■Medium- to long-term growth strategy
1. Medium-term management plan
Nagai Leven ＜7447＞ has announced a medium-term management plan that rolls over plans up to that point based on results for the 2023/8 fiscal year, but there are currently no changes to these plans. As numerical targets, we have set sales of 18.9 billion yen and operating income of 5.5 billion yen* for the fiscal year ending 2026/8. Also, the gross profit margin bottomed out in the 2024/8 fiscal year, and it is expected that it will gradually improve thereafter due to effects such as price revisions, etc., and it is planned to recover to over 45% in the final fiscal year ending 2026/8.
*An exchange rate of 125 yen (fixed) is assumed.
However, since the current situation, including exchange rates, is changing, the company has stated that it “plans to review these plans once after the end of this fiscal year (2024/8 fiscal year).”
2. Future business strategy
The business environment surrounding the company is currently being affected by the COVID-19 pandemic, but it can be said that it is a tailwind in the medium to long term. According to data released by the Ministry of Health, Labor, and Welfare, etc., it is predicted that demand for nursing staff will increase from 1.68 million in fiscal 2019 to a maximum of 2.02 million in fiscal 2025. Furthermore, demand for nursing care workers is predicted to increase from 1.86 million people in fiscal 2020 to 2.45 million in fiscal 2025.
Under such a business environment, the company plans to achieve medium-term growth through three strategies: (1) a market strategy aimed at expanding sales, (2) a product strategy to stabilize profitability, and (3) a production strategy to improve profit margins.
(1) Market strategies aimed at increasing sales
As a market strategy, in addition to deepening the core market where the company's market share is relatively high, sales will increase by expanding market share in peripheral markets where there is high room for future growth. As for overseas markets, we will advance market development by utilizing the business model that the company excels at, mainly in Korea and Taiwan, China. By implementing these strategies, it is planned that the sales composition ratio by market for the 2026/8 fiscal year will be 69% for the core market (77% for the fiscal year ending 2020/8, 72% for the 2023/8 fiscal year), 29% for the peripheral market (22%, 26%), and the overseas market 2% (same 1%, same 1%).
(2) Product strategies to stabilize profitability
As a product strategy, it is a policy to further stabilize profitability by promoting sales expansion of high-end products and high value-added products, and at the same time raising the level of value-added products and mass-sold products. As a result, it is planned that the sales composition ratio by product for the 2026/8 fiscal year will be 10% for high-end products (6% for the fiscal year ending 2020/8, 8% for the 2023/8 fiscal year), 59% for high value-added products (same 51%, same 58%), value-added products 28% (same 33%, same 30%), and mass sales products 3% (same 4%, same 4%).
(3) Production strategies to improve profit margins
As a production strategy, by shifting production overseas, we aim to increase overseas production ratios while suppressing exchange rate risks, and improve profit margins. Furthermore, development of low-cost strategic products utilizing overseas factories will also be promoted. Domestically, the policy is to maintain high profit margins by strengthening the ability to respond to QR and multi-product small-lot production. By implementing these strategies, it is planned that the production composition ratio for the 2026/8 fiscal year will be 58% overseas production (50% for the 2020/8 fiscal year, 53% for the 2028/8 fiscal year), 42% domestic production (49%, same 46%), and 0% purchased products (same 1%, same 1%).
(Written by FISCO Visiting Analyst Noboru Terashima)