■ Future Outlook of System Integrator <3826>

2. 2-Year Business Plan

(1) Performance Goals and Basic Policies

The company announced a 2-year business plan "2-Year Business Plan" at the beginning of the period. The performance targets for the second year of the plan, the fiscal year ending February 2026, are set at ¥5,000 million in revenue and ¥336 million in operating profit, aiming to exceed the performance level of the fiscal year ending February 2024, which included the E-Commerce business. It is a plan to put each business on a growth trajectory through strengthening sales and development functions.

Regarding the mission, it remains the same as before to continue creating software that gives time rather than taking it. They place a focus on 'Enterprise Business Systems', concentrating resources on the development of core systems, in addition to further growth of existing businesses such as development support tools and AI systems, and actively investing in the development and nurturing of new products and services to solve corporate business challenges.

As the goal for the fiscal year ending February 2026, they aim to 'promote sustainable growth and enhanced governance, driving shareholder value maximization', and towards that achievement, they aim to transform into a true system integrator that can provide more value than expected to customers' 'business and issue resolution' as a top-level system coordinator.

<2-Year Basic Policy>

• They will work on strengthening profitability by aiming for a continuous 1% improvement in profitability in all businesses, targeting an early recovery of a 10% revenue operating profit margin (most recently achieved 12.2% in the fiscal year ending October 2022). They actively utilize AI technology internally to enhance productivity.

Regarding the business policy, the company will focus resources on business systems, AI, and development support tools to establish a model for solving issues leveraging the company's strengths, thereby achieving stable growth. Additionally, proactive investments will be made in new business development to create new products and services to support the next 10 years.

In terms of human resources and organization, efforts will be made to cultivate professional talents with high technical expertise, value-providing capabilities, and active behavior. The organization will undergo restructuring in March 2024 (separation of development and sales functions) to enhance technical and competitive capabilities. Quality new graduates will be hired, as well as experienced professionals to strengthen the workforce. A new personnel evaluation system starting in February 2025 will emphasize business performance and competencies, aiming to boost employee motivation and engagement.

Regarding investments, in addition to investing in businesses and talent for sustainable growth, investments will also be made in corporate partnerships, including M&A. The company is actively evaluating system development companies with IT engineers that contribute to the growth of the ERP business. The focus is on companies with annual revenues of several hundred million yen and 20-30 employees. The potential for successful M&A deals has increased as the costs have decreased.

For management infrastructure, a system will be established to maintain management data, conduct data analysis, and make agile management decisions. This will enable the company to have a structured approach for dynamic decision-making based on data analysis.

In terms of shareholder returns, efforts will target improving TSR (stock price increase + dividends) to implement stable and continuous shareholder returns.

As for ESG and SDGs initiatives, the company will strengthen its governance structure by maintaining and securing transparency in management, establishing executive and monitoring systems to enhance competitive advantages. Contribution activities to the local community will continue at each business location as before.

(2) Long-Term Vision

The long-term vision sets sales targets of 7.1 billion yen for the fiscal year ending February 2028 and 12 billion yen for the fiscal year ending February 2033. Efforts in the long term include creating strong products and brand power like "Object Browser" to increase brand recognition, nurturing new pillars following the ERP business (GRANDIT) through new business development, corporate partnerships, and M&A. The company aims to develop at least three businesses with revenues ranging from 30 to 5 billion yen in the long term to drive revenue growth.

(Written by FISCO guest analyst, Jo Sato)