BRIDGE REPORT
(2462)

東証1部

LIKE Co., Ltd. (2462)
Yasuhiko Okamoto President
Yasuhiko Okamoto
President
Corporate Profile
Company
LIKE Co., Ltd.
Code No.
2462
Exchange
Tokyo Stock Exchange, First Section
Industry
Service
President
Yasuhiko Okamoto
HQ Address
Umeda Hankyu Building Office Tower 19F, Kakudamachi 8-1, Kita-ku, Osaka-shi
Year-end
May
Home Page
Stock Information
Share Price Shares Outstanding Market Cap. ROE (Act.) Trading Unit
¥3,845 9,381,297 shares ¥36.071 billion 12.3% 100 shares
DPS (Est.) Dividend Yield (Est.) EPS (Est.) PER (Est.) BPS (Act.) PBR (Act.)
¥20.00 - ¥74.62 - ¥699.91 5.5x
* Stock price as of the close on August 9, 2017. Number of shares at the end of the most recent term excluding treasury shares.
* DPS, EPS is based on the number of shares effective as of the 2 for 1 stock split conducted on September 1, 2017, but because the August 9, 2017 share price is used, no PER data is shown.
 
Consolidated Earnings Trends
Fiscal Year Sales Operating Profit Current Profit Net Profit EPS(¥) DPS(¥)
May 2014 14,951 303 374 259 28.29 30.00
May 2015 18,067 470 502 331 36.13 30.00
May 2016 31,844 953 1,426 1,795 195.33 40.00
May 2017 40,051 1,524 2,493 810 86.53 36.00
May 2018 Est. 47,000 1,780 3,250 1,400 74.62 20.00
* Estimates are those of the Company. From FY5/16, the definition for net profit has been changed to net profit attributable to parent company shareholders (Abbreviated as parent net profit).
* FY5/18 EPS reflects the 2 for 1 stock split conducted on September 1, 2017.

This Bridge Report presents details of fiscal year May 2017 earnings results and fiscal year May 2018 earnings estimates for LIKE Co., Ltd.
 
Key Points
 
 
 
Company Overview
 
Based upon its corporate motto of "Planning the Future - Leveraging Human Resources to Create the Future", LIKE endeavors to create a corporate group structure that is capable of providing vital services necessary at all stages of life in the operating realms of child and nursing care, human resources and other services.
 
<Business Segments and LIKE Group Companies>
LIKE's business segments are divided between the comprehensive human resources services business, which includes human resources dispatch, business process consignment, dispatched worker for employment and job placement, hiring and training support services, the childcare support services business, which includes consigned operation of public and private childcare facilities, the nursing care services business, which includes nursing facility operations, and the multimedia services business, which includes cellular telephone carrier shop operations.

The LIKE Group is comprised of the holding company LIKE Co., Ltd., six consolidated subsidiaries and one non-equity accounting method affiliate. The consolidated subsidiaries include LIKE Staffing, which provides worker dispatch and business process consignment services to cellular telephone shops within its comprehensive human resources services business, Astaff Inc., which provides dispatch of administrative staff, headhunting services and business school operations, LIKE Kids Next Co., Ltd and its subsidiary LIKE Academy which provides consigned childcare and publicly public childcare operations, and LIKE Care Next Co., Ltd., which provides nursing care facility operation services. In addition to these, a joint venture company called Career Design Academy Co., Ltd., has been created to provide corporate training services with LIKE Staffing Co., Ltd. and T-GAIA Co., Ltd. (Tokyo Stock Exchange, First Section, Stock code: 3738) providing 20% and 80% of the capital respectively.
 
 
LIKE's medium term business plan calls for sales and current profits of ¥55.2 and ¥3.5 billion, respectively, to be achieved in fiscal year May 2019. Based upon its corporate motto of "Planning the Future - Leveraging Human Resources to Create the Future", LIKE endeavors to create a corporate group structure that is capable of providing vital services that are required at all stages of life in the three operating realms of child care, nursing care, and human resources. Furthermore, its business plan is progressing smoothly and both sales current profits are trending ahead of schedule..
 
<Shareholder Benefit Program>
LIKE offers a shareholder benefit program including issuance of QUO Card prepaid cards in value of ¥1,000 to holders of between 100 and 500 shares and ¥2,000 to holders of between 500 and 2,000 shares as of the term end in May. Also, discounts on admission to nursing care facilities operated by Sunrise Villa amounting to ¥300,000 (Effective discount for one room until end August 2018) will be given to holders of over 100 shares.
 
