WORLD HOLDINGS 2429

ワールドホールディングス

Recent Updates

2021-11-11

Revisions to its full-year FY12/21 earnings forecast and dividend forecast

2021-11-11

Q3 FY12/21 flash update

2021-09-15

1H FY12/21 report update

Get in touch

Fukuoka Asahi Building 6F, 2-1-1 Hakata Ekimae, Hakata-ku, Fukuoka-shi, Fukuoka Prefecture 812-0011

https://world-hd.co.jp/

092-474-0555

Summary

World Holdings Co., Ltd. is a pure holding company with 33 consolidated subsidiaries under its umbrella and operates in four business domains. The Human Resources and Education business mainly provides subcontracting and staffing for various professional services. The Real Estate business focuses on new condominium development and renovations. The Information and Telecommunications business is mainly engaged in mobile phone handset sales, and the Other businesses cover management of agricultural park facilities.

Professional ServicesReal Estate Management & DevelopmentDiversified Telecommunication ServicesCommercial Services & SuppliesHotels, Restaurants & Leisure

Key dates

2020-09-18

Coverage initiation

Full Report

2021-11-11

Q3 FY12/21 flash update

2021-11-11

1H FY12/21 Flash Update

2021-08-06

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Executive summary

Business overview

World Holdings Co., Ltd. is a pure holding company with 32 consolidated subsidiaries under its umbrella and operates in four business domains. The Human Resources and Education business (57.5% of total revenue and 60.5% of total operating profit in FY12/20) mainly provides subcontracting and staffing for various professional services. The Real Estate business (33.3%, 39.0%) focuses on new condominium development and renovations. The Information and Telecommunications business (6.3%, 2.6%) is mainly engaged in mobile phone handset sales, and the Other businesses (2.2%, loss of JPY200mn) cover management of agricultural park facilities.

World Holdings uses its diverse business portfolio to hedge against market fluctuation and other business risks. It operates across a range of geographic regions and industries, and incorporates both recurring-revenue business (Human Resources and Education, Information and Telecommunications) and one-time revenue business (Real Estate). While the Human Resources and Education business represents the bulk of its operations, the company has expanded into other businesses as well. Launched in December 2005, the Information and Telecommunications business helped offset the slump in the staffing business amid the global financial crisis in 2008. The crisis also left the real estate industry with a dwindling number of players, and World Holdings capitalized on that opportunity to make a full-fledged push into the Real Estate business in 2010.

The core Human Resources and Education business consists of four segments. The factory staffing business (38.1% of total revenue, 28.9% of segment operating profit) runs staffing and subcontracting in the manufacturing industry. The technology staffing business (11.8%, 22.2%) conducts tech staffing and subcontracting. The R&D staffing business (5.0%, 9.3%) conducts research and development staffing and subcontracting, and the sales and marketing staffing business (2.7%, 0.2%) provides sales and call center staffing. With its focus on the manufacturing industry (production processes, R&D), the company’s strength lies in blue-collar staffing and subcontracting. The company has achieved substantial growth in the fields of semiconductors and machinery-related manufacturing, and it further expanded into third-party logistics (3PL) in 2012 when it began handling logistics duties for Amazon Japan (Amazon Japan is now a major customer, accounting for 14.1% of companywide revenue and 38.4% of revenue in the factory staffing business in FY12/19). The company has also been working to augment its business portfolio by expanding its scope beyond manufacturing to design and development of machinery and electronics, as well as R&D for pharmaceuticals and biotechnology. Most recently, it has also been spreading out into white-collar staffing services.

The Human Resources and Education business has a labor-intensive earnings structure. Earnings in subcontracting are determined by the formula “revenue = number of contracts x contract value.” In the staffing business, the formula is “revenue = number of registered workers x billing rates,” and ongoing revenues are generated commensurate with the number of registered workers. Registrations have been on the rise in the years since the global financial crisis, and billing rates as well have been growing.

The Real Estate business began in earnest in 2010, after the global financial crisis, by launching development operations in Japan’s central Kanto region. The company is particularly adept at the “seed lot” business. It makes strategic purchases of small parcels of land (“seed lots”), negotiates for the rights to surrounding land, and then puts them up for either sale or joint development. The company primarily develops and sells new condominiums (of 20 to 60 units selling for around JPY26mn per unit). For large development projects it mostly teams up with major developers. The company also excels in renovation, i.e., fixing up and adding new value to pre-owned properties, and most recently it has been venturing into conversion work as well, in which it redesignates the use of existing buildings, fully refurbishes them, and converts them to new buildings.

Lead times in the Real Estate business, from sourcing through design, construction, completion, and sale, vary depending on property type. In condominium development, lead times are long, taking two to three years from sourcing to handover, and capital turnover is slow. Conversely, detached homes and conversion have lead times of six to 12 months. Renovation is a one-time revenue business with lead times of four to six months. Prefabricated homes and property management are high capital turnover, recurring-revenue businesses with revenues generated on an ongoing basis over the duration of contract. The formula for the Real Estate business is “revenue = revenue generated along the duration vector (time of property delivery, month-to-month) x the quantity of respective properties).” The company works to ensure stability within the Real Estate business by diversifying its portfolio over business type, capital turnover times, and recurring vs. one-time revenue operations.

Trends and outlook

World Holdings posted FY12/20 revenue of JPY143.6bn (+5.3% YoY), operating profit of JPY6.3bn (+32.2%), recurring profit of JPY6.8bn (+41.2%), and net income attributable to owners of the parent of JPY5.9bn (+100.0%). Progress vs. revised full-year company forecasts (announced on November 9, 2020) was 100.7% for revenue, 104.1% for operating profit, 106.6% for recurring profit, and 114.7% for net income.

The company’s revised FY12/21 forecast (announced November 10, 2021) calls for revenue of JPY151.4bn (+5.4% YoY), operating profit JPY7.3bn (+17.0%), recurring profit JPY7.5bn (+11.2%), and net income attributable to owners of the parent JPY4.9bn (-16.6%). The company upwardly revised its initial forecast as 5G and other semiconductor-related demand drove results in its core Human Resources and Education business while timely property deliveries helped the Real Estate business.

Final year targets of the company’s five-year Medium-Term Business Plan 2021 spanning FY12/17 to FY12/21 were revised downward in a rolling plan updated on August 19, 2019. The revised plan called for FY12/21 revenue of JPY175bn (versus initial target of JPY200bn) and operating profit of JPY8bn (JPY10bn). The main reason for the revision was the shift in the company’s stance toward strengthening risk management for the Real Estate business, which experienced a bubble in FY12/16. The company left intact its targets for ROE of 20% or higher, equity ratio of 20% or higher, and dividend payout ratio of 30% or higher.

Strengths and weaknesses

Strengths
・ Business portfolio conducive to well-balanced risk hedging against changes in business conditions and industry fluctuation.
・ In its core Human Resources and Education business, the company has differentiated itself from competing staffing companies by expanding its range of subcontracting schemes.
・ One-stop services from upstream to downstream manufacturing processes (from R&D through design and development, manufacturing, logistics, and repair work).

Weaknesses
・ Inter-segment fragmentation leads to inefficient resource allocation and keeps low-profit businesses artificially alive.
・ Little sign of disciplined judgment in business development.
・ High dependency on the company’s owner in the Real Estate business puts sustainable operations at risk.

Key financial data

Income statement		FY12/11	FY12/12	FY12/13	FY12/14	FY12/15	FY12/16	FY12/17	FY12/18	FY12/19	FY12/20	FY12/21
(JPYmn)		Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Cons.	Est.
Revenue		37,892	53,007	56,450	68,829	87,984	94,334	127,147	142,894	136,319	143,571	151,354
	YoY	18.0%	39.9%	6.5%	21.9%	27.8%	7.2%	34.8%	12.4%	-4.6%	5.3%	5.4%
Gross profit		6,743	9,117	10,581	13,087	17,530	21,019	25,268	27,740	26,310	25,018
	YoY	14.9%	35.2%	16.1%	23.7%	33.9%	19.9%	20.2%	9.8%	-5.2%	-4.9%
	Gross profit margin	17.8%	17.2%	18.7%	19.0%	19.9%	22.3%	19.9%	19.4%	19.3%	17.4%
Operating profit		588	1,223	2,120	3,748	5,137	7,407	7,064	7,370	4,730	6,251	7,316
	YoY	70.4%	108.0%	73.3%	76.8%	37.1%	44.2%	-4.6%	4.3%	-35.8%	32.2%	17.0%
	Operating profit margin	1.6%	2.3%	3.8%	5.4%	5.8%	7.9%	5.6%	5.2%	3.5%	4.4%	4.8%
Recurring profit		678	1,290	2,164	3,722	5,133	7,306	7,007	7,357	4,805	6,786	7,547
	YoY	39.2%	90.3%	67.8%	72.0%	37.9%	42.3%	-4.1%	5.0%	-34.7%	41.2%	11.2%
	Recurring profit margin	1.8%	2.4%	3.8%	5.4%	5.8%	7.7%	5.5%	5.1%	3.5%	4.7%	5.0%
Net income		214	658	834	1,992	3,810	4,192	4,612	4,650	2,956	5,913	4,931
	YoY	269.0%	207.5%	26.7%	138.8%	91.3%	10.0%	10.0%	0.8%	-36.4%	100.0%	-16.6%
	Net margin	0.6%	1.2%	1.5%	2.9%	4.3%	4.4%	3.6%	3.3%	2.2%	4.1%	3.3%
Per-share data (split-adjusted; JPY)
Shares issued (year-end; '000)		16,734	16,814	16,832	16,832	16,832	16,832	16,933	16,957	16,962	17,567
EPS (JPY)		13.2	40.3	49.6	118.5	228.1	250.9	275.4	276.4	175.6	341.4	282.4
EPS (fully diluted; JPY)		13.1	40.2	49.6	118.5	226.5	248.3	270.7	272.0	174.3	339.9
Dividend per share (JPY)		4.5	8.5	10.0	23.7	45.7	75.3	82.7	83.0	52.7	101.7	84.8
Book value per share (JPY)		262	298	340	444	646	850	1,060	1,249	1,346	1,638
Balance sheet (JPYmn)
	Cash and cash equivalents	3,349	4,897	5,970	10,794	11,059	15,770	18,227	18,825	16,513	22,817
Total current assets		15,407	21,279	28,157	41,606	50,402	66,996	70,315	69,823	76,920	68,132
Tangible fixed assets		663	733	637	867	1,176	2,071	4,707	5,439	5,919	5,297
Investments and other assets		913	1,034	1,116	1,523	2,155	2,451	3,094	3,342	3,820	5,436
Intangible assets		141	757	655	2,090	2,595	1,872	1,921	1,359	690	291
Total assets		17,126	23,805	30,566	46,087	56,329	73,392	80,039	79,964	87,352	79,157
	Short-term debt	6,168	9,387	10,931	15,888	20,962	29,861	33,094	28,321	27,701	17,204
Total current liabilities		11,112	15,733	19,594	29,032	32,913	44,018	49,175	46,136	52,790	34,637
	Long-term debt	675	1,803	3,617	7,699	10,286	12,384	9,566	9,112	8,592	12,073
Total fixed liabilities		1,052	2,245	4,288	8,627	11,519	13,909	11,724	11,479	10,617	14,458
Total liabilities		12,165	17,978	23,882	37,660	44,432	57,928	60,899	57,616	63,408	49,095
	Shareholders' equity	4,310	5,028	5,721	7,419	10,838	14,305	17,764	21,036	22,634	28,624
Total net assets		4,961	5,826	6,683	8,426	11,897	15,464	19,140	22,347	23,944	30,061
Total interest-bearing debt		6,843	11,190	14,548	23,587	31,248	42,245	42,660	37,433	36,293	29,277
Cash flow statement (JPYmn)
Cash flows from operating activities		-2,225	-1,703	-2,012	1,717	-4,437	-3,644	8,159	9,277	2,708	13,770
Cash flows from investing activities		-112	-1,004	-141	-2,300	-2,075	-1,473	-2,668	-1,405	-2,489	-1,030
Cash flows from financing activities		2,534	4,243	3,213	5,405	6,481	9,999	-3,058	-7,538	-2,597	-6,604
Financial ratios
ROA (RP-based)		4.4%	6.3%	8.0%	9.7%	10.0%	11.3%	9.1%	9.2%	5.7%	8.2%
ROE		5.1%	14.1%	15.5%	30.3%	41.7%	33.3%	28.8%	24.0%	13.5%	23.1%
	Equity ratio	25.2%	21.1%	18.7%	16.1%	19.2%	19.5%	22.2%	26.3%	25.9%	36.2%
	Total asset turnover	2.5	2.6	2.1	1.8	1.7	1.5	1.7	1.8	1.6	1.7
	Net margin	0.6%	1.2%	1.5%	2.9%	4.3%	4.4%	3.6%	3.3%	2.2%	4.1%
Number of employees		9,419	10,584	9,910	11,082	12,885	15,559	17,924	18,852	19,498	22,717

