Summary: RIZAP Group<2928>The comprehensive enterprise, which is committed to proving that "people can change" as its unique management philosophy, develops a variety of businesses in the three areas of health creation, health care / beauty, lifestyle, and investment. Under the vision of "Global No.1 in the self-investment industry", it has achieved remarkable growth by actively utilizing M&A under the holding company structure and has grown to include 68 group companies, including 5 listed subsidiaries, and 4,606 consolidated employees. Listed on the Sapporo Stock Exchange's Ambitious Market in 2006, it formulated a medium-term management plan in September 2022, but revised it in February 2024 to achieve an operating profit of ¥400 million (fiscal year ending March 2027) by aggressively expanding the new business "chocoZAP". The fiscal 2024 performance was sales revenue of ¥16,629.8 million (+7.6% YoY), operating loss of ¥594 million (compared to a loss of ¥4948 million in the same period of the previous year), pre-tax loss of ¥4524 million (compared to a loss of ¥7,031 million in the same period of the previous year), and net loss attributable to the owners of the parent of ¥4,300 million (compared to a loss of ¥12,673 million in the same period of the previous year). Due to the black ink conversion of the chocoZAP business, it achieved a black ink of ¥417.5 million on an operating profit basis in the fourth quarter alone. As for sales revenue, the RIZAP-related business (including the chocoZAP business) significantly increased its revenue (+¥201 million) by focusing on expanding the convenience gym "chocoZAP". In existing businesses, there was an increase in revenue, including Antiroza Co., Ltd. (+¥419.8 million), while there was a decrease in revenue due to store structure reform in REXT Co., Ltd., etc. (-¥599.8 million) and the impact of selling the Sikata business under the subsidiary BRUNO<3140>at the end of the previous year (-¥511.1 million). As for operating loss, the group as a whole improved due to the transition of the chocoZAP business to the investment recovery period and the success of business portfolio reform such as REXT.
Higashi Twenty-One <9029> is a comprehensive logistics company originating in Kansai. With the slogan "Evolution for Customers - Shinka to the Future," it is a unique comprehensive logistics company that expands its core business (excluding 3PL business related to transportation and distribution) and promotes the expansion of the Tokyo metropolitan area business, leveraging M&A and actively expanding into high-value-added logistics services, logistics services in peripheral and growth areas that differ in character from general transportation businesses.
1. Strengths include logistics design capabilities that respond to customer needs and a customer base centered on major and excellent companies.
We provide a variety of logistics services centered on transportation and warehousing businesses, with strength in logistics design capabilities that respond to individual customer needs. With a high degree of recognition and market share in the Kansai region, where the company originated, it has built a customer base centered on a wide range of major and excellent companies, contributing to stable revenue. The company has established a unique business area segmentation that differs from the reporting segments, and is promoting initiatives for growth in all business areas. The business area segments include office services businesses such as office relocation, logistics services businesses such as 3PL operations, IT services businesses such as IT equipment kitting, building and delivery businesses such as building logistics and mailroom outsourcing, care services businesses such as rental and sales of welfare equipment for care support service providers, and core businesses. With proactive business expansion, 3PL operations and IT services have significantly expanded in the near future, and office services and core businesses are also expanding smoothly.
2. The 2024 fiscal year recorded the highest ever significant increase in revenue and profit.
In the consolidated financial results for the fiscal year ending in March 2024, sales were 40,635 million yen, up 16.7% from the previous year, operating profit was 2,190 million yen, up 14.8%year-on-year, ordinary profit was 2,309 million yen, up 14.0% year-on-year, and net income attributable to the parent company's shareholders was 1,506 million yen, up 18.8% year-on-year. Overall, the company achieved significant year-on-year increases in revenue and profit, reaching record high performance levels, roughly in line with the upwardly revised values reported on October 27, 2023. Sales expanded in all business areas. In particular, the warehouse business saw an increase in transactions with Amazon Japan Co., Ltd. (hereinafter referred to as "Amazon Japan"), while the office services business saw strong sales activity due to personnel reinforcement, and the other business experienced a significant increase in revenue due to the inclusion of Tabibito Inc. (consolidated for the current fiscal year, consolidated from the second half of the previous fiscal year). On the profit side, in addition to an increase in costs such as growth investment and increased personnel expenses, the company absorbed factors that increased costs such as initial costs (fixtures, equipment, and warehouse consumables, etc.) for the opening of a large-scale 3PL center, including taking advantage of significant growth in revenue and receipt of appropriate freight rates.
