9417.T

• Company Overview and Strategic Transformation

  • Smart Value is a 98-year-old company founded as a local factory, currently listed on the Tokyo Stock Exchange Standard market, and is undergoing a full business portfolio restructuring: it divested its mobile phone sales agency business in 2020 and its digital government SaaS business for local governments in 2025, transitioning to a two-segment structure focused on Mobility Services and Smart Venue.
  • The company's long-term mission is to "Build a social system that will stand the test of history." It believes that pure software SaaS businesses face displacement risk from generative AI, while physical IoT and place-based integrated business models that combine data/ICT/AI with real-world community development are more resilient. Its long-term goal is to build a "smart city model" that serves as urban infrastructure for Japan's aging, declining population era, increasing exchange population, boosting local consumption and circulation, and cultivating civic pride.

• Mobility Services Operational Updates

  • The segment operates two core products: CiEMS, a telematics solution for commercial fleet management, and Kuruma Base, a carsharing/unmanned rental platform that enables 24/7 operations with just vehicles and parking.
  • CiEMS: New contract acquisitions are growing steadily, with expanded partnerships with construction equipment rental firms (such as Aktio) and financial institutions. The 3G network shutdown scheduled for March 2026 is expected to cause a temporary drop in contracted units to 26,792 units from 28,663 units at the end of FY2025, as 3G-enabled devices can no longer be used. The company is actively promoting upgrades to the LTE-based CiEMS Plus model bundled with the CiEMS Report alcohol check compliance app, which is expected to generate temporary sales upside from device upgrades.
  • Kuruma Base: Contract count has grown past 1,000 from 878, with expansion to construction equipment rental operators including Wakita after Aktio and Rent, enabling fully unmanned 24/7 rental operations at over 50 yards. After a 2-year pilot with Tokushima City, the company has launched a commercial public vehicle sharing service that allows multi-use: public employee use on weekdays, public/tourist use on weekends, and emergency vehicle use during disasters, creating an efficient multi-purpose asset model. A target of 1,200 contracts by the end of FY2026 is set.
  • Future growth will focus on opening up and monetizing accumulated commercial vehicle data, including deep vehicle data (speed, fuel consumption, EV battery status, fault codes) to enable predictive maintenance, reduce vehicle downtime, support commercial EV transition, and streamline fleet operations for logistics companies.

• Smart Venue Operational Updates

  • The company has completed and operates the 11,000-capacity GLION ARENA KOBE on Kobe's waterfront, which opened in spring 2025. It currently draws over 10,000 visitors weekly and has surpassed 1 million annual visitors, operated via a consortium with NTT Docomo and NTT Urban Development. The arena is 100% powered by renewable energy, the first such private venue in Japan.
  • Recent milestones include: partnering with NTT to connect the arena to the Osaka-Kansai Expo site via NTT's next-generation IOWN communication technology for a successful high-quality low-latency live viewing event; hosting major events including the Japanese Volleyball All-Star Game, with a future sumo tournament already scheduled, establishing the arena as a leading content hub in the Kansai region.
  • The company is implementing its smart city model centered on the arena under the "Smartest Arena" concept, which combines hard/soft integrated operation and digital/social synergy to drive regional revitalization: it has launched the Commons Tech KOBE community platform with over 40 participating local businesses to drive community engagement; a dedicated official app with payment, loyalty, coupon functionality collects real-time user attribute, purchase and movement data, which is analyzed via BI and AI tools to enable targeted marketing and demand forecasting, with the goal of connecting arena visitors to consumption across the Kobe/Sannomiya area. After 10 months of operation, the model has already delivered steady visitor referral results and contributed to increased local foot traffic, with plans to expand the Kobe model to other regions with planned new arena/stadium projects.

• ESG and Operational Governance

  • The company has less than 200 employees post-divestment, with a very low turnover rate. It has implemented comprehensive work-life balance support, earned the 2025 Excellent Health Management certification for large corporations, and pursues active DE&I, sustainability, and information security initiatives (holds ISO27001 certification), with AI integration to improve internal operational efficiency.

