■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).

1. Performance Outlook for March 2025

For the fiscal year ending in March 2025, Yamatane (9305) expects a significant increase in revenue and net profit, with sales of 7.65 billion yen (+18.6% year-on-year), operating profit of 350 million yen (+0.3% year-on-year), and net income attributable to parent company shareholders of 2.64 billion yen (+8.1% year-on-year).

The company is expected to see an increase in revenue due to the full-year contribution of Shokukai, which joined the group in the fiscal year ending March 2024. However, on the profit side, the amortization of Shokukai, consulting fees related to the ongoing Etchujima real estate development project, and increased costs associated with IR strengthening will be a burden. In addition, it is expected that various expenses such as the increase in general expenses due to the impact of inflation, the cost of training for expanding human capital investment, and the establishment of the Etchujima Development Promotion Office and SCM Promotion Department in April 2024, which will result in an increase in labor costs. The operating profit is expected to be slightly higher due to increased net income attributable to parent company shareholders by accelerating investment securities sales and other activities in tandem with the Syndicate loan fees associated with the M&A that occurred in the fiscal year ending in March 2024. There is no need to be particularly concerned about the significant decline in the first half of the year due to costs related to the Hongmok Pier new warehouse completed in June 2024 and real estate acquisition taxes.

2. Segment performance forecast. In the logistics business, sales are expected to increase by 2.2% year-on-year to 2.495 billion yen, while segment profit is expected to decrease by 2.3% year-on-year to 225 million yen. As for the outlook for the logistics industry, it is predicted that the volume of consumer-related and production-related freight will continue to be sluggish due to the high resource prices and the rising cost of living, and the volume of construction-related freight will also decrease, and although total transport volume is expected to remain firm, it will fall below the previous year. The company aims to increase revenue by steadily implementing fare revisions. In addition, to elevate its position from a logistics partner to an SCM partner, the company established an SCM promotion department in April 2024 and is working to improve logistics efficiency and enhance services. As a company with many native-born employees, this is an aggressive move, but with external talent who has expertise in the field as department managers, there is also a sense of expectation for the speed of activities. In addition, by steadily operating the newly completed Hongmok Pier new warehouse in June, the earning power will also be enhanced. On the other hand, due to the outsourced costs such as the car rental costs associated with the 2024 problem, continued cost increases associated with IR strengthening, and a temporary increase in costs associated with the operation of the Hongmok Pier new warehouse, a decline in profit is expected.

In the food business, sales are expected to increase by 32.1% year-on-year to 4.51 billion yen, while segment profit is expected to increase by 86.5% year-on-year to 146 million yen. Regarding the rice distribution industry, the company expects the supply-demand balance to tighten as the trend of increased consumption of meals outside the home continues, and the price of traded rice is expected to rise further due to inflationary pressures. However, the company expects rice prices, which soared due to the heat wave in 2023, to gradually stabilize. In the frozen wholesale industry, demand for industrial catering providers remain firm amid increasing food service consumption, with further growth in demand for prepared foods. Besides, the company expects to contribute to the business performance of the processed food wholesale industry through Shokukai's group participation for the year. With rice wholesale and sales, the company will focus on securing appropriate profits and expanding its market share, while placing particular emphasis on cultivating new customers. To address the issues of labor shortages, etc., the company aims to realize the revitalization of farming and the region by providing solutions to these challenges through the "Proximity/Deep Cultivation/Promotion Strategy" in the production areas, and to further strengthen its ties with the production areas. In the processed food wholesale industry, the company will promote its business by adopting strategies such as responding to changes in the business environment of catering service providers and enhancing the efficiency of the deli business, establishing a sound business model, and rebuilding and fostering product brands. In collaboration with thecompany's SCM Promotion Department in the logistics business, the company is also planning to address issues involving logistics that particularly affect the rice industry. The company aims to achieve a fusion of food and logistics and capture demand for conversion from other competing companies.

For the food business, the company expects sales of 4.51 billion yen (+32.1% year-on-year) and segment profit of 146 million yen (+86.5% year-on-year). In the rice distribution industry, while the supply and demand balance is expected to tighten as the trend of increased meal consumption outside the home continues, the company expects the price of traded rice to rise further due to inflationary pressures. However, the company expects rice prices, which soared due to the heat wave in 2023, to gradually stabilize. In the frozen food wholesale industry, demand for industrial catering providers remain firm amid increasing food service consumption, with further growth in demand for prepared foods. The company expects to contribute to the business performance of the processed food wholesale industry through Shokukai's participation in the group. As for rice wholesale and sales, the company is making efforts to secure appropriate profits and expand its market share, while placing particular emphasis on cultivating new customers. In procurement, the company aims to realize the revitalization of farming and the region by providing solutions to issues such as a shortage of human resources in the production areas through the "Proximity/Deep Cultivation/Promotion Strategy" and to further strengthen its ties with the production areas. In addition, the company aims to promote its business in the processed food wholesale industry by implementing strategies such as responding to changes in the business environment of catering service providers, enhancing logistics efficiency, and rebuilding and fostering product brands. Moreover, the company plans to work with the SCM Promotion Department in the logistics business to address the challenges of the rice industry's logistics and further promote the fusion of food and logistics in order to capture demand arising from the conversion of other competing companies.

In the information business, sales are expected to increase by 0.9% to ¥1,750 million compared to the previous year, while segment profits are expected to decrease by the same 45.0% to ¥60 million. Against the backdrop of accelerated investments in DX utilizing AI and other factors in the information service industry, while IT human resources shortages continue to progress, in the resident-type business of SE dispatch, we plan to secure technicians, strengthen further relationships with partners, and strengthen the acquisition of new development and operation work for general-purpose machine platforms, which is expected to steadily progress. In the inventory equipment rental business, we will further expand our services, such as by proceeding with the transition to mobile app services. On the other hand, we expect a decline in profits due to a decrease in the special demand for system development associated with invoice support.

In the real estate business, sales are planned to increase by 11.1% to ¥4,700 million from the previous year, with segment profits expected to increase by the same 1.1% to ¥2,080 million. Regarding the real estate industry, we expect a gradual recovery in demand for rental office buildings. Although a large supply of office buildings is predicted in major cities in Japan, we expect that rent prices will remain strong due to demand for office relocation and expansion. Based on the medium- to long-term repair plan, we aim to improve the added value and safety of properties, and through environmentally-conscious management of office buildings, such as the active use of renewable energy, we will maintain and enhance the quality and level of our existing properties and services to ensure high occupancy rates. In June 2023, we newly acquired Plaza Monzen-Nakacho, which is directly connected to the subway Tozai Line and Oedo Line Monzen-Nakacho Station, and while there will be an increase in depreciation expenses related to real estate, stable rent and high occupancy rates are expected due to its excellent location, so we expect an overall increase in revenue and profit. Regarding the Etchu-jima real estate development project, we are collaborating with external experts such as Japan Research Institute Co., Ltd. through the Etchu-jima Development Promotion Room to promote the formulation of concrete plans and schedules, and plan to release the "Etchu-jima Grand Vision" in May 2025. There is also great expectations from the Koto Ward Office, and we aim to create an attractive city while discussing with the administration.

(Writer: FISCO analyst Tomoichi Murase)