Japan Exchange Full-Year Profit Forecast Misses Estimates

Japan Exchange Group Inc. (8697), the main bourse operator in the world’s second-largest equity market, didn’t boost its full-year profit forecast as analysts had expected. The shares fell.

The company expects to earn 22 billion yen ($225 million) in the year ending March 31, Japan Exchange reiterated today. Analysts had expected the bourse to raise its projection to 29.1 billion yen, according to the average of seven estimates compiled by Bloomberg. Net income was 16.6 billion yen in the six months through Sept. 30, beating the company’s own forecast of 15 billion yen. Shares sunk 3.3 percent as of 1:06 p.m. in Tokyo, reversing an earlier advance of as much as 3.3 percent. The Topix index erased gains to fall 0.8 percent.

“While earnings were above the company’s forecasts, its guidance was below the market consensus and that’s being taken negatively,” said Naoki Fujiwara, the Tokyo-based chief fund manager at Shinkin Asset Management Co., which oversees about 600 billion yen. “Also, shares have been strong this past week, so investors may be feeling like all the good news is already out.”

Japan Exchange has almost tripled since it was formed through the merger of the Tokyo and Osaka bourses in January. The value of stocks traded declined last quarter from the first three months of the fiscal year, the exchange said today.

Revenue in the first half was 61.7 billion yen, beating the bourse’s projection of 58 billion yen.

Full-Year Forecasts

Japan Exchange lifted its revenue forecast to 105 billion yen for the year ending March 31 from 101.5 billion yen and increased its operating-profit outlook by 5.5 percent to 38.5 billion yen. Both increases were less than analysts had estimated. The company didn’t provide year-earlier comparisons because of the merger.

The Topix index is the world’s best-performing developed equity gauge this year and gained 62 percent in the four quarters through September, the steepest rally since the period ended March 1973.

While stock trading value declined from the first fiscal quarter, Japan Exchange maintained a daily average of 2 trillion yen, it said. Exchange-traded-fund trading values were near record levels, increasing 6 times on the year, it said.

The total value of shares changing hands on the first section of the Tokyo Stock Exchange was 351.5 trillion yen in the first half of this fiscal year, the most since 2007, the bourse said in a statement on Oct. 1. Investors traded a record 200 million derivatives contracts in the period, according to the statement.

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: Sarah McDonald at smcdonald23@bloomberg.net

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