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Recent updates

Revisions to its full-year FY12/21 earnings forecast and dividend forecast

2021-11-11

On November 10, 2021, World Holdings Co., Ltd. announced revisions to its full-year FY12/21 earnings forecast and dividend forecast.

The company made an upward revision to its full-year FY12/21 forecast at the time of its Q3 results announcement. The revised forecast calls for revenue of JPY151.4bn (+5.4% YoY), operating profit JPY7.3bn (+17.0%), recurring profit JPY7.5bn (+11.2%), and net income attributable to owners of the parent JPY4.9bn (-16.6%). The company upwardly revised its initial forecast as 5G and other semiconductor-related demand drove results in its core Human Resources and Education business while timely property deliveries helped the Real Estate business.

Trends and outlook

Quarterly trends and results

Cumulative		FY12/19				FY12/20				FY12/21			FY12/21
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	% of Est.	Rev. FY Est.
Revenue		30,614	66,827	101,964	136,319	36,480	70,844	98,682	143,571	33,032	65,047	101,533	67.1%	151,354
	YoY	1.7%	3.8%	0.1%	-4.6%	19.2%	6.0%	-3.2%	5.3%	-9.5%	-8.2%	2.9%		5.4%
Gross profit		5,272	13,189	20,022	26,310	6,017	11,963	16,796	25,017	5,969	11,100	17,467
	YoY	1.4%	12.2%	4.5%	-5.2%	14.1%	-9.3%	-16.1%	-4.9%	-0.8%	-7.2%	4.0%
	Gross profit margin	17.2%	19.7%	19.6%	19.3%	16.5%	16.9%	17.0%	17.4%	18.1%	17.1%	17.2%
SG&A expenses		5,109	10,659	15,931	21,580	4,658	9,189	13,512	18,766	4,286	8,648	13,351
	YoY	10.3%	9.4%	7.8%	5.9%	-8.8%	-13.8%	-15.2%	-13.0%	-8.0%	-5.9%	-1.2%
	SG&A ratio	16.7%	16.0%	15.6%	15.8%	12.8%	13.0%	13.7%	13.1%	13.0%	13.3%	13.1%
Operating profit		162	2,529	4,090	4,730	1,358	2,773	3,283	6,251	1,682	2,452	4,115	56.2%	7,316
	YoY	-71.6%	26.1%	-6.7%	-35.8%	738.3%	9.6%	-19.7%	32.2%	23.9%	-11.6%	25.3%		17.0%
	Operating profit margin	0.5%	3.8%	4.0%	3.5%	3.7%	3.9%	3.3%	4.4%	5.1%	3.8%	4.1%		4.8%
Recurring profit		159	2,529	4,105	4,805	1,393	2,872	3,608	6,786	1,825	2,621	4,362	57.8%	7,547
	YoY	-71.2%	26.4%	-5.8%	-34.7%	776.1%	13.6%	-12.1%	41.2%	31.0%	-8.7%	20.9%		11.2%
	Recurring profit margin	0.5%	3.8%	4.0%	3.5%	3.8%	4.1%	3.7%	4.7%	5.5%	4.0%	4.3%		5.0%
Net income		11	1,685	2,659	2,956	1,640	2,497	3,010	5,913	1,324	1,891	3,150	63.9%	4,931
	YoY	-92.6%	56.2%	0.9%	-36.4%	-	48.2%	13.2%	100.0%	-19.3%	-24.3%	4.7%		-16.6%
	Net margin	0.0%	2.5%	2.6%	2.2%	4.5%	3.5%	3.1%	4.1%	4.0%	2.9%	3.1%		3.3%
Quarterly		FY12/19				FY12/20				FY12/21
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Revenue		30,614	36,213	35,137	34,355	36,480	34,364	27,838	44,889	33,032	32,015	36,486
	YoY	1.7%	5.7%	-6.4%	-16.2%	19.2%	-5.1%	-20.8%	30.7%	-9.5%	-6.8%	31.1%
Gross profit		5,272	7,917	6,833	6,288	6,017	5,946	4,833	8,221	5,969	5,131	6,367
	YoY	1.4%	20.9%	-7.8%	-26.7%	14.1%	-24.9%	-29.3%	30.7%	-0.8%	-13.7%	31.7%
	Gross profit margin	17.2%	21.9%	19.4%	18.3%	16.5%	17.3%	17.4%	18.3%	18.1%	16.0%	17.5%
SG&A expenses		5,109	5,550	5,272	5,649	4,658	4,531	4,323	5,254	4,286	4,362	4,703
	YoY	10.3%	8.5%	4.7%	1.0%	-8.8%	-18.4%	-18.0%	-7.0%	-8.0%	-3.7%	8.8%
	SG&A ratio	16.7%	15.3%	15.0%	16.4%	12.8%	13.2%	15.5%	11.7%	13.0%	13.6%	12.9%
Operating profit		162	2,367	1,561	640	1,358	1,415	510	2,968	1,682	770	1,663
	YoY	-71.6%	64.9%	-34.4%	-78.6%	738.3%	-40.2%	-67.3%	363.8%	23.9%	-45.6%	226.1%
	Operating profit margin	0.5%	6.5%	4.4%	1.9%	3.7%	4.1%	1.8%	6.6%	5.1%	2.4%	4.6%
Recurring profit		159	2,370	1,576	700	1,393	1,479	736	3,178	1,825	796	1,741
	YoY	-71.2%	63.7%	-33.1%	-76.7%	776.1%	-37.6%	-53.3%	354.0%	31.0%	-46.2%	136.5%
	Recurring profit margin	0.5%	6.5%	4.5%	2.0%	3.8%	4.3%	2.6%	7.1%	5.5%	2.5%	4.8%
Net income		11	1,674	974	297	1,640	857	513	2,903	1,324	567	1,259
	YoY	-92.6%	79.8%	-37.4%	-85.3%	-	-48.8%	-47.3%	877.4%	-19.3%	-33.8%	145.4%
	Net margin	0.0%	4.6%	2.8%	0.9%	4.5%	2.5%	1.8%	6.5%	4.0%	1.8%	3.5%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Number of on-site specialists at World Intec (monthly)

(persons)	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
Jan.	6,849	10,195	11,105	7,173	5,159	6,171	7,886	8,048	7,994	9,077	10,557	12,744	14,099	14,743	15,433	19,261
Feb.	6,958	10,210	11,045	6,589	5,097	6,327	7,986	7,605	8,296	9,215	10,736	12,656	13,968	14,653	15,670	19,530
Mar.	6,917	9,968	10,925	5,489	5,029	6,348	7,851	7,200	8,311	9,700	10,601	12,508	13,817	14,567	15,897	19,683
Apr.	7,435	10,310	11,034	5,210	5,215	6,335	7,431	7,372	8,498	9,429	11,202	12,864	14,316	15,074	16,697	20,541
May	7,917	10,235	11,046	5,027	5,360	6,351	7,508	7,374	8,425	9,467	11,221	13,050	14,491	15,153	17,275	20,761
Jun.	7,999	10,190	11,083	5,040	5,617	6,367	7,625	7,472	8,500	9,578	11,653	13,237	15,209	15,577	17,633	21,446
Jul.	8,095	10,615	10,985	5,129	5,728	6,907	7,694	7,612	8,674	9,557	11,938	13,258	15,004	15,621	17,498	21,459
Aug.	8,232	10,703	10,837	5,300	5,761	7,115	7,866	7,636	8,641	9,691	11,909	13,109	14,648	15,521	17,417	21,692
Sep.	8,082	11,171	10,862	5,223	5,884	7,512	7,912	7,710	8,647	9,788	12,168	13,141	14,648	15,657	18,373	21,798
Oct.	8,478	11,242	10,380	5,258	5,975	7,616	8,124	7,814	8,919	10,232	12,468	13,284	14,884	15,583	19,153
Nov.	9,466	11,389	9,795	5,350	6,103	7,756	8,251	7,864	9,198	10,655	13,010	13,729	15,527	16,532	19,799
Dec.	9,411	11,019	8,290	5,147	6,090	7,892	8,368	7,997	9,088	10,681	13,120	13,818	15,390	16,346	19,597

