ENVALITH
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Youji Corporation

2152・Standard Market・Services

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幼児活動研究会株式会社 logo
Youji Corporation2152

Business

Youji Katsudo Kenkyukai (Youken) is a comprehensive early childhood education service company founded in 1972. In its core physical education instruction business, the company provides regular curriculum physical education instruction to 1,296 kindergartens/nurseries nationwide (as of end-March 2026), and operates extracurricular physical education clubs (sports, soccer, rhythmic gymnastics, etc.) at 1,318 locations, with membership totaling approximately 66,971. The company also engages in event planning, therapeutic education services (physical education instruction for children with disabilities), and small-scale childcare operations. In its consulting-related business, it provides management and educational consulting to 233 kindergartens/nurseries (as of the same period-end). With a nationwide network of branches spanning from Hokkaido to Okinawa, the company has over 50 years of history as a specialized firm focused on the early childhood education sector.

Business Model

Revenue exceeding 96% is generated by the childhood physical education instruction-related business, which employs a recurring-revenue model combining annual contracts with kindergartens/nurseries (core curriculum) and monthly-fee clubs (extracurricular). Low cancellation rates form a stable earnings base. In April 2025, price increases were implemented for both core curriculum and extracurricular clubs, achieving higher revenue and profit through higher unit prices. The consulting business provides high-value-added services centered on an information-provision membership system. Capital expenditure is minimal, and the company maintains an asset-light, high-profitability structure with human capital and know-how as its principal assets.

Company Strengths

Since its founding in 1972, the company has expanded branches nationwide from Hokkaido to Okinawa, with the number of curricular physical education venues reaching 1,296 kindergartens/nurseries and extracurricular physical education reaching 1,318 locations as of the end of March 2026. The know-how accumulated through instruction at approximately 5,000 facilities nationwide, together with the 'Cosmo' brand, forms an entry barrier that is difficult for competitors to replicate in a short period.

Curricular physical education instruction is provided under annual contracts, while extracurricular clubs operate on a monthly fee basis, securing a stable recurring revenue base. In FY2026 (ending March 2026), the ordinary income margin reached 19.0%, exceeding the company's own target of 15%, maintaining a highly profitable structure. With debt-free management, cash and cash equivalents stood at ¥9,872 million and the current ratio at 809.9%, indicating an extremely sound financial base.

Despite implementing price increases for both curricular and extracurricular clubs in April 2025, the number of curricular physical education venues increased by 17 facilities year-on-year to 1,296, and the number of consulting contracts increased by 12 to 233. The limited customer attrition following the price increase demonstrates the difficulty of substituting the service and the high level of customer loyalty.

ENVALITH's Perspective

Net income for FY2026 (ending March 2026) increased sharply to ¥1,144 million (up 31.1% year on year), but this includes a temporary factor: a gain on sale of investment securities of ¥214 million (recorded as extraordinary income). Excluding this, growth on an ordinary income basis was a solid 14.4% year on year. The forecast for FY2027 (ending March 2027) calls for net income of ¥997 million (down 12.8% year on year), a decline expected mainly due to the drop-off of extraordinary income and higher personnel expenses. Investors should evaluate the company based on its underlying ordinary income figure (forecast at ¥1,430 million, up 0.7% year on year).

The number of extracurricular sports program members stood at 66,971 as of the end of March 2026, down 1.4% from the end of the previous fiscal year. Despite measures such as expanding classes for two-year-olds, the company has not achieved a net increase in membership. In terms of market conditions, the declining birthrate is forming a medium- to long-term ceiling on demand as the number of children enrolled in nurseries and kindergartens decreases, and there are limits to a strategy of maintaining sales through unit price increases via fee hikes. The divergence between the increase in the number of venues (+18 locations) and the decline in membership suggests a decline in the utilization rate of existing venues, which warrants close attention from the perspective of earnings quality.

In the consulting-related business, the number of contracts increased to 233 (up 12 from the end of the previous fiscal year), but segment profit declined to ¥70 million (down 9.1% year on year), indicating deteriorating profitability. The main cause is rising personnel expenses, and cost structure improvements have not kept pace relative to the scale of revenue (¥285 million). Although this is a small segment accounting for only about 4% of total company sales, optimizing staff allocation and raising unit prices will be key challenges in maintaining its positioning as a high-value-added service.

Growth Strategy

A four-pillar growth strategy centered on fee increases, expansion of 2-year-old classes, growth of the therapeutic education business, and an increasing number of consulting contracts

Following the April 2025 increase, the company implemented further fee increases for regular curriculum programs and extracurricular club membership fees in April 2026. By passing through rising costs from inflation and higher personnel expenses, the company aims to maintain and strengthen its revenue base. The fact that the number of contracts exceeded the year-earlier level even after the price increase supports the company's pricing power.

To address the declining trend in extracurricular physical education membership numbers, the company is focusing on establishing and expanding classes for 2-year-olds. The number of extracurricular physical education instruction venues reached 1,318 at the end of FY2026 (ending March 2026), up 18 from the previous fiscal year-end, and the company aims to recover membership numbers by capturing younger age groups.

The company has explicitly stated in its management policy that it will expand its therapeutic education (ryoiku) business, which provides physical education instruction for children with disabilities. Revenue from this business, categorized under 'other operations' within early childhood physical education-related businesses, reached ¥122 million (up 12.1% year on year), and the company intends to accelerate expansion into adjacent areas by leveraging its existing instructional expertise.

The number of consulting contracts stood at 233 as of the end of March 2026, up 12 from the previous fiscal year-end, maintaining an upward trend. The company is capturing growing demand for external consulting services amid labor shortages and hiring difficulties faced by kindergartens and nurseries, and aims to maintain and expand revenue by focusing on comprehensive support guidance and individualized training programs. However, deteriorating segment profitability due to rising personnel expenses remains a challenge.

Last updated: July 19, 2026