 
Fiscal Year May 2017 Earnings Results
 
 
Sales, Current Profits Rise 25.8%, 74.8% Year-On-Year
Sales rose by 25.8% year-on-year to ¥40.051 billion. Strong demand for human resources allowed sales of the comprehensive human resources services business to grow by 24.0% year-on-year to ¥19.368 billion, and the full year contribution from the subsidiary, which was added in the previous term and only contributed only 10 months worth of earnings in the last term, allowed sales of the childcare support services business to rise by 39.7% year-on-year to ¥14.724 billion. Full occupancy rates allowed sales of the nursing care services business to grow by 6.8% year-on-year to ¥5.295 billion.

With regard to profits, gross profit margin improved on the back of higher sales and improvement in cost of sales of the nursing care services business. Furthermore, higher sales, general and administrative expenses arising from higher labor, hiring and training expenses were absorbed and allowed operating profit to rise by 59.9% year-on-year to ¥1.524 billion. Increases in facility subsidies received for the childcare support services business allowed non-operating income to improve, but a deterioration in extraordinary income caused net profit to decline by 54.9% year-on-year to ¥810 million. This deterioration in extraordinary income is attributed to the loss of ¥1.282 billion in valuation gains on staged acquisitions booked in the previous term, and to the booking of a liquidation loss of ¥381 million.

Compared with the initial earnings estimates, increases in pay ahead of consigned child care contract renewals and revisions in consumption tax treatment caused profits of the childcare support services business to fall shy of estimates. Furthermore, operating profit fell short of estimates due to increases in advertising expenses (Associated with brand advertising on nationwide television for the change of the Company's name).
 
 
 
Comprehensive Human Resources Business
Sales and operating profit rose by 24.0% and 30.2% year-on-year to ¥19.368 and ¥2.123 billion respectively. Amidst the severe shortage of labor, the matching and job training structure that enables LIKE to turn inexperienced workers into productive resources, and success in proposals to change work styles at client workplaces allowed dispatched worker contract sales to rise 15.0% year-on-year. Furthermore, high regard earned by LIKE for its unique operations allowed sales of business process consignment to rise 44.1% year-on-year. At the same time, sales of the dispatching and headhunting services fell 19.6% year-on-year due to declines in services provided to the cellular telephone sales industry arising from revisions in the dispatched worker law.

By industry, sales to the mobile communications industry rose 24.8% year-on-year due to the high regard of clients within the industry for LIKE's systems that turn workers with little or no experience into productive assets and its unique consigned operations. Moreover, sales to the apparel industry also rose by 36.6% year-on-year as the Company was successful in capturing long term contracts. In addition, sales to the call center and logistics industries also rose by 40.6% and 34.4% year-on-year respectively on the back of expanded Internet sales. Some of the sales relating to distribution, which had been included in the apparel industry category, have now been booked in the logistics category. Furthermore, some of the sales to the childcare and nursing care industries have been eliminated within the Group (Sales of Like Kids Next Co., Ltd. rose ¥68 to ¥142 million, sales of LIKE Care Next Co., Ltd. grew ¥20 to ¥128 million).
 
 
 
 
Childcare Support Services Business
Success Holdings (Currently known as LIKE Kids Next) was converted to become a subsidiary and its earnings were consolidated from the second quarter of fiscal year May 2016 (10 months of earnings of Success Holdings from July 2016 to April 2016 were booked). In addition, the company name of Success Holdings has been changed to LIKE Kids Next, and Success Academy to LIKE Academy during August 2017.

Sales of ¥14.724 billion were booked, along with an operating loss of ¥76 million. During fiscal year May 2017, cost of sales margin deteriorated on the back of collaboration with LIKE Staffing Co., Ltd., which conducts comprehensive human resources services, increases in hiring and pay of childcare providers, improvements in retention rates, and opening of new public childcare facilities. The number of consigned childcare and public childcare facilities operating as of the end of the term stood at 165 and 151 respectively (Compared with 182 and 120 at the end of the previous term).
 
 
Nursing Care Services Business
The main service provider Sunrise Villa was converted to a fully owned subsidiary in April 2017, and its name was changed to LIKE Care Next in May 2017. Sales rose 6.8% year-on-year to ¥5.295 billion and operating profit of ¥153 million in the current term was recorded after a loss of ¥64 million in the previous term. These favorable results are attributed to consignment of hiring services by LIKE Staffing and improvements in nursing service quality due to fortification of nursing care providers. Furthermore, the full occupancy rates at nursing care facilities also contributed to the recovery in profitability.
 