3. Revenue and profit are expected to increase in the fiscal year ending March 2025, and the company's forecast is conservative with potential for upward revision.
The projected consolidated financial results for the fiscal year ending March 2025 are sales of 42,500 million yen, up 4.6% from the previous year, operating profit of 2,450 million yen, up 11.9% year-on-year, ordinary profit of 2,600 million yen, up 12.6% year-on-year, and net income attributable to the parent company's shareholders of 1,640 million yen, up 8.8% year-on-year. We expect to increase revenue and profit through an aggressive business expansion strategy. Sales are expected to grow in all business areas, driven by the full-scale operations of the Tokyo metropolitan area transport center established in November 2023, the Kobe West Logistics Center (LC) established in March 2024 (hereinafter, LC), the anticipated start of operations at the Kawanishi LC, the expansion of the 3PL business for procurement of materials for the Kansai Electric Power Group and the expansion of delivery operations for major e-commerce companies, among other factors. On the profit side, we expect to absorb the increase in costs for growth investments such as vehicle, equipment, and personnel costs, as well as the high-value-added services and revenue effects, and we also expect to benefit from the completion of the initial cost for the three large 3PL centers opened in April 2023. The company's forecast is generally conservative, but we believe there is a high possibility of an upward revision due to initiatives for improving productivity and expanding businesses, including peripheral areas.
4. The target values for the medium-term management plan 2026 have been upwardly revised, with a focus on growth in all business areas.
In July 2020, the company set out the long-term management vision 'Higashi 21 Group VISION2030,' which aims to be a company that continues to transform itself to deliver the best service to its customers. In its medium-term management plan, formulated in May 2023 and covering the period from the 2024 fiscal year to the 2026 fiscal year, the company set the theme as 'Leap forward for 3 years based on growth' and set a target of 42 billion yen in revenue and 2.5 billion yen in recurring profit for the 2026 fiscal year. Since it is expected that these targets will be achieved ahead of schedule in the 2025 fiscal year, they were revised upward in May 2024, and the targets for revenue, recurring profit, and dividend per share were set at 45 billion yen, 2.8 billion yen, and 40.0 yen, respectively. There is no major change in the basic strategy for growth, and in addition to growth strategies by business segment, the company will promote the creation of synergies across business borders and invest in technology infrastructure to improve operational efficiency and increase strength. Regarding recurring profit margin, the company aims to secure a level that exceeds the median of the land transportation industry through the provision of high value-added logistics services. The target ROE is 8% or more. Although it is expected to decline compared to the actual results for the 2024 fiscal year due to the impact of aggressive investment for business expansion, the company aims to secure a level that exceeds the median of the land transportation industry. The company also aims to promote shareholder return and sustainability management.
Pay attention to progress in the company's growth strategy.
Our company highly evaluates the fact that the company's business expansion strategy based on an ambitious long-term vision, such as revising upward the final year target of its medium-term management plan for 2026, has been clearly demonstrated. As the potential for medium- to long-term growth increases with the acceleration of the growth strategy, we continue to pay attention to the progress of the growth strategy.
■Key Points
- A unique comprehensive logistics company originating from the Kansai region and actively expanding into neighboring growth areas. - Strong logistics design capabilities that respond to customer needs and a customer base centered on major and excellent companies.
- Estimated to achieve record high with significant increase in revenue and profit in the 2024 fiscal year. - Expected to continue to achieve an increase in revenue and profit in the 2025 fiscal year, and company forecasts are conservative with the possibility of upward revision.
- A unique comprehensive logistics company originating from the Kansai region and actively expanding into neighboring growth areas. - Strong logistics design capabilities that respond to customer needs and a customer base centered on major and excellent companies. - Estimated to achieve record high with significant increase in revenue and profit in the 2024 fiscal year. - Expected to continue to achieve an increase in revenue and profit in the 2025 fiscal year, and company forecasts are conservative with the possibility of upward revision.
- Estimated to achieve record high with significant increase in revenue and profit in the 2024 fiscal year. - Expected to continue to achieve an increase in revenue and profit in the 2025 fiscal year, and company forecasts are conservative with the possibility of upward revision.
Its medium-term management plan for 2026 has been revised upward, based on an ambitious long-term vision.
(Authored by FISCO guest analyst Masanobu Mizuta)