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ベルトラ Research Memo(6):2024年12月期は過去最高の営業収益、黒字転換を見込む

veru inc Research Memo (6): The fiscal year ending December 2024 is expected to achieve the highest operating income in history, turning into black.

Fisco Japan ·  Oct 17, 2024 04:36

Outlook for veru inc <7048>

For the fiscal year ending December 2024, the company forecasts operating revenue of 5,468 million yen, up 76.4% compared to the previous year, operating profit of 350 million yen (a loss of 89 million yen in the previous year), ordinary profit of 340 million yen (a loss of 135 million yen in the previous year), and a net income attributable to the parent company's shareholders of 264 million yen (a loss of 76 million yen in the previous year), with no changes from the initial performance forecast. The company, which has completed the survival period of the COVID-19 pandemic, regards the fiscal year ending December 2024 as the first year to achieve sustainable growth beyond the pre-pandemic period. Continuing towards the end of the period, it aims to accelerate growth investments aimed at expanding operations and increasing awareness, building upon the businesses that have been rebuilt and strengthened through the pandemic to stack up earnings around the core business portfolio, with the expectation of achieving operating revenue surpassing pre-pandemic levels. For the growth investments in the fiscal year ending December 2024, a total investment framework of 780 million yen has been established. With the aim of expanding operations and increasing awareness, funds will be allocated to various measures for the OTA business and LINKTIVITY business. Specific items and amounts include investments of 450 million yen to increase awareness in the OTA business, 120 million yen to improve frequency and opportunities for use, 50 million yen to strengthen Japanese tours, 60 million yen for improving business productivity, and 100 million yen planned for the LINKTIVITY business to expand business areas through new solution development.

Furthermore, the company is expecting a return to profitability on the profit front. While actively promoting growth investments for the purpose of strengthening the foundation for sustainable growth, the company is prepared to accumulate profits by achieving record high operating revenue and absorbing cost increases. However, affected by historical yen depreciation and other factors, the return of the overseas travel market is lagging behind expectations. With this in mind, the company plans to implement appropriate cost control measures based on the top-line situation towards the end of the period.

The policies and initiatives for each business in the latter half of the fiscal year ending December 2024 are as follows:

(1) Overseas Travel Business

Regarding the trends in the overseas travel market, although the impact of the COVID-19 pandemic continues, the company expects the recovery to be somewhat prolonged due to factors such as yen depreciation and rising fuel prices. Based on this premise, the company assumes a conservative scenario Scenario1 (annual average 65% recovery) and a Scenario2 in case of improved external conditions (annual average recovery rate of 72%). According to these scenarios, Scenario1 with a conservative assumption anticipates a recovery rate of 70% as of December 2024, while Scenario2, representing a pattern of improved external conditions, anticipates a rate of 92%. Even in the event of improved external conditions, it is expected to take some time before returning to pre-pandemic levels. While travel demand is gradually recovering, the current recovery speed is slower than anticipated. Nevertheless, the company aims to increase frequency and opportunities for use by expanding the value proposition area from Tabinaka to the entire travel market. Specifically, as mentioned earlier, the company plans to increase its top line by expanding the product valuation in the activity areas of transportation, meals, etc., in addition to the experiential value proposition area that plays a significant role for the company. Simultaneously, it will promote collaboration with ticket platform companies that handle many tourist facilities like museums. With the expansion of the product lineup related to facilities in addition to tour products conducted by guides, the goal is to increase frequency and opportunities for use. Specifically for HawaiiActivities, as the number of travelers from the U.S. mainland to Hawaii has been recovering to pre-pandemic levels, the company plans to continue expanding its product offerings mainly on Oahu Island to increase reservations.

Moreover, in the medium to long term, the company plans to consider entering the global market. While the return of Japanese travelers abroad is slower than expected, the company aims to incorporate local travel demands by expanding into overseas markets primarily in Asia, leading to business growth.

(2) Domestic Travel Business

Regarding the domestic travel market, the number of travelers has already recovered to pre-pandemic levels as we transition to the post-COVID era. However, although the market is gradually normalizing, it is facing increasing competition due to new competitors entering the market. In this context, the company plans to increase the number of products steadily while enhancing the attractiveness of its services, increase awareness through advertising investment, and expand bookings. In terms of expanding the product lineup, the company will actively collaborate with other companies including ticket platform companies. Specifically, the company plans to expand the product lineup by partnering with companies dealing with domestic tourist facilities to complement the main experiential tour products.

(3) Ticket Platform Business (LINKTIVITY)

Amidst the surge in the inbound market, it is almost certain that the number of inbound travelers in 2024 will surpass pre-pandemic levels. In this context, focusing on the core of the existing railway platform for inbound travelers, the company will accelerate growth by expanding target customers, product categories, and sales channels, thereby widening the TAM (Total Addressable Market) . Notably, the company has designated the rapidly growing inbound market as a strategic investment area from a medium-term perspective. The company also aims to actively invest in developing new solutions for inbound experiences. Following this strategy, in March 2024, the consolidated subsidiary Linktivity conducted a capital business alliance with Tokyo Metro to raise funds. The funds raised through this capital alliance will be allocated to expanding the ticket platform business through strengthening the operational structure and developing new services to promote business growth. The performance of this business is currently very strong, with record-breaking transaction volume in July 2024 as the highest monthly total to date. By strengthening investments amid the expected market growth, the company is focusing on building a business foundation that can firmly link strong demand to business performance expansion.

(Written by FISCO Guest Analyst Yoichiro Shimizu)

The translation is provided by third-party software.


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