Integral (5842) Q2 2024 earnings summary

Executive summary

• Achieved solid growth in Q2 2024, driven by fair value increases, investment disposals, and carried interest realization.

• Fund V closed at ¥250bn, doubling the size of Fund IV and marking a significant milestone.

• Major share sales included Skymark, JRC, Itokin, and Mamezou K2TOP Holdings, with significant carried interest recognized from Fund II Series.

• Realization of carried interest in Fund III during Q3, reflecting successful exits and fund performance.

• The Group completed a recapitalization transaction for Itokin, now a subsidiary, but continues to measure it at fair value through profit or loss.

Financial highlights

• Revenue for the six months ended June 30, 2024, was ¥9,683mn, up 51.4% year-over-year.

• Net income for Q2 2024 was ¥4,736mn, compared to ¥3,508mn in Q2 2023.

• Operating income for Q2 2024 was ¥6,834mn, up from ¥5,089mn in Q2 2023.

• Basic EPS: ¥142.78; Diluted EPS: ¥133.52, both calculated assuming a 10-for-1 stock split.

• One-time expenses of ¥1.2bn were recorded in Q2 2024, mainly agent fees for Fund V fundraising.

Outlook and guidance

• No formal earnings forecast provided due to the unpredictable nature of private equity investments and fair value movements.

• Reference recurring profit/loss forecast for FY2024: Fund management fees expected at ¥4,320mn (+15.0% YoY), management support fees at ¥241mn (+22.5% YoY), recurring expenses at ¥3,543mn (+20.7% YoY), and operating expenses at ¥5,091mn (+64.9% YoY).

• Targeting FE AUM growth rate of 10–20% through organic and inorganic expansion.

• Maintaining fee-related revenue margin of 30–40% via cost control.

• Five-year average ROE targeted at approximately 15%.