9029.T

Company Overview & Core Strategy

• Higashi Holdings was founded in 1944 from the merger of 13 transport companies in Osaka, transitioned to a holding company structure in April 2025, and currently operates 11 group companies with 48.1 billion yen in group revenue (FY2025 March term) and approximately 1,600 employees.
• Core competitive advantage: 80+ years of experience adapting to changing customer needs to evolve logistics services, with built-in logistics design capabilities and on-site execution strength. The company follows a "bullet train model" growth strategy where all business segments act as growth drivers, avoiding over-dependence on any single segment.
• Hybrid business structure: 55% of revenue comes from a stable base of long-term large blue-chip clients, with profits from this base invested in new business development to balance stability and growth. A specialized new business development department vets opportunities for feasibility, profitability and risk before launching and handoff to operating divisions.

Key Recent Operational Updates

• 3PL for Large EC Clients: The company operates 5 large EC-focused logistics centers (4 in Kansai, 1 in Kanto) handling non-standard-sized products that cannot be processed by the client's automated sorting centers, with 24/7/365 operation. EC-related transportation volume grew 4x year-over-year, and the Narayama Logistics Center expansion will double capacity to ~30,000 tsubo, making it the group's largest 3PL center to support further growth.
• M&A and New Group Additions: Added Piales (ICT services) to the group in June 2025 to strengthen IT service end-to-end capabilities.
• Business Model Innovation: Building delivery business reworked its model to cut or eliminate fixed management fees to win contracts against large logistics competitors, offsetting lost revenue by expanding tenant-facing general affairs BPO services (reception, staffing, relocation, office supply agency) to build a sustainable profitable model, and has won multiple new high-profile building contracts in central Tokyo.
• Sustainability & Governance: Established a sustainability basic policy in 2021 and a sustainability promotion committee in 2023 to推进 CSV (Creating Shared Value) management as part of Prime Market upgrade preparations.

2026 March Term 2nd Quarter Cumulative Results

• Revenue: 26.799 billion yen, +21.9% YoY (all-time high)
• Operating Profit: 1.858 billion yen, +68.3% YoY (all-time high)
• Ordinary Profit: 1.929 billion yen, +65.2% YoY (all-time high)
• Net Income Attributable to Parent: 1.223 billion yen, +77.5% YoY (all-time high)
• Growth drivers: Full-scale operation of the newly opened Kawanishi Logistics Center, full-year consolidation of Neo Competence, large contract wins in office services, and stable operation and profitability of existing large EC 3PL centers driving margin expansion.

• The previous mid-term plan (Mid-Term 2026) was completed one year early driven by stronger-than-expected growth, so a new 3-year Mid-Term 2028 plan was launched, targeting 55.0 billion yen in revenue and 3.5 billion yen in ordinary profit by FY2028 March term, with the period focused on completing fundamentals for upgrade to the Tokyo Stock Exchange Prime Market.
• Full-year FY2026 March term guidance was upward revised: Revenue to 54.0 billion yen, ordinary profit to 34.0 billion yen, reflecting stronger-than-expected first half results despite planned downstream capex for the Narayama Logistics Center expansion and growth investments in personnel, vehicles and equipment in the second half.
• The company already meets the Prime Market's market cap (circa 25.0 billion yen current market cap) and floating share ratio (circa 40% vs required 35%) requirements, and is implementing governance reforms per lead underwriter recommendations to meet Prime governance standards within the 3-year mid-term plan window.
• Year-end dividend guidance was upward revised from 46 yen per share to 50 yen per share, consistent with the target consolidated payout ratio of 30% or higher. The 2.69% dividend yield (excluding shareholder benefits) exceeds the average for Prime/Standard markets as of November 2025.