 
Total assets rose by ¥2.343 billion from the end of the previous term to ¥24.642 billion at the end of the current term. Tangible assets grew on the back of new childcare and other facility openings, while intangible assets declined due to a reduction in goodwill amortization. Within liabilities, outstanding payments and interest bearing liabilities both increased. Capital adequacy ratio declined from 29.8% at the end of the previous term to 26.6% at the end of the current term.
 
 
 
Fiscal Year May 2018 Earnings Estimates
 
<LIKE Group Brand Unification Strategy>
The name LIKE was chosen in reflection of the Company's "corporate goal of becoming a company that is loved by all of its stakeholders including job seeking workers, nursing and healthcare facility users, business partners, shareholders and employees", and efforts have been made to unify the Group's branding.

In December 2016, Nihon Enterprise changed its name to LIKE Co., Ltd. and the name of its consolidated subsidiary from J-COM Co., Ltd. to LIKE Staffing Co., Ltd., and in May 2017 changed the name of Sunrise Villa to LIKE Care Next Co., Ltd. Furthermore, the name of Success Holdings was changed to LIKE Kids Next Co., Ltd. and Success Academy to LIKE Academy Co., Ltd. in August 2017. However, the name of the Sunrise Villa nursing care facilities remains unchanged.
 
 
Sales, Current Profits to Rise 17.3%, 30.4% Year-On-Year
LIKE's earnings estimates for fiscal year May 2018 call for sales to rise by 17.3% year-on-year to ¥47.0 billion. Sales of the nursing care services business are expected to remain in line with the term just ended due to full occupancy rates at existing facilities, but strong demand for human resources is expected to allow sales of the comprehensive human resources services business to rise by 27.1% year-on-year, and an increase in the number of childcare facilities (Target for newly opened public childcare facilities is 20) is expected to boost sales of childcare support services business by 12.1% year-on-year. With regard to profits, increases in sales, general and administrative expenses arising from continued growth in labor and hiring expenses are expected to be offset by the higher sales and to allow operating profit to rise 16.7% year-on-year to ¥1.780 billion. An anticipated increase in subsidies is also expected to allow current profits to rise by 30.4% year-on-year.

LIKE is expected to pay ¥10 dividends at the end of the first half and second half for a full year dividend of ¥20 per share. After the two for one stock split conducted on September 1, 2017 is considered, the actual dividend paid is ¥40, an increase of ¥4 per share from the term just ended. LIKE aims to achieve a consolidated dividend payout ratio of 35% or more, and plans to pay interim dividends and year-end dividends twice a year.
 
 
(2) Strategy by Business Segment
Comprehensive Human Resources Services Business
The securing of human resources is an important management issue for companies in all industries. LIKE has highly flexible solutions responding to the needs of job seeking workers including the ability to propose job matching services which cover a wide range of diversified clients and provide flexible working conditions including three day work weeks and shorter working hours. At the same time, the Company endeavors to increase the working population by leveraging the unique knowhow of its Group to turn inexperienced workers into fully contributing workers, raising the job retention rates by close follow up after employment, and by providing classroom and on the job training led by experienced staff. Also, skill evaluation and training will be applied to workers from overseas, whose numbers are expected to grow in the future, in order to quickly turn them into productive resources.

LIKE's training programs are designed to turn workers of into productive resources regardless of their skills or lifestyle, and allows for them to take the program at their own pace. Program lecturers with experience in a wide range of occupations teach program participants the various skills required by LIKE's clients. In addition to explanations of details regarding various industries and jobs, the workers are also provided with opportunities to visit workplaces to see firsthand the attractiveness of various jobs with a goal of raising the working population and job retention rates.
 
 
Childcare Support Services (Consigned Childcare Facilities: 165, Public Childcare Facilities: 151)
The intensifying problem of children unable to gain access to childcare (Due to severe shortages of childcare providers and facilities) has become an urgent issue. In addition to efforts implemented to secure childcare providers and increase childcare facility numbers, LIKE endeavors to grow both sales and profits and become Japan's number one childcare support services business operator by providing high quality childcare support services.
 
Increase in Childcare Facilities
With regards to the consigned operation of childcare facilities, the LIKE Group will review various projects from its long list of customers and select the most promising projects with the strongest potential to yield high levels of profitability. At the same time, LIKE seeks to create new childcare facilities that will continue to be chosen by parents even after the problem of children who cannot gain entrance to publicly operated nursery school or preschools is resolved. In addition, efforts will be conducted to fortify childcare service contents.
 
