Monex Group, Inc. started as online brokerage Monex, Inc. in April 1999 with CEO Oki Matsumoto and Sony Corporation as core investors. The company grew through mergers with Nikko Beans, Inc. in 2005, and ORIX Securities in 2010. The group expanded overseas by adding Boom Group and TradeStation Group, Inc. in 2010 and 2011, respectively.
Capital Markets
Executive summary
One of Japan’s top five online brokers with subsidiaries in US and in cryptocurrency exchange business
Monex Group, Inc. started as online brokerage Monex, Inc. in April 1999 with CEO Oki Matsumoto and Sony Corporation as core investors. The company grew through mergers with Nikko Beans, Inc. in 2005, and ORIX Securities in 2010. The group expanded overseas by adding Boom Group (in Hong Kong) in 2010 and TradeStation Group, Inc. (in the US) 2011. Seeing blockchain and cryptocurrency technology as key growth drivers in the future, Monex Group has been preparing to enter this field since announcing its “new beginning” initiative in October 2017. In keeping with this plan, it subsequently acquired cryptocurrency exchange operator Coincheck, Inc. in April 2018.
Monex Group’s core business is retail online brokerage services. The company offers trading services mainly in equities, forex, and investment trusts (mutual funds), as well as futures, options, bonds, and cryptocurrency. Peers are SBI Securities, Rakuten Securities, Matsui Securities, and au Kabucom Securities (in order of market share).
In FY03/21, mainstay subsidiary Monex, Inc. reported a total of 1.94mn customer accounts (ranking it third among Japan’s top five online brokerages with 11.8% market share), customer assets under custody of JPY5.1tn (third; 13.1%), equity trading value of JPY19.2tn (fifth, 5.8%), and margin trades outstanding of JPY207.6bn (fifth; 7.9%). Monex is distinguished from its competitors by its US subsidiary and its subsidiary in the cryptocurrency exchange business. Its customer base mainly consists of investors with a longer-term outlook who do not mind paying higher commissions for the diverse trading order options and trading tools the company offers.
Monex Group has five reporting segments: Japan, US, Asia-Pacific, Crypto Asset, and Investment. At the Japan segment, Monex, Inc. is the core business, at the US segment the core business is TradeStation Group, at the Asia-Pacific segment the core business is Boom Securities, at the Crypto Asset segment the core business is Coincheck, and at the Investment segment the core business is Monex Ventures. In FY03/21, the Japan segment accounted for 38.8% of net operating revenue, the US segment 30.6%, and the Crypto Asset segment 27.8%. At the pre-tax profit level, the Japan segment accounted for 34.2% of consolidated earnings, the US segment 15.0%, and the Crypto Asset segment 46.3%.
Japan (Monex, Inc.): At the Japan segment, net operating revenue comes from stock brokerage commissions (51.4% in FY03/21), trading income (15.6%), and net financial income (22.7%). Segment SG&A expenses are mostly fixed costs, with trading-related expenses accounting for 27.5%, personnel expenses 22.1%, and system-related expenses 44.9% in FY03/21.
US (TradeStation Group): At the US segment, net operating revenue comes from commissions received (78.4% in FY03/21) and net financial income (17.1%). Segment SG&A expenses includes trading-related expenses (35.6% in FY03/21), personnel expenses (38.8%), and system-related expenses (18.2%)—the elevated level of personnel expenses reflecting the high cost of its in-house software development team. At end-March 2021, the US segment reported a total of 145,887 active accounts and USD10.3bn in customer assets under custody.
Crypto Asset (Coincheck, Inc.): As a cryptocurrency exchange operator, Coincheck derives the majority of its operating revenue from net trading income. Segment SG&A expenses includes trading-related expenses (40.4% in FY03/21), personnel expenses (28.7%), and office expenses (4.6%). At end-FY03/21, Coincheck reported a total of 3.72mn downloads of it trading app by users, of which the number of users with verified identities came to 1.20mn . Coincheck is currently the top cryptocurrency exchange operator in Japan both in terms of the number of cryptocurrencies handled (16) and trading app downloads.
