Japan Exchange Boosts Dividend Outlook as Profit Misses Estimate

Japan Exchange Group Inc. (8697) reported net income that missed analyst estimates in its first full-year earnings report after the merger of the Tokyo Stock Exchange Group Inc. and Osaka Securities Exchange Co. The shares, which tripled this year through April 26, fell as much as 3.8 percent after the announcement.

Net income for the year through March 31 was 10.9 billion yen ($111 million), missing the 11.2 billion yen estimate of seven analysts surveyed by Bloomberg while beating the exchange’s forecast of 9.5 billion yen profit in announced in January. The exchange forecast an 19 percent increase in profit to 13 billion yen for the current fiscal year ending March 31, 2014. The bourse also raised its dividend outlook to 95 yen this year, up from 80 yen the previous year.

Japan Exchange, created through the merger of the Tokyo and Osaka bourses to cut costs amid slumping volume and increased international competition, has received a boost as government policies to defeat deflation spurred a record rally in the country’s stocks. The daily volume of shares traded on the first section of the Tokyo Stock Exchange averaged about 3.3 billion shares since November, compared with about 1.9 billion shares in the same period a year earlier, according to data compiled by Bloomberg.

Photographer: Kiyoshi Ota/Bloomberg

Employees work on the trading floor of Japan Exchange Group Inc.'s Tokyo Stock Exchange (TSE) in Tokyo. Close

Employees work on the trading floor of Japan Exchange Group Inc.'s Tokyo Stock Exchange (TSE) in Tokyo.

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Photographer: Kiyoshi Ota/Bloomberg

Employees work on the trading floor of Japan Exchange Group Inc.'s Tokyo Stock Exchange (TSE) in Tokyo.

Shares of Japan Exchange have “risen sharply, buoyed by higher equities trading volumes and market expectations that the rally in Japanese shares is set to extend,” wrote Takehito Yamanaka, an analyst at Credit Suisse Group AG which initiated coverage on the stock with a neutral rating on April 23. “For trading volume to rise further, not only expectations of economic recovery but also solid evidence that the recovery is entrenched will likely be necessary.”

The shares rose 3.1 percent to 12,250 yen at the trading break, its highest since its merger this January.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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