Source: Shared Research based on company data

By segment (cumulative)				FY12/19				FY12/20				FY12/21			FY12/21
(JPYmn)				Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	% of Est.	Rev. FY Est.
Revenue (external customers)				30,614	66,827	101,964	136,319	36,480	70,844	98,682	143,571	33,032	65,047	101,533	67.1%	151,354
	YoY			1.7%	3.8%	0.1%	-4.6%	19.2%	6.0%	-3.2%	5.3%	-9.5%	-8.2%	2.9%		5.4%
	Human Resources and Education			18,325	37,332	57,137	77,774	19,069	38,922	59,521	83,142	23,085	48,002	74,557	73.1%	101,940
		YoY		7.1%	5.0%	4.7%	3.6%	4.1%	4.3%	4.2%	6.9%	21.1%	23.3%	25.3%		22.6%
		Factory		11,785	23,913	36,594	50,001	12,114	25,111	38,651	55,102	15,941	33,102	50,228	73.2%	68,645
			YoY	4.1%	2.5%	2.0%	1.0%	2.8%	5.0%	5.6%	10.2%	31.6%	31.8%	30.0%		24.6%
		Technology		4,037	8,220	12,581	16,902	4,207	8,353	12,650	17,003	4,246	8,538	13,393	72.5%	18,474
			YoY	28.1%	16.9%	14.3%	11.2%	4.2%	1.6%	0.5%	0.6%	0.9%	2.2%	5.9%		8.7%
		R&D		1,692	3,504	5,287	7,108	1,750	3,515	5,320	7,200	1,889	3,915	5,918	73.5%	8,051
			YoY	6.1%	5.0%	5.3%	4.9%	3.4%	0.3%	0.6%	1.3%	7.9%	11.4%	11.2%		11.8%
		Sales and marketing		810	1,695	2,675	3,761	997	1,941	2,897	3,835	1,008	2,445	5,017	74.1%	6,769
			YoY	-22.6%	-8.2%	0.4%	6.5%	23.1%	14.5%	8.3%	2.0%	1.1%	26.0%	73.2%		76.5%
	Real Estate			8,291	20,377	32,030	42,082	14,238	25,541	29,908	48,081	6,783	10,481	17,068	46.8%	36,509
		YoY		-9.8%	-0.2%	-9.1%	-19.1%	71.7%	25.3%	-6.6%	14.3%	-52.4%	-59.0%	-42.9%		-24.1%
	Information and Telecommunications			3,369	6,999	9,567	12,344	2,492	5,252	7,059	9,133	2,443	4,944	7,296	78.1%	9,338
		YoY		0.6%	3.8%	1.5%	-0.3%	-26.0%	-25.0%	-26.2%	-26.0%	-2.0%	-5.9%	3.4%		2.2%
	Other			628	2,117	3,226	4,118	679	1,126	2,194	3,214	719	1,619	2,611	73.2%	3,567
		YoY		38.3%	26.4%	20.6%	18.8%	8.1%	-46.8%	-32.0%	-22.0%	5.9%	43.8%	19.0%		11.0%
Operating profit				162	2,529	4,090	4,730	1,358	2,773	3,283	6,251	1,682	2,452	4,115	56.2%	7,316
	YoY			-71.6%	26.1%	-6.7%	-35.8%	738.3%	9.6%	-19.7%	32.2%	23.9%	-11.6%	25.3%		17.0%
	Operating profit margin			0.5%	3.8%	4.0%	3.5%	3.7%	3.9%	3.3%	4.4%	5.1%	3.8%	4.1%		4.8％
	Human Resources and Education			949	2,141	3,489	5,179	1,108	2,228	3,690	5,515	1,463	3,036	4,878	73.1%	6,675
		YoY		-4.2%	-1.9%	-1.1%	4.3%	16.8%	4.1%	5.8%	6.5%	32.0%	36.3%	32.2%		21.0%
		Segment profit margin		5.2%	5.7%	6.1%	6.7%	5.8%	5.7%	6.2%	6.6%	6.3%	6.3%	6.5%		6.5%
		Factory		506	1,137	1,838	2,679	466	957	1,676	2,632	714	1,662	2,354	72.0%	3,270
			YoY	-22.5%	-18.3%	-20.3%	-15.5%	-7.9%	-15.8%	-8.8%	-1.8%	53.2%	73.7%	40.5%		24.2%
			Segment profit margin	4.3%	4.8%	5.0%	5.4%	3.8%	3.8%	4.3%	4.8%	4.5%	5.0%	4.7%		4.8%
		Technology		354	774	1,210	1,761	462	886	1,387	2,019	543	954	1,615	73.4%	2,200
			YoY	41.6%	28.1%	30.0%	31.7%	30.5%	14.5%	14.6%	14.7%	17.5%	7.7%	16.4%		9.0%
			Segment profit margin	8.8%	9.4%	9.6%	10.4%	11.0%	10.6%	11.0%	11.9%	12.8%	11.2%	12.1%		11.9%
		R&D		106	263	453	711	170	381	604	843	218	447	665	71.2%	934
			YoY	6.0%	6.5%	19.2%	27.2%	60.4%	44.9%	33.3%	18.6%	28.2%	17.3%	10.1%		10.8%
			Segment profit margin	6.3%	7.5%	8.6%	10.0%	9.7%	10.8%	11.4%	11.7%	11.5%	11.4%	11.2%		11.6%
		Sales and marketing		-17	-33	-12	27	8	3	21	18	-12	-27	243	89.7%	271
			YoY	-	-	-	-	-	-	-	-33.3%	-	-	-		1,403.9%
			Segment profit margin	-	-	-	0.7%	0.8%	0.2%	0.7%	0.5%	-	-	4.8%		4.0％
	Real Estate			-23	1,227	1,987	1,460	861	1,835	1,418	3,550	740	400	914	31.4%	2,915
		YoY		-	56.5%	-18.8%	-68.2%	-	49.6%	-28.6%	143.2%	-14.1%	-78.2%	-35.5%		-17.9%
		Segment profit margin		-	6.0%	6.2%	3.5%	6.0%	7.2%	4.7%	7.4%	10.9%	3.8%	5.4%		8.0%
	Information and Telecommunications			-88	48	-17	10	91	275	284	240	4	93	133	127.9%	104
		YoY		-	-34.2%	-	233.3%	-	472.9%	-	-	-95.6%	-65.9%	-53.2%		-56.7%
		Segment profit margin		-	0.7%	-	0.1%	3.7%	5.2%	4.0%	2.6%	0.2%	1.9%	1.8%		1.1%
	Other			-126	196	226	132	-141	-369	-279	-200	-62	-83	-105	93.8%	-112
		YoY		-	-	-	-	-	-	-	-	-	-	-		-
		Segment profit margin		-	9.3%	7.0%	3.2%	-	-	-	-	-	-	-		-3.1%
	Company-wide expenses, eliminations			-546	-1,086	-1,595	-2,052	-560	-1,196	-1,829	-2,854	-464	-994	-1,704		-2,265

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Segment profit margins are calculated using segment revenue for results and segment revenue from external customers for forecasts.

By segment (quarterly)				FY12/19				FY12/20				FY12/21
(JPYmn)				Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Revenue (external customers)				30,614	36,213	35,137	34,355	36,480	34,364	27,838	44,889	33,032	32,015	36,486
	YoY			1.7%	5.7%	-6.4%	-16.2%	19.2%	-5.1%	-20.8%	30.7%	-9.5%	-6.8%	31.1%
	Human Resources and Education			18,325	19,007	19,805	20,637	19,069	19,853	20,599	23,621	23,085	24,917	26,555
		YoY		7.1%	3.1%	4.1%	0.8%	4.1%	4.5%	4.0%	14.5%	21.1%	25.5%	28.9%
		Factory		11,785	12,128	12,681	13,407	12,114	12,997	13,540	16,451	15,941	17,161	17,126
			YoY	4.1%	1.0%	1.1%	-1.7%	2.8%	7.2%	6.8%	22.7%	31.6%	32.0%	26.5%
		Technology		4,037	4,183	4,361	4,321	4,207	4,146	4,297	4,353	4,246	4,292	4,855
			YoY	28.1%	7.9%	9.7%	3.0%	4.2%	-0.9%	-1.5%	0.7%	0.9%	3.5%	13.0%
		R&D		1,692	1,812	1,783	1,821	1,750	1,765	1,805	1,880	1,889	2,026	2,003
			YoY	6.1%	4.0%	5.9%	3.5%	3.4%	-2.6%	1.2%	3.2%	7.9%	14.8%	11.0%
		Sales and marketing		810	885	980	1,086	997	944	956	938	1,008	1,437	2,572
			YoY	-22.6%	10.5%	19.8%	25.1%	23.1%	6.7%	-2.4%	-13.6%	1.1%	52.2%	169.0%
	Real Estate			8,291	12,086	11,653	10,052	14,238	11,303	4,367	18,173	6,783	3,698	6,587
		YoY		-9.8%	7.7%	-21.4%	-40.1%	71.7%	-6.5%	-62.5%	80.8%	-52.4%	-67.3%	50.8%
	Information and Telecommunications			3,369	3,630	2,568	2,777	2,492	2,760	1,807	2,074	2,443	2,501	2,352
		YoY		0.6%	7.0%	-4.3%	-5.9%	-26.0%	-24.0%	-29.6%	-25.3%	-2.0%	-9.4%	30.2%
	Other			628	1,489	1,109	892	679	447	1,068	1,020	719	900	992
		YoY		38.3%	21.9%	11.0%	12.5%	8.1%	-70.0%	-3.7%	14.3%	5.9%	101.3%	-7.1%
Operating profit				162	2,367	1,561	640	1,358	1,415	510	2,968	1,682	770	1,663
	YoY			-71.6%	64.9%	-34.4%	-78.6%	738.3%	-40.2%	-67.3%	363.8%	23.9%	-45.6%	226.1%
	Operating profit margin			0.5%	6.5%	4.4%	1.9%	3.7%	4.1%	1.8%	6.6%	5.1%	2.4%	4.6%
	Human Resources and Education			949	1,192	1,348	1,689	1,108	1,120	1,462	1,825	1,463	1,573	1,842
		YoY		-4.2%	0.0%	0.2%	17.5%	16.8%	-6.0%	8.5%	8.1%	32.0%	40.4%	26.0%
		Segment profit margin		5.2%	6.3%	6.8%	8.2%	5.8%	5.6%	7.1%	7.7%	6.3%	6.3%	6.9%
		Factory		506	631	701	841	466	491	719	956	714	948	692
			YoY	-22.5%	-14.6%	-23.4%	-2.4%	-7.9%	-22.2%	2.6%	13.7%	53.2%	93.1%	-3.8%
			Segment profit margin	4.3%	5.2%	5.5%	6.3%	3.8%	3.8%	5.3%	5.8%	4.5%	5.5%	4.0%
		Technology		354	420	436	551	462	424	501	632	543	411	661
			YoY	41.6%	18.6%	33.3%	35.7%	30.5%	1.0%	14.9%	14.7%	17.5%	-3.1%	31.9%
			Segment profit margin	8.8%	10.0%	10.0%	12.8%	11.0%	10.2%	11.7%	14.5%	12.8%	9.6%	13.6%
		R&D		106	157	190	258	170	211	223	239	218	229	218
			YoY	6.0%	6.8%	42.9%	44.1%	60.4%	34.4%	17.4%	-7.4%	28.2%	8.5%	-2.2%
			Segment profit margin	6.3%	8.7%	10.7%	14.2%	9.7%	12.0%	12.4%	12.7%	11.5%	11.3%	10.9%
		Sales and marketing		-17	-16	21	39	8	-5	18	-3	-12	-15	270
			YoY	-	-	-	-	-	-	-14.3%	-	-	-	-
			Segment profit margin	-	-	2.1%	3.6%	0.8%	-	-	-	-	-	-
	Real Estate			-23	1,250	760	-527	861	974	-417	2,132	740	-340	514
		YoY		-	120.5%	-54.3%	-	-	-22.1%	-	-	-14.1%	-	-
		Segment profit margin		-	10.3%	6.5%	-	6.0%	8.6%	-	11.7%	10.9%	-	7.8%
	Information and Telecommunications			-88	136	-65	27	91	184	9	-44	4	89	40
		YoY		-	277.8%	-	575.0%	-	35.3%	-	-	-95.6%	-51.6%	344.4%
		Segment profit margin		-	3.7%	-	1.0%	3.7%	6.7%	0.5%	-	0.2%	3.6%	1.7%
	Other			-126	322	30	-94	-141	-228	90	79	-62	-21	-22
		YoY		-	387.9%	-	-	-	-	200.0%	-	-	-	-
		Segment profit margin		-	21.6%	2.7%	-	-	-	8.4%	7.7%	-	-	-
	Company-wide expenses, eliminations			-546	-540	-509	-457	-560	-636	-633	-1,025	-464	-530	-710

Cumulative Q3 FY12/21 results

Overview:

Revenue: JPY101.5bn (+2.9% YoY) (progress vs. revised full-year company forecast: 67.1%)
Operating profit: JPY4.1bn (+25.3% YoY) (56.2%)
Recurring profit: JPY4.4bn (-20.9% YoY) (57.8%)
Net income*: JPY3.2bn (+4.7% YoY) (63.9%)
*Net income attributable to owners of the parent

Key takeaways from results

Revenue rose JPY2.9bn YoY. Revenue was down JPY12.8bn YoY in the Real Estate business due to the absence of a large-scale property sale recorded in the same period the previous year, but this was more than offset by Human Resources and Education revenue rising JPY15.0bn YoY. The increase in Human Resources and Education revenue was driven by a JPY11.6bn increase in factory staffing revenue.

