■ Growth Strategy of Select Corporation＜5078＞

1. Formulation of 'Vision 2030'

The company has formulated a long-term management vision 'Vision 2030' starting from the fiscal year ending February 2025, setting out the 'desired state' towards 2030, clarifying policies and strategies for further sustainable growth and improvement of medium- to long-term corporate value. This plan is positioned as a milestone towards the realization of the longer-term management vision 'CEL Future Strategy', considering the baton pass to the next generation of management. The 'desired state' is defined as 'maximizing corporate value and realizing material and spiritual happiness', promoting the improvement of the gross profit margin through the pursuit of high value-added as a niche top player in the apartment specialty manufacturer. Moreover, the company regards human capital as the cornerstone of management in enhancing corporate value. In the plan, from the perspective of how to achieve the 'desired state', the company formulates and implements a human resources strategy to aim for sustainable improvement in corporate value. Quantitative targets include setting the target for the fiscal year ending February 2030 at a revenue of 40 billion yen, operating profit of 4 billion yen, operating profit margin of 10.0%, ROE of 10.0%, and PBR of 1.0 times. As for the revenue structure, the plan is to maintain the ratio of stock business at 40.0% as in the fiscal year ending February 2023 and cover all corporate costs with the profits from the stock business. It is a plan driven by philosophy and strategy rather than figures, aiming to promote the achievement of quantitative targets and the realization of material and spiritual happiness of employees side by side, which we believe will lead to the enhancement of medium- to long-term corporate value and deeper satisfaction of stakeholders.

2. Company-wide Strategy of 'Vision 2030'

As the company-wide strategy of 'Vision 2030', aiming to achieve overwhelming differentiation by selecting and concentrating limited management resources under the principle of 'Measure In and Control Out', and providing added value. Based on the principle of 'Be Niche' of 'Cellophosphy', the company promotes a niche strategy that selects and concentrates 'guests', 'areas', 'structures', and 'targets'. Guests are narrowed down to 'young people who carry the future' with a focus on living, and the business area is limited to the Tokyo metropolitan area (1 metropolis, 3 prefectures). In terms of development, the focus is on corner lots in the southern and western areas of Tokyo, limiting to steel frame construction that combines seismic resistance and can maintain high quality through in-house factory production. In addition, it emphasizes 'Income Real Estate' with low risk and high market growth rates by advancing the deployment of differentiated products through 'My Style Vintage'. By concentrating management resources on these niche strategies, the company aims to provide added value through overwhelming differentiation. For the implementation of each measure, executive managing directors will lead as committee chairs and establish subcommittees in lower organizations to drive reforms.

3. Key Measures of 'Vision 2030'

As the key measures of 'Vision 2030', it aims to improve profitability, enhance productivity, and establish new business models derived from apartment management. To improve profitability, the company aims for 'My Style Vintage' products to account for 100% of the product composition, expanding its unique rental and building management menu. At the grassroots, the introduction of the highest-grade 'Vintage-Gran' of 'My Style Vintage' is planned. It is believed that the plan includes planning interior designs that emphasize luxury in line with the concept, further enhancing the company's brand value compared to conventional products. To improve productivity, the company will promote efficiency through digitalization, shorten construction periods through technological reforms, advance automation through robots, and streamline production efficiency through common parts. For the establishment of new business models derived from apartment management, it considers expanding multidimensional management through business operations synergistic with contracting, development, and management. It will continue to promote the creation of a high-profit structure by pushing forward with value-added enhancement and cost reduction focusing on efficiency. Moreover, it sets objectives, methods, effects, and targets for each measure and aims to solve challenges through reforms and improvements.

4. Investment Plan

The Company has established an investment plan of 5.5 billion yen by the end of February 2030, considering the profit and loss balance, in order to achieve the quantitative goals set in 'Vision 2030.' The breakdown includes investments of 0.75 billion yen for talent development such as operating the Cerea Academy and workstyle reforms, 0.75 billion yen for technological reforms in design construction and production, 0.5 billion yen for digital reforms to improve efficiency through process improvements, and anticipates an investment of 3.5 billion yen for multifaceted management expansion through M&A and capital alliances. The Company's investment plan is considered to be feasible and balanced with the profit and loss balance, taking into account the current fund balance, real estate business funds, two years of internal reserves, and working capital.

5. Human Capital Management

The Company views human capital as essential for enhancing corporate value and the foundation of management. In 'Vision 2030,' measures are being implemented to maximize corporate value from the perspectives of 'activation of human resources,' 'development of human resources,' 'acquisition of human resources,' and 'establishment of benefits and systems.' Specifically, under 'activation of human resources,' the Company is introducing a retirement age system for executives, various measures to enhance employee engagement, and initiatives to promote flexible working methods free from time and location constraints. Under 'development of human resources,' the operation of the Cerea Academy aims to clarify decision criteria and behavioral guidelines for management and employees. Additionally, setting career paths, advancing the development of next-generation business leaders, and promoting reskilling to cultivate highly specialized human resources are part of the strategy. Regarding 'acquisition of human resources,' the policy is to recruit a diverse range of highly specialized talents to support the creation of corporate value. Efforts are being made to formulate recruitment strategies including new graduate and mid-career hiring policies, and to establish a system for nurturing new graduates, focusing on recruiting young talents to lead the next generation. Job-based employment is also being promoted. Under 'establishment of benefits and systems,' a goal of an average annual income of 9 million yen is set, and a comprehensive review of base pay and performance distribution is being carried out. Consideration is being given to implementing a 3-day workweek. Moreover, as part of human capital management, efforts are aimed at reinforcing the establishment of a high value-added creation system by automating and outsourcing business processes and controls, and increasing the proportion of highly specialized human resources.

Furthermore, as part of human capital management, efforts are being made to automate and outsource business processes and controls, and to adjust the allocation structure to one with a higher proportion of highly specialized talents, aiming to strengthen the establishment of a high value-added creation system.

In the interim period of February 2025, steady progress was observed in key areas. In terms of activating human resources, initiatives to strengthen both workstyle reforms and employee well-being are being promoted. For workstyle reforms, efforts are focused on improving workplace environments and introducing flexible work practices to enhance employee productivity and satisfaction. As part of this, an employee survey was conducted in October to consider further improvements based on employee feedback. From the perspective of human resource development, preparations for the opening of the Cerea Academy are progressing well. A small-scale opening is scheduled for February 2026, with the systematic construction of faculties and departments currently underway. Regarding human resource acquisition, the Company achieved the recruitment of 18 personnel by September 2024 and plans to continue recruiting new employees from October onwards. The recruitment strategy, emphasizing close collaboration with agents and rapid response, has proven effective in securing human resources. Additionally, the job-based new personnel system introduced in this period evaluates each employee based on their expertise and achievements, realizing a fairer and more transparent system design. This system contributes to boosting employee motivation and plays a significant role in retaining excellent human resources. Furthermore, in terms of benefits and system improvements, the annual holidays have been increased from 120 days to 126 days in the previous period, while the paid leave acquisition rate has been maintained at 85%, reflecting the company's stance of promoting employees to take time off. Additionally, if the profit plan for this period is achieved, further holidays are planned to be added, demonstrating the company culture's emphasis on employee well-being. By clearly prioritizing tasks in each department, efforts to improve work efficiency are being made, and progress in improving the working environment through workstyle reforms can be clearly seen.

(Author: FISCO Guest Analyst Ryoji Mogi)