Nippon Insure Co., Ltd.

Nippon Insure guarantees rent payments as more Japanese landlords stop accepting personal guarantors, with an aging population adding demand. Cash accumulates in a business earning 32% ROCE, making its 10% dividend payout and policy for cash use central to valuation.

Company

Nippon Insure Co., Ltd.

ニッポンインシュア株式会社

A rent guarantee company collecting initial, renewal and monthly fees. Guarantees account for 94% of revenue.

Last Close: ¥2,418; May 18, 2026 · −31% from Aug-25 peak · +257% off Aug-24 trough
Market Cap / enterprise value (EV): ¥6.94bn / ¥4.67bn EV; net cash ¥2.27bn (33% of cap) · capital return at ~10% payout
EV / OP · forward: 5.3x; trailing 6.2x · vs Aug-25 peak ~8.8x fwd · strict pass (≤12x)
ROCE · trailing: 32%; FY09/23 27% → FY09/24 26% → FY09/25 32% · re-accelerating
OP Margin · group: 28% · seg-wtd; reported 20.3% · 8.2pp corporate-overhead bridge · 1H FY09/26 actual 28.6%
Shares & Float: 2.87M sh · ~60% float; founder bloc ~30% · Toyoshima RE 9.9% (filing basis) · avg daily turnover ~¥49M (60-day)

01 · Share-price regime

What moved the share price over the past two years?

stock price has approximately quadrupled from ¥897 in May 2024 to ¥3,485 in August 2025. In addition to the initial guarantee fee, renewal guarantee fees and monthly guarantee fees will accumulate from existing contracts, and it is assumed that profits will increase more than sales growth. Since then, it has lost about a third of its gains. The turning point was the FY9/25 full-year financial results and FY9/26 company plan announced in November 2025. Operating profit in FY9/25 increased by +81.5%, but the next year's plan was only +16.4%.

5843 vs. TOPIX · 24 months · Daily candle + volume

high price¥3,485 · 2025-08-18 low price¥678 · 2024-08-05 Currently¥2,418

Nippon Insure/Nichiashi 60 day moving average TOPIX Rebase (1308.T) Volume

01 · The rally Nippon Insure is a Standard Market rent guarantee company, with guarantees accounting for about 94% of FY9/25 sales; listed peers include Casa (7196) and Zenhoren (5845). It guarantees rent for tenants unable or unwilling to provide a guarantor. Property managers submit applications through Cloud Insure, with underwriting using arrears data accumulated since October 2008 and JICC/LICC membership data. After paying landlords in arrears cases, it collects through an internal call center and seven regional locations. H1 FY9/26 collection was 99.1% and the incidence of recourse receivables 6.2%. Initial, renewal and monthly guarantee fees form three revenue streams; accumulated contracts build recurring renewal and monthly income. The shares reached a post-IPO low of ¥678 on August 5, 2024, traded around ¥800–900, then broke out after November 14 FY9/24 results showing sales up 12% and OP up 43%. They rose to ¥1,743 in spring 2025 and ¥3,485 on August 18, up 414% from the low. FY9/25 sales grew 16.0% to ¥3,737M and OP 81.5% to ¥759M as recurring fees lifted margins faster than SG&A. ROCE on average invested capital rose from 25.6% to 32.3%. About 8.8x next-twelve-month EV/EBIT at the high assumed this profit level would become the new steady state.

02 · The reversal The reversal began on November 14, 2025. FY9/25 OP was ¥759M (+81.5%), with a 20.3% consolidated margin and about 28% on a segment-weighted basis. FY9/26 guidance was ¥4,233M sales (+13.3%) and ¥883M OP (+16.4%). Slower OP growth made August’s valuation harder to justify. FY9/25’s recurring renewal and monthly fees had changed an earnings model centered on initial fees, but that step-up does not repeat at the same rate annually. FY9/26 also included estimated annual amortization of ¥40–60M for the ¥306M Cloud Insure upgrade through November 2027, and staffing investment in cities including Nagoya. H1 initial guarantee contracts fell 1.4% to 15,145; new inflows are needed to replenish recurring fees. The shares fell toward ¥2,200–2,400 around December’s AGM and temporarily stabilized there as investors priced in more normal profit growth against higher costs.

