■Summary

TKP ＜3479＞ (hereafter, TKP) is developing a “space regeneration distribution business” starting from the rental conference room business. There are characteristics of a unique business model where idle real estate etc. are purchased in large (cheap) lots (at a low price) from real estate owners, “space” is “regenerated” into conference rooms, banquet halls, etc., and sold and shared in small lots to corporations. A new market has been created by linking the needs of real estate owners who want to make effective use of idle real estate and corporations that want to use conference rooms efficiently at low cost, and high growth potential has been achieved. It has a wide range of 235 locations and 1,938 rooms (144,000 tsubo) in major cities in Japan, and its customer base has risen to over 30,000 companies (as of the end of February 2024).

Since the 2021/2 fiscal year, business performance has temporarily receded due to the spread of the novel coronavirus infection (hereafter, COVID-19), and new store openings etc. have been suppressed, but current business performance has returned to the level before the COVID-19 pandemic, and full-scale expansion of stores for business expansion, and infrastructure strengthening with an eye on after the COVID-19 pandemic has subsided (hereafter, after COVID-19), etc., have begun to move in earnest toward a return to growth.

1. Consolidated financial results for the fiscal year ending 2024/2

As for the consolidated financial results for the fiscal year ending 2024/2, sales decreased 27.6% from the previous fiscal year to 36,545 million yen, and operating profit increased 28.9% to 4,607 million yen, and even though sales declined due to the sale of the Regus business*, there was a significant increase in profit due to a recovery in demand, and final profit hit a record high.

* As of 2023/2/1, all shares (hereafter, Regus business) of Japan Regus Holdings Co., Ltd. (hereafter, Nippon Regus), which develops rental offices “Regus”, etc., and Taipei Regus Enterprise Management Consulting Co., Ltd. (hereafter, Taiwan Regus business) were sold.

Sales excluding the impact of the sale of the Regus business were secured an increase in sales (17.7% increase from the previous fiscal year) due to a full-scale recovery in demand for rental meeting rooms and social gatherings, which is the main force, in response to relaxation of behavioral restrictions and heightened demand for human resource development, and growth in lodging sales against the backdrop of recovery/rapid increases in inbound and domestic travel. Meanwhile, in terms of profit and loss, while actively investing in upfront costs (opening new stores, strengthening recruitment, system development costs, etc.) for future business expansion, a significant increase in profit was achieved due to growth in “sales per square meter”, etc. Although the recovery in food and beverage sales (catering, bento boxes, etc.) was a factor in the increase in outsourcing costs, a system for in-house production has been put in place again, and further profit and loss improvements can be expected in the future. Also, in terms of activities, in addition to leaving results with the opening of 19 new stores and large-scale expansions, etc., we were able to lay various paving stones for added value improvement (expansion of the software domain) and new business development, such as making Lyricala ＜9827＞, which handles interior design, etc., a capital and business alliance with Shikaku ＜7049＞, which handles rental housing brokerage, etc.

2. Consolidated Earnings Forecast for the Fiscal Year Ending February 2025

Regarding the consolidated earnings forecast for the fiscal year ending 2025/2, the company anticipates a significant increase in sales and profit, with sales rising 23.1% from the previous fiscal year to 45,000 million yen, and operating profit increasing 59.5% to 7,350 million yen. As for sales, demand for rental conference rooms and social gatherings and demand for lodging are generally strong, and promotion of new store/expansion of existing facilities, response to demand for social gatherings, etc., will continue to contribute to the increase in sales. In terms of profit and loss, while actively investing in upfront costs (opening new stores, recruitment activities, personnel increases, etc.) for building a system for business expansion, a significant increase in profit was achieved through increased sales and strengthened profitability, and the operating profit margin is also expected to improve significantly to 16.3% (12.6% for the previous fiscal year).

3. Mid-term management plan

Based on the fact that it has decided to sell the Regus business, the recovery in demand for rental conference rooms and social gatherings has progressed, and the purchasing environment is also moving towards a tailwind, it is now entering its second year by promoting a medium-term management plan (3 years) with an eye on the post-coronavirus. The policy is to take in peripheral businesses while actively expanding the floor area of rental conference rooms, expand market share, expand target markets, and focus on optimizing management efficiency. Sales of 57.5 billion yen and operating profit of 9.4 billion yen (operating profit margin 16.3%) have been set as targets for the fiscal year ending 2026/2, which is the final year, and it is planned to update the highest performance level ever.

■Key Points

・In the 2024/2 fiscal year, a significant increase in profit was achieved due to rental conference rooms and social gatherings, recovery in inbound demand, etc.

・In addition to opening 19 new stores and working on large-scale floor expansions, we also laid various paving stones for future business expansion through partnerships with other companies, etc.

・Amid the external environment as a tailwind for the 2025/2 fiscal year, we anticipate a significant increase in sales and profit due to new store openings, floor expansion, etc.

・In the medium-term management plan, the policy is to increase added value while actively expanding the floor area of rental conference rooms, expand market share and expand target areas, and update the highest level of performance ever

(Written by FISCO Visiting Analyst Ikuo Shibata)