KeePer Technical Laboratory Co., Ltd.

Business Details

Develops, outsources manufacturing of, and sells car coating chemical products, tools, and equipment for KeePer Pro Shops, primarily located at gas stations nationwide, and for new car dealers. The business consists of four channels: aftermarket, new car market, overseas, and non-automotive, with the new car market rapidly expanding. Through technical training and certification programs, the business supports the maintenance of KeePer brand quality and the expansion of the network of shops offering the service.

Recent Overview

New car market surged 24.1% year on year, but higher advertising costs and a sharp decline in non-automotive sales led to a 4.8% decrease in segment profit

Cumulative Q3 sales for the fiscal year ending June 2026 were ¥8,227 million (up 4.4% year on year). The new car market reached ¥2,950 million (up 24.1% year on year), expanding its share of sales to 35.9%, as factory-option adoption progressed at Subaru, Volvo, and Mercedes-Benz. In March 2026, Mitsubishi Motors also began factory-option adoption. Meanwhile, the aftermarket grew only 2.6% amid consumers' heightened savings mindset due to rising fuel prices, and the 'non-automotive' category fell 58.6% due in part to a rebound from large lump-sum deliveries in the same period of the prior year. Increased TV commercial costs for Dia II KeePer pressured profit, resulting in segment profit of ¥3,157 million (down 4.8% year on year). KeePer Pro Shops in Taiwan expanded from 3 to 15 stores, but other overseas markets declined, resulting in an overall overseas decrease of 15.5%.

Key Products

Growth Drivers

• Rapid expansion of the new car market: In addition to Subaru, Volvo, and Mercedes-Benz, Mitsubishi Motors Corporation also began factory-option adoption from March 2026, with cumulative Q3 sales up 24.1% year on year and share of sales rising to 35.9%
• Introduction of LX KeePer: Launched from February 2026 as an exclusive product for new car dealers, aiming to further expand the new car market at the mainstream M-size price point of approximately ¥100,000
• Effect of the Dia II KeePer launch: The renewal of the flagship product in November 2025 and the nationwide TV commercial campaign continue to drive a recovery in aftermarket demand
• Expansion of KeePer Pro Shops in Taiwan: Rapid expansion from 3 to 15 stores, establishing a foothold for overseas expansion
• Increase in coatings applied per KeePer Pro Shop: Increased chemical sales driven by growth in the number of coatings applied for key products

Risks

• Structural shrinkage of the aftermarket: The risk that the ongoing decline in the number of gas stations, combined with soaring fuel prices and consumers' heightened savