■Nagai Leven's Medium- to Long-Term Growth Strategy (7447)

1. Medium-term management plan

Regarding the medium-term management plan, the company reviews (rollover) the plan every fiscal year based on recent performance since the current situation, including exchange rates, tends to fluctuate. We have set sales of 18.8 billion yen and operating income of 4.8 billion yen for the fiscal year ending 2027/8 as target values for the current medium-term management plan*.

* An exchange rate of 140 yen/USD (fixed) is assumed. The previous plan was 125 yen/USD.

2. Future business strategy

The business environment surrounding the company is currently affected by exchange rate fluctuations, soaring domestic prices, etc., but it can be said that it is a tailwind in the medium to long term. According to the company's financial results briefing materials, the number of nursing staff demand is predicted to increase from 1.66 million people in fiscal 2022 to a maximum of 2.02 million in fiscal 2025, and it is predicted that 1.89 million people in demand for nursing care staff in fiscal 2022 will also increase to 2.45 million in fiscal 2025.

Under such a business environment, the company plans to promote medium-term growth through three strategies: (1) a market strategy aimed at expanding sales, (2) a product strategy to stabilize profitability, and (3) a production strategy to improve profit margins.

(1) Market strategies aimed at increasing sales

In addition to deepening the core market, we aim to expand our market share in surrounding markets. As for overseas markets, we will establish sales branches mainly in South Korea and Taiwan as supply and sales bases to advance market development. By implementing these strategies, it is planned that the sales composition ratio by market for the 2027/8 fiscal year will be 68% for the core market (75% for the fiscal year ending 2028/8, 71% for the fiscal year ending 2024/8, same order below), 29% (24%, 28%) for the peripheral market, and 3% (1%, 1%) for the overseas market.

In the surrounding market in particular, we aim to increase the share of compell packs and patient wear, aiming for sales of 5500 million yen and a sales structure ratio of 29.0%.

(2) Product strategies to stabilize profitability

At the same time as expanding sales of high-end products and high value-added products, we aim to raise the level of value-added products and mass-marketed products, and stabilize profitability. As a result, it is planned that the sales composition ratio by product for the 2027/8 fiscal year will be 9% for high-end products (7% for the 2028/8 fiscal year, 8%, same order below), high value-added products 62% (53%, 60%), value-added products 27% (34%, 28%), and mass-marketed products 2% (4%, 4%).

(3) Production strategies to improve profit margins

By shifting production overseas, we aim to increase overseas production ratios while suppressing exchange rate risks, and improve profit margins. Furthermore, development of low-cost strategic products utilizing overseas factories will also be promoted. Domestically, the policy is to maintain high profit margins by strengthening the ability to respond to QR and multi-product small-lot production. By implementing these strategies, it is planned that the production composition ratio for the 2027/8 fiscal year will be 64% overseas production (51% for the 2028/8 fiscal year, 54%, same order below), domestic production 36% (48%, 45%), and purchased products 0% (1%, 1%).

In overseas production, we aim to increase overseas production volume to 6900 million yen and the purchase ratio of overseas production to 64% by promoting low-price strategic products in the core market by promoting local procurement of materials.

(Written by FISCO Visiting Analyst Noboru Terashima)