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.

A development company that manufactures and sells industrial inkjet printers and other products in one stop.

Mimaki Engineering <6638> is a development company that manufactures and sells industrial inkjet printers, cutting plotters, and ink used in printers in one stop. Sales markets include the SG (sign graphics) market for producing advertisements and signs, the IP (industrial products) market for enhancing industrial products and small objects for consumers, and the TA (textile and apparel) market for printing on fabric and ready-made clothing. The company has a global business with overseas sales accounting for about 70% of its sales. The replacement cycle for products in each market is 4-5 years, so revenue is accumulated by introducing new products every year. The digitalization rate of the industrial print market is high in the SG market, but only about 5-10% in other markets, indicating a great potential for growth.

The company's strength lies in its complex proprietary technology platform for industrial printers, which includes chemicals such as ink. The ink, in particular, was developed to be able to print on anything other than water and air. High-functionality ink that can print on various materials is a differentiating factor in a wide range of markets for inkjet printers, as well as a source of stable income as a consumables business. Other strengths include XY control technology, head control technology for discharging ink, order production using digital on-demand manufacturing, one-stop support for diverse and small-lot needs, factory automation technology to promote smart factories, and strong local sales capabilities globally. Although the company does not manufacture its own heads, it is a strength that it can procure the best heads from the market according to demand.

By strengthening sales and improving profitability, the company expects to continue to achieve double-digit growth in operating income and achieve record profits in the fiscal year ending March 2025.

In the fiscal year ending March 2024, the company achieved record highs with net sales of JPY 75.631 billion (+7.1% YoY) and operating income of JPY 5.48 billion (+29.2% YoY). While printer sales for the SG and IP markets, which had expanded in the fiscal year ending March 2023, decreased, the company's DTF (direct to film) machine, which it introduced for the TA market, sold well in advanced countries and ink sales remained strong. On the profit side, although there was an impact from high-cost materials such as semiconductors procured in the fiscal year ending March 2023, the company achieved a significant increase in profit due to a revision of sales prices and positive effects of exchange rates. For the fiscal year ending March 2025, the company expects net sales of JPY 80.8 billion (+6.8% YoY) and operating income of JPY 6.5 billion (+18.6% YoY). It anticipates increased revenue in all markets due to sales expansion and increased use of high-cost materials, leading to double-digit growth in operating income.

Due to continuing double-digit earnings growth, the company has set its sights on achieving its Mimaki V10 vision, aiming for an operating profit margin of 10 percent and evolving into the next-generation Mimaki by the fiscal year ending March 2025. To this end, it has strengthened management focusing on capital costs and the stock price, improving ROE, ROIC, and PER. Concrete measures include 1) improving earnings by achieving the Mimaki V10 vision, 2) strategic investment for future growth, 3) strengthening financial base by aligning inventory and borrowings, 4) introducing an executive compensation system that contributes to improving corporate value, 5) stable and continuous dividends based on shareholder return policy, and 6) reducing capital costs by promoting dialogue with investors. To execute these measures steadily, it has reorganized and expanded its corporate functions.

The company has designated the fiscal year ending March 2025 as a year of evolution toward the next-generation Mimaki, keeping its Mimaki V10 vision in sight, as it continues to achieve double-digit earnings growth.

2024 fiscal year performance achieved record highs with net sales of JPY 75.631 billion (+7.1% YoY) and operating income of JPY 5.48 billion (+29.2% YoY). The company expects further revenue increase for all markets due to sales expansion and increased use of high-cost materials, leading to double-digit growth in operating income and improving operating profit margin to 10 percent, and aiming for its Mimaki V10 vision. Concrete measures include 1) improving earnings by achieving the Mimaki V10 vision, 2) strategic investment for future growth, 3) strengthening financial base by aligning inventory and borrowings, 4) introducing an executive compensation system that contributes to improving corporate value, 5) stable and continuous dividends based on shareholder return policy, and 6) reducing capital costs by promoting dialogue with investors. To execute these measures steadily, it has reorganized and expanded its corporate functions.

■Key Points

A development company that manufactures and sells proprietary industrial inkjet printers and other products in one stop.

We expect to continue double-digit growth in sales during the March 2025 period, due to strengthened sales and improved profitability.

We have set our management policy to "evolve" and plan to strengthen management focusing on capital costs and stock prices.

(Author: FISCO guest analyst Nobumitsu Miyata)