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.

Wonder Planet <4199> is based in Nagoya and engages in the development and operation of mobile games targeting domestic and global markets. Major titles include "Crash Fever" (Japanese version) and "Pandland" (Japanese version). Since its release in July 2015, "Crash Fever" has become a long-term operating title with a cumulative 14 million downloads. In addition to in-house development, the company collaborates with partners to develop and operate titles that can be enjoyed by many users in the long term, adopting a freemium model for revenue generation. Furthermore, aiming for medium to long-term revenue growth, the company is developing two IP titles with strong partners and plans to release about one new title per year from 2025 onwards.

* A mechanism where you can use it for free and earn revenue from some users. It is a portmanteau of "free" meaning freedom and "premium" meaning sophistication.

1. Summary of Performance for the Fiscal Year ending August 2024

In the fiscal year ending August 2024, the revenue was 2,449 million yen (a decrease of 29.3% compared to the previous year), operating profit was 121 million yen (an increase of 142.9%), ordinary profit was 113 million yen (an increase of 301.2%), and net income was 92 million yen (compared to a loss of 236 million yen in the previous year). The major title, "Crash Fever," benefitted greatly from its 9th-anniversary campaign, and the increased costs associated with developing new titles were effectively managed. Overall, there was a significant improvement in revenue foundation and cost control. As of the end of August 2024, the company had 146 employees, maintaining an efficient organizational structure. Additionally, the jointly developed title "Pandland" with Game Freak Co., Ltd., released in June 2024, is currently in an investment-driven phase focusing on improving return on investment. The success of new titles is expected to significantly contribute to future business growth.

2. Outlook for the Fiscal Year ending August 2025

For the fiscal year ending August 2025, the company plans to continue promoting its growth strategy towards the profit growth phase after investment. Regarding the cost burden associated with growth investments, the company aims to achieve overall operating profit for the full year through company-wide support. In the fiscal year ending August 2025, there are expectations of short-term pressure on performance due to reduced sales due to the discontinuation of services for "Jumpchi Heroes" and the overseas version of "Crash Fever," investment-driven activities for "Pandland," and increased costs for new developments. However, in the medium to long term, performance recovery and expansion are expected due to the success of new titles and the re-growth of existing titles. The company believes that by continuing to focus extensively on development investments and cost control measures, there is a high possibility of achieving overall operating profit for the full year.

3. Future Initiatives

The company aims to expand its share in the hybrid casual gaming market amid the polarization of the mobile gaming market. Leveraging its accumulated achievements towards the four important factors in the global hybrid casual gaming sector: 'casual,' 'long-term operation,' 'global,' and 'IP utilization,' the company is striving to gain market share in the rapidly expanding market. Regarding new titles, following the release of 'Pandland' in June 2024, there are currently two new titles in development, with a goal of releasing approximately one new title per year from 2025 onwards. These titles are designed for a wide range of users with a focus on long-term operation, utilizing the recognition of IP to provide new gaming experiences. It is important to pay attention to the medium to long-term growth potential.

* Intellectual Property (IP) refers to intellectual property rights such as copyrights and copyrights.

■Key Points

- Develop and operate mobile gaming business targeting domestic and global markets.

- In the fiscal year ending August 2024, the success of the 9th-anniversary campaign for 'Crash Fever' maintained an operating profit.

- For the fiscal year ending August 2025, while there is expected cost pressure due to growth investments, the company expects to secure an operating profit through the re-growth of existing titles and the expansion of new titles.

- In the medium to long term, the company will focus on expanding its share in the hybrid casual gaming market by leveraging its accumulated achievements.

(Author: FISCO Guest Analyst Ryoji Mogi)