ENVALITH
株式会社レイ logo

Ray Corporation

4317・Standard Market・Services

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株式会社レイ logo
Ray Corporation4317

Business

Rei Co., Ltd. is an integrated video production company built around two core businesses, the Advertising Solutions Business and the Technical Solutions Business, providing an end-to-end service ranging from planning and production of SP & Event, TV Commercial, and other content, to digital video equipment rental and Post-production. Its main customers are client companies and advertising agencies (Advertising Solutions) and production companies, TV stations, and film companies (Technical Solutions). The group operates through two consolidated subsidiaries (including Clay Co., Ltd.) and one affiliated company, and is listed on the Standard Market of the Tokyo Stock Exchange. Since its founding in 1981, the company has expanded its business with digital video technology at its core.

Business Model

The Advertising Solutions Business is a contract-based model where external cost control is key, receiving planning and production orders from clients and advertising agencies. The Technical Solutions Business handles rental and production leveraging in-house video equipment and editing studios, with facility utilization rates determining profitability. The two businesses are linked through ¥859 million in inter-segment internal orders, achieving differentiation through technical proposal capabilities and mutual complementarity of earnings.

Company Strengths

The company operates a vertically integrated model in which the Advertising Solutions Business handles planning and production while the Technical Solutions Business handles video equipment rental and editing. As indicated by inter-segment sales of ¥859 million in internal orders, the collaboration between the two businesses is a source of differentiation in technical proposal capability and competitiveness in winning orders.

The Technical Solutions Business recorded sales of ¥6,109 million against operating profit of ¥1,472 million (operating margin of approximately 24%). Concert and other entertainment-related projects remained solid throughout the fiscal year, achieving a 4.2% increase in profit year on year. Continued capital investment in state-of-the-art video equipment (¥989,770 thousand in the current period) maintains the company's competitive advantage.

As of the end of the fiscal year ended February 2025, the equity ratio stood at 74.5%, with cash and cash equivalents of ¥2,867 million. Interest-bearing debt is centered on short-term borrowings and remains limited in balance, maintaining financial soundness that allows capital expenditure and working capital to be covered mainly through the company's own funds.

ENVALITH's Perspective

In Q1 of FY2027 (ending February 2027), the company achieved revenue growth with net sales of ¥3,780 million (+17.5% YoY), but operating profit declined to ¥446 million (-9.1% YoY). Cost of sales increased significantly to ¥2,528 million (from ¥1,954 million in the same period last year), causing the gross profit margin to deteriorate from 39.3% to 33.1%. This appears to be mainly attributable to rising production costs in the TV Commercial Division, and warrants attention as a structural issue where revenue growth is not translating into profit.

The full-year forecast for FY2027 (ending February 2027) calls for net sales of ¥13,000 million (-3.1% YoY) and operating profit of ¥1,000 million (-43.1% YoY), representing a substantial profit decline. Q1 operating profit of ¥446 million corresponds to 44.6% of the full-year forecast, which appears to be a high progress rate on its own; however, against the cumulative H1 (Q1+Q2) forecast of ¥350 million, Q1 alone already recorded ¥446 million, implying that Q2 alone is expected to fall into an operating loss. Even accounting for seasonality, dependence on the second half is high, and attention should be paid to the risk of downside in performance.

In terms of the market environment, the entertainment-related market, including concerts and stage events, remains active, serving as a favorable external factor supporting stable order intake for the Technical Solutions Business. On the other hand, the TV Commercial Division has been affected by both weak order intake and rising production costs, causing the operating profit margin of the Advertising Solutions Business to decline sharply from approximately 10.8% in the same period last year to approximately 4.7%. The ongoing impact of the structural contraction of the TV advertising market driven by the digital shift on the company's earnings structure warrants continued close monitoring.

Growth Strategy

Capturing entertainment demand and deepening real-times-digital fusion proposals

In Q1 of the fiscal year ending February 2027, net sales in the Advertising Solutions Business achieved substantial growth of +41.4% year on year. The booking of large-scale projects has driven the SP & Event Division, and the company aims to continue expanding order intake against a backdrop of growing entertainment demand.

Ongoing renewal investment in large-scale video equipment (acquisition cost of machinery and vehicles: ¥3,635 million) and expanded utilization of enlarged editing rooms have strengthened the revenue base of both the Video Equipment Rental & Operation and Post-production divisions. In Q1, performance was favorable, driven by large-scale projects such as exhibitions and concerts.

On June 26, 2026, the company completed the disposal of treasury shares totaling 57,686 shares (total disposal value of approximately ¥30 million) to 35 individuals, including directors, executive officers, division heads, and department heads. The company will continue to design incentives for management and executives aimed at enhancing corporate value, with the goal of retaining specialized personnel and strengthening organizational capabilities.

Last updated: July 17, 2026