RenetJapanGroup,Inc. Q1 FY2026 earnings call

• Overall Financial Performance
  • Achieved growth in both revenue and profit in the first quarter, with the combined Reuse and Recycling business hitting a record high quarterly revenue, with a 320 million yen YoY revenue increase.
  • The company's share price increased approximately 4x over the past 12 months, ranking 13th for share price increase across the entire Tokyo Stock Exchange in 2025, and 1st on the Nagoya Stock Exchange.
• Shareholder Return
  • Added a new "Upward Revision Memorial Shareholder Benefit": for shareholders holding 1 unit (100 shares) or more, a uniform 500 yen digital gift, with record date at the end of May 2026.
  • Existing benefits: 1) 25th Anniversary Memorial Benefit: 30,000 yen digital gift for shareholders holding 3 units or more, record date at end of February 2026, with a benefit yield of approximately 9% based on recent share price. 2) Regular twice-yearly benefit: total 30,000 yen per year (15,000 yen in February, 15,000 yen in August) for shareholders holding 10 units or more. All three benefits can be combined for eligible shareholders.
• IR Activity Enhancement
  • Launched online CEO Salon, held twice a month (1st and 3rd Monday, 18:30-19:00), currently has over 200 registered members, 40-50 attendees per session. Digests are distributed via email/LINE to registered members who cannot attend. It is expected to reach 3,000 registered members after the February 2026 benefit record date, with over 100 attendees per session going forward.
  • Opened an IR account on X (former Twitter), and published dialogues with famous economists/influencers on YouTube, with more dialogues with high-profile guests scheduled in March 2026.
• Reuse Business Updates
  • Opened the 2nd co-located Type B Continuing Employment Support facility for people with disabilities. Unprocessed junk items from the hobby/figure category of reuse business are allocated to this facility, successfully creating employment for disabled people and achieving profitability.
  • Currently 33 disabled people work at the co-located facilities, with an average monthly wage of 53,000 yen, far higher than the national average of 15,000-20,000 yen, winning the Aichi Prefecture Governor Award. The first facility achieves 35 million yen annual operating profit.
  • The company plans to expand to 20 co-located facilities within 5 years, and current volume is sufficient to support this expansion. After full expansion, it is expected to add 700 million yen to the existing operating profit of the reuse business.
• Recycling Business Updates
  • The GIGA School Program special demand from replacement of old 1-person-1-device terminals for primary and secondary schools is ongoing. Around 10 million units of terminals were deployed nationwide in 2020, and the first replacement cycle is starting after 5 years, with the special demand expected to last 2.5 years, with two major peaks in 2026 and 2027. The 2026 bidding peak runs from March to August 2026, and the first quarter has seen smooth progress in the early stage.
  • The existing B2C home pickup recycling business is also growing, driven by Windows 10 replacement demand and rising market prices for used PCs, pushing up selling prices.
• Social Care Business Updates
  • Revenue decline is caused by planned disposal of unprofitable business, and existing core business is improving. A new day-service supported group home for moderate to severe disabled people opened in Kawaguchi City, Saitama in October 2025, reached full occupancy within 3 months and achieved profitability early, with an expected annual operating profit of 25 million yen after full occupancy. The company will replicate this successful model and accelerate expansion across the three major metropolitan areas (Tokyo, Chubu, Kinki).
• Foreign Human Resources Business Updates
  • The business has built a full end-to-end system covering local sending, domestic registration support and management. It initially entered via niche Cambodia market and auto mechanic roles, and has now launched operations in high-population Vietnam and Indonesia (population of ~200 million). It will expand into large-volume segments like foreign drivers and welfare occupations, and leverage group synergy to supply talent to the group's own group home facilities.