Securing Childcare Providers
Knowhow regarding hiring and post hiring training of childcare providers accumulated by LIKE Staffing will be leveraged to strengthen the hiring capability and retention rates of childcare providers. Specifically, knowhow will be shared through personnel exchange, matching will be strengthened, and training contents will be shared within the Group. Moreover, LIKE has joined the non-profit organization "Iku-Boss Kigyo Domei" (Literally "Childcare Conscious Boss Corporate Alliance) in February 2016 as part of its efforts to facilitate an environment that makes working easier for parents and childcare providers. "Iku-Boss" means a boss who takes into consideration the work-life balance of the workers and supports their career and personal life while at the same time realizing results in the workplace and enjoying their own private life.(Non-profit Organization Fathering Japan).
 
Nursing Care Services (21 Facilities, 1,156 Rooms)
LIKE pursues the provision of high quality nursing care services that are highly differentiated, and seeks to secure adequate nursing care providers. LIKE also seeks to differentiate its services by stationing nursing care providers at its facilities 24 hours a day, and collaborates with medical institutions for end-of-life nursing care to become the nursing care facility operator of choice. Collaboration will also be conducted with LIKE Staffing to turn inexperienced workers into productive nursing care providers as part of its efforts to secure adequate nursing care staff numbers, and to raise the working population by improving job retention rates. In addition, LIKE is fortifying its training program contents for workers from overseas in light of the "Technical Training Law" and "Revised Immigration Law" implemented on November 28, 2016.
 
 
Conclusions
 
Efforts to unify the LIKE Group's brand were completed in August 2017. Going forward, LIKE will endeavor to become a company that provides vital services in childcare, human resources, nursing care, and at all stages of people's lives. While efforts are being made to secure an adequate number of childcare facilities based upon increases in and relaxation of conditions for subsidies paid to childcare facility operators and increases in compensation to childcare providers with a goal of resolving the intensifying issue of children unable to gain access to childcare, the limiting factor continues to be the low number of childcare providers. In addition, LIKE expects to open two new nursing care facilities, one each in both Kanagawa Prefecture and Tokyo, in response to the full occupancy rate conditions at its existing nursing care facilities. In addition to the quick startup of new facilities to resolve the conditions of full occupancy, LIKE will also have to implement efforts to secure nursing care providers. Also, a close watch should be kept upon which growth trajectory LIKE chooses in its human resources services including the realms of childcare and nursing care.
 
 
<Reference: Regarding Corporate Governance>
 
 
◎Corporate Governance Report Updated on Dec. 1, 2016
<Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)>
Principle 1-4
Our company will consider strategically holding said shares only when we judge that the shareholding would generate synergy to increase our corporate value. Furthermore, while taking account of the improvement of the corporate value of said company and impacts on our company, we will exercise our voting rights of strategically held shares to express our intention of being for or against a bill.

Principle 1-7
In accordance with "Accounting Standard for Related Party Disclosures" and "Implementation Guidance on Accounting Standard for Related Party Disclosures," our company confirms the existence of transactions with related parties and the importance of said transactions, discloses transactions to be disclosed, if any, and is careful not to have discrepancies with the conditions for transactions with a third party. In addition, our company checks, every fiscal year, whether or not any transactions handling a certain amount of money or over have been conducted between our company and any directors or any of his/her relatives within the second degree of kinship.

Principle 5-1
Our company has designated a director and established a department, both of which are in charge of overall IR activities for our corporate group, in order to encourage constructive dialogue with shareholders.
Our company exerts ourselves to disclose information in a fair, timely, and proper manner in accordance with "Disclosure Policy" that we have set forth to organize our basic ideas.
Our company discloses Disclosure Policy on our website (https://www.like-gr.co.jp/ir/policy.html).
The details of our IR activities are as described in the second section of "Implementation Status of Policies regarding Shareholders and Other Stakeholders" in this report.
 
Disclaimer
This report is intended solely for information purposes, and is not intended as a solicitation to invest in the shares of this company. The information and opinions contained within this report are based on data made publicly available by the Company, and comes from sources that we judge to be reliable. However we cannot guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and or opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration.
Copyright(C) 2017 Investment Bridge Co., Ltd. All Rights Reserved.
 
 
PAGE TOP