■ Medium-term Management Plan 1. The goal of the medium-term management plan The outline of the "Medium-term Management Plan 2025" (fiscal year from February 2024 to February 2026) that Veru, Inc. is currently working on is as follows. The company believes that the market environment will change after the end of the corona pandemic. Regarding the changing societal situation, the company assumes various management challenges arising from the normalization of economic activities and the consequent labor market shortages, uncertain future risks, the rise of marketing needs due to the evolution of technology and the increasing complexity of customer touchpoints. As for the company's market, it predicts the importance of securing highly skilled personnel through marketing technology utilization and the increase in effective BPO demands in both the defensive and offensive areas amid various management challenges, as well as rising labor costs due to a shortage of human resources and the automation of customer correspondence. In April 2023, the company established a new corporate brand slogan, "How will you respond to that voice?". Although it has been listening to the needs of society, companies, and consumers by listening to the people's voices and solving problems with meticulous communication, the problems that can be solved by interpreting the "voice" are becoming more multifaceted and complex due to technological innovations. Meanwhile, the new epoch of "NEW BPO," which the company group aims to achieve as a slogan, is to model the process of turning many of the voices gathering at the CX site (customer response department) into values related to management decisions and to lead to the optimal action by utilizing data. NEW stands for Next, Engage, and Widen, aiming to delve into all the voices (maximizing the performance of 40,000 people, enhancing the utilization of data), connect stakeholders (collaboration with partners), and broaden the sphere of influence (growth strategy for expanding into new business domains). In other words, it is considered that the company aims to utilize a wide range of collaborations with companies more than in the past, not only in contact centers but also in marketing and other areas. In the "Medium-term Management Plan 2025," the company has set three key policies and plans to make additional investments of a total of over 15 billion yen for three years from fiscal year 2024 to achieve them. As a result, it has set quantitative targets to achieve sales revenue of 180 billion yen (an average year-on-year increase of 7.1%), operating profit of 16.5 billion yen (an operating margin of 9.2%), net income after tax of 11 billion yen (an average year-on-year increase of 11.8%), ROE of 14.4%, and a dividend payout ratio of 50% for the final fiscal year ending in February 2026. It is a goal-setting that exceeds the sales revenue average annual increase of 5.3% and the tax-exempted income average annual increase of 8.7% in the previous medium-term management plan, based on the assumption regarding the changing social and economic environment. Although the first year of the plan, the fiscal year ending in February 2024, started off tough due to the unexpected decrease in high-profit corona-related businesses, the company aims to achieve its target for the final year by investing in organic growth (growth by internal resources) and reform through generated AI after the fiscal year ending in February 2025.
2. Growth Strategy
To achieve the management numerical targets of the mid-term management plan and approach the realization of the task, Property Technologies <5527> aims to accelerate the growth of the second-hand housing restoration business by expanding real bases, strengthening partnerships with brokerage companies using SaaS products, and dramatically expanding KAITRY. However, qualitative improvement of the business is necessary for growth, and to that end, it will promote qualitative improvement of purchases, qualitative improvement of sales, and strengthening of core competencies as a growth strategy. Expectations for the portal site KAITRY are particularly high, and Plason is also considering new initiatives such as strengthening sales of long-term rentals and repurchasing and reselling high-end city center apartments.
(1) Qualitative improvement of purchases
For qualitative improvement of purchases, we aim to assess 70,000 properties (33,222 in November 2023) using a strategic approach that leverages technology and expands information, and aim for a direct purchase rate of 10% (2.1% in November 2023). Specifically, we will promote the use of the portal site KAITRY, expand advertising to increase awareness and acquire new customers, and proceed to fix existing customers by proposing accurate timing to switch residence. We will also increase the inflow of purchase information through SaaS products such as HOMENET Pro and KAITRY professional. In addition, we will expand the network by continuing to strengthen transactions with brokerage companies at existing bases and opening new bases at two locations each year.
(2) Qualitative improvement of sales
In the qualitative improvement of sales, we will also leverage technology to shorten the inventory holding period from purchase settlement to sales settlement by about one month from November 2023, and aim to sell 150 properties annually through the direct sales route which will start in November 2024. For this purpose, we will utilize data science such as using an original scoring model to derive sales difficulty and suitability from existing properties to be purchased, providing easy-to-image property information based on surrounding environments and generated AI in HOMENET Pro, etc., and increase PV and site return by listing over 1,000 renovated condominiums and increasing name recognition. We will also promote the use of the KAITRY sales page. At the same time, we will aim to strengthen our core competencies supporting the qualitative improvement of business through information coverage and visibility by expanding the database, improving the accuracy of appraisals, enhancing the development system for new business/products, and verifying the feasibility of new businesses and products through proof of concept, strengthening the organization, enhancing internal collaboration for POC implementation, and conducting joint research through industry-academic partnerships.
(3) Strengthening of core competencies
By expanding the database, improving the accuracy of appraisals, strengthening the development system for new businesses/products, and strengthening the core competencies that support qualitative improvements in the business, we will enhance the qualitative improvement of the business. Regarding information coverage and visibility improvements, we will strengthen the front-line through the display of alerts that measure the effectiveness of real-time business KPIs, ahead-of-the-curve indicators of supply and demand environments, and implemented field strategies, which serve as important indicators of qualitative improvement. We will continue to verify AI appraisal numbers through stacking and comparison with actual appraisals. In addition, we will strengthen the development system for new businesses and new products by increasing the number of development team members, strengthening organizational structure, and conducting joint research and discovering new themes through industry-academic partnerships and implementing POC.
※Proof of Concept: Verification of the feasibility of new businesses, etc.
(4) Role of KAITRY:
In the growth strategy, KAITRY's role is significant. Through the reinforcement of direct procurement at KAITRY, new procurement opportunities, such as high-quality procurement that cannot be obtained through brokerage, which leads to short-term sales with high profitability, are increasing. It also leads to excavation of sales and housing replacement needs, becoming an engine for expanding business areas. In addition, in direct sales, it becomes a differentiating factor as the company’s unique sales route. It offers convenience and economy for users as there is no fee for buying and selling round trips and they can browse both the purchase and sales pages at once. Thus, direct procurement and direct sales through KAITRY are very beneficial to the company. To further utilize these benefits, the company is promoting system development such as real-time asset management such as creating assessment documents and price volatility on the app and ITization of important matters explanation for direct procurement, and system development such as virtual staging* and peripheral environment scoring, and AI-based recommendation for direct sales. In addition, the company aims to establish a more profitable business model by adding service menus other than repurchase by its in-house group to incorporate previously overlooked demand. We will be paying attention to the future trend of KAITRY's evolution.
*Placing your desired CG furniture and CG interiors on the Panorama VR.
(Author: FISCO guest analyst Nobumitsu Miyata)