1. Reuse segment: Revenue of 1.594 billion yen, 116.1% of the previous year's same period, grew 16% YoY. It accounts for 53.67% of total consolidated revenue. 2. Recycling segment: Revenue of 975 million yen, 154.4% of the previous year's same period. It accounts for 32.83% of total consolidated revenue. Combined Reuse and Recycling segment has total revenue of 2.56 billion yen, and recurring profit of 330 million yen, driving the whole company's profit growth with a 73 million yen YoY profit increase. 3. Social Care segment: Revenue of 358 million yen, 58.3% of the previous year's same period, decreased 41.7% YoY due to sale of franchise headquarters business and consolidation of unprofitable locations. However, existing group home facilities saw 27 million yen revenue increase and 40 million yen operating profit improvement. 4. Foreign Human Resources segment: Revenue of 48 million yen, 159.5% of the previous year's same period, strong growth though revenue size is still small. 5. Combined Social Care (including Foreign Human Resources) has total revenue of 400 million yen, and recurring profit of 10 million yen. Total consolidated revenue for 1Q 2026 September Term is 2.97 billion yen, total recurring profit is 130 million yen, net profit is 68 million yen.

• Full year 2026 September Term guidance has been upwardly revised: total revenue revised from 15 billion yen to 16 billion yen (7% upward revision), operating profit and recurring profit revised from 1 billion yen to 1.3 billion yen (30% upward revision).
• The upward revision is driven by better-than-expected progress in GIGA terminal bidding, and strong performance of the existing B2C recycling business; most of the GIGA related revenue and profit will be recognized in the second half of the full year. Management sets an internal target of reaching 300 billion yen to 500 billion yen market capitalization by the end of the current term (September 2026).
• Under an optimistic scenario, after-tax profit can reach 2 billion yen, which would correspond to around 3 billion yen operating profit. The company is working to achieve this higher target while the currently announced 1.3 billion yen operating profit is a solid base target.
• The company expects retained earnings to turn positive by the end of the current term, and plans to start dividend payments starting from the next term, and is considering a progressive dividend policy that increases dividend along with company growth, with the policy expected to be finalized in the second half of the current term.
• Management expects PER to rise from the current ~20x to 30x-40x in the medium term.

• Previous fraud incident in Cambodia operations taught the company that compliance is critical, especially for the Social Care business which relies on government compensation/subsidies.
  • The company has established a dual internal audit system (group-level and Social Care division-level) , increased headcount for compliance and audit, and the CEO receives direct regular reports to strengthen compliance monitoring, to prevent errors in subsidy application that have impacted other listed firms in the same industry.
• Monthly order volume disclosure is withheld to prevent competitors from gaining sensitive information that could impact bidding outcomes.
• The lithium-ion battery collection business is still in the early potential stage, and the company will only enter this market after confirming clear monetization to avoid operating at a loss.

Q: What is your target payout ratio in the future?

A: Currently we return value to shareholders via benefits, but the company's financial position has improved significantly, and we expect to be able to start paying dividends from next term. We have not decided on a specific future payout ratio yet, but we aim to implement a progressive dividend policy that increases dividends along with company growth, and we will finalize the policy in the second half of this term.

Q: You mentioned that even the received orders as of now can generate 1 billion yen operating profit. Can we understand that the full year target will be at least 1 billion yen after half a year?

A: 1 billion yen is a solid target. With the upward revision, we believe 1.3 billion yen is fully achievable, and we are looking to set an even higher target. Comparing our progress to climbing a mountain, we are currently between the second and third station, the weather (business conditions) is clear, we can see the summit, but there is still some fog and uncertainty, and we will work our way to the top.

Q: Has the number of participants in CEO Salon increased since launch? Can you share the approximate number before and after launch?

A: Member count has grown steadily, and we currently have over 200 members, with 40-50 attendees per session. After the February 2026 benefit record date, we expect around 3,000 registered members, which should bring over 100 attendees per session. We will send timely updates via email or LINE to all registered members.

Q: When will you start disclosing monthly GIGA order volume? Can you update on the retained earnings position and dividend start plan?

A: We have to withhold monthly order disclosure because competitors are closely monitoring our activity, to ensure we can win bids. We share progress updates in CEO Salon, so please join the salon for updates. As for retained earnings, it was a negative 250 million yen at the end of September, but we expect it to turn positive fully this year if we hit our 1.3 billion yen recurring profit target, which will allow us to start dividend payments.

Q: If we capture 1% market share in the GIGA terminal business, how much will it contribute to recurring profit?