Operating profit rose JPY832mn YoY. Operating profit was up JPY1.2bn YoY in the Human Resources and Education business, down JPY504mn YoY in the Real Estate business, and down JPY151mn YoY in the Information and Telecommunications business.

Segment overview

Human Resources and Education business

Factory staffing business

Revenue came to JPY50.2bn (+30.0% YoY) and segment profit JPY2.4bn (+40.5% YoY). 5G and semiconductor-related operations continued to perform well, booking record high orders on the back of an increase in semiconductor-related demand. In the logistics field, smooth operations of new facilities opened in FY12/20 drove results.

Technology staffing business

Revenue came to JPY13.4bn (+5.9% YoY) and segment profit JPY1.6bn (+16.4% YoY). Seamless collaboration with the factory staffing business led to growth in the semiconductor field. The Information and Telecommunications business also grew as a result of inter-group company collaboration. The company is focused on personnel development to boost the skills and qualifications of its staff and provide higher quality technological expertise.

R&D staffing business

Revenue came to JPY5.9bn (+11.2% YoY) and segment profit JPY665mn (+10.1% YoY). Each existing field in the research staffing business performed well and the company also strategically expanded into new fields for staffing.

Sales and marketing staffing business

Revenue came to JPY5.0bn (+73.2% YoY) and segment profit JPY243mn. Although the impact of the COVID-19 pandemic lingered for the tourism industry, call center operations performed well. The company captured COVID-19 related demand such as for vaccination sites, as well as extraordinary demand related to the Olympics. It also worked to expand business by setting up a new call center and promoting subcontracting of light work.

Real Estate business

Revenue came to JPY17.1bn (-42.9% YoY) and segment profit JPY914mn (-35.5% YoY). The company delivered some properties that were scheduled for delivery in Q4 ahead of time. While proceeding with careful business expansion, the company is making steady progress in acquiring blue-chip properties in preparation for FY12/22 onward.

Information and Telecommunications business

Revenue came to JPY7.3bn (+3.4% YoY) and segment profit JPY133mn (-53.2% YoY). Profit temporarily fell significantly YoY because the company focused on executing sales promotion initiatives and made upfront spending for human resource development.

Other businesses

Revenue came to JPY2.6bn (+19.0% YoY) with a segment loss of JPY105mn (vs. JPY279mn loss in cumulative Q3 FY12/20). In the agricultural park management business, the company was forced to temporarily close its flagship facility in Osaka Prefecture due to the COVID-19 pandemic.

FY12/21 outlook

		FY12/20			FY12/21				YoY
(JPYmn)		1H Act.	2H Act.	FY Act.	1H Act.	2H Est.	Rev. FY Est.	FY Est.	1H Act.	2H Est.	Rev. FY Est.
Revenue		70,844	72,727	143,571	65,047	86,307	151,354	150,194	-8.2%	18.7%	5.4%
Cost of revenue		58,880	59,673	118,553	53,947
Gross profit		11,963	13,054	25,017	11,100
	Gross profit margin	16.9%	17.9%	17.4%	17.1%
SG&A expenses		9,189	9,577	18,766	8,648
	SG&A ratio	13.0%	13.2%	13.1%	13.3%
Operating profit		2,773	3,478	6,251	2,452	4,864	7,316	6,465	-11.6%	39.9%	17.0%
	Operating profit margin	3.9%	4.8%	4.4%	3.8%	5.6%	4.8%	4.3%
Recurring profit		2,872	3,914	6,786	2,621	4,926	7,547	6,388	-8.7%	25.9%	11.2%
	Recurring profit margin	4.1%	5.4%	4.7%	4.0%	5.7%	5.0%	4.3%
Net income		2,497	3,416	5,913	1,891	3,040	4,931	4,573	-24.3%	-11.0%	-16.6%
	Net margin	3.5%	4.7%	4.1%	2.9%	3.5%	3.3%	3.0%

The company’s FY12/21 forecast calls for revenue of JPY150.2bn (+4.6% YoY), operating profit JPY6.5bn (+3.4%), recurring profit JPY6.4bn (-5.9%), and net income attributable to owners of the parent JPY4.6bn (-22.7%). In addition, the company’s 1H forecast calls for revenue of JPY63.7bn (-10.1% YoY), operating profit JPY1.3bn (-53.0% YoY), recurring profit JPY1.3bn (-55.3% YoY), and net income attributable to owners of the parent JPY886mn (-64.5% YoY).

On November 10, 2021, the company upwardly revised its full-year FY12/21 forecast at the time of its Q3 results announcement. The revised forecast calls for revenue of JPY151.4bn (+5.4% YoY), operating profit JPY7.3bn (+17.0% YoY), recurring profit JPY7.5bn (+11.2% YoY), and net income attributable to owners of the parent JPY4.9bn (-16.6% YoY). The company upwardly revised its initial forecast as 5G and other semiconductor-related demand drove results in its core Human Resources and Education business while timely property deliveries helped the Real Estate business.

The information below is current as of the beginning of FY12/21. Shared Research will provide an update following an interview with the company.

Segment forecasts

The company’s initial forecast calls for revenue growth of JPY6.6bn YoY, including JPY13.7bn in the Human Resources and Education business and JPY1.0bn in Other businesses, which includes agricultural park facilities, and declines of JPY7.7bn in the Real Estate business and JPY364mn in the Information and Telecommunications business. The company targets operating profit expanding JPY214mn YoY, including expected gains of JPY695mn in the Human Resources and Education business and JPY370mn in the Other businesses category, and declines of JPY1.4bn in the Real Estate business and JPY50mn in the Information and Telecommunications business. Note that in FY12/20, COVID-19 pandemic-related subsidies were booked under non-operating revenue, but have not been factored into the FY12/21 forecast.

Human Resources and Education

Forecast revenue growth of JPY13.7bn in the Human Resources and Education business breaks down to increases of JPY10.9bn in the factory staffing business, JPY1.1bn in the technology staffing business, JPY675mn in the R&D staffing business, and JPY1.0bn in the sales and marketing staffing business. Segment profit growth of JPY695mn comprises a rise of JPY843mn in the factory staffing business and decline of JPY110mn in the technology staffing business.

Factory staffing business

FY12/20 revenue grew by JPY5.1bn YoY. The company expects revenue to grow by JPY10.9bn YoY in FY12/21. The COVID-19 pandemic put the brakes on revenue growth in FY12/20, but the company saw a rise in large orders in Q4. The company thus expects major projects to get underway in 5G, including peripheral businesses such as semiconductor production equipment. The company opened two logistics centers in FY12/20, which should make significant contributions to revenue and profit in FY12/21.

Technology staffing business

The company is hiring veteran employees to boost the skill levels of existing employees and increase billing rates, but is incurring training costs upfront, so has conservative forecasts for FY12/21.

R&D staffing business

The company expects a strong performance from the research staffing unit. It said it expected orders in PCR test analysis amid the pandemic. For PCR testing-related business, in some cases there are special dispatch conditions for reception and office staff, and coordination with the sales and marketing staffing business opens up potential business opportunities for the group as a whole.

Sales and marketing staffing business

Improved profitability is in prospect as the company restructured the organization and cut back on apparel related projects in FY12/20. Tourism projects with JTB involve upfront spending so are a drag on profit, but the company expects strong orders from light duty, major supermarket, and call center customers.

Real Estate

The company sees real estate prices as difficult to read because of the pandemic. It has adopted a basically cautious approach to business development, and is looking for the market environment to turn. It aims to build a real estate finance platform involved in asset management and servicer businesses.

Information and Telecommunications

In response to requests from the Ministry of Internal Affairs and Communications to reduce mobile phone charges, carriers are launching new fee plans from March 2021. The company said the outlook was murky in light of this. Applications for mobile carriers’ new plans are only available online, so the company anticipates a prolonged phase of mobile store consolidation. It continues to assemble a top-notch store network and expand its line of solutions merchandise and area coverage for corporate customers in a quest for higher per-store earnings.

Other Businesses

The company had to close agricultural parks during the peak season (March to May) in FY12/20, but expects somewhat of recovery in 2021. In September to November 2020, monthly park visitor numbers came in above comparable 2019 figures. The company plans to make best use of the fact that these outdoor facilities tend not to become crowded, and aims at enhancing their role as necessary relaxation facilities for local communities. The state of emergency looks likely to be lifted in March 2021, and developments through May bear close attention.

Segment forecasts

			FY12/19			FY12/20			FY12/21	YoY	YoY
(JPYmn)			1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	FY Est.	Change	Rate
Revenue			66,827	69,492	136,319	70,844	72,727	143,571	150,194	6,623	4.6%
	Human Resources and Education		37,332	40,442	77,774	38,922	44,220	83,142	96,825	13,683	16.5%
		Factory	23,913	26,088	50,001	25,111	29,991	55,102	65,964	10,862	19.7%
		Technology	8,220	8,682	16,902	8,353	8,650	17,003	18,135	1,132	6.7%
		R&D	3,504	3,604	7,108	3,515	3,685	7,200	7,876	676	9.4%
		Sales and marketing	1,695	2,066	3,761	1,941	1,894	3,835	4,849	1,014	26.4%
	Real Estate		20,377	21,705	42,082	25,541	22,540	48,081	40,363	-7,718	-16.1%
	Information and Telecommunications		6,999	5,345	12,344	5,252	3,881	9,133	8,769	-364	-4.0%
	Other		2,117	2,001	4,118	1,126	2,088	3,214	4,236	1,022	31.8%
Operating profit			2,529	2,201	4,730	2,773	3,478	6,251	6,465	214	3.4%
	Human Resources and Education		2,141	3,038	5,179	2,228	3,287	5,515	6,210	695	12.6%
		Factory	1,137	1,542	2,679	957	1,675	2,632	3,476	844	32.1%
		Technology	774	987	1,761	886	1,133	2,019	1,908	-111	-5.5%
		R&D	263	448	711	381	462	843	849	6	0.7%
		Sales and marketing	-33	60	27	3	15	18	-23	-41	-
	Real Estate		1,227	233	1,460	1,835	1,715	3,550	2,167	-1,383	-39.0%
	Information and Telecommunications		48	-38	10	275	-35	240	190	-50	-20.8%
	Other		196	-64	132	-369	169	-200	170	370	-
	Company-wide expenses, eliminations		-1,086	-966	-2,052	-1,196	-1,658	-2,854	-2,274	580	-
Operating profit margin			3.8%	3.2%	3.5%	3.9%	0.4%	4.4%	4.3%
	Human Resources and Education		5.7%	7.5%	6.7%	5.7%	0.9%	6.6%	6.4%
		Factory	4.8%	5.9%	5.4%	3.8%	1.0%	4.8%	5.3%
		Technology	9.4%	11.4%	10.4%	10.6%	1.3%	11.9%	10.5%
		R&D	7.5%	12.4%	10.0%	10.8%	0.9%	11.7%	10.8%
		Sales and marketing	-1.9%	2.9%	0.7%	0.2%	0.3%	0.5%	-0.5%
	Real Estate		6.0%	1.1%	3.5%	7.2%	0.2%	7.4%	5.4%
	Information and Telecommunications		0.7%	-0.7%	0.1%	5.2%	-2.6%	2.6%	2.2%
	Other		9.3%	-3.2%	3.2%	-32.8%	26.5%	-6.2%	4.0%

Medium-term management plan

Five-year plan

New and old medium-term plan

World Holdings’ Medium-Term Business Plan 2021 is a five-year plan spanning FY12/17 to FY12/21. The previous medium-term plan focused on profit through structural reform, whereas the current plan anticipates lower profit margins due to strategic investments.

