■Future Outlook LeTech <3497> expects an increase in sales and ordinary income of more than 20%, with sales of 2.14 billion yen (+33.8% YoY), operating income of 150 million yen (+7.7% YoY), ordinary income of 100 million yen (+21.7% YoY), and net income of 1.03 billion yen (-11.4% YoY) for the July 2024 term, and has maintained its initial forecast (announced in September 2023).
2. Future growth strategy. (1) Elementary and junior high school department. Step <9795> has been working on increasing its share in the Yokohama-Kawasaki area, where an increase in the number of students is expected, as its most important priority in order to continue to grow as a teaching institute specialized in Kanagawa prefecture in the medium to long term. The number of successful applicants at public schools in Yokohama City in the spring of 2024 widened the gap with other schools, and for the second consecutive year, the number of successful applicants to Yokohama Suiran High School, which is considered the most difficult school in the prefecture, accounted for over 40% of the total successful applicants, further strengthening the brand power in the Yokohama area. The company aims to continue to achieve overwhelming numbers of successful applicants at Yokohama Suiran in the future. In the case of the company, the selection of desired schools is left up to the students' initiative, so it is unlikely that the number of successful applicants to Yokohama Suiran High School will suddenly increase. However, the company expects that the number of successful applicants will continue to increase in the future, as they plan to increase the number of students in the Yokohama-Kawasaki area. Regarding Tama High School, which is considered the most difficult in Kawasaki City, the number of successful applicants in the spring of 2024 was 59, which is 17 less than the previous year, and the difference with the top institute (124) has widened. It is believed that this is due to a decrease in the number of expectations from STEP students, as well as the influence of the top institute increasing its number of schools and strengthening them in the vicinity of Tama School. However, the company has increased the number of schools and students along the JR Nanbu Line and Odakyu Line in recent years, so it is expected to take the top position within the next two years. (2) High school department. Among the students attending public junior high schools in Kanagawa prefecture, the proportion of STEP students was 11.0% as of October 2023. Of this, 14.5% were in areas other than Yokohama and Kawasaki, 9.2% were in Yokohama City, and 5.0% were in Kawasaki City. On the other hand, according to population forecasts up to 2030, the northern part of Yokohama City and Kawasaki City are expected to continue to increase, while the western part of the prefecture and Yokosuka City are expected to continue to decline, making it reasonable to expand the number of schools and increase the share in the Yokohama-Kawasaki area. As an immediate goal, the company aims to increase the share of junior high school department students in the Yokohama-Kawasaki area to about 15%, and plans to open new schools at a pace of approximately 3 to 4 schools per year in these areas. It is believed that it will be possible to achieve a 15% share in the Kawasaki area with around 15 schools and in the Yokohama area with around 25 schools, and the expansion of share in the Yokohama-Kawasaki area could increase the number of students to 1.34 times the current level, assuming that the number of STEP students at other public junior high schools remains stable. If this is achieved over a 10-year period, the increase in the number of students would be an annual rate of 3%. Looking at the share of students in major urban areas, there are regions that have higher shares than 15%, such as Fujisawa City, where the company is headquartered, at 26.0%, Kamakura City at 22.7%, and Ebina City at 19.9%, so there is sufficient potential for the Yokohama-Kawasaki area to achieve a share of over 15% in the long term. In fact, the share has already been extended to the 16% range in Aoba and Totsuka districts of Yokohama City. The pace of school development depends on the development of teachers and the availability of appropriate real estate. As for the search for real estate, the market environment for finding property has become easier compared to before, as competitor institutes withdraw from the market or financial institutions consolidate their sales bases. In fact, the Hi-STEP Shin-Yurigaoka School was opened in a property that had been withdrawn by a competitor institute.
(1) Elementary and junior high school department. (2) High school department.
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Of the number of students attending public junior high schools in Kanagawa prefecture, the proportion of STEP students was 11.0% as of October 2023. Of this, 14.5% were in areas other than Yokohama and Kawasaki, 9.2% were in Yokohama City, and 5.0% were in Kawasaki City. On the other hand, according to population forecasts up to 2030, the northern part of Yokohama City and Kawasaki City are expected to continue to increase, while the western part of the prefecture and Yokosuka City are expected to continue to decline, making it reasonable to expand the number of schools and increase the share in the Yokohama-Kawasaki area.
As an immediate goal, the company aims to increase the share of junior high school department students in the Yokohama-Kawasaki area to about 15%, and plans to open new schools at a pace of approximately 3 to 4 schools per year in these areas. It is believed that it will be possible to achieve a 15% share in the Kawasaki area with around 15 schools and in the Yokohama area with around 25 schools, and the expansion of share in the Yokohama-Kawasaki area could increase the number of students to 1.34 times the current level, assuming that the number of STEP students at other public junior high schools remains stable. If this is achieved over a 10-year period, the increase in the number of students would be an annual rate of 3%. Looking at the share of students in major urban areas, there are regions that have higher shares than 15%, such as Fujisawa City, where the company is headquartered, at 26.0%, Kamakura City at 22.7%, and Ebina City at 19.9%, so there is sufficient potential for the Yokohama-Kawasaki area to achieve a share of over 15% in the long term. In fact, the share has already been extended to the 16% range in Aoba and Totsuka districts of Yokohama City. The pace of school development depends on the development of teachers and the availability of appropriate real estate. As for the search for real estate, the market environment for finding property has become easier compared to before, as competitor institutes withdraw from the market or financial institutions consolidate their sales bases. In fact, the Hi-STEP Shin-Yurigaoka School was opened in a property that had been withdrawn by a competitor institute.
※ Calculation based on 150 students per school in the junior high school department.
In the case of the elementary school department, the company aims to achieve an increase in the number of students by further honing its unique strengths of being a learning institute where students can enjoy learning. By consciously working on creating an environment where students can learn with pleasure, they hope to increase the number of students who enroll.
(2) High school department.
In the university sector, schools have been opened at a pace of one every 3-4 years. In order to maintain the quality of education while increasing the number of schools, new schools will be opened only after securing teacher resources. As a result of these efforts, the number of university admissions has also dramatically increased in recent years, and it has become a top-level brand among learning centers mainly for public high school students in Kanagawa prefecture. In 2024, expansion of the Yokohama campus is planned, but the policy is to consider relocation and expansion for popular schools in the future. Also, due to the fact that real estate properties are now easier to find than before, there is a possibility of opening new campuses in 2025 and beyond, as mentioned earlier. In particular, it is expected that they will eventually expand to the Kawasaki area as there are currently no schools there.
(Written by FISCO guest analyst, Jo Sato)