RenetJapanGroup,Inc. Q4 FY2025 earnings call

• 2025 September Full-Year Results
  • Achieved profitability as planned after exiting the Cambodia business and refocusing on domestic operations
  • Reported 10.4 billion yen in total revenue, 490 million yen in ordinary profit, 490 million yen in net income attributable to parent shareholders, after an upward revision of 240 million yen to ordinary profit from the previous forecast. Upward revision came from 130 million yen from equity-linked derivative transactions and 220 million yen from Reuse & Recycling business growth
  • Total assets stood at 7 billion yen, 14 billion yen lower than the previous period, with a 13% equity ratio
• Shareholder Return and IR Initiatives
  • Newly established a 25th anniversary of founding commemorative shareholder benefit: 30,000 yen digital gift for shareholders holding 300 shares or more as of the end of February 2026, with an approximate 10% yield
  • Expanded regular shareholder benefits: 30,000 yen in digital gifts annually (15,000 yen twice per year) for shareholders holding 1,000 shares or more, for a total of 60,000 yen annual benefits including the commemorative benefit
  • Completed a 300 million yen equity-linked derivative transaction with EVO FUND; will consider additional shareholder return measures (expanded benefits, additional transactions, stock split) as performance grows
  • Launched the free Renet Japan CEO Salon for individual investors to provide the same level of information disclosure as for institutional investors, including quarterly earnings briefings and twice-monthly online CEO sessions to discuss business progress (excluding inside information), facility tours, and a summary email magazine for non-attendees
• Core Business Strategy
  • The company follows the "ES Model" growth strategy aligned with ESG: Environment-focused small home appliance recycling, and Social-focused social care services, centered on the "Kankufuku Renkei Model" that combines recycling business with creating employment for people with disabilities
  • Recycling: Holds the top market share in personal computer recycling in Japan, with formal agreements with 745 local governments covering 89 million people (approximately 70% of the national population covered by major local governments). Is positioned to capture massive special demand from the replacement of GIGA School program personal computers, with 4.74 million units to be replaced in 2026 and 4.55 million units in 2027, totaling approximately 10 million units over two years (10x the company's normal annual volume of 1 million units). Has raised 2 billion yen via a subordinated capital loan to fund purchases and expand recycling center capacity, all capacity expansion costs are already included in the 2026 plan. Full-scale bidding will run from March 2026 to August 2026, and the 2026 plan only includes already received orders as of October 2025, making the forecast very conservative
  • Social Care: Currently operates 51 directly operated group homes for people with disabilities in the Tokyo metropolitan area and 10 in Aichi Prefecture, focused on mild cases. Will expand opening of new day service support type group homes for moderate to severe cases, planning 3 new openings in 2026, with full-scale expansion accelerating after 2027. Aims to open 200 new group homes by 2035, building 5 billion yen in annual operating profit from this stable, recurring stock-type revenue. Has recently signed trilateral Kankufuku Renkei cooperation agreements with Toda City/JR East Japan and with Shizuoka Prefecture/local companies, combining GIGA terminal recycling with expanding disability employment
  • Long-term target: Reach 100 billion yen in revenue and 10 billion yen in ordinary profit by 2035, combining the temporary special demand from GIGA replacement with long-term recurring revenue from group homes

For the 2025 September full year: Reuse business contributed +255 million yen to revenue growth; Recycling business contributed +377 million yen to revenue growth; Social Care business saw -900 million yen revenue due to the sale of Anispi Holdings; Finance business saw -1 billion yen revenue due to exit from the segment. For operating income growth in 2025 September full year: Reuse & Recycling contributed +222 million yen; Social Care & Foreign Talent contributed +741 million yen; Finance business contributed +566 million yen. For the 2026 September full year plan: Recycling business is projected to add +4.45 billion yen to revenue growth; Reuse business is projected to add +434 million yen to revenue growth; For operating income growth: Reuse & Recycling is projected to add +993 million yen; Social Care & Foreign Talent is projected to see -190 million yen. The lower projected Social Care revenue is due to spinning off the franchise division and retaining only directly operated facilities; existing directly operated facilities continue to grow revenue steadily.

• 2026 September full year guidance calls for 15 billion yen in total revenue (144% of 2025 revenue), 1 billion yen in both operating profit and ordinary profit (201% of 2025 ordinary profit), and 700 million yen in net income attributable to parent shareholders, representing a large increase in both revenue and profit
  • The 1 billion yen ordinary profit forecast is very conservative, only including already secured orders as of October 2025, due to the 3-6 month lag between order receipt and revenue/ profit recognition. Management expects additional order progress each quarter and will disclose progress quarterly
  • Full-scale bidding will accelerate from February 2026, so revenue and profit recognition will be weighted heavily towards the second half of the fiscal year; first half results will likely be lower due to this lag
  • GIGA School terminal replacement special demand will last for approximately 2.5 years through 2027, and will repeat on a 5-year cycle after a 2-year gap, creating recurring waves of special demand going forward
  • Management expects that the equity ratio will improve rapidly in 2026 driven by performance gains; the 2 billion yen subordinated capital loan counts 80% of its value as capital for regulatory purposes, resulting in a material effective improvement in the equity ratio from the perspective of banks

• Bidding competition could intensify in the GIGA School terminal replacement market, which could pressure win rates and margins
• Commodity prices for recovered materials (including rare earths, gold, silver, copper) are subject to market fluctuations, which could impact recycling segment profitability
• The company's current equity ratio is relatively low at 13%, though it is projected to improve with performance gains and the new capital loan
• Expansion of new group homes requires a 1.5 year lead time from land purchase to opening, which could slow the pace of growth of the social care segment if site acquisition is delayed
• Large-volume M&A to reach the 100 billion yen revenue target could require future capital increases, though management has stated it has no plans for capital increases at current share price levels

Q: Is it possible that the 2026 September full year profit forecast will be revised upward given that the current forecast only includes already secured orders? / A: Management states that there is a material possibility of an upward revision if progress continues as expected. While they note potential risks from future competitive intensification and material price fluctuations, they currently have a positive outlook that results will meaningfully exceed the current conservative forecast, and will update guidance as progress is achieved each quarter.

Q: What is the current win rate for GIGA School terminal disposal bids? / A: The company focuses its bidding on projects that meet its capacity and profitability targets, and currently has a win rate of over 50%, ranging from 70% to 80% for targeted bids. Most local governments separate the bidding for new terminal supply and old terminal disposal, so the company most often bids solely on the disposal contract, but is also open to partnering with new terminal suppliers for combined bids to capture all available opportunities.

Q: What is the company's plan to reach the long-term target of 100 billion yen in revenue? / A: Management will focus exclusively on growing the existing core recycling and disability group home businesses, rather than expanding into new unrelated areas. Growth will come from organic expansion of group home openings (targeting 200 locations by 2035) and M&A of peer companies in both the recycling and social care segments, which management views as necessary to reach the 100 billion yen target early.

Q: What is the cycle of GIGA School terminal replacement special demand, and when will the next wave occur after the current one? / A: The current large wave of special demand will run from FY2026 through FY2027, with remaining revenue recognition into early 2028. After a lull in 2028, the next wave of replacement special demand will start around 2029-2030, repeating on a 5-year replacement cycle as expected, creating recurring future demand.

Q: Is there any bankruptcy risk given the company's relatively low equity ratio? / A: Management states there is zero bankruptcy risk, as the company currently holds 2 billion yen in cash and cash equivalents in its bank accounts, and the 2 billion yen new capital loan has strengthened its balance sheet sufficiently to fund the GIGA opportunity.