Rolling plan

The FY12/21 plan as initially formulated aimed for revenue of JPY200bn (including JPY10–15bn contribution from M&A) and operating profit of JPY10bn (5.0% OPM). In the wake of the COVID-19 pandemic, the forecast now calls for revenue of JPY150.2bn (+4.6% YoY), operating profit JPY6.5bn (+3.4%), recurring profit JPY6.4bn (-5.9%), and net income attributable to owners of the parent JPY4.6bn (-22.7%). The plan avoids an overambitious growth path in response to changes in the market environment. The company left intact its objectives of an ROE of 20% or higher, an equity ratio of 20% or higher, and a dividend payout ratio of 30% or higher.

By segment

FY12/21 targets (JPYmn)				FY12/18	FY12/19	FY12/20	FY12/21	FY12/21	Change	CAGR
				Act.	Act.	Act.	Est.	Initial targets	FY12/18–FY12/21	CAGR
Revenue				142,894	136,319	143,571	150,194	175,000	7,300	1.7%
	Human Resources and Education			75,964	77,774	83,142
		% of revenue		52.9%	56.7%	57.5%
		Factory		49,525	50,001	55,102
			% of revenue	34.5%	36.5%	38.1%
		Technology		15,664	16,902	17,003
			% of revenue	10.9%	12.3%	11.8%
		R&D		7,108	7,108	7,200
			% of revenue	4.9%	5.2%	5.0%
		Sales and marketing		3,667	3,761	3,835
			% of revenue	2.6%	2.7%	2.7%
	Real Estate			52,029	42,082	48,081
		% of revenue		36.2%	30.7%	33.3%
	Information and Telecommunications			12,426	12,344	9,133
		% of revenue		8.6%	9.0%	6.3%
	Other			3,574	4,118	3,214
		% of revenue		2.5%	3.0%	2.2%
Operating profit				7,370	4,730	6,251	6,465	8,000	-905	-4.3%
	Operating profit margin			5.2%	3.5%	4.4%	4.3%	4.6%
Net income attributable to owners of the parent				4,650	2,956	5,913		-
ROE				24.0%	13.5%	23.1%		20% or higher
Equity ratio				26.3%	25.9%	36.2%		20% or higher
Payout ratio				30.0%	30.0%	30.0%		30% or higher
FY12/21 targets (persons)				FY12/18	FY12/19	FY12/20		FY12/21	Change	CAGR
				Act.	Act.	Act.		Initial targets	FY12/18–FY12/21	CAGR
No. of specialists employed				21,577	21,646	27,543	-	28,964	7,387	10.3%
	Factory			16,782	16,266	22,103	-	20,565	3,783	7.0%
	Technology			2,437	2,634	2,778	-	2,819	382	5.0%
	R&D			1,023	1,045	1,120	-	1,180	157	4.9%
	Sales and marketing			1,335	1,701	1,541	-	4,400	3,065	48.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Number of specialists employed are the average of the three months for Q4. Figures for the factory staffing business include those employed by other companies.

Doing things “the World Holdings way”

Under its rolling plan, the company has tweaked its basic strategy and put together a policy that aims for solid growth. In the course of executing its basic strategy, the company seeks to do things “the World Holdings way.” Based on an accurate grasp of its long-term potential, the “World Holdings way” consists of three main elements.

Reassess the optimal scale of each business and achieve growth driven by intrinsic potential. Employ risk management to achieve stable growth, rather than merely chasing short-term economic trends.
Do not use M&A merely to gain size, but do make use of M&A to attain strategically crucial functions based on level-headed assessments of enterprise value and price.
Spark innovation to carve out our own unique position within the industry.

Human Resources and Education business

Initial projections

With the revision to the Worker Dispatching Act, labor shortages, and growing outsourcing needs, the projection was that companies who are incapable of adapting to the revised laws would withdraw, and market needs would gravitate around staffing companies that are capable of the requisite compliance.

Current assessment

In actuality, the weeding out of the industry has been milder than anticipated due to changes in the market environment.

At the same time, though, owing to the COVID-19 scourge, the work style reform movement has accelerated and reached critical mass.

Basic strategy for the future

Focus on home-grown growth without resorting to high-risk M&A

Aim for top brand position in the field of manufacturing and implement solid strategies. Leverage innovation to pioneer new fields

Carry out co-sourcing* with bona fide corporate partners. Foster and organize human resources with stronger management abilities, expertise, and advanced skills

*Co-sourcing is a more evolved form of outsourcing that goes beyond simple quantitative human resources support to work together with the customer to solve challenges.

Enhance inter-segment collaboration and respond to new needs. Deepen ties to our clients and adapt to societal needs such as senior citizen staffing and side business

Real Estate business

Initial projections

The company initially expected land prices and construction costs to remain high and selling prices to continue to rise along with persistently robust demand for hotels (commercial premises) and strong demand for Greater Tokyo area real estate. This was based on a growing market for condominiums, labor shortages in construction industries, and growing inbound demand.

Current assessment

In actuality, the real estate market has remained in a bubble longer than anticipated.

The impact of the COVID-19 scourge has been limited, and the sourcing environment has improved as well.

Basic strategy

Take a more circumspect approach to sourcing on development projects and reassess optimal scale

Clarify areas of investment and expand business domains

Aim for stable growth in development operations within the scope of newly assessed optimal scale

Concentrate on the growing field of revitalization (renovation, conversion)

Build a foundation for asset management and other financial services businesses in preparation for a turnaround in the external environment

Expansion into real estate finance business

Loan servicing business and asset management business

The company has traditionally dealt only in actual real estate, but having gone through various real estate cycles, it has come to handle real estate derivatives as well. Its expansion into the real estate financial business is spearheaded by two subsidiaries (World Asset Management Co., Ltd. and Mirai Servicing Co., Ltd.). Mirai Servicing is positioned as a financial instruments portal in the capacity of a servicer, and World Asset Management forms private real estate funds and private REITs as an advisor and agent.

Servicer

A loan servicer is a debt servicing specialist licensed by Japan’s Minister of Justice to handle the management and collection of “specified monetary debts” either on behalf of a financial institution or transferred from one. The company’s aim is to form deeper collaborative ties by allying with financial institutions’ servicers as well as collecting payments on behalf of financial institutions that have no servicers.

Information and Telecommunications business

Current assessment

Telecom carriers have maintained a selective stance on sales agents.

Future outlook

Lower ARPU will reduce recurring revenue earnings, and the replacement cycle will grow longer.

Customer needs will become more diversified with the launch of commercial 5G service (in 2020).

Basic strategy

Expect the move to consolidate mobile stores to be a prolonged process

Continue to invest in building a top-notch store network; achieve healthy and steadily profitable store operations

Expand lineup of merchandise for enterprise solutions for corporate clients and mitigate the impact of mobile store earnings trends

Use the above basic strategy to reap survivor’s benefits and build a new earnings model

Other businesses

Building on the success (growth in park attendance) of Sylvanian Park (Comorebi Ibaraido Forest, Ibaraki Prefecture) and Alps Gym (Shiga Agricultural Park, Shiga Prefecture), leverage other facilities’ revitalization planning, which have proven successful, to achieve early profitability.

Use the core agricultural parks business (Farm Co., Ltd.) to revitalize facilities and stimulate local communities. Contribute to children’s upbringing and wide-ranging job creation through interaction with nature.

Business

Business model overview

Business segments

World Holdings operates in four business domains. The Human Resources and Education business (57.5% of total revenue and 60.5% of total operating profit in FY12/20) mainly provides subcontracting and staffing for various professional services. The Real Estate business (33.3%, 39.0%) focuses on new condominium development and renovations. The Information and Telecommunications business (6.3%, 2.6%) is mainly engaged in mobile phone handset sales, and the Other businesses (2.2%, segment loss of JPY200mn) cover management of agricultural park facilities.
In its mainstay Human Resources and Education business, the company provides subcontracting and staffing services focused on full-time employment or regularly employed worker dispatching. It is particularly adept at blue collar and R&D professions, and covers general professions to some extent as well. The company is also actively working to tap into new fields. Unusual for a staffing service company, World Holdings has expanded into third party logistics (3PL) operations in e-commerce logistics (sorting, packaging, etc.), which it is cultivating into a core business. In addition, the company is expanding into the materials and tourism industries in collaboration with industry majors.

History of business expansion

Origins

World Holdings traces its roots back to Mikuni Sangyo (now Mikuni Co., Ltd.), founded in 1981 by Eikichi Iida (the company’s president). Mikuni originally handled built-to-order and built-for-sale housing, but it currently runs general real estate operations under World Holdings’ umbrella. Having survived the bursting of Japan’s bubble economy in February 1991, Iida sought out other lines of business, and in February 1993 he founded the blue-collar staffing and subcontracting company World Intec Co., Ltd. (the core unit of World Holdings). The company’s growth got a boost in March 2004 when the revised Worker Dispatching Act lifted the ban on dispatching on-site workers for manufacturing industries.

Leads the industry in formulating a manufacturing subcontracting standards manual

From 2006 to 2007, fraudulent subcontracting at manufacturers such as Canon (TSE1: 7751) and Panasonic (TSE1: 6752) emerged as a public scandal. The underlying issue was the lack of clear distinction between worker staffing and subcontracting. In 2005, World Holdings led the industry in compiling its own manufacturing subcontracting standards manual. The manual sets the standard for completing subcontracted manufacturing work to satisfy the compliance standards put forth in the government’s public notification designating the distinction between worker staffing business and subcontracting (Ministry of Labour public notice no. 37). By obtaining certification from labor regulators, the company established the standards for manufacturing contracting that clearly separates subcontracting from staffing. By doing so, it was able to differentiate itself from its competitors and build up a successful track record in the subcontracting business. The industry shakeout triggered by the fraudulent subcontracting scandal presented an opportunity, which the company seized upon to accelerate the transition of manufacturing staffing to subcontracting. Meanwhile, one of the company’s greatest strengths is government-corporate collaboration, which it has leveraged to advocate for employee training, job creation, and employment stability.

