■ Growth strategy 1. Business environment Considering the business environment surrounding the "AIAI Three Education Zones" developed by the AIAI group <6557>, AIAI NURSERY in the field of licensed nursery schools is expected to experience a large shift in nursery policies from 2024, as the organization responsible for child and family services was established in April 2023 with the aim of improving the quality of early childhood education and care, and as a response to the "unprecedented decline in the number of children" in Japan. However, despite the encouragement from the government, the saturated market feeling cannot be ignored due to the declining birth rate and the significant reduction in the number of newly opened nursery schools, taking into account factors such as the resolution of the waiting list problem in the industry. We also believe that the elimination of small-scale operating companies, considering the shortage of childcare workers, is a possibility to consider. On the other hand, the number of children with developmental disabilities is increasing even in the declining birth rate, and the demand for facilities for disabled children (child development support, medical child development support, after-school day services, visit support for nursery facilities, etc.) is rapidly increasing. Considering this situation, we believe that, not only is the business environment for AIAI PLUS and AIAI VISIT positive, the business environment for the "AIAI Three Education Zones", which provides integrated child care, therapeutic care, and education, is also favorable. 2. AIAI Group Mid-term Management Plan 2023-2025 The company formulated the AIAI Group Mid-term Management Plan 2023-2025 in May 2023, which incorporated a reconsideration of the position of the tech field, the construction of new business models such as nursery school visit support (AIAI VISIT) and early childhood education programs. The target figures are listed as sales of 12-13 billion yen and operating profit of 300-500 million yen in the final fiscal year ending March 2026, and cumulative investment of 680 million yen over three years. In the first term of the plan, ending in March 2024, sales and operating profit exceeded the final year target value, and the total number of children, the total number of visits to nursery facilities, and the total number of internal license holders all exceeded the plan. The growth strategy is progressing smoothly, and there is no major change in the basic strategy of maximizing group synergy through the "AIAI Three Education Zones". Regarding AIAI NURSERY, considering the situation in which the speed of opening licensed nursery schools is slowing down throughout the industry due to the resolution of the waiting list problem, the company will slow down the speed of opening new facilities with the maturity of the market in mind. However, in addition to continuing to expand into regions with high needs and high investment efficiency, the company will promote efforts to reorganize the industry. On the other hand, due to the growing demand for facilities for disabled children, AIAI PLUS will be developed as a pillar of growth after AIAI NURSERY, and the expansion of AIAI VISIT will be fully implemented in the Tokyo metropolitan area as a new business model. Regarding the expansion of AIAI VISIT, securing specialized visiting support personnel is an important point, so we will strengthen our approach from a variety of channels and promote the excavation of potential qualified persons. 7. Corporate-related initiatives In terms of financial and capital aspects, the company will continue to improve its self-capital and aim to support the stable growth of its business from a financial perspective. In terms of human capital, we will promote the creation of a work environment in which all employees at the facilities and offices can work comfortably and foster human resources. In AIAI NURSERY and AIAI PLUS, we will increase the options for work styles based on the preferences and stages of life of the employees working in the facilities, and establish a workplace environment where work and family can be balanced.

First-phase midterm management plan for the Long-term Vision "Challenge 80th" and InfrastructureStage.

Midax Holdings <6564> formulated the Midax Group's 10-year vision "Challenge 80th" in June 2022 to embody the ideal to be aimed at the 80th anniversary ten years later, on the occasion of the 70th anniversary of its founding in April 2022. To achieve the "Challenge 80th," it established a first-phase midterm management plan and intends to promote the plan over two phases in five years toward the realization of "Challenge 80th." As a basic strategy, it will continue to evolve into one of the leading comprehensive waste management companies in the industry and aims to become a true leader in the industry by positioning the first-phase midterm management plan period (March 2023 to March 2027) as a stage for establishing growth acceleration infrastructure and the second-phase midterm management plan period (March 2028 to March 2032) as a stage for establishing the industry's leading position through growth acceleration. The performance target figures are revenue of 10 billion yen and operating income of 5 billion yen in the final year of the first-phase midterm management plan in March 2027 (organic growth only, excluding mergers and acquisitions), and revenue of 40 billion yen and operating income of 12 billion yen in the final year of "Challenge 80th" in March 2032 (including mergers and acquisitions). By March 2024, the revenue from organic growth alone had reached 8.95 billion yen, and it can be said that it is progressing smoothly toward the revenue target of 10 billion yen in March 2027.

The company's policy is to focus on expanding into the Kanto region in terms of business area expansion. It aims to expand its market share in the Kanto region, where the market is large, by actively expanding into it, using its advantages of owning a large number of processing facilities and permits as a weapon, while maintaining a high profit margin. As a plan for equipment investment (intermediate processing facilities and final disposal sites), it is promoting an increase and long-term investment of existing bases, as well as selecting multiple candidate sites for installation in the Pacific Belt Zone and the Kanto region, and advancing the plan simultaneously and in parallel order in order to obtain early installation permits and further expand the business.

As part of the first-phase midterm management plan period, the company plans to develop two controlled final disposal sites (each with a capacity of 1.5 million to over 2 million cubic meters) as part of its final disposal plan, but obtaining a disposal permit is not easy and takes quite some time, so the company is widening its range of candidate sites throughout the eastern Japan region. It has already completed terrain surveys and geological surveys for both candidate sites and is currently conducting environmental surveys. Regarding the development plan for intermediate processing facilities, a new incineration facility site has already been acquired in Kumagaya City, Saitama Prefecture in March 2022. Furthermore, as part of the Midax Group's efforts to upgrade existing water treatment facilities and address aging, it plans to operate a new water treatment facility in Hamamatsu City, Shizuoka Prefecture (tentatively named the Toda Plant) after April 2026 (land already acquired, contracts for construction signed with construction contractors in April and May 2024). The processing capacity will be about five times that of the existing facility (Midax head office), with a total investment of about 3.5 billion yen. It should be noted that with regard to the development of new facilities, the company aims to actively utilize M&A, not just self-development.

In May 2024, it announced the management's efforts to realize capital costs and stock prices. As a current analysis, the company recognizes its shareholder capital cost to be about 9% and its ROE (return on equity) to have surpassed its shareholder capital cost continuously over the past five years, maintaining a level of 15% as its goal. Its PBR (price-to-book ratio) has also remained above 2 for the same period. Its future direction is to pursue various measures for improving capital profitability and continuing to achieve ROE that exceeds shareholder capital costs, including the steady achievement of the first-phase midterm management plan, the implementation of continuous shareholder returns, and the implementation of active IR activities.

(Authored by FISCO guest analyst Masanobu Mizuta)