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.

FOBAL <8275> develops its business as a next-generation management consulting group that supports ESG management of small and medium-sized enterprises with visibility and companionship as its basic strategy. It specializes in information and communication consulting such as IP integration systems, information security, and web construction. It conducts comprehensive consulting, overseas expansion, human resources and education, environment, and business succession consulting.

1. Business Overview. P-B Systems <4447> is an independent SIer based in Fukuoka, with expertise in system virtualization technology and strong cloud-based infrastructure building capabilities that builds various information systems for mid-sized enterprises, SaaS providers, and public agencies. The secure cloud system business is the core of the business, supporting total security, resilience building related to cybersecurity, and the realization of DX with cloud technology, ranging from digital work promotion to experience-sharing VR theaters with MetaWalkers, a series of emotional system businesses. The company is also fostering metaverse businesses. The company has claimed to have been a "small group of professionals in system virtualization" to date. However, steering toward further growth in the future, the company plans to expand its scale from the FY2024, aiming to transform itself into a "professional group of hybrid clouds."

The company's sales and profits are mainly composed of the FOBAL business group and the FOBAL Telecom business group. As the pillar of the business, the FOBAL business group handles information and communication consulting such as IP integration system, information security, and web construction for small and medium-sized enterprises. It also conducts comprehensive consulting, overseas expansion, human resources and education, environment, and business succession consulting and handles sales of OA and network equipment, as well as service forwarding.

2. Performance trends

For the first quarter of the fiscal year ending March 2025, consolidated revenue increased by 10.4% year-on-year to 15,820 million yen, operating profit increased by 1.1% to 451 million yen, ordinary profit increased by 0.5% to 534 million yen, and quarterly net profit attributable to parent company shareholders decreased by 23.1% to 195 million yen, maintaining increased profits in operating profit and ordinary profit along with solid revenue growth. In terms of revenue, growth is attributed to various services and equipment sales, such as visualization support services (icon services) in response to the increasing momentum of DX promotion in small and medium-sized enterprises and local governments, growth in electrical utility services, and contributions from newly consolidated group companies. On the profit side, while gross profit increased due to the expansion of visualization support services (icon services), controlled growth in selling and administrative expenses led to increased profits.

For the full fiscal year ending March 2025, consolidated revenue is expected to increase by 5.5% year-on-year to 67,000 million yen, operating profit by 11.3% to 3,600 million yen, ordinary profit by 7.0% to 3,700 million yen, and current net profit attributable to parent company shareholders by 4.4% to 2,100 million yen, all showing an increase in revenue and profit as estimated (as initially forecasted). While being led by the Forbal Business Group, the performance outlook is solid across all segments due to positive business environment and internal structures. Furthermore, having completed two M&A transactions (totaling approximately 1.7 billion yen in sales) in May 2024, there is a confident expectation of further performance improvement.

Please use your Futubull account to access the feature.

The company indicated that starting from the fiscal year ending March 2025, it will change the segment previously labeled as "other" to "human capital management consulting" and strategically strengthen it. As background, the new strategy for the fiscal year ending March 2025 focuses on "supporting visualization accompanying ESG management" as a priority, and it is necessary to cultivate talent capable of promoting ESG management internally and externally. The core company in this segment, i-tech Co., Ltd., has been conducting seminars and e-learning to train DX professionals, but moving forward, they will focus on educating ESG promoting professionals. Additionally, Tanita Healthlink Co., Ltd., which became a subsidiary in May 2024, supports corporate health management and will significantly contribute to the company's ESG management support. The company became the 7th domestic company to obtain certification for the international guideline ISO 30414 on the disclosure of human capital information in December 2023 and aims to promote support as a top runner in human capital management.

4. Shareholder return policy

The company recognizes returning profits to shareholders through dividends as an important management issue. They plan to decide on dividend payments while considering internal reserves and stable profit distribution from a medium to long-term perspective, maintaining a balance between the two. They do not commit to a specific payout ratio. With a background of stable profit growth, the company has continued to increase dividends, with dividends in the past 10 periods either increasing or remaining the same, and a historical payout ratio of around 30% or higher. For the fiscal year ending March 2025, they expect a dividend of 30.00 yen (an increase of 2.00 yen compared to the previous period) and a projected payout ratio of 37.4%. In the shareholder benefits program, shareholders holding 100 shares or more as of September 30th each year receive an electronic money gift, which has received positive feedback.

■Key Points

- The focal point is on the visualization accompanying management support services (icon services), with Qitabankuai Business Group supporting GDX (Green Digital Transformation) and ESG management for small and medium-sized enterprises.

- In the first quarter of the fiscal year ending March 2025, Forvall Business Group led the way in increased revenue and profit.

- For the fiscal year ending March 2025, revenue is expected to be 670 billion yen, with operating profit of 36 billion yen.

(Written by FISCO Guest Analyst, Hideo Kakuta)