The value World Holdings delivers to its customers

Thanks to its manufacturing subcontracting standards manual, the company is able to satisfy the standards for staffing and subcontracting business (Ministry of Labour notice no. 37) as well as adapt flexibly to its customers’ needs by fully leveraging the mechanisms of both types of business. It uses staffing contracts for all work outside the purview of the subcontracting standards manual, while also pursuing the transition to subcontracting during the duration of the staffing contract.
The subcontracting business has the advantage of building up employee skills and expertise since the company’s team assumes the core work pertaining to design, development, and production. It also facilitates the securing of long-term ongoing contracts. Manufacturers also benefit from stable operations of production lines and the securing of technology successors. The disadvantage of subcontracting for the company (subcontractor) is that it has to burden additional costs incurred by failing to complete the work by the contract date.

In the staffing business, the company can anticipate revenue commensurate with the number of registered workers. The disadvantage is that it has to keep regularly employed staffing workers on the payroll even when they are on standby due to a shortage of customer demand. There are also barriers to reducing salaries accordingly when staffing fees are reduced.

World Holdings has dedicated itself to three main prerequisites for powering its competitive edge: (1) compliance, (2) rigorous employment training to enable the execution of subcontracted production work, and (3) the financial base required for investments in personnel and subcontracting. Handling warehousing for Amazon Japan has enabled the company to make a name for itself in the 3PL industry, and what helped it achieve this is its highly rated track record pertaining to the mechanisms and productivity of its subcontracting services.

Staffing, or “Worker Dispatching,” means deploying a worker(s) employed by one party (staffing agency) so as to be engaged in work for another party (client company) under the instruction of the latter (worker dispatch contracting). In contrast, in business subcontracting the objective is the completion of work as a result of labor (Article 623 of the Civil Code), and value is generated with respect to the result of the work performed rather than the work itself (subcontracting). Hence, subcontractors give instructions to the workers that they themselves employ.
Source: Shared Research based on materials form the Ministry of Health, Labour and Welfare

There are two approaches to staffing operations. In “Registered Type Worker Dispatching,” the dispatched worker contracts with a staffing agency when a customer is found that offers conditions that satisfy the worker’s demands. In “Regularly (Indefinitely) Employed Worker Dispatching,” the dispatched worker is a full-time or contract employee of the staffing agency. The former has the advantages of giving the worker a certain degree of freedom to choose work that suits his/her lifestyle in terms of the kind of work, working hours, and duration of work. The latter, on the other hand, offers stable employment and income, and, in some cases, attractive benefits. The disadvantage of working as a dispatched worker is that it is hard to obtain stable employment. In the case of registered dispatching, a lack of customers creates standby times, causing gaps between employment.
The advantage of subcontracting is that it offers long-term work regardless of the type of employment. In many cases, the contracts between a subcontracting company and its customers cover entire projects, and thus are often long-term contracts. The disadvantage for the subcontractor is that, because the contract value is determined beforehand, failure to properly manage human resources drags down productivity, drives up costs, and eats into profit.

Transition to a holding company

The company expanded into the Information and Telecommunications business in December 2005, and by leveraging the features of recurring revenue business, it partly compensated for the slump in the staffing business when the global financial crisis hit in 2008, and managed to weather the crisis. Capitalizing on the shrinking number of players in the real estate industry following the crisis, the company made a full-fledged push into the Real Estate business in 2010 as a condominium developer. On July 1, 2014, it transitioned to a holding company structure (the present-day World Holdings). The company has conducted a number of M&A in the same industries it operates in as well as in different industries, such as the acquisition of the agricultural park management business, and most of these were corporate rehabilitation offers, the main exceptions being Hoeikensetsu Co., Ltd. (which has now been sold off) and Mikuni Co., Ltd. (President Iida’s original company).

Revenue (by segment) and operating profit

Source: Shared Research based on company data

Changes in the staffing business industry
2007 Compliance violations come to light → Collapse of the leading companies
2008 Global financial crisis → Plunge in production volume and decline in number of clients
2009 New government elected and Worker Dispatching Act revised → Ambiguity of legal revisions leads to acceleration of direct hiring and decline in dispatched labor
2010 Yen appreciation → Production adjustments and offshoring, further acceleration of industry weeding out
2013 Labor contract revision
2015 Revision of Worker Dispatching Act
2019 Work style reform
2020 Equal pay for equal work

Company milestones
2005 Completion of manufacturing subcontracting standards manual; expansion into Information and Telecommunication business, listing on JASDAQ (moved to the First Section of TSE in 2016)
2010 Expansion into Real Estate business (business expansion via acquisition of Mikuni Co., Ltd. in 2014)
2014 Transition to holding company

Source: Shared Research based on company materials

Balanced management using optimal scale to generate ongoing optimal profits

Multiple cornerstone businesses, including staffing and real estate

World Holdings aims to build a business structure resistant to the impacts of changes in the socioeconomic and business environments. In fact, it has achieved stable business management by running its business in a well-balanced way, using geographic and industry diversification and incorporating both recurring-revenue and one-time revenue businesses. It has also conducted numerous M&A in the same industries it operates in as well as in different industries (most of them corporate rehabilitations). It currently has multiple cornerstone businesses, including the Human Resources and Education business and Real Estate business. These segments respectively cover different business domains, and this accords the double benefits of mutual defense against the impact of fluctuation in individual industries as well as the dispersion of business resources.

Optimal scale business

Since founding the company, President Iida has undertaken a variety of businesses, from real estate to the staffing and education business, information and telecommunications, and agricultural parks management. Along with business domain expansion, Mr. Iida has worked to ensure business management of suitable scale. He asserts that limiting the company’s main and subordinate businesses to three each holds the key to successfully running an optimally balanced, stable business. Rather than chasing the top position in each individual business, President Iida places higher priority on generating optimal profit on an ongoing basis using the optimal scale conducive to control under a holding company structure.

Mixture of recurring-revenue and one-time revenue businesses

Human Resources and Education business

The Human Resources and Education business is basically a recurring-revenue business. Staffing is a labor-intensive business, with earnings determined by the formula “revenue = number of registered workers x billing rates,” and generates ongoing revenues commensurate with the number of registered workers. Worker registrations have been on the rise in the years since the global financial crisis of 2008, and billing rates as well have been growing. When retention and utilization rates of registered workers are stable, there is little fluctuation in revenue and the business can secure stable earnings.

Real Estate business

The Real Estate business primarily develops and sells new condominiums (of 20 to 60 units, selling for around JPY26mn per unit). The company also focuses on renovation, i.e., fixing up and adding new value to pre-owned properties, and most recently it has been venturing into conversion work as well, in which it redesignates the use of existing buildings, fully refurbishes them, and converts them to new buildings. The company’s four regional subsidiaries (respectively covering the Greater Tokyo area, and the Tohoku, Kinki, and Kyushu regions) run community-rooted businesses as mid-sized developers of condominiums designed for families, and the company is engaged in renovation nationwide.

The company’s idea of optimal scale in its Real Estate business (i.e., annual supply quantities) is as follows (according to its FY12/16 earnings materials).
Development: 100–200 units in the Tohoku region, 400–500 units in the Greater Tokyo area, 100–200 units in the Kinki region, 100–200 units in the Kyushu region
Renovation: 1,500 units

Development and conversion are basically one-time revenue businesses. The company sees its renovation operations as close to a recurring-revenue business since its steady procurement and a large customer base enable it to obtain ongoing orders. Prefabricated home rentals, property management, and asset management (REITs, funds) are recurring-revenue businesses.

The Real Estate business consists of a variety of operations of varying capital turnover. In condominium development, lead times are long, taking two to three years from sourcing to handover, and capital turnover is slow. Conversely, detached homes and conversion have lead times of six to 12 months. Renovation has lead times of four to six months. Prefabricated homes and property management are high capital turnover recurring-revenue businesses with revenue generated on an ongoing basis during the duration of contracts. The formula for the Real Estate business is “revenue = revenue generated along the duration vector (time property delivery, month-to-month) x the quantity of respective properties”.

The company is particularly adept at the neighboring land development from “seed lots” that major real estate corporations generally do not utilize (this involves realignment of property rights), as well as renovation and conversion. It purchases small parcels of land (seed lots), negotiates rights to surrounding land, and develops large-scale commercial premises, which paves the way to build its own condominiums or jointly develop properties with major developers. In recent years, the company has seen an increase in the sale of undeveloped commercial premises, in which large commercial premise arrangements attract direct buyers from major developers or hotel operators.

Information and Telecommunications business

The Information and Telecommunications business is a recurring-revenue business consisting primarily of mobile handset sales. It has one of the largest store networks in the Kyushu region (37 stores as of December 2020), and aims to expand market share in Kyushu in conjunction with its corporate business (solutions proposals). The mobile phone business operates on the formula “revenue = {revenue generated upon contract signing + service charges commensurate with monthly telecom fees (for the duration of the contract)} x number of subscribers.” The company says that, in the future, it aims to take on full-fledged commissioned software development, and leverage the synergistic effects with its enterprise solutions business to augment its Information and Telecommunications business.

Globalization

Even before founding World Intec, President Iida had always had his eyes on globalization and has made attempts at international expansion. The company’s name even reflects his ambition for worldwide business deployment. In Mr. Iida’s mind, globalization is both outbound and inbound. For the past 30 years he has frequently traveled abroad, worked to gather information, and has broadened his outlook on the world. The company currently has 10 offices overseas, largely in China and Southeast Asia, and has been engaging in overseas businesses (i.e., outbound) for more than 20 years. Although they are struggling to contribute to earnings, they have steadily sown the seeds for business. Meanwhile, thanks to domestic globalization (inbound), the percentage of revenue contributed by overseas companies has risen to around 30%. Notably, in the factory staffing segment of the Human Resources and Education business, logistics subcontracting for Amazon Japan (sorting, packaging, etc.) has grown into a high-volume operation, accounting for 14.1% of overall revenue (or JPY19.2bn, 38.4% of factory staffing business revenue, in FY12/19). The company says it hopes to expand into overseas repair operations and global clinical trials for CRO operations.

Expansion into real estate finance business

Loan servicing business and asset management business

Servicer

Other real estate finance operations

The company’s consolidated subsidiary Mikuni has jointly developed a reverse mortgage product called “Mikuni Guaranteed Purchase Type” together with The Bank of Fukuoka. The bank has previously offered only trust-type reverse mortgages, but it has now added the non-trust standard-type “Mikuni Guaranteed Purchase Type” to its lineup. Leveraging its expertise in purchase assessment, Mikuni handles the real estate property appraisal duties involved in the new reverse mortgage product. Mikuni fields requests for collateral property appraisal from The Bank of Fukuoka, and handles the appraisal of the property used as collateral when reverse mortgage customers sign their contracts (the property undergoes annual reappraisal). When it comes time to sell the real estate property in question, Mikuni uses specialist brokers to handle sales and purchases of collateral property and allocates it to the repayment of the customer’s loan.

A reverse mortgage is a type of financial instrument geared toward senior citizen homeowners. The customer borrows against the value of their detached home or condominium, and when the homeowner dies, the proceeds from the home’s sale go to the lender to repay the loan.

