Company Overview

1. Company Overview

Forval <8275> has been expanding its business with the basic strategy of being a next-generation management consulting group that supports ESG management of SMEs with a visualization escort type. It is strong in information and communication consulting such as IP integrated systems, information security, and web construction, and conducts management consulting such as comprehensive consulting, overseas expansion, human resources and education, environment, and business succession. In the past, it mainly conducted wholesale sales of information and communication equipment, but in the mid-2000s it faced a large decline in sales and profits and switched to a consulting business style focused on visualization escort type management support (icon service). This business model transition was successful, achieving 12 consecutive years of operating profit increases until the end of March 2020, and although it experienced a decrease in profits due to the spread of the new coronavirus infection, it updated its highest profit in the recent settlement. It is a unique company that solves various challenges faced by small and medium-sized enterprises such as informationization and management improvement, overseas expansion, and business succession. DX/GX and ESG management have become urgent issues for small and medium-sized enterprises throughout Japan, and the role of the company has become even greater.

2. History

Established as Shin Nihon Kohnou Co., Ltd. in 1980 with the business purpose of selling telecommunication equipment, computers, and terminal equipment, etc., the company founder and current chairman, Hideo Ookubo, received the 1st Entrepreneur Award in 1988, setting a then-japan record for the shortest time to publicly list shares as a listed stock. In 1991, inspired by "For Social Value," the company changed its name to Forval Co., Ltd. Since then, in 2008, it started providing comprehensive IT consulting services called the "Visualization Accompaniment-based Management Support (Icon Service)." In January 2014, it moved to the Tokyo Stock Exchange (TSE) Second Section and was designated to the First Section in October of the same year. Following the TSE reorganization in April 2022, it transitioned to the Prime Market, but in October 2023, it switched to the Standard Market after considering various requirements.

Since its founding, the company has been dedicated to creating the "new normal" from the user's perspective in the information and communication field. Starting from the liberalization of telephone sets at its inception, followed by reductions in long-distance, international, and local call charges, the company has aimed to challenge the liberalization of line basic fees, the spread of corporate mobile phones, and further reduction of call charges. In 2022, it began efforts to establish a solid position as an accompaniment advisor for GDX transformation in small and medium-sized enterprises as its medium- to long-term growth strategy theme. Presently, with a clear goal to support the ESG management of SMEs in an accompaniment-based manner, the company has set to evolve into a consulting firm, providing expertise to SMEs in the next-generation management consulting business through the accompaniment-based management support (Icon Service) and other services.

3. Business content

The company consists of four business segments: the Forval Business Group, which supports GDX and ESG management in small and medium-sized enterprises and sells hardware such as security-related and copier equipment; the Forval Telecom Business Group, which deals with communication services like optical line services and ISPs; the Comprehensive Environmental Consulting Business Group, handling environmental-related products such as photovoltaic systems, LED, and rechargeable batteries; and the Human Capital Management Consulting offering HR and education services, system development, etc.

In the first quarter of the fiscal year ending March 2025, the Forval business group accounts for 55.2% of the total company's revenue composition, 73.1% of the total company's segment profit composition, and the Forval Telecom Business Group accounts for 34.7% of the revenue composition and 24.8% of the segment profit composition, making these top two segments the main force. The Comprehensive Environmental Consulting Business Group is mainly led by Appletree and achieved profitability in the full year ending March 2024. The Human Capital Management Consulting includes Aitech, which provides services in the fields of personnel and education, and Forval Kaelwork, which conducts system development, showing growth potential and high profitability (5.1% of segment profit composition). Tanita Health Link, which supports health management (subsidized in May 2024), will also join this segment.

4. Personnel Development and Treatment.

The company places emphasis on the interaction with customer companies and focuses on nurturing the personnel responsible for these interactions. Approximately 70 new employees join each year and undergo a long training period of one year before being assigned one year after joining the company. During this year, they experience core services of the company such as Visualization Co-pilot Management Support (Icon Services) as advisors, remote support call centers, and sales departments to learn necessary expertise and skills. Additionally, recognizing the essentiality of IT knowledge in carrying out the company's operations, they explicitly list more than 10 recommended qualifications to be utilized for skills development. Among them, (1) Internet Test .com Master, (2) Business Statistics Specialist, (3) Personal Information Protection Specialist Certification Exam, (4) DX Advisor Exam, (5) eco Certification (Environmental Social Certification Exam) (R) are considered important, and nearly all members of departments having customer interactions (consulting, call centers, sales) have obtained these qualifications. The company group has 890 corporate doctors (as of April 1, 2024), and partner companies have 979 (as of the end of May 2024) who are actively engaged in frontline support for small and medium-sized enterprises.

The company has been supporting customer companies in improving productivity and solving the issue of long working hours, which is a challenge for small and medium-sized enterprises, through IT and other means. They have consistently promoted reducing overtime hours, taking paid leave, and focusing on improving employee health and productivity. Particularly, they have actively addressed flexible working styles, prevention of stress-related illnesses such as mental health issues, prevention of lifestyle diseases, considering them as key issues. They have been actively working on these areas. In March 2024, they were consecutively certified as a 'Good Health Management Company' recognizing superior health management practices. They uphold the fundamental policy of 'Happiness Distribution,' stating that the increase in profit gained through company efforts is equally shared among shareholders, the company, and employees, enhancing employee motivation. In December 2023, they obtained certification for ISO 30414, an internationally recognized guideline for disclosing information on human capital, being the 7th company domestically to do so.

(Written by FISCO Guest Analyst, Hideo Kakuta)