03 · Current position H1 FY9/26 results were released on May 14, 2026. Sales were ¥2,064M (+15.6%), OP ¥590M (+52.5%) and net profit ¥417M (+53.3%). The 28.6% OP margin was 7.7ppt above full-year guidance of 20.9%. H1 achieved 49% of the full-year sales plan and 67% of the OP plan. Incremental OP margin (change in OP divided by change in sales) was 0.73, slightly above 0.66 between FY9/24 and FY9/25. Credit quality also improved: the incidence of recourse receivables fell from 6.4% to 6.2%, and the collection rate rose from 98.8% to 99.1%. The company may be selecting contracts for profitability and collectability rather than pursuing volume indiscriminately. The equity ratio reached 51.4%, cash and deposits ¥2,760M and net cash ¥2,265M, or 33% of its ¥6,939M market capitalization. The FY9/26 dividend is planned to rise from ¥19 to ¥22, but the payout remains about 10%. No buyback has been authorized and management has made no comment about revising the dividend policy. Over the next four quarters, watch whether H1’s high incremental margin continues in H2, whether initial guarantee contracts recover through the Nagoya branch and new business partners, and whether November’s FY9/26 results bring a stronger capital policy from a business earning 32% ROCE with ¥2.26bn in net cash.

02 · Investor issues

Three issues the market is looking at

Based on

's most recent quarterly financial results and the Q&A at the IR briefing, there are three points at issue. Will the high profit growth continue, will the slowdown in new contracts affect future renewal fees, and will shareholder returns be expanded?

Issue 01 · Operating leverage

Is the operating profit +52.5% in H1 due to an improvement in the profit structure, or is it a temporary increase?

Bullish Bullists view the H1 results on May 14th as evidence that renewal guarantee fees and monthly guarantee fees from existing contracts are contributing more to profits than the company's plan. H1 operating profit margin28.6%FY26 full year plan 20.9%7.7ppexceeded the full-year operating profit plan in half a year.67%earned. The operating profit margin for the increase in sales is0.73It was. The rate of claims owed has decreased from 6.4% to 6.2%, and the recovery rate has improved from 98.8% to 99.1%. Renewal guarantee fee and monthly guarantee fee are based on sales.~39%, and the additional customer acquisition costs are small as they are obtained from existing contracts.Q3 FY9/26 (August 2026) Operating profit margin is 27% or more and sales growth rate is 15% or moreTherefore, it is easy to judge that H1's high profit margin is not due to a lag in the timing of recording, but rather a continuous improvement due to the absorption of fixed costs.

Bearish Bearish groups view the rapid increase in profits in FY9/25 as a phase in which the accumulation of renewal guarantee fees and monthly guarantee fees once had a significant effect. The view is that profit margins do not increase at the same pace every year. The operating profit margin of 20.9% in the FY9/26 company plan includes the amortization cost (annual¥40~60M (estimated)) and human capital investment in major cities. The points to check areH2 FY9/26 operating profit margin is below 20%Or not. In that case, it would be easier to explain that H1's high profit margin was due to the timing of cost generation.

Issue 02 · Initial guarantee contract

Are initial guarantee contracts slowing down? If growth slows down, will future guarantee renewal premiums stop growing?

Bullish Bulls are looking at the number of initial guaranteed contracts in H1.15,145 (-1.4%)This is seen as a result of narrowing down credit rather than a lack of demand. During the same period, the incidence of receivables improved and the recovery rate rose to 99.1%. It appears that the company prioritized the possibility of collection and profitability rather than tracking the number of cases. The Nagoya branch, which opened in March 2024, is still in the process of being launched, and the same examination and collection platform can be used in adjacent areas such as nursing care expense guarantee and hospitalization expense guarantee. The points to check areQ3 The number of first-time guarantee contracts in FY9/26 (August 2026) is +2% or more compared to the same period last yearWhether or not. If the Nagoya branch and the development of a new real estate management company are effective, the slowdown in H1 will be seen as a temporary adjustment that prioritizes quality rather than a structural ceiling.

Bearish Bears believe that an influx of new contracts is essential for increasing renewal premiums. The number of initial guarantee contracts is7 locationsIf the company's structure remains flat or decreasing, it may be starting to see the limits of its sales network compared to major competitors with over 20 locations. Regional concentration in Kyushu, Tokyo, Kanagawa, and Osaka remains, and we have no choice but to rely on steady expansion through branch openings. The points to check areThe number of first-time guarantee contracts in FY9/26 is lower than 33,749 in FY9/25.Or not. If it falls below, new inflows will remain sluggish for the second consecutive year, which will also affect growth in renewal guarantee fees from FY9/28 to September.

Issue 03 · Capital allocation

Is the 10% dividend payout ratio a level that can only be maintained while prioritizing growth investments, or will it continue for the time being?

