01 · THE RALLY Nippon Insure is, in its essentials, a rent-debt guarantor — a company that stands behind a tenant's monthly rent so that landlords can sign leases without insisting on a human cosigner. The product has become quietly indispensable as Japan's demographics shift: more single-person households, more elderly renters, more borrowers caught by the 2020 Civil Code reform that capped a personal guarantor's exposure. Founded in Fukuoka and listed on the Tokyo Stock Exchange's Standard market in October 2023, the company derives roughly 94% of its FY9/25 revenue from this guarantee business, with Casa (7196) and Zenhoren (5845) the closest listed peers. The mechanics are straightforward. Property-management companies submit tenant applications through Cloud Insure, the firm's in-house underwriting platform; decisions draw on seventeen years of rent-default history (the guarantee product was launched in October 2008) and on the JICC and LICC consumer-credit consortium databases. When tenants default, the company pays the landlord and then collects from the tenant through its branch network and call centre — a process that recovered 99.1% of subrogated amounts in the first half of FY9/26 against a 6.2% incidence rate. Customers pay in three layers: an initial premium worth roughly half a month's rent (minimum ¥20,000), an annual ¥10,000 renewal fee, and optional monthly add-ons. The structure builds on itself — every new vintage of contracts adds permanently to the renewal and monthly book underneath. The stock's path since listing reflects, almost cleanly, the slow arrival of that compounding effect in the income statement. From a post-IPO low of ¥678 on August 5, 2024, shares rebuilt through a ¥800-900 range and then broke higher when FY9/24 results, published on November 14, put the operating-leverage shape on paper: revenue up 12% on the recurring book and operating profit up 43%. By spring 2025 the stock had more than doubled to ¥1,743, and the rally accelerated through summer to a peak of ¥3,485 on August 18 — a +414% move from trough to crest in twelve months. The substance behind that peak sat in the FY9/25 print itself: revenue up 16.0% to ¥3,737M and operating profit up 81.5% to ¥759M, as the renewal and monthly book passed the scale at which its growth meaningfully outpaced new-contract growth and overhead grew more slowly than the top line. Return on capital employed widened from 25.6% in FY9/24 to 32.3% in FY9/25 on the same averaged basis. By mid-August the market was paying close to 8.8x forward operating profit for the business, in effect treating one strong year as the new run-rate.

02 · THE REVERSAL The turn came on November 14, 2025, when management published FY9/25 actuals together with its FY9/26 initial guidance. The actuals stood up — operating profit of ¥759M (+81.5%), a reported operating margin of 20.3% or roughly 28% on a segment-weighted basis — but the guidance reframed the story. Management called for revenue growth of 13.3% and operating-profit growth of just 16.4%, to ¥883M. The deceleration from +81.5% to +16.4% was abrupt enough that the multiple implied at the August peak no longer arithmetic-checked. Two distinct things were happening underneath. The first was that the FY9/25 step was inflection-shaped rather than slope-shaped — the renewal and monthly book had crossed a one-time scale threshold, and beyond that crossing incremental margins would settle back toward something more ordinary. The second was a deliberate cost increase baked into the FY9/26 numbers: amortization of the Cloud Insure platform overhaul, an estimated ¥40-60M annual drag against a five-year program totalling ¥306M through November 2027, alongside salesforce build-out for the Nagoya branch that opened in March 2024 and continued main-city expansion. A quieter signal sat beneath those two. H1 FY9/26 initial-contract count came in at 15,145, down 1.4% year-on-year, even as the renewal book kept widening. A flywheel that compounds renewal income still needs new vintages coming in the top, and the top was flat. Through the December AGM cycle and into the new fiscal year the stock walked steadily down into a ¥2,200–2,400 band, finding repeated support there as the market settled on a view of FY9/26 as decelerating growth against a higher cost base. By spring, roughly a third of the rally was gone.

03 · WHERE WE STAND NOW H1 FY9/26 arrived on May 14, 2026, and the numbers came in better than the guide suggested they would. Revenue of ¥2,064M (+15.6%), operating profit of ¥590M (+52.5%) and net income of ¥417M (+53.3%) together implied that the structural operating leverage had survived the cost step-up. The H1 operating margin landed at 28.6%, almost eight points above the full-year guide of 20.9%. By the half, the company had booked 49% of guided revenue and 67% of guided operating profit. The amount of additional operating profit earned per additional yen of revenue ran at 0.73 in the first half — modestly above the 0.66 read off the FY9/24-to-FY9/25 step. Credit metrics moved in the same direction. Default incidence eased from 6.4% to 6.2%, and recoveries improved from 98.8% to 99.1%. Volume was flat at the same time, which is the signature of a deliberate underwriting choice rather than a passive outcome. The balance sheet kept thickening: equity ratio rose to 51.4%, cash reached ¥2,760M at FY9/25 close, and net cash stood at ¥2,265M against a market capitalization of ¥6,939M — 33% of the cap. The FY9/26 dividend per share rose to ¥22 from ¥19, but the implied payout ratio stayed at ~10%, the same target the company has held since starting to pay dividends after listing. No buyback has been authorized; no review of the payout target has been disclosed. What the next four quarters resolve, then, is three things at once: whether the first-half operating margin holds in the second half, whether new-contract volume picks up as the Nagoya branch matures and the partner channel expands, and whether the FY9/26 results in November address a question the market keeps asking — what capital return looks like at a business earning 32% on capital with ¥2.3bn of cash it does not seem to need.