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SHIKIGAKU Business Strategies and Profits Reviewed by KCR



TOKYO, December 8, 2021 / PRNewswire / – SHIKIGAKU Co., Ltd. (TOKYO: 7049) , the company which mainly provides management consulting and platform services based on ‘Shikigaku’, an organizational management theory based on original and unique logical concepts, was recently reviewed by KCR Inc., a company independent research and investor relations support providing reports on various Japanese listed companies. In this report, KCR provides an analysis of the business model and profits of the company.

Highlights of the report

With its business philosophy of “Spreading Shikigaku and Maximizing People’s Potential”, SHIKIGAKU Co., Ltd. (TSE Mothers: 7049) has focused on conducting activities aimed at spreading his theory of Shikigaku since its founding. Established in march 2015, the company has since applied its Shikigaku theory internally and was listed on the Mothers section of the Tokyo Stock Exchange in just four years. The Shikigaku theory was invented by Kenji fukutomi, currently the second largest shareholder of the Company, and was subsequently systematized and extended by Koudai Ando, ​​President and Representative Director of the Company. When the Company was established, it started with only 500,000 JPY in capital, including 250,000 JPY each of President Ando and Kenji fukutomi, and has since grown at an astonishing rate.

The existing activities of the company include its main activity of organizational consultancy; the Sports Entertainment business, which consists primarily of a B2 League basketball team that the Company has acquired to expand its business area; and the venture capital fund business. In addition, the company has started practical support fund business and contract development business as new ventures. In its Organization Consulting activity, the Company plans to further increase its consultant workforce from 20 to 25 consultants. Ultimately, the Company aims to prove the effectiveness of its Shikigaku theory by increasing the size of this staff to 100 consultants. Meanwhile, the company is striving to further increase the number of contracted businesses and sales figures associated with its platform services and increase the sales generated by SHIKIGAKU Career while striving to maintain sales by consultant of JPY4 million. The Company also strives to prove the usefulness of its Shikigaku theory in all of its other areas of business by developing for-profit business operations in these areas. For example, the Company began to expand its fund-related business by proving that issuers supported by the Company generated higher results when implementing the Company’s Shikigaku theory on a large scale.

The unique logic of the Shikigaku system involves a structure of consciousness, and the system itself represents patterns of behavioral logic that are set in motion from the moment a person or organization becomes aware of a problem until the moment when this problem is being addressed. By minimizing misunderstandings and misperceptions that arise within organizations, the system reduces wasted time while communicating at the lowest possible level, improves employee focus and ultimately increases the productivity of the organization. Basically, the system focuses on leadership training and is characterized by its suitability for all business operations carried out by organizations. Due to the Company’s revenue model, profits increase with the growth in the number of consultants providing services. The growth of the Company is based on the revenue generated by multiplying the sales per consultant by the total size of the consultant staff. Meanwhile, the profits from the Company’s platform services, which generate recurring revenue on a monthly basis by providing ongoing organizational management support based on the Company’s Shikigaku theory, increase with the associated number of companies under contract. The company sets the bar very high for its consultants and only 1.6% of applicants have received job offers in the past year. SHIKIGAKU managed to shorten his required consultant training period to 78 days, which is 30 days less than the previous year.

The company is currently receiving a large number of inquiries regarding its Shikigaku theory. Indeed, the company acquires around 70% of its customers through referrals, which can be taken as proof of the high level of trust that customers place in the Shikigaku system. As part of its medium-term management plan, the Company aims to firmly position its Shikigaku system as an essential tool for business and organizational management and to meet the conditions for listing on the main market of the Tokyo Stock Exchange. by achieving sufficient market capitalization, generating adequate business results, and putting in place a satisfactory governance system. Through this same plan, the Company aims to generate net sales of JPY6.3 billion, operating result of JPY1.5 billion, and a 25% ROE in FY02 / 24.

Based on the current average amount of sales it generates per customer, the Company estimates the growth potential in the domestic market at JPY1.1 trillion. Its current share only comprises around 0.06% of the 3.58 million companies in the Japan, which leaves a significant room for growth. The company’s Shikigaku system can be implemented in any industry and can also be applied to non-corporate organizations. The company’s Shikigaku system can be used in a very wide range of circumstances, as it can be implemented in any industry and can be applied to non-commercial organizations as well. In recent years, relatively low labor productivity has become an urgent problem in Japan (which ranks 26th out of 37 OECD countries), and the Company expects its Shikigaku system to gain attention as a method of improving labor productivity in Japan over the medium to long term.

Currently, the Company is generating strong results. It generated substantial increases in sales and profits in the first half of fiscal year 02/22. At the end of 1S, the consolidated turnover amounted to JPY 1,801,483 thousand (up 86.4% over one year), while EBITDA (operating income + depreciation and amortization + amortization of goodwill + amortization of lease deposits) JPY236.142 thousand (+ 7,588.7% year-on-year), operating income JPY201.292 thousand (against an operating loss of JPY24.381 thousand in 1H FY02 / 21), ordinary profit JPY197,270 thousand (compared to the ordinary loss of JPY25 918 thousand in 1H FY02 / 21) and the profit attributable to the owners of the parent company JPY120 333 thousand (compared to a loss of 105,132 thousand JPY attributable to the owners of the parent in the year 1H FY02 / 21). During FY02 / 22, the Company expects net sales of 3,798 million yen (up 51.6% over one year), EBITDA of JPY 470 million (up 136.2% over one year), operating income of 400 million yen (up 191.2% year-on-year) and ordinary profit of JPY353 million (up 77.4% year-on-year).

SHIKIGAKU issued its fourth series of rights to acquire shares in April 2021. About half of these share acquisition rights have already been exercised. SHIKIGAKU will mainly use the funds raised through these share acquisition rights to recruit consultants and cover advertising expenses. At the moment, the Company is focused on growth and does not pay dividends.

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This report is intended to provide benchmark information for investment decisions and is not intended to solicit investments. Although the figures and opinions contained in the report are based on data obtained from sources believed to be reliable, KCR Inc. does not guarantee their accuracy. KCR will not assume any responsibility for any loss or damage caused by the use of any or all of these materials. Investors are advised to make investment decisions based on their own judgment and responsibility. The opinions and forecasts described in the report are expressed as of the date of its preparation and we cannot guarantee their accuracy or completeness. In addition, these opinions and forecasts may change in the future without notice. KCR reserves all rights regarding the content. Copying or reproduction of the content without prior authorization is prohibited.

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