Diversification through M&A (corporate revitalization)

The company’s core segment, the Human Resources and Education business has achieved all of its growth through its own home-grown efforts. In contrast, when it comes to the Real Estate business and other combined and diversified business segments, its basic strategy is to expand into and augment new business through M&A. However, the only bona fide M&A actions the company has taken are when it made Hoeikensetsu Co., Ltd. (which has now been sold off) and Mikuni Co., Ltd. (President Iida’s original company) subsidiaries. The rest are nearly all corporate rehabilitation offers. Farm Co., Ltd. was undergoing court-supervised rehabilitation under Japan’s Civil Rehabilitation Act when the company acquired it and made it a subsidiary in February 2017. Three years later, Farm was profitable again, and the company says it has since seen an increase in inquiries and negotiations from local governments (cities, towns, and villages) for park management and administration. By leveraging human talents, the company has imbued its philosophy of “Creating the ways we live” in all activity, from putting people to work in its Human Resources and Education business through corporate rehabilitation. Thus, its use of M&A is one of the ways in which it puts its philosophy into practice.

Specific examples

December 2005: Expands into Information and Telecommunications business by making e-support and Network Solutions subsidiaries
November 2012: Makes clinical trial contractor DOT International (currently DOT World) a subsidiary
December 2014: Makes general realtor Mikuni Sangyo (currently Mikuni) a subsidiary
August 2015: Makes prefabricated home builder Omachi (currently Omachi World) a subsidiary
July 2016: Makes camera and electric appliance repair business Nikken Techno a subsidiary
January 2017: Makes Hoeikensetsu a subsidiary. Hoeikensetsu designs, builds, and sells built-to-order detached homes in Hokkaido. (Hoeikensetsu was sold off in 2020)
February 2017: Makes agricultural park facility administrators Farm and Crowdeight subsidiaries
February 2018: Makes software development contractor Saihi Information Service a subsidiary
June 2019: Expands into real estate finance by making investment advisor and agent World Asset Management a subsidiary
September 2019: Makes loan servicing and bond management consulting firm Fuji Servicing (currently Mirai Servicing) a subsidiary

Group business overview

The World Holdings Group consists of a pure holding company, World Holdings, and its 32 consolidated subsidiaries.

Key consolidated subsidiaries in the Human Resources and Education business

Factory staffing business

World Intec Co., Ltd.

Active industries: Focus on manufacturing, covering a wide range of fields including semiconductors, electrical and electronics, logistics, automotive, machinery, environment and energy, groceries and consumer goods, and chemicals

Professions: Subcontracting and staffing primarily for manufacturing and production management companies in areas including manufacturing and assembly, inspection and quality control, logistics/sorting/packaging.

World Next Co., Ltd.: Administrative consignment and support for employment of women bringing up children for post-quake recovery work in Fukushima Prefecture

World Intec Taiwan Co., Ltd.: Recruitment and manufacturing staffing in Taiwan

EngmaIntec Co., Ltd.: Subcontracting business in China

Tohoworld Corporation: Joint venture with Toho Titanium. Staffing business aimed at the continuance of technologies and skills specializing in the materials industry.

Technology staffing business

World Intec Co., Ltd.

Active industries: Semiconductors, machinery, automotive, and information and telecommunications services

Professions: Staffing and subcontracting primarily for production technology, design and development, maintenance, as well as product repair work outsourced from manufacturers.

Nikken Techno Co., Ltd.: Camera and home electronics repair

World Construction Co., Ltd.: Construction technician staffing

Saihi Information Service Co., Ltd.*: Commissioned software development

Saihi Information Service was created by spinning off the systems unit of Saihi Motor Co., Ltd. It has a long history of developing and maintaining vehicle operation systems for route buses. Given that expertise, it has a high level of technological abilities in systems development, and has handled numerous projects for government agencies and universities. It became a subsidiary of World Holdings in 2018.

Geographic Information of Kyushu, Inc. (special subsidiary): Geographic information systems (GIS), general systems development, maintenance, and administration, and diagram and text systems operations.

R&D staffing business

World Intec Co., Ltd. (research staffing unit): Staffing of researchers specializing in bio and chemicals, staffing of pharmacists, nurses, and clinical trial technicians and other development staff, and pharmaceuticals safety information management staffing

DOT World Co., Ltd. (CRO unit): Commissioned clinical testing services for pharmaceuticals development

Sales and marketing staffing business

World Staffing Co., Ltd.: Staffing of sales clerks for the fashion industry and department stores and mass retailers, call center operators, and light duty staff in the logistics field

JW Solution Co., Ltd.: Joint venture with JTB providing staffing service for the tourism industry

Key consolidated subsidiaries in the Real Estate business

World Residential Co., Ltd. (Greater Tokyo area), World iCity Co., Ltd. (Tohoku region), World Wisteria Homes Co., Ltd. (Kinki region), World Mikuni Co., Ltd. (Kyushu region): These four subsidiaries run community-rooted businesses as mid-sized developers of condominiums designed for families

Mikuni Co., Ltd.: Renovations, real estate brokerage, and rental property management

Omachi World Co., Ltd.*: Manufacture, sale, and rental of prefabricated homes in the Tohoku and Kyushu regions

Omachi World’s expansion into the Kyushu region is the result of synergistic effects straddling businesses by leveraging the powerful local sales and marketing network of the Information and Telecommunications business (enterprise solutions for corporate clients).

World Asset Management Co., Ltd. (non-consolidated): Investment advisory and agency

Mirai Servicing Co., Ltd. (non-consolidated): Loan servicing and bond management consulting

Key consolidated subsidiaries in the Information and Telecommunications business

E-support, Inc. and associated subsidiaries: Mobile store management, call center operations, sales of LED lighting and OA equipment and other energy cost saving solutions for businesses

Key consolidated subsidiaries in the Other businesses

World Intec Co., Ltd., Farm Co., Ltd., and associated subsidiaries: Agricultural park facilities operation including management of five directly operated facilities and numerous designated management facilities nationwide

Advan Co., Ltd.: Personal computer schools, website creation, and staff cultivation for the Human Resources and Education business.

Business segment				FY12/11	FY12/12	FY12/13	FY12/14	FY12/15	FY12/16	FY12/17	FY12/18	FY12/19	FY12/20
(JPYmn)				Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.	Act.
Revenue				37,892	53,007	56,450	68,829	87,984	94,334	127,147	142,894	136,319	143,571
	YoY			18.0%	39.9%	6.5%	21.9%	27.8%	7.2%	34.8%	12.4%	-4.6%	5.3%
	Human Resources and Education			24,231	27,104	34,172	40,229	45,420	51,998	67,043	75,964	77,774	83,142
		YoY		9.1%	11.9%	26.1%	17.7%	12.9%	14.5%	28.9%	13.3%	2.4%	6.9%
		Total revenue composition		63.6%	50.9%	60.4%	58.3%	51.5%	54.9%	52.3%	52.9%	56.7%	57.5%
		Factory		15,722	17,893	21,021	24,932	26,911	30,112	41,655	49,525	50,001	55,102
			YoY	11.2%	13.8%	-	18.6%	7.9%	11.9%	38.3%	18.9%	1.0%	10.2%
			Total revenue composition	41.3%	33.6%	37.1%	36.1%	30.5%	31.8%	32.5%	34.5%	36.5%	38.1%
		Technology		6,007	6,227	7,469	8,554	9,781	10,697	12,632	15,664	16,902	17,003
			YoY	0.1%	3.7%	-	14.5%	14.3%	9.4%	18.1%	24.0%	7.9%	0.6%
			Total revenue composition	15.8%	11.7%	13.2%	12.4%	11.1%	11.3%	9.8%	10.9%	12.3%	11.8%
		R&D		2,502	2,984	3,693	4,062	4,755	5,533	6,489	7,108	7,108	7,200
			YoY	20.2%	19.3%	23.8%	10.0%	17.1%	16.4%	17.3%	9.5%	0.0%	1.3%
			Total revenue composition	6.6%	5.6%	6.5%	5.9%	5.4%	5.8%	5.1%	4.9%	5.2%	5.0%
		Sales and marketing		-	-	1,989	2,681	3,973	5,656	6,267	3,667	3,761	3,835
			YoY	-	-	-	34.8%	48.2%	42.4%	10.8%	-41.5%	2.6%	2.0%
			Total revenue composition	0.0%	0.0%	3.5%	3.9%	4.5%	6.0%	4.9%	2.6%	2.7%	2.7%
	Real Estate			1,514	8,794	8,683	15,545	31,785	34,491	49,101	52,029	42,082	48,081
		YoY		-	480.8%	-1.3%	79.0%	104.5%	8.5%	42.4%	6.0%	-19.1%	14.3%
		Total revenue composition		4.0%	16.5%	15.3%	22.5%	36.0%	36.4%	38.3%	36.2%	30.7%	33.3%
	Information and Telecommunications			9,176	11,658	13,097	12,618	10,535	7,747	9,178	12,426	12,344	9,133
		YoY		14.0%	27.0%	12.3%	-3.7%	-16.5%	-26.5%	18.5%	35.4%	-0.7%	-26.0%
		Total revenue composition		24.1%	21.9%	23.1%	18.3%	11.9%	8.2%	7.2%	8.6%	9.0%	6.3%
	Other			3,168	5,667	666	602	510	511	2,939	3,574	4,118	3,214
		YoY		63.6%	78.9%	-88.2%	-9.6%	-15.3%	0.2%	475.1%	21.6%	15.2%	-22.0%
		Total revenue composition		8.3%	10.6%	1.2%	0.9%	0.6%	0.5%	2.3%	2.5%	3.0%	2.2%
Operating profit				588	1,223	2,120	3,748	5,137	7,407	7,064	7,370	4,730	6,251
	YoY			70.4%	108.0%	73.3%	76.8%	37.1%	44.2%	-4.6%	4.3%	-35.8%	32.2%
	Operating profit margin			1.6%	2.3%	3.8%	5.4%	5.8%	7.9%	5.6%	5.2%	3.5%	4.4%
	Human Resources and Education			1,164	1,114	2,087	2,848	3,526	3,962	4,703	4,965	5,178	5,512
		YoY		-3.3%	-4.3%	87.3%	36.5%	23.8%	12.4%	18.7%	5.6%	4.3%	6.5%
		Segment profit margin		4.8%	4.1%	6.1%	7.1%	7.8%	7.6%	7.0%	6.5%	6.7%	6.6%
		Total revenue composition		79.7%	50.8%	67.5%	58.0%	53.4%	73.1%	51.7%	53.5%	76.3%	60.5%
		Factory		596	489	1,204	1,918	1,801	2,080	2,587	3,169	2,679	2,632
			YoY	-15.3%	-18.0%	-	59.3%	-6.1%	15.5%	24.4%	22.5%	-15.5%	-1.8%
			Segment profit margin	3.8%	2.7%	5.7%	7.7%	6.7%	6.9%	6.2%	6.4%	5.4%	4.8%
			Total revenue composition	40.8%	22.3%	38.9%	39.1%	27.3%	38.4%	28.5%	34.1%	39.5%	28.9%
		Technology		327	356	638	699	989	1,015	1,263	1,337	1,761	2,019
			YoY	-11.4%	8.9%	-	9.6%	41.5%	2.6%	24.4%	5.9%	31.7%	14.7%
			Segment profit margin	5.4%	5.7%	8.5%	8.2%	10.1%	9.5%	10.0%	8.5%	10.4%	11.9%
			Total revenue composition	22.4%	16.2%	20.6%	14.2%	15.0%	18.7%	13.9%	14.4%	26.0%	22.2%
		R&D		241	269	195	159	518	571	634	559	711	843
			YoY	84.0%	11.6%	-27.5%	-18.5%	225.8%	10.2%	11.0%	-11.8%	27.2%	18.6%
			Segment profit margin	9.6%	9.0%	5.3%	3.9%	10.9%	10.3%	9.8%	7.9%	10.0%	11.7%
			Total revenue composition	16.5%	12.3%	6.3%	3.2%	7.8%	10.5%	7.0%	6.0%	10.5%	9.3%
		Sales and marketing		-	-	50	72	218	296	219	-100	27	18
			YoY	-	-	-	44.0%	202.8%	35.8%	-26.0%	-	-	-33.3%
			Segment profit margin	-	-	2.5%	2.7%	5.5%	5.2%	3.5%	-	0.7%	0.5%
			Total revenue composition	0.0%	0.0%	1.6%	1.5%	3.3%	5.5%	2.4%	-1.1%	0.4%	0.2%
	Real Estate			-75	462	511	1,869	3,061	5,171	4,635	4,589	1,460	3,550
		YoY		-	-	10.6%	265.8%	63.8%	68.9%	-10.4%	-1.0%	-68.2%	143.2%
		Segment profit margin		-	5.3%	5.9%	12.0%	9.6%	15.0%	9.4%	8.8%	3.5%	7.4%
		Total revenue composition		-5.1%	21.0%	16.5%	38.1%	46.3%	95.5%	51.0%	49.4%	21.5%	39.0%
	Information and Telecommunications			213	408	441	172	4	244	25	3	10	240
		YoY		29.1%	91.5%	8.1%	-61.0%	-97.7%	-	-89.8%	-88.0%	233.3%	-
		Segment profit margin		2.3%	3.5%	3.4%	1.4%	0.0%	3.1%	0.3%	0.0%	0.1%	2.6%
		Total revenue composition		14.6%	18.6%	14.3%	3.5%	0.1%	4.5%	0.3%	0.0%	0.1%	2.6%
	Other			157	211	52	18	15	17	-272	-270	132	-200
		YoY		726.3%	34.4%	-75.4%	-65.4%	-16.7%	13.3%	-	-	-	-
		Segment profit margin		5.0%	3.7%	7.8%	3.0%	2.9%	3.3%	-	-	3.2%	-
		Total revenue composition		10.7%	9.6%	1.7%	0.4%	0.2%	0.3%	-3.0%	-2.9%	1.9%	-2.2%
	Company-wide expenses, eliminations			-873	-972	-973	-1,162	-1,472	1,990	-2,029	-1,917	-2,052	-2,854
Large lot customer (10% or more of total revenue)
	Amazon Japan								7,757	13,156	17,681	19,246
	% of revenue								8.2%	10.3%	12.4%	14.1%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Segment revenue forecasts are calculated using revenue from external customers (YoY comparisons are provisionally calculated using revenue excluding company-wide expenses and eliminations)

