SPARX FY2017 Q3: Operating Profit more than doubled due to equity and renewable investment biz.
As of the end of December 2017 (the end of the third quarter), the value of AUM (assets under management) surpassed 1.2 trillion yen for the first time in seven years.
The underlying upward trend in the Japanese stock market was a boon that led to big increases in performance fees and contributed to gains.
The group also received performance fees on funds that develop and operate renewable energy power plants, contributing to gains from our real asset strategy as well.
Group CEO Shuhei Abe summarized the period by saying that if we think of our performance in 2007 as our peak, we are now back up to the seventh station.
Investment in Japanese stocks is the group's primary business, and our business has experienced an increase in AUM across the board, from our long/short investment strategy to small- and mid-cap equity one.
Nevertheless, the US stock market took a tumble in the first few days of February, which has led to the beginning of a correction for the Japanese stock market as well.
Abe sees this correction in a positive light, attributing the drop to cyclical rather than structural factors, and considers it as a good chance to purchase stocks at low prices.
After announcing the financials for the period, the company also announced that in terms of AUM, as of the end of January, the AUM of its South Korean business had fallen by about 100 billion yen.
Abe said that because fee rates for the group's Korean business were lower, any negative impact of this AUM decline on performance throughout the period ending March 2018 will be slight, but that the group still intends to support and focus on making its Korean business an integral part of SPARX where the Korean team is able to successfully implement the SPARX-style of investment.
Lastly, the group addressed a shareholder proposal related to Teikoku Sen-i Co., Ltd., made by SPARX in January.
SPARX made a shareholder proposal seeking dividends of 90 yen rather than the 30 yen announced by Teikoku Sen-I, and for the term of office for directors to be set at one year rather than two.
Abe said that with Japan's economy showing an underlying trend toward recovery and away from deflation, he believes that Japanese companies need to think carefully about capital efficiency, and he sees the role of the SPARX Group to continue to provide guidance to companies and fulfill its fiduciary duty to its clients, including households, and institutional investors such as pensions.