ENVALITH
THE WHY HOW DO COMPANY株式会社 logo

THE WHY HOW DO COMPANY,Inc.

3823・Standard Market・Information & Communication

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THE WHY HOW DO COMPANY株式会社 logo
THE WHY HOW DO COMPANY,Inc.3823

Business

THE WHY HOW DO COMPANY, Inc. traces its origins to the former Acrodea, Inc., founded in 2004, and changed to its current company name in 2022. In 2023, it transitioned to a pure holding company structure and has since pursued diversified management centered on M&A as its core growth strategy. It currently operates five business segments: Solutions (IoT & platforms), Food & Beverage Business (Shibuya Niku Yokocho trademark management and sublease), Education-related Business (IT School for Job Seekers), Entertainment (music business centered on Tetsuya Komuro and capsule toys), and Lifestyle Business (tanning machines, cosmetics, and bridal). The company comprises seven consolidated subsidiaries and is listed on the Standard Market of the Tokyo Stock Exchange.

Business Model

The company acquires companies with business succession needs through long-term buy-and-hold M&A that is not premised on eventual sale, and enhances corporate value through PMI (post-merger integration) and value-up initiatives. Each segment combines stock-type revenue (trademark management fees, sublease income, software license fees) with project-type revenue (concert appearances, contracted development, capsule toy sales), aiming to diversify risk across the overall portfolio. EBITDA is the key management indicator, and the company has set a medium-term target of achieving EBITDA of ¥1.0 billion.

Company Strengths

In FY2025 (ending August 2025), Entertainment Business sales were ¥996 million (up 286.8% year on year), with segment profit of ¥166 million (up 113.7% year on year). In addition to production projects and concert appearances by Tetsuya Komuro, the Capsule Toy Business of Dream Planet, Inc., which became a subsidiary in September 2024, contributed for the full fiscal year, growing into the largest segment, accounting for approximately 57% of the group's total sales of ¥1,751 million.

In FY2025 (ending August 2025), sales reached ¥1,751 million, up 134.3% year on year, mainly driven by the consolidation of Dream Planet and Sunrise Japan as subsidiaries. On the other hand, the company completed its withdrawal from the Industrial Waste Treatment Business (Ube Seikan Recycling Center) and the Guam bingo system business as of March 31, 2025, implementing a healthier revenue structure by streamlining unprofitable operations.

At the end of FY2025 (ending August 2025), the equity ratio was 62.2% (improved from 48.8% at the end of the previous fiscal year), and cash and deposits stood at ¥1,246 million. Total net assets increased to ¥1,577 million, mainly due to ¥888 million in proceeds from share issuance through the exercise of stock acquisition rights. Interest-bearing debt remained limited to ¥335 million, securing capacity for further M&A investment.

ENVALITH's Perspective

For FY2026 (ending March 2026, 8-month period), operating loss was ¥502 million and net loss attributable to owners of the parent was ¥902 million, a significant deterioration from the prior period's (12-month) operating loss of ¥73 million and net loss of ¥69 million. The main causes were one-time costs related to the acquisition of new subsidiaries and a provision for doubtful accounts of ¥343 million associated with the transfer of loan receivables to a former subsidiary. The company has recorded operating losses almost continuously since the fiscal year ended August 2009, and the material uncertainty regarding going-concern assumptions has not been resolved. While the swing to positive adjusted EBITDA is commendable, the uncertain timing of a turnaround under GAAP metrics remains the greatest risk for investment decisions.

Total assets doubled from ¥2,473 million at the end of the prior period to ¥5,331 million, while the equity ratio fell sharply from 62.2% to 29.4%. Long-term borrowings surged from ¥271 million to ¥1,397 million, and short-term borrowings jumped from ¥65 million to ¥434 million, resulting in a substantial expansion of total interest-bearing debt. Goodwill balance also surged from ¥108 million to ¥1,413 million. Investors need to closely monitor the rise in financial leverage and the future impairment risk associated with the continuation of the M&A strategy.

The earnings forecast for FY2027 (ending March 2027) is net sales of ¥6,259 million, operating profit of ¥165 million, and adjusted EBITDA of ¥464 million. This assumes that the four companies—Still Un, Dream Planet, Iiyama Doken, and Cowell—will contribute to earnings for the full fiscal year, and the forecast may fluctuate significantly depending on PMI progress, each company's business environment, and the presence or absence of additional M&A. In particular, since Iiyama Doken and Cowell were acquired near the end of the current fiscal year, their earnings contributions are expected to materialize in earnest from the following period onward, making quarterly progress checks important for assessing the likelihood of achieving the forecast.

Growth Strategy

Aiming for adjusted EBITDA of ¥1,000 million and net sales of ¥10,000 million through long-term partnership-style M&A and AI-driven value-up initiatives

In FY2026 (ending April 2026), the company made four companies (Still Un, Goodman, Iiyama Doken, and Cowell) subsidiaries, rapidly expanding group net sales. Under the principle of the "Third Way of M&A," premised on long-term holding rather than divestiture, the company continues to pursue deal acquisition targeting quality regional companies facing succession shortages. For FY2027 (ending April 2027), net sales of ¥6,259 million are planned, reflecting full-year contributions from the four companies.

In the medium-term management policy announced on May 26, 2026, the company plans net sales of ¥10,000 million, operating profit of ¥280 million, and adjusted EBITDA of ¥1,000 million for FY2028 (ending April 2028) (Year 3). The company has newly established the M&A Strategy Division and the AI Value-Up Division, building a new organizational structure to accelerate growth.

The company has newly established the AI Value-Up Division to promote operational efficiency and value enhancement through the introduction of AI technology into acquired subsidiaries. The company is also advancing AI utilization in existing businesses, such as Goodman's AI-enabled continuous automatic monitoring-type water leak detection equipment.

Still Un (bridal and glamping) will contribute for a full year starting in FY2027 (ending April 2027), securing stable earnings as the group's largest revenue segment. Through an integrated service model utilizing company-owned real estate facilities, the company aims to build an earnings base resilient to economic fluctuations.

Iiyama Doken (civil engineering and paving works) and Cowell (LED lighting planning, sales, and rental), acquired near the end of the fiscal year under review, had limited earnings contribution in FY2026 (ending April 2026), with full-scale sales and profit contribution expected from FY2027 (ending April 2027) onward. The company aims to diversify its portfolio through the launch of new segments in construction business and lighting equipment-related business.

Last updated: July 17, 2026