eREX Co.,Ltd. Q3 FY2026 earnings call

• Core Business Model
  • Erex operates across three core business pillars: power retail, power trading, and aggregation. Power retail to corporate and residential customers is the core business; trading combines wholesale power exchange trading and over-the-counter trading to optimize procurement and sales. Aggregation bundles distributed power generation, consumer-side balancing resources, including generation, fuel, and grid-scale energy storage, to monetize these resources in the power market.
  • Erex ranks 8th among new power providers for high-voltage power sales volume as of September 2025.
• Market Context and Strategic Focus
  • As renewable energy penetration grows, power supply and demand volatility increases: renewable output is weather-dependent, leading to larger swings between periods of excess and insufficient power. For companies with high shares of market-linked pricing and market procurement, this volatility creates unpredictable margin swings.
  • Securing adequate balancing capacity through a combination of easily dispatchable power generation, fuel management, demand-side management, and energy storage is the key to stable earnings and capturing new revenue opportunities. Erex is building this capacity while expanding revenue sources on top of its core retail and trading businesses via in-house generation and aggregation activities.
• Mid-Term Operational Priority
  • The touchstone for mid-term growth is stable operation of the company's in-house biomass power plants, which run on wood pellets and palm kernel shells. Unlike intermittent renewables, biomass output is easily planned if fuel supply is secured, but the company faces multiple operational challenges: fuel is primarily sourced from overseas, requiring management of fuel quality variation, port logistics, storage, and sustainability certification.
  • If stable fuel procurement and operation are achieved, and balancing resources such as grid-scale storage are successfully monetized, this will help Erex improve its earnings structure by reducing reliance on low-margin retail power sales.
• Shareholder Return
  • For the full 2026 March fiscal year, Erex forecasts a year-end dividend of 11 yen per share. The company is also introducing a new "Premium Shareholder Benefit Club" program that will award benefit points based on holding size to shareholders holding 300 shares or more.

For the cumulative first three quarters of the 2026 March fiscal year, Erex's high-voltage retail segment reported 2,202 gigawatt-hours of sold electricity volume, with a contracted capacity of 966 megawatts at the end of the third quarter. Based on full fiscal year 2025 March results, revenue contribution is split as follows: Power retail accounts for 56.8% of total revenue, power wholesale accounts for 31.4% of total revenue, and other segments account for the remaining 11.9% of total revenue. No absolute revenue figures for individual segments were provided in the transcript.

• For the current 2026 March fiscal year, Erex maintains a pre-tax income target of 7.5 billion yen.
  • The company has announced a long-term target to achieve more than 50 billion yen in pre-tax income between 2030 and 2035.
  • The next mid-term management plan covering fiscal years 2027 March through 2029 March is scheduled for publication on February 26, 2026. Market participants are specifically focused on how the company will translate its plans for stable biomass operation (including fuel supply) and the buildout of balancing capacity into formal numerical targets in the new mid-term plan.

• Biomass power generation operational risk: Fuel supply is primarily overseas, exposing the company to risks related to fuel quality variation, port logistics disruptions, storage challenges, and compliance with sustainability certification requirements. Failure to resolve these issues will prevent stable operation and limit progress on improving the company's earnings structure.
  • Earnings volatility risk: High penetration of variable renewable energy increases power market price volatility. For Erex, which has a large retail business with exposure to market-linked prices and market procurement, this volatility can lead to unpredictable profit margins without sufficient balancing capacity.

No structured question and answer session is included in the provided transcript.