Bullish Bulls believe that capital adequacy ratio in 12 months46.7% to 51.4%and cash and deposits rose to¥2,760MPay attention to how much it has accumulated. The dividend per share for FY9/26 is scheduled to increase to ¥22 (previous year ¥19), but the dividend payout ratio relative to the expected EPS ¥218.59 is still approximately 10%. Internal reserves are reasonable as long as the company is able to maintain ROE of 23.6%, but once the accumulation of capital begins to exceed investment opportunities, the room for returns becomes an issue. The points to check areIncrease the dividend payout ratio target to over 15% in FY9/26 financial results (November 2026) or resolve to acquire treasury stock for the first timeThings. If that happens, the way we look at surplus capital will change to the point where we reevaluate it.

Bearish Bearish groups are those related to the founding family (Miyoshi family, Sanko Management, M Support) based on the current number of outstanding shares.~30%(32.45% in the 2023 large holding report), and has related party transactions with Miyoshi Real Estate (guarantee business sales).6.76%, outsourcing fee5.58%) should also be emphasized. Although the company has indicated a policy of a dividend payout ratio of around 10%, there is no capital return policy including share buybacks or total return ratio yet. The points to check areMaintained dividend payout ratio target of 10% in FY9/26 financial results and did not explain usage even if net cash exceeded ¥3bnOr not. If that happens, the perception is that accumulating capital is the policy itself, and that a review is not forthcoming.

03 · Catalyst

Three points to note that affect capital efficiency

List three evaluation materials related to

disclosure and capital policy. In either case, the evaluation can be changed to without waiting for profits to increase further.

Highlight 01 · Disclosure

Visualization of the number of initial guarantee contracts and renewal guarantee fees

Breakdown of guarantee fee sales · FY9/25 actual + H1 FY9/26 (million yen)

FY9/25 Initial guarantee fee

¥1,964M

FY9/25 Renewal guarantee fee

¥973M

FY9/25 Monthly guarantee fee

¥482M

H1 FY9/26 Number of initial guarantee contracts

15,145 (-1.4%)

Renewal guarantee fee + monthly guarantee fee increased to approximately 39% · Meanwhile, new inflow remained flat to decreased

In the H1 explanatory materials, it is easy to understand how renewal guarantee fees and monthly guarantee fees accumulate. On the other hand, the number of initial guarantee contracts has increased-1.4%This point is a little difficult to see. If you can see the number of initial guarantee contracts by sales channel and region, along with renewal guarantee fees and monthly guarantee fees, on a quarterly basis, you can determine whether the improvement in profit margin is due to recurring revenue or due to a slowdown in new inflows. The uncertainty that the market places on renewal guarantee fees for two to three years may also be reduced.

execution burden
Add one KPI table every quarter

The earliest trigger
Q3 FY9/26 financial results · August 2026

Highlight 02 · Capital policy

Dividend/share buyback policy and lower limit of dividend payout ratio

FY9/26 Breakdown of shareholder returns

DPS ¥22

¥63M

Stock buyback

None

Expected net profit

¥617M

Net cash on balance sheet

¥2,265M

Dividend payout ratio is 10% against ROE 23.6% · Net cash has expanded to 33% of market capitalization

ROE 23.6%・ROCE32%of businesses, net cash exceeds market capitalization.33%While the dividend payout ratio is10%The focus of the evaluation is how the surplus capital will be used. Possible conditions that could lead to a change in perspective include raising the dividend payout ratio target to 25-30%, lowering the total return ratio to net income, and acquiring treasury stock for the first time. Either of these can lead to a change in evaluation from a “company with excess capital” to a “company that is conscious of capital efficiency.” The required procedure is one resolution of the board of directors.

execution burden
1 board resolution

The earliest trigger
FY9/26 financial results · November 2026

Highlight 03 · Disclosure

Breakdown of related party transactions with Miyoshi Real Estate and reduction policy

Status of founding family related/related party transactions

Founding family-related shareholding ratio

~30%

Miyoshi Real Estate · Guarantee business sales

6.76%

Miyoshi Real Estate · Business commission fee

5.58%

Explanation of trading conditions

Basic contract description only

Although the ratio is not large, it has been a transaction since the company's founding, and investors are looking at the governance aspect.