Trends and outlook
For FY03/22, the company reported full-year consolidated operating revenue of JPY88.8bn (+14.0% YoY), net operating revenue of JPY83.5bn (+13.4% YoY), operating profit equivalent of JPY14.9bn (-37.3% YoY), pre-tax profit of JPY20.8bn (-2.3% YoY), and profit attributable to parent company shareholders of JPY13.0bn (-9.2% YoY). Operating revenue reached a historical high due to growth in the Japan, US, and Crypto Asset segments. Operating profit equivalent declined as the company stepped up its marketing activities in the US.
In the wake of the move by major online brokers in the US to commission-free trading in October 2019, Monex changed its own direction in Q3 FY03/20 and began working to move its business model away from a brokerage service-based model and more toward an asset management service-based model. Under the new business model, the Monex Group will be focusing less on generating brokerage commissions and more on receiving compensation for services to support the wealth building and asset management of its customers.
Strengths and weaknesses
Shared Research sees the company’s strengths as its diversification by region, business, and customer base; customers willing to pay higher commissions for its value-added services; and highly acclaimed trading platform. Its weaknesses lie in a high cost structure and being late to acquire active traders due to a product-driven approach. (See the Strengths and weaknesses section for details.)
Key financial data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures that exceed 1,000% YoY are denoted by -.
Recent updates
Notice regarding year-end dividend
On April 27, 2022, Monex Group, Inc. announced its year-end dividend forecast for FY03/22.
The company’s shareholder returns policy aims at paying stable dividends of at least JPY7.5 per share for each half-yearly period and conducting share buybacks at the discretion of management. It also aims to improve total shareholder returns (TSR). For FY03/22, the company plans to pay a year-end dividend of JPY7.7 per share (JPY7.5 in FY03/21), bringing the annual dividend per share to JPY15.3 (JPY12.0 in FY03/21).
Notice regarding Coincheck Group B.V, a consolidated subsidiary's listing on NASDAQ by De-SPAC
Monex Group, Inc. announced the planned listing on NASDAQ of consolidated subsidiary Coincheck Group B.V. through De-SPAC transaction.
Monex Group concluded a business combination agreement between Coincheck Group B.V. (CCG), a wholly owned subsidiary that will become the holding company of Coincheck Inc. as a result of the transaction, and Thunder Bridge Capital Partners IV, Inc. (TBCP), a SPAC listed on NASDAQ. CCG plans to list its shares on NASDAQ following the business combination.
CCG is scheduled to be listed on NASDAQ with the ticker symbol CNCK by end-2022. Under the agreement, the pre-money equity valuation of CCG (equity valuation before the above transaction) is calculated as the initial valuation of around USD1.3bn (approximately JPY150bn) + earn-out (price adjustment that allows for the acquisition of 50mn additional CCG shares if certain conditions are met). The earn-out portion is worth UD500mn (approximately JPY60bn; calculation based on the assumption that CCG shares are initially issued at USD10 per share).
CCG will remain a consolidated subsidiary of Monex Group after listing on NASDAQ, making Coincheck Inc. a wholly owned subsidiary of CCG. The company also commented that the growth strategies of Coincheck and CCG will remain an important part of Monex Group's strategy.
Trends and outlook
Quarterly trends and results
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures that exceed 1,000% YoY are denoted by -. Quarterly performance figures calculated using differences in cumulative quarterly performance.
Note. Figures may differ from company materials due to differences in rounding methods.
Note: Figures that exceed 1,000% YoY are denoted by -.
Note: Quarterly performance figures calculated using differences in cumulative quarterly performance.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures that exceed 1,000% YoY are denoted by -.
Note: Cumulative quarterly performance calculated as the total of quarterly results.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures that exceed 1,000% YoY are denoted by -.
Note: Cumulative quarterly performance calculated as the total of quarterly results.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures that exceed 1,000% YoY are denoted by -.
Note: Cumulative quarterly performance calculated as the total of quarterly results.
Note: Depreciation for US and Asia-Pacific segments include depreciation of identified intangible assets at the time of acquisition of TradeStation Group and Monex Boom Securities Group.