• The company revised its full-year FY2026 guidance downward from its initial forecast, due to non-core non-cash losses recorded in the first half. The new full-year guidance is: consolidated net sales of 5.936 billion yen (136.1% year-over-year), operating profit of 261 million yen (a swing from a 440 million yen operating loss in the prior full year), with an expected net ordinary loss of 634 million yen and a net loss of 789 million yen for the full year, driven by non-operating items including 374 million yen in interest expense from lease accounting adoption, 68 million yen in impairment loss from the headquarters relocation, and 157 million yen from partial reversal of deferred tax assets.
  • Full-year EBITDA is projected to reach 1.314 billion yen; the prior year's higher 1.993 billion yen EBITDA included one-time gains from the digital government business divestment, so the current result reflects a strong core operating trend. Cash position is expected to stay around 3 billion yen, and capital expenditure has been drastically reduced as the company now focuses on monetizing existing completed investments, particularly the Kobe arena.
  • Management expects to achieve quarterly net profitability in the 4th quarter (April-June 2026), marking the first quarterly profit since the business transformation, which is seen as a positive milestone for the company's next growth phase.
  • The company notes that the current half-year core business performance is on track: operating results have improved steadily from Q1 through Q3, and while Q3 (January-February) is a typically slow season, management expects to cross into full quarterly profitability in Q4 as planned.

1. Mobility Services Segment: For the 2nd quarter of the 2026 June fiscal year, net sales reached 627 million yen, which is 107% of the prior year period. Segment profit hit 131 million yen, growing 128.8% year-over-year with improving profit margins. For the full fiscal year 2026, net sales are expected to be 894 million yen, with a slight decline from the prior year driven by reduced low-margin product sales, and the segment remains on a steady growth track.
2. Smart Venue Segment: For the 2nd quarter of the 2026 June fiscal year, net sales reached 2.203 billion yen, which is 536.6% of the prior year period. The segment narrowed its net loss to 12 million yen from a 107 million yen loss in the prior year period, showing significant improvement. For the full fiscal year 2026, the segment expects net sales of 4.857 billion yen with a projected segment profit of 380 million yen. The full-year revenue breakdown is: 30% from venue rental, 25% from sponsorship/naming rights, 31% from self-operated events and ancillary revenue (hospitality, food & beverage, merchandise), and 14% from contracted development and smart city model operations. In total consolidated terms for the half-year period: net sales hit 2.83 billion yen, 156.7% year-over-year, with a consolidated operating loss of 49 million yen, a major improvement from a 152 million yen loss in the prior year period.

• The 3G network shutdown will cause an unavoidable temporary decline in CiEMS contracted units, though this impact is already factored into guidance and new customer growth remains on track.
  • The Smart Venue business is an unprecedented private-sector led model in Japan, so it took longer to ramp up than initial expectations, leading to the downward revision to the full-year earnings forecast.
  • Lease accounting on-balance sheet treatment of the arena construction has pushed down the company's equity ratio significantly, and improving this ratio via core operating profits is a key priority for the coming years.
  • The company is in a critical multi-year transition period following full business portfolio restructuring, with execution risk remaining as it scales the new business model.

Q: It is expected that visitor numbers for the Smart Venue arena will plateau at some point. What measures do you have to stabilize visitor numbers, and how do you mitigate the risk of an opening hype period followed by a steady decline in attendance?

A: The first 10 months since opening have been a trial and evaluation period, where event organizers and users tested the arena's usability across factors including sound quality, setup/teardown time, and visitor flow. Now we have reached a stage where the arena has earned solid positive evaluation from regular users, built through close iterative communication with clients. We have already accumulated a strong pipeline of non-cancelable bookings extending out to 2027, and this booking pipeline is growing steadily. This solid backlog forms the base for stable attendance and future growth. Looking at industry trends for comparable arenas, we expect attendance will continue to grow and stabilize at a high level, and we are continuing to build out this foundation to support long-term stable results.