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.

Nissou <1444> is a company that engages in renovation and real estate businesses. The main focus is on renovation business, handling restoration work, renovation work, house cleaning, in-occupancy maintenance work, as well as large-scale projects such as exterior painting and rooftop waterproofing. Specializing in small-scale and low-priced renovation work that large enterprises find difficult to enter, operating in the blue ocean market (a market with few competitors due to being a new business area). It is a business of small profits but by devising business activities, they achieve profits. Real estate business is a new business started from the fiscal year ending July 2024, mainly handling the purchase and brokerage of resort properties in the Shonan area of Kanagawa Prefecture, among others.

1. Overview of Performance for the fiscal year ending July 2024

Consolidated performance for the fiscal year ending July 2024: Revenue increased by 12.3% year-on-year to 4,678 million yen, operating profit decreased by 62.0% to 56 million yen, ordinary profit decreased by 55.6% to 63 million yen, and net income attributable to parent company shareholders decreased by 63.8% to 25 million yen, with revenue reaching a record high. Following the acquisition of Yana Corporation as a consolidated subsidiary in the fiscal year ending July 2023, the renovation business performed well, and the new start of business by Japan Resort Bank, Inc. in the real estate business was a contributing factor. On the profit side, expenses increased due to the expansion of group companies through M&A and costs related to M&A implementation. However, the M&A strategy pursued by the company as part of its growth strategy is steadily progressing. For the fiscal year ending July 2024, they approved 2 M&A deals and executed 1.

2. Outlook for Performance for the fiscal year ending July 2025

The consolidated performance outlook for the fiscal year ending July 2025 anticipates a 22.3% increase in revenue to 5,722 million yen, a 97.7% increase in operating profit to 111 million yen, a 115.6% increase in ordinary profit to 136 million yen, and a 194.0% increase in net income attributable to parent company shareholders to 73 million yen. In addition to the steady growth of existing businesses, the consolidation effect of Sasaki Co., Ltd., acquired in June 2024, and Heisei Housing Co., Ltd. (now Heisei Housing Co., Ltd.), acquired in August of the same year, will contribute. In the real estate business, procurement is progressing smoothly, contributing to revenue growth. On the profit side, measures like price adjustments for securing proper profits are expected to result in a growth rate surpassing the revenue increase.

3. Future growth strategy

In July 2022, Nissou was listed on the Tokyo Stock Exchange (TSE) Growth Market, achieving a simultaneous listing on the Nagoya Stock Exchange (NSE) Next Market. The company aims to further expand its performance and enhance its corporate value, actively promoting business. By actively pursuing the steady growth of existing renovation business and aggressive entry into new business areas, they aim to accelerate growth. Regarding the expansion of existing business areas and entry into new business areas, they also plan to actively consider M&A. Furthermore, they are also considering entering overseas markets in the medium to long term.

■Key Points

In the July 2024 term, although revenue reached a record high, the landing was in a decline. Growth strategies such as starting new businesses and implementing M&A are progressing smoothly.

The July 2025 term is expected to return to growth in both revenue and profit.

Pursuing the enhancement of corporate value through steady growth of existing businesses and creation of new businesses.

(Written by FISCO Guest Analyst Yoichiro Shimizu)