1. General Logistics & 3PL Business: 3PL revenue grew more than 5x since FY2021 March term driven by large-scale EC business expansion; 3PL revenue grew from 7.8 billion yen (FY2023 March term) to 14.6 billion yen in 2 years, contributing strongly to overall growth. The large EC client alone generated 8.7 billion yen in revenue, accounting for 18.2% of total company revenue. General logistics grew 3.7 billion yen in 2 years from expanded large client contracts and M&A contributions. This segment is targeted for major growth under the mid-term plan.
2. Office Service & Building Delivery Business: Office services handle large-scale office relocations and layout changes, while building delivery focuses on integrated in-building logistics management. This segment has achieved strong growth from new client wins driven by ongoing large-scale building development in the Tokyo metropolitan area, and has innovated a new business model to cut fixed management fees while expanding high-margin BPO services for tenants.
3. IT Service Business: Grows alongside the IT/ICT industry, offering end-to-end IT device support from introduction to disposal, plus system maintenance and engineer dispatching. Recent wins include a 400,000+ unit order for the NEXT GIGA School Initiative device refresh project, and the June 2025 acquisition of Piales has strengthened end-to-end ICT service capabilities. This segment maintains high growth rates.
4. Care Service Business: Offers rental and sales of welfare equipment for care providers, with end-to-end support from order handling to delivery to user homes, as a niche stable business segment.

• The logistics industry overall faces persistent labor shortages, requiring the company to invest heavily in recruitment, salary improvements and retention initiatives to support growth.
• Building delivery industry competition has intensified with major national logistics providers entering the market, increasing pressure to cut fixed management fees and requiring business model innovation to remain competitive.
• Over-reliance on a small number of growth drivers could slow overall company growth, which the company mitigates through its multi-segment all-driver growth strategy.
• The 3PL large EC business has very high operational barriers, requiring rapid scale-up of staff and equipment to meet immediate high-volume output requirements, creating execution risk for new center launches.

Q: What is the priority between expanding non-logistics businesses versus growing core logistics and adjacent services? / A: All non-logistics businesses (office services, building delivery, IT services) naturally evolved from customer needs that emerged during core logistics operations. The company's strategy remains centered on core logistics, and will continue to evolve new services from logistics in response to customer and societal demand, keeping logistics as the fundamental base of all operations.

Q: What is Higashi's current position relative to Prime Market listing requirements, and when is it expected to meet all criteria? / A: Higashi already meets the quantitative financial requirements: current market capitalization is around 25.0 billion yen (meeting the 25.0 billion yen requirement), and the floating share ratio is ~40% (meeting the 35% requirement). It is currently implementing governance reforms under lead underwriter guidance to meet the Prime Market's governance standards, and expects to fully satisfy all requirements within the Mid-Term 2028 plan period.

Q: Why was the previous mid-term plan completed one year early, and what drove the better-than-expected performance? / A: The biggest driver was unexpectedly large 3PL business growth: new large centers (Kobe Nishi LC opened 2024, Kawanishi LC opened 2024) grew 3PL revenue from 7.8 billion yen in FY2023 to 14.6 billion yen two years later. General logistics also grew 3.7 billion yen over two years from new large contracts (catalog shipping, new banknote ATM delivery/installation) and M&A contributions. All other segments (IT services, office services) also performed above plan, enabling the early completion.

Q: Why can Higashi win such large contracts for large EC 3PL, when many other logistics companies compete for this work, and can this advantage be sustained? / A: Only a handful of companies in Japan can handle this business, which requires building out a large warehouse with custom material handling equipment, recruiting hundreds of warehouse staff and dozens of forklifts in 3-6 months, and immediately handling tens of thousands of outgoing cases per day from launch. Higashi has now accumulated the operational knowledge and scalable capabilities to deliver on these requirements, earning the client's trust, and the limited pool of capable providers means significant future growth opportunities remain for Higashi in this segment.

Q: What is the status of recruitment and retention to support continued growth? / A: To address industry-wide labor shortages, Higashi added a staffing firm (Neo Competence) to the group to stabilize warehouse worker recruitment, and uses multiple channels to expand driver candidate pools. It is targeting 1,800 total employees under Mid-Term 2028, continuing new graduate and mid-career hiring, and improving retention through salary reviews, enhanced training, and engagement surveys to support long-term career development for employees.