■Performance Trends

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

Papanets ＜9388＞'s financial results for the fiscal year ended 2024/2 were sales of 4,491 million yen, up 12.1% from the previous fiscal year, operating profit of 337 million yen, up 14.9% from the same period, ordinary profit of 341 million yen, up 16.2% from the same period, and net income of 235 million yen, up 16.2% from the same period. Social activities have been normalized as the alert level of the COVID-19 pandemic has dropped, and while demand from foreign tourists has also recovered, “regular building patrol services” have been stably implemented in the “management company support business,” and the number of buildings patrolled has increased. Business trips for companies have also been resumed, and in the “monthly condominium support service,” the number of contract cases for cleaning after set-up and moving out has increased for both existing customers and new customers. Meanwhile, in the “interior total support business,” the recovery in sales of house makers and furniture manufacturers has been delayed, and demand for services continues to not return to the level before the COVID-19 pandemic.

(1) Sales by business

Looking at sales by business for the 2024/2 fiscal year, the “management company support business” increased 14.1% from the previous fiscal year to 3,308 million yen, the “interior total support business” increased 5.9% to 1,153 million yen, and “others” increased 52.6% to 29 million yen.

As for the financial results for the fiscal year ending 2024/2, the “management company support business” achieved 2-digit growth. In anticipation of market demand for an increase in domestic and international travelers and business travelers, a business strategy aimed at strengthening sales and strengthening the number of workers at the site matched. The fact that growth in the “interior total support business” is relatively modest may indicate that it is being affected by market saturation or competition, which suggests the need for a strategic review. Overall, although the company is on a growth trajectory, differences in growth rates across divisions reflect business diversity and ability to adapt to changes in market conditions. As a future outlook, we believe it is necessary to strengthen our market position in the interior total support business.

(2) Number of properties covered by the “Regular Building Inspection Service”

Looking at the number of target properties for the “regular building inspection service” that the company has contracted, rental housing grew to 17,487 buildings at the end of the 2024/2 fiscal year, an increase of 13.0% from the end of the previous fiscal year, and there was an increase of 2,005 buildings. In terms of rental containers, there was a decrease of 26.1% from the same period to 1,667 buildings, a decrease of 588 buildings. In terms of the total number of buildings, although rental containers declined drastically, the increase in rental housing led by an increase in rental housing, and has continued to increase steadily since the end of the 2018/2 fiscal year, and it has grown to 19,154 buildings, up 8.0% from the same period, and increased by 1,417 buildings.

(3) Sales by service

Sales for the fiscal year ended 2024/2 for the four services “regular building inspection service,” “rental container inspection service,” “monthly condominium support service,” and “nationwide two-man delivery network service,” which are the company's main forces, were 699 million yen, up 15.3% from the previous fiscal year, “rental container inspection service” increased 11.6% to 528 million yen, and “monthly apartment support service” 19.1% The increase was 1,627 million yen, and the “nationwide two-man delivery network service” increased 1.9% from the same period to 655 million yen. Sales of each service have remained steady as a whole, and in particular, “regular building inspection services” and “monthly condominium support services” are driving growth. The reason why “monthly condominium support services” have the highest sales growth rate seems to be because the company has successfully adapted to housing market trends and changes in consumer lifestyles. There was only a slight increase in “nationwide two-man delivery network services,” but since the performance of the “interior total support business” will recover after the 2025/2 fiscal year, and it is expected that new customers will be acquired in addition to existing customers due to an increase in demand for services related to set-up and move-out in the market, an expansion in sales is anticipated.

(4) Number of clients

Looking at the number of clients for the 2024/2 fiscal year, the “management company support business” acquired 355 companies against 380 companies, which is the target for the 2024/2 fiscal year, and the “interior total support business” acquired 234 companies against 270 companies with the same target. Both the “management company support business” and “interior total support business” expanded steadily until the first half, but growth was sluggish in the second half. The main reason why the number of new contracts for both services fell short of expectations is that the company terminated contracts with financially unstable clients as a precautionary measure to avoid potential bad debts in the future. This limited growth in the number of clients in the short term, but we see that it reflects the company's attitude of prioritizing stable business growth by adapting to the market environment and current state of credit risk faced by the company.

(5) Net sales growth rate and operating profit margin

Looking at the sales growth rate from the 2022/2 fiscal year, although the target was not reached for the 2022/2 fiscal year, there were improvements in the 2022/2 fiscal year and 2024/2 fiscal year. The 2023/2 fiscal year slightly exceeded the target, and 112.1%, which greatly exceeded the target of 109.1%, was achieved in the 2024/2 fiscal year. The operating profit margin shows a value that is closer to the target, and the actual results exceeded the target of 6.7% compared to the target for the 2022/2 fiscal year, and 7.3% compared to the target of 7.0% in the 2022/2 fiscal year. Although the results for the fiscal year ended 2024/2 fell short of the target of 7.7%, we maintained a stable operating margin of 7.5%.

Sales have been approaching target values over time, and in particular, targets were achieved in the recent fiscal year ending 2023/2 and 2024/2. Operating margins consistently exceed targets or maintain performance close to those targets, which indicates that operational efficiency is increasing. Overall, compared to the COVID-19 pandemic period, the company is on a healthy growth trend, and it can be seen that operational efficiency has also improved.

(Written by FISCO Visiting Analyst Hiroshi Nakayama)