A: It is hard to give a specific number because the size of each municipality's contract varies. Our priority is to steadily win bids and accumulate order volume, and we aim to avoid missing out on large municipal contracts.

Q: Is there still demand for used memory even though it has lower capacity than new memory?

A: There is widespread media coverage of memory shortages right now, driven by huge demand from AI and data centers, which has pushed up memory market prices. We expect demand for used memory to increase further going forward.

Q: What is your compliance system for the Social Care business, to avoid the subsidy application errors that have hit other listed companies?

A: We learned a hard lesson from the fraud incident in Cambodia, so we know strengthening internal controls is critical while we pursue aggressive growth. Since Social Care relies on government compensation, we have strengthened compliance: we increased audit headcount, implemented a dual audit system across the group and the Social Care division, I personally direct additional focus on this area and require direct regular reports to me to ensure thorough checks.

Q: When will you start disclosing order information, I have waited for a year already?

A: We originally planned monthly disclosure, but we have to withhold it because competitors are closely watching our IR information. Instead, we share progress updates in CEO Salon which is held twice a month on Monday, please join us there.

Q: What is the current status of your 100,000 unit iPad inventory?

A: We are shipping units steadily as preparation completes, and channel development is progressing smoothly.

Q: How do you account for iPad procurement costs?

A: We recognize costs when the order is received and units are shipped from our warehouse, same period as when revenue and profit are recognized. There is a 1-3 month lag between bidding and shipping, but we already include leading indicator order data in our full year guidance when we publish it.

Q: Can you share an example of how you increased selling prices for PC part sales?

A: We sort memory and other parts into detailed categories and sell them through multiple channels, including hard disks. I receive weekly sales reports, and I can confirm selling prices are increasing steadily.

Q: Can the procured iPads be resold overseas?

A: We have inquiries from overseas buyers as well as domestic, and we are considering exporting a portion of the inventory.

Q: Do you have sufficient security and fire prevention measures for your centers that store large volumes of tablets?

A: We have comprehensive information security measures: we have full-time security guards from a third-party security company stationed at the entrance, metal detectors, and full security camera coverage. I personally go through the metal detector even when I visit, so security is very strict. For fire prevention, given the risk of lithium-ion battery ignition, we have fire extinguishers and water/foam extinguishing equipment on hand for immediate response, so we have comprehensive measures in place.

Q: Why did you concentrate benefit record dates in February, I am worried about price drop after ex-rights?

A: There are two benefits with record date in February, and we added the new upward revision benefit with record date in May specifically to encourage shareholders to continue holding after the February ex-rights, so it is not a direct response to ex-rights price drop, but we split the dates to encourage continued holding.

Q: Do you reuse good-quality used PCs directly, or do you mostly disassemble them?

A: We do reuse PCs that are in good condition directly. But most of the PCs we receive are older units that have been stored away at home, rather than newer high-quality units, so only a portion are reused directly.

Q: What is the driver of the upward revision: is it better procurement progress or better resale performance?

A: The key driver is that procurement progress has been better and more certain than expected, so we reflected that in the full year guidance. We are also actively developing multiple domestic and international sales channels to achieve higher resale prices.

Q: Have meeting requests from institutional investors increased?

A: Yes, we have seen a gradual increase in meeting requests from institutional investors.

Q: What PER are you targeting this term considering the special nature of the GIGA demand? I think after-tax profit could reach 2 billion yen this term.

A: Current PER is around 20x, and we believe it deserves a higher PER given current performance. The 2 billion yen after-tax profit you mentioned is a level we are aiming to exceed. In an optimistic scenario 2 billion yen after-tax is possible, there are still hurdles to clear but we will work toward that target.

Q: Do you plan to add continuous holding requirements for benefits after you start paying dividends?

A: After we start paying dividends, we will review the positioning of shareholder benefits. We are considering providing more generous benefits to long-term shareholders.

Q: Do you currently collect lithium-ion batteries, and is there a risk of this business being unprofitable?

A: We already handle lithium-ion batteries that are included in the home appliances we collect, but we do not currently run an active dedicated collection business. This is becoming a major social issue with over 8,000 ignition accidents per year, and the government is expected to focus on this area going forward. Our existing home pickup collection network and municipality relationships are very well-suited for this business, and we often get inquiries from the government and industry, so we expect to run a pilot project in the near future. This has great potential to expand our collection business, but we will not enter the market until we confirm clear monetization, we do not plan to operate this at a loss.

