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.

Japan Air Tech <6291> is the only domestic specialized manufacturer of clean air systems, offering one-stop solutions from order receipt to design, manufacturing, installation, and post-delivery maintenance. With the purpose of 'supporting the future with clean air,' the company has a wide range of products and design/construction technologies focusing on the semiconductor, electronic, and bio fields that require clean environments. Particularly emphasizing research and development, the energy-saving performance of the proprietary fan developed contributes significantly to achieving a decarbonized society, making it a highly competitive high value-added product.

1. Performance Overview of the Second Quarter Financial Results for the Fiscal Year Ending December 2024

For the second quarter of the fiscal year ending December 2024 (January-June 2024), the performance showed a revenue of 6,758 million yen (a decrease of 6.3% compared to the same period last year), operating profit of 606 million yen (an increase of 19.7% year-on-year), ordinary profit of 1,044 million yen (a 30.4% increase year-on-year), and interim net profit of 747 million yen (a 30.5% increase year-on-year). Looking at the progress compared to the full-year performance forecast (after upward revision), the progress rates are: revenue 50.1%, operating profit 65.2%, ordinary profit 79.7%, and net income for the period 79.5%. Revenue has been progressing steadily for the second quarter, and the profits at various stages have been showing good progress. In terms of profits, the receipt of dividends exceeded expectations at 397 million yen from overseas related companies. Profit improvement measures such as product price revisions and margin improvement through cost reduction have been successful. Regarding profit margins, the operating profit margin improved to 9.0% (an increase of 2.0 points year-on-year), while the ordinary profit margin increased to 15.5% (an increase of 4.4 points year-on-year). When looking at revenue by sector, growth was seen in the fields of semiconductors, electronic industries, and automobile-related companies in Japan due to increased semiconductor production plans and expanded equipment investments. In the second quarter of the fiscal year ending December 2024, the revenue ratio by sector increased by 3.1 points from 49.5% in the fiscal year ending December 2023 to 52.6%. In the bio field, revenue ratio increased in the pharmaceutical field due to solid equipment investments in pharmaceutical facilities and research facilities related to infectious disease research. However, sales of infection control equipment remained sluggish, leading to a decrease in the medical field.

2. Financial estimates for the fiscal year ending December 2024.

The performance forecast for the fiscal year ending December 2024 shows a revenue of 13,500 million yen (a decrease of 1.1% compared to the previous year), operating profit of 930 million yen (an increase of 31.5% year-on-year), ordinary profit of 1,310 million yen (an increase of 29.7% year-on-year), and net income for the period of 940 million yen (an increase of 28.4% year-on-year). While revenue is almost at the same level as the previous year, each stage of profit is expected to increase. Considering the results of the second quarter of the fiscal year ending December 2024, the company revised its full-year performance forecast based on the results of the second quarter and further raised the profit levels. With the increased levels, the operating profit margin is expected to be 6.9% (an increase of 1.7 points year-on-year) and the ordinary profit margin to be 9.7% (an increase of 2.3 points year-on-year). Continued solid business environment for equipment investments in the electronic and bio fields in the latter half of the year is expected, with active investments in new facilities and expansions in the electronic component industry. In the automobile sector, there is strong investment in EV-related equipment, likely leading to an increase in orders for clean rooms and clean room equipment. In the bio field, there are solid investments in research facilities necessary for activities such as vaccine research for infection prevention by pharmaceutical manufacturers, as well as in clean rooms for cell processing. These investments are expected to contribute to filling the demand gap caused by the decline in special demand for countering the spread of the novel coronavirus infection (hereinafter referred to as the COVID-19 pandemic). Considering these factors, we have a considerably conservative estimate regarding profitability.

3. Medium-Term Management Plan

The company formulated a five-year (2024-2028) medium-term management plan in December 2023. In October 2023, the company transitioned from the Tokyo Stock Exchange (TSE) Prime Market to the TSE Standard Market. In order to comply with the listing maintenance standards on the new market, the company incorporated new management policies and strategies. The plan sets out six mid- to long-term basic policies focusing on 'establishing clean air system technology that is recognized worldwide and contributing to society' under the company's purpose, including 'improving the sales ratio of standard and semi-standard products', 'eliminating price competition through differentiation (hardware, software, creativity)', 'globalization', 'expanding into new markets', 'maintaining a total shareholder return ratio of 65% or higher (within the planned period)', and 'commitment to sustainability management'. The numerical targets aim for a revenue of 18 billion yen, operating profit of 1.4 billion yen, and ordinary profit of 1.8 billion yen in fiscal year 2028.

■Key Points

Supported by strong capital investment in both the electronic and biotechnology sectors, performance is progressing smoothly.

A mid-term management plan to secure revenue of 18 billion yen in fiscal year 2028 has been formulated and is being promoted.

The mid-term management plan advocates a basic policy of total return ratio of 65% or more, and expands shareholder return measures.

(Writer: FISCO analyst Tomoichi Murase)