■Company Overview of Hirayama Holdings <7781>

1. Company Overview

The company group focuses on "insourcing and dispatch businesses" and "engineer dispatch business" as its main businesses, expanding domestically and internationally. The company group supports all stages of contracting and manufacturing processes through manufacturing outsourcing and dispatch, and in manufacturing outsourcing, it collaborates with the company group's on-site improvement consultants to achieve on-site improvements at customer plants, realizing productivity improvements and providing high-quality services. In July 2015, it listed on the Tokyo Stock Exchange JASDAQ (Standard) to enhance recognition and secure personnel, and transitioned to a holding company structure in March 2017 to promote M&A strategies and expand its business areas while continuing to grow. It transitioned to the Standard Market in the Tokyo Stock Exchange market reclassification in April 2022.

2. History

The company's origin dates back to Mr. Hirayama Joichi, the father of the representative director and president Hirayama Yoshikazu, who founded a wholesale business of daily necessities as an individual in Shimonoseki City, Yamaguchi Prefecture in 1955. Subsequently, thinking that a change in business model was necessary from the matured wholesale business of daily necessities, in 1989, it started manufacturing plant outsourcing operations (now insourcing and dispatch business), and in 1992, when the business gained momentum, it reorganized it into Hirayama Corporation.

Immediately after starting contracting operations, it mainly served automobile-related companies in the Chugoku region, gradually expanding its sales area to the Tokai and Kanto regions by opening Nofu branch in 1993, Utsunomiya branch in 1994, and Takasaki branch in 1996, while expanding its business scale. Initially, the main clients were export-oriented companies, but due to the progress of yen appreciation, a shift to overseas production continued, prompting diversification of client industries. In particular, it won a subcontract for Terumo <4543> in 2000, and its reliability and consulting capacity for on-site improvement were highly evaluated, leading to the expansion of the transaction size year by year, accounting for 52.0% of the company's revenue in the fiscal year ending June 2014, becoming a driving force for leapfrog performance. As the business scale expanded, the sales composition ratio for Terumo decreased to 13.8% by the end of June 2024, but the sales level has been stable, and it remains the largest customer. Moreover, the company obtained the first certification when the Manufacturing Subcontracting Excellent Proper Business Operator Certification System started in 2011.

The Manufacturing Subcontracting Business Improvement Promotion Council, operated as a project commissioned by the Ministry of Health, Labour and Welfare, certifies operators who comply with laws related to contracting operations, achieve employment improvement management, and enhance subcontracting systems among operators conducting excellent and proper subcontracting operations. It aims to promote the proper implementation of manufacturing subcontracting businesses, promote employment management improvements, ensure healthy market competition in the manufacturing subcontracting industry, and contribute to the enhancement of workers' welfare and the long-term qualitative improvement of manufacturing business of the ordering parties.

Further diversifying its business areas beyond manufacturing in response to the impact of the Lehman Shock in autumn 2008, while facing a decline in orders from client companies and sluggish business performance, in 2009, it aimed to expand its business areas by incorporating Top Engineering Co., Ltd., engaged in engineering dispatch business, as a subsidiary. In 2014, aiming for overseas expansion, after establishing HIRAYAMA (Thailand) Co., Ltd., it further acquired JOB SUPPLY HUMAN RESOURCES Co., Ltd. (hereinafter JSHR), a local human resources service company by Hirayama Thailand in 2015. Additionally, in order to expand the domestic insourcing and dispatch business area, it successively acquired FUN to FUN, Heiwa Tekkosho in 2018, and Hirayama Care Service in 2019. Initially engaged in automobile maintenance business and nursing care facility operation, Hirayama Care Service sold its automobile maintenance business in June 2024 and now focuses on operating nursing care facilities and nursing service business. Most recently in July 2023, it acquired Hirayama GL, which was engaged in tire manufacturing and related operations at four factories in Kyushu, as a subsidiary of Bridgestone's group company.

3. Group companies

As of the end of June 2024, the consolidated subsidiaries consisted of 12 companies, with the main insourcing and dispatch business being operated by Hirayama Corporation, FUN to FUN, and the three companies of Hirayama GL, which were grouped in July 2023. In addition, the engineering dispatch business is operated by Top Engineering Corporation, overseas business by Hirayama Thailand, JSHR, Hirayama Myanmar Co., Ltd. (hereinafter referred to as Hirayama Myanmar), consulting business by Hirayama, and foreign employee management support services by Hirayama Global Supporter Corporation (hereinafter referred to as Hirayama GS) and Sunrise Cooperative, as well as Peace Steel Works, Hirayama Care Service, Hirayama LACC Corporation, etc.

The revenue performance for the period ending June 2024, with Hirayama at 22,011 million yen and FUN to FUN at 4,836 million yen, collectively accounts for approximately 76% of the total. The number of group employees at the end of June 2024 (including limited regular employees and contract employees) decreased slightly from the previous period to 10,613 due to a reduction in overseas business personnel. However, the personnel in the insourcing and dispatch business, accounting for about 70% of the total, continues to increase.

(Written by FISCO guest analyst, Jo Sato)