Miyoshi Real Estate, which has a close relationship with the founding family, will receive guarantee business sales.6.76%, outsourcing fee5.58%has been accounted for. The amount itself is not controlling. However, changes in transaction amounts, whether transaction conditions are equivalent to third-party transactions, and changes in dependence due to expansion outside Kyushu are important information when evaluating listed companies. If these can be identified in the related party notes in the securities report or in a single document explaining financial results, the governance discount for related party transactions can be reduced.

execution burden
1 notification note + 1 slide

The earliest trigger
FY9/26 Securities Report · December 2026

04 · Valuation

3 scenarios

Three scenarios for the next four quarters show possible valuations under different combinations of disclosure, results and capital policy. They are analytical reference points, not predictions.

bearish scenario

¥1,800 – ¥2,100

−26%〜−13%

Assumed valuation multiple ~4~5x EV/EBIT (next 12 months)

The high incremental profit margin in H1 was only a factor in the delay;The number of initial guarantee contracts has not increased, only capital accumulates.

Requirements

H2 FY9/26 operating profit margin20%For the full year, sales came in at around 20.9% of the company's plan.

The number of first-time guarantee contracts in FY9/26 was higher than that in FY9/25.33,749 itemsThis is the second consecutive year of sluggish growth.

As of FY9/26, we maintained the dividend payout ratio target of 10%, and there was no resolution to acquire treasury stock, resulting in net cash¥3bnexceed.

Neither the breakdown of related party transactions nor the breakdown of the number of initial guarantee contracts each quarter is disclosed.

The rate of claims owed has worsened to over 6.5%, and the stock of renewal guarantee fees has been affected by the deterioration in credit.

¥1,800~2,100 in the bearish range of
is equivalent to ~4.4~5.3 times in FY26 next 12 months EV/EBIT. This is clearly lower than the 7 to 10 times expected in the private market for similar domestic credit businesses, and will only occur if the market continues to place a strong undervaluation on the sustainability of renewal guarantee fees.

Basic scenario

¥2,600 – ¥3,000

+8%〜+24%

Assumed valuation multiple ~6~7x EV/EBIT (next 12 months)

The high incremental profit rate of H1 continues,One of the three points of interest will materialize。

Requirements

Q3 Operating profit margin in FY9/26 (August 2026)≥25%・Sales growth rate ≥14%, FY26 full year operating profit≥¥950M(+8% compared to company plan).

The number of first-time guarantee contracts in FY9/26 remained flat to slightly increased compared to FY9/25 (contributing to the launch of the Nagoya branch and new business partners).

Announced either raising the dividend payout ratio target or acquiring treasury stock for the first time in FY9/26 financial results.

A more detailed breakdown of related party transactions will be disclosed in the FY9/26 securities report.

bullish scenario

¥3,600 – ¥4,200

+49%〜+74%

Assumed valuation multiple · ~8 to 10 times EV/EBIT (next 12 months)

Two of the three points of interest have materialized., it is confirmed that the high incremental profit rate of H1 is not temporary.

Requirements

Q3 Operating profit margin in FY9/26≥27%・Sales growth rate ≥15%, FY26 full year operating profit≥¥1,050M(+19% compared to company plan) and announced an upward revision.

The number of initial guarantee contracts is+5% or more compared to the same period last year(The launch of the Nagoya branch and adjacent areas such as nursing care and hospitalization expense guarantees contributed).

Dividend payout ratio target set in FY9/26 financial results≥25%The total return policy will also be shown.

In the FY9/26 securities report, we will show the multi-year trends in related party transactions and our policy for reducing dependence.

The incidence rate of claim claims is≤6.0%further improved and maintained a recovery rate of over 99%.

¥4,200, which is the upper limit of the
bullish scenario, exceeds the August 2025 high of ¥3,485, and is at a level that takes into account a revaluation of ~9-10x in EV/EBIT for the next 12 months. Exceeding this would require a multi-year view in which adjacent areas such as nursing care and hospitalization expense guarantees become a secondary source of growth, which is outside of this four-quarter scenario.

SOTP · Guarantee business

Rent debt guarantee + Nursing care expenses guarantee + Hospital expenses guarantee · Sales composition ratio: 94%

FY9/26 segment sales (estimate)~¥4,010M

Segment operating profit margin (FY9/25 results)29.4%

Estimated segment operating income (median)~¥1,000〜1,200M

Peer valuation multiple (Casa 7196, Zenhoren 5845)~5~10x EV/EBIT

Median EV: 8x next 12 months segment operating profit~¥80~10 billion

SOTP · Business infrastructure business + net cash

Considering WASH House + Curves FC/excess cash

FY9/26 Other segment sales (estimate)~¥230M

Other segment operating profit margin~16%

Other segment EV @ 3~4x~¥100〜140M

Excess net cash addition (end of FY9/25)¥2,265M

SOTP suggested stock value vs. current market capitalization~¥100~12 billion vs. ¥6.9bn

If one of the points of interest materializes, the SOTP will also be consistent with the basic to bullish scenario range.

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