement, up 0.37%.

Quarterly Performance Highlights

The M&A advisory firm delivered impressive first-half results, with sales reaching ¥22,587 million, a 21.5% year-over-year increase and 112.4% of the original forecast. Ordinary profit surged 43.1% to ¥8,571 million, representing 126.0% of the initial projection. The operating profit margin improved significantly to 37.9%, up 5.7 percentage points from the previous year.

As shown in the following summary of H1 FY2025 results, the company’s performance exceeded expectations across key metrics:

The company has completed 48.8% of its full-year sales target and 50.4% of its ordinary profit target at the halfway point of the fiscal year, positioning it well to achieve its annual goals. This represents a substantial improvement compared to the previous year’s first-half progress rates of 38.0% for sales and 35.2% for ordinary profit.

The following chart illustrates the company’s progress toward full-year earnings forecasts:

The strong performance was driven by an increase in both transaction volume and value. The number of completed transactions rose 7.5% year-over-year to 488, while the average revenue per M&A transaction increased 12.6% to ¥44.6 million. Particularly notable was the 58.6% increase in large transactions (those with total success fees exceeding ¥100 million), which grew from 29 in H1 FY2024 to 46 in H1 FY2025.

The second quarter specifically showed even stronger momentum, as detailed in this breakdown of Q2 FY2025 results:

The comprehensive income statement reveals substantial improvements across all profit metrics, with net profit attributable to the parent company increasing 44.7% year-over-year to ¥5,410 million:

Strategic Initiatives

Nihon M&A Center is pursuing several strategic initiatives to sustain its growth trajectory. The company has expanded its overseas presence by establishing local subsidiaries in five ASEAN countries to promote cross-border M&A involving mid-sized and small companies. This international expansion has already yielded results, with the company supporting 12 cross-border M&A transactions during FY2024.

The following slide details the company’s overseas activities:

The company is also developing its fund business as a second pillar of growth. Through various investment vehicles including Japan Investment Fund, J-Search, and AtoG Capital, Nihon M&A Center is investing in mid-sized and small companies with a focus on value creation and regional rejuvenation.

As illustrated in this overview of the fund business:

Additionally, Nihon M&A Center is strengthening its PMI (Post Merger Integration) consulting services in response to increasing client demand. The company’s track record in providing PMI support has grown from 55 cases in FY2022 to 93 in FY2024, with 59 already completed in the first half of FY2025.

The following slide shows the growth of the PMI consulting business:

The company continues to enhance its regional presence through community-based initiatives, including opening satellite offices in four prefectures (Niigata, Miyagi, Ibaraki, and Shizuoka) and implementing local marketing strategies. These efforts are complemented by nationwide seminar tours held at approximately 40 locations, which received over 6,000 applications in the first half of the fiscal year.

Forward-Looking Statements

Despite the strong first-half performance, Nihon M&A Center maintained its full-year forecast of ¥46,300 million in sales (+5.0% YoY) and ¥17,000 million in ordinary profit (+1.7% YoY). This conservative outlook reflects the company’s focus on returning to its "customary cycle of attaining results targets" after missing forecasts in previous years.

The following slide details the company’s FY2025 forecast:

For the medium term, Nihon M&A Center has set targets of ¥50,000 million in sales for FY2026 and ¥54,000 million for FY2027, with corresponding ordinary profit targets of ¥18,000 million and ¥20,000 million, respectively.

The company plans to maintain its shareholder-friendly dividend policy, with a projected dividend of ¥29 per share for FY2025, representing a payout ratio of 83.6%. This continues the company’s commitment to a dividend payout ratio of 60% or more during the mid-term management plan period.

As shown in this overview of the company’s dividend policy:

Nihon M&A Center also expects to maintain a high return on equity, with a forecast of 22.9% for FY2025, slightly below the 24.1% achieved in FY2024 but still well above the 20% threshold the company aims to exceed.

While the company faces challenges, including employee retention particularly among newer staff and a decrease in new sell-side mandates, its strong first-half performance and strategic initiatives position it well for continued success in the Japanese M&A advisory market.

Full presentation:

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