■ Fulltec <6546> Medium- to Long-Term Growth Strategy

The company has outlined a growth strategy focusing on three growth axes: horizontal, vertical, and "plus alpha". The horizontal growth strategy involves expanding market areas, aiming to increase market share in the Tokyo-centered Kanto region with a large market, and expand business into areas such as the Chubu and western Japan regions where sales and maintenance service bases have not been established. In the capital region, the company's awareness has been increasing along with an increase in orders at large buildings and commercial facilities. They have been steadily accumulating achievements in the Kyushu region where they entered in January 2021, and plan to expand based on the successful experiences there. To achieve this, the company recognizes the limitations of its own management resources and considers expanding through mergers and acquisitions with other companies in the same industry.

The vertical growth strategy involves expanding business areas, aiming to explore the stock market and strengthen product development capabilities. In terms of stock market renewal, they are working on initiatives to create and enhance connections with end users to stimulate demand, aiming for early achievement of replacing 7,000 units. As a strategy, they plan to strengthen renewal sales personnel, enhance sales to building management companies, and promote total renewal. Total renewal involves not individually renewing automatic door driving devices, fixtures, security systems, but receiving renewal orders for a single automatic door unit. They are actively promoting this based on customer needs, and in the fiscal year ending December 2023, total renewal out of the renewal revenue of 2,950 million yen for automatic doors and fixtures amounted to 533 million yen. Recently, the application of automatic doors has expanded to various uses such as hands-free automatic opening and closing, barrier-free accessibility, energy efficiency, security, fire prevention, and soundproofing. Enhancing product development capabilities that match these uses is essential for advancing total renewal.

In terms of maintenance strategy, they are aiming to improve the maintenance contract rate, strengthen approaches to around 0.21 million units beyond maintenance contract targets, and establish an efficient maintenance system at low cost through IoT utilization. Particularly through the use of IoT technology, they aim to expand the maintenance and inspection service "Fi-R", which enables 24/7 remote monitoring and annual regular inspections at low cost. For the company, this effort leads to increased productivity of maintenance personnel, reduced labor costs, and ultimately strengthens profitability. Additionally, they have started initiatives where maintenance personnel wear wearable cameras and receive instructions from technicians at the Sapporo call center for repair and inspection work on-site, aiming for early empowerment of maintenance personnel and efficiency in maintenance services.

"Plus Alpha" growth axis involves expanding into new business areas, aiming to propose automatic doors with added value and develop new products beyond automatic doors. The company has provided new products with new features through collaboration with other companies, such as the "e-media door" (a combination of image analysis AI and automatic doors) and the "social eye" (a non-contact barrier-free toilet door switch with information function). The company is considering advancing product development internally and expanding through mergers and acquisitions. The first step in this strategy is the consolidation of Wise Corporation's subsidiary. Wise Corporation has storage security systems and remote control, monitoring, and control technology, enabling the company's internal development of automatic doors and related products. Furthermore, it allows Wise Corporation to offer products and technology such as parcel lockers and personal lockers for offices, as well as proposals for security enhancement to end users such as owners and building management companies. They have already received technical requests from some end users regarding control functions, and collaboration seems to be underway. The company established an M&A promotion office on June 1, 2024, and it is expected that consideration of M&A focusing on the "plus alpha" growth axis will accelerate in the future.

On the other hand, a challenge in advancing growth strategies lies in securing and nurturing an adequate number of talents. Out of the company group's 735 employees (as of the end of the second quarter of 2024), about 300 are technical staff working in the construction and maintenance services department. To continue growing based on the stock market, ensuring technical staff is essential. Additionally, securing renewal sales representatives is also crucial. In the fiscal year ending December 2024, they increased new hires to 11, and career hires to 34. Emphasizing career hires amid tough competition for new hires. The company is focusing on "healthy management" to address this challenge, prioritizing improving the engagement of each employee. Similar to the previous year, they were certified as a "Healthy Management Excellent Company (large company division) 2024." In the fiscal year ending December 2024, they plan to introduce regional and job-specific allowances, implement preferential measures for transferees, and improve the personnel evaluation and appraisal system.

(Author: FISCO Guest Analyst Shuji Matsumoto)