Segment business overview

Human Resources and Education business (57.5% of total revenue, 60.5% of total operating profit in FY12/20)

In its mainstay Human Resources and Education business, the company provides subcontracting and staffing services focused on full-time employment or regularly employed worker dispatching. The R&D staffing business handles upstream processes in the manufacturing field. The technology staffing business handles mid- to upstream processes (although repairs are downstream). The factory staffing business handles mid- to downstream processes, and the sales and marketing staffing business handles post-manufacturing downstream domains.

In the Human Resources and Education business, because of the large scale of revenue in the logistics field, the subcontracting ratio for factory staffing business has risen. The rise in the company’s ratio of subcontracting is largely attributable to the successful use of its manufacturing subcontracting standards manual, which enabled it to differentiate itself from its competitors by clearly delineating the difference between staffing and subcontracting and satisfying compliance standards. Another significant factor is the compartmentalization of manufacturing processes on the client side. Whereas the scope of subcontracting was traditionally focused on downstream processes where competition among subcontractors was concentrated, it has now expanded to upstream processes as well. For example, in logistics subcontracting, subcontracting was traditionally limited to truck loading and destination sorting, but the scope has now expanded to encompass upstream processes such as merchandise picking and shipment packaging.

Factory staffing business (38.1% of total revenue, 28.9% of segment operating profit in FY12/20)

In FY12/20, this segment’s revenue breakdown by industry was 20.1% electrical and electronics, 40.2% logistics, 2.7 automotive, 12.0% semiconductors, 5.9% machinery, 3.0% environment and energy, and 16.1% other.

Registered workers include regular employees (on-site specialists and administrators), external staff seconded from other companies, and consignment staff from overseas or governments. The number of on-site specialists (average for Q4) has been increasingly each year in the form of fresh graduates and mid-career hires, but utilization rates declined in Q1 FY12/20 due to the impact of the COVID-19 pandemic in the overseas business.

The company has been training personnel to open new facilities in the logistics field, and in the electrical and electronics field it has achieved strong performance in 5G and semiconductor-related operations, where it has been strategically expanding business. The company therefore expects the number of registered workers to return to growth in FY12/20 on a full-year basis.

The main customers are manufacturers in the semiconductor and machinery industries. In recent years, there has also been an increase in business in the logistics field (such as Amazon Japan).

In logistics (such as Amazon Japan), subcontracting at warehouses had been the realm of freight companies such as Nippon Express (TSE1: 9062). World Holdings is unique among staffing companies for expanding into the warehousing market and cultivating customers. Leveraging the skills in production and process management it has accumulated in manufacturing industry staffing and subcontracting, the company has grown to become a major player in its subcontracting of logistics operations (sorting, packaging, etc.) at Amazon Japan. The majority of the company’s logistics business is with Amazon Japan (generating revenue of JPY19.2bn, accounting for 14.1% of the company’s revenue in FY12/19).

As part of its undertakings in new business domains, World Holdings established the staffing business company Tohoworld, a joint venture with major materials manufacturer Toho Titanium (TSE1: 5727) specializing in the materials industry. The materials industry has been a difficult one for staffing agencies to penetrate since it requires highly specialized skills. At the same time, though, workers in the materials industry are aging, and with technical skills at risk of dying out, this is driving up the need for apprenticing. Tohoworld has pioneered to meet those needs by drawing on the experience and expertise of both World Holdings and Toho Titanium.

Factory staffing business

(JPYmn)		FY12/11	FY12/12	FY12/13	FY12/14	FY12/15	FY12/16	FY12/17	FY12/18	FY12/19	FY12/20
Revenue (external customers)		15,722	17,893	21,015	24,928	26,910	30,111	41,654	49,524	50,001	55,102
	YoY	11.2%	13.8%	17.4%	18.6%	8.0%	11.9%	38.3%	18.9%	1.0%	10.2%
% of revenue by category
	Electrical and electronics	13.8%	18.8%	22.5%	23.0%	24.4%	19.5%	19.1%	20.0%	19.2%	20.1%
	Logistics	8.5%	11.5%	11.3%	14.3%	17.5%	27.9%	32.0%	35.8%	38.4%	40.2%
	Automotive	2.8%	6.7%	10.6%	9.4%	6.5%	4.8%	4.2%	3.1%	4.1%	2.7%
	Semiconductors	33.9%	25.0%	8.9%	9.0%	11.5%	15.6%	14.4%	13.0%	12.9%	12.0%
	Machinery	10.5%	8.2%	9.0%	13.6%	11.2%	5.7%	8.5%	8.6%	5.2%	5.9%
	Environment and energy	6.3%	4.6%	5.5%	5.6%	5.8%	6.0%	3.6%	2.8%	3.0%	3.0%
	Chemical				3.3%	4.6%
	Other	24.2%	25.3%	32.2%	21.6%	18.5%	20.5%	18.2%	16.7%	17.2%	16.1%
Segment employees				6,998	7,698	8,144	10,161	15,090	16,782	16,266	22,103
	Administrative	222	252	243	276	335	336	419	-	-
	Specialists			6,755	7,422	7,809	9,825	14,671	-	-
Segment profit (JPYmn)		596	489	1,204	1,918	1,801	2,080	2,587	3,169	2,679	2,632
	YoY	-15.3%	-18.0%	146.2%	59.3%	-6.1%	15.5%	24.4%	22.5%	-15.5%	-1.8%
	Segment profit margin	3.8%	2.7%	5.7%	7.7%	6.7%	6.9%	6.2%	6.4%	5.4%	4.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Technology staffing business (11.8% of total revenue, 22.2% of segment operating profit in FY12/20)

In FY12/20, this segment’s revenue breakdown by industry was 31.1% semiconductors, 20.5% IT services, 4.5% machinery, 8.7% automotive, and 35.2% other. The company has achieved steady growth through the use of training programs to cultivate inexperienced workers and place them as technicians. It is working to place workers in highly advanced areas by focusing on hiring experienced workers and enhancing training programs to boost worker skills.

The segment’s registered workers consist of regular employees (both on-site specialists and administrators), and it hires fresh graduates as well. The number of on-site specialists (average for Q4) has been growing each year, with notable increases in workers in the areas of design and development, as well as construction and repair, and other technologies (the number of production engineering workers is holding steady).

Technology staffing business

(JPYmn)		FY12/11	FY12/12	FY12/13	FY12/14	FY12/15	FY12/16	FY12/17	FY12/18	FY12/19	FY12/20
Revenue (external customers)		5,982	6,197	7,335	8,430	9,547	10,334	12,155	15,200	16,902	17,003
	YoY	0.3%	3.6%	18.4%	14.9%	13.3%	8.2%	17.6%	25.1%	11.2%	0.6%
% of revenue by category
	Semiconductors			43.1%	44.9%	47.4%	44.5%	37.8%	42.6%	34.2%	31.1%
	IT services			15.7%	16.3%	15.6%	15.7%	16.0%	15.2%	19.3%	20.5%
	Machinery			5.9%	6.5%	5.1%	4.8%	6.2%	5.4%	4.7%	4.5%
	Automotive			6.2%	5.8%	5.6%	6.2%	6.1%	6.9%	8.4%	8.7%
	Construction					6.8%				8.4%	10.1%
	Other			29.1%	26.5%	19.5%	28.8%	34.0%	29.9%	25.0%	25.1%
Segment employees				1,396	1,552	1,669	1,897	2,042	2,437	2,634	2,778
	Administrative	63	64	58	75	93	145	153	-	-	-
	Specialists			1,338	1,477	1,576	1,752	1,889	-	-	-
No. of specialists employed (avg. for Q4)				1,396	1,552	1,669	1,897	2,042	2,437	2,634	2,778
	New hires								114	175	180
	Production engineering			632	679	749	799	679	739	697	790
	Design and development			567	658	705	797	1,052	1,331	1,535	1,509
	Construction and repair, other			197	215	215	301	311	367	402	480
Segment profit (JPYmn)		327	356	638	699	989	1,015	1,263	1,337	1,761	2,019
	YoY	-11.4%	8.9%	79.2%	9.6%	41.5%	2.6%	24.4%	5.9%	31.7%	14.7%
	Segment profit margin