Q: Can you reconfirm the timeline for dividend start based on the financial position?

A: Retained earnings is negative 250 million yen at the end of September, but we expect it to turn positive fully by the end of this term, so we can start dividends promptly next term.

Q: What share of GIGA bidding results are public versus non-public?

A: Most are non-public, only around 30-40% are open to public view, so over half are non-public.

Q: If after-tax profit is 2 billion yen that would be around 3 billion yen operating profit, are you targeting a level even higher than that?

A: It is too early to disclose a higher target since we just finished the first quarter and just announced the upward revision. Using the mountain climbing analogy, that higher profit level is the summit we are aiming for, and our currently published 1.3 billion yen target is just the second/third station. We will work toward reaching that higher profit level, starting with achieving the upwardly revised 1.3 billion yen target.

Q: I hold 3,000 shares and am looking forward to dividends.

A: Thank you very much for holding our shares. We will grow steadily over the medium and long term to deliver dividends that meet your expectations, we hope you will continue to support us. We have seen more selling than we expected after the upward revision, but we will continue to deliver strong performance going forward, and we hope you will continue to hold and look forward to future results.

Q: Are you concerned about your health with all the additional work from CEO Salon?

A: Thank you for your concern, I am very healthy. My recent annual checkup had no issues, I exercise regularly and play golf once a week even in the winter, I am very energetic and focused on the GIGA business, so please do not worry.

Q: When will your talk with Emin Yilmaz be published?

A: The recording will be done soon, and we expect to publish it on YouTube around March. We plan to add more talks with famous YouTubers and high-profile influencers going forward.

Q: I could not make it to the results presentation in Nagoya.

A: In-person presentations deliver the most energy, but we have monthly online CEO Salon where you can ask questions live online, so we hope you will join us there.

Q: Can you send LINE notifications before CEO Salon starts, I often forget the schedule.

A: We already send reminder notifications via LINE and email, so please check your messages for updates.

Q: Can you explain how your disabled support facilities are profitable, it seems to generate surprisingly high profit?

A: For group homes for disabled people, our model achieves around 25 million yen annual operating profit per facility. For the Type B continuing employment support co-located with reuse business, profit is around 35 million yen per facility. Group homes get most of their revenue from government compensation, with zero net cost burden from residents. For the employment support facilities, the reuse revenue is all paid out as wages to disabled workers, so the facility's profit comes from government compensation. The government gives additional compensation to facilities that pay higher wages, and our average wage of over 50,000 yen per person is among the highest in Japan, so the additional compensation is large, which drives the strong profitability.

Q: Can I visit your recycling center?

A: We have held shareholder visit events before where I guided tours personally, and we plan to hold similar events again when the timing is right. We also have a video of a previous facility tour posted on our IR website for people who cannot travel to Nagoya, please watch it there.

Q: Do you plan to hold another facility tour event?

A: We plan to hold another one in the future, no specific dates are set yet but we are working on it.

Q: What are your measures after the February ex-rights?

A: We added the new May benefit to encourage shareholders to hold through after the February ex-rights, so we hope shareholders will stay to get the May benefit as well. We know the share price is important, and we will continue to deliver strong performance and positive news to support the share price.

Q: What PER are you targeting in 3 months?

A: Current PER is around 20x, and we aim to increase it to 30x-40x going forward, so we hope the market will re-rate our stock higher.

Q: Can you disclose the number of ordered units?

A: We cannot disclose specific order unit numbers because that would allow competitors to infer our bidding prices and selling prices, which would hurt our competitiveness. Please refer to the aggregate quarterly numbers we disclose.

Q: Could you have IR staff handle more questions so you can focus on strategy?

A: We already have IR and management staff that handle inquiries. You can send questions to the IR desk via email, and the responsible person will reply. We also accept pre-questions for CEO Salon, and I answer questions there directly, so please feel free to send questions through either channel, we split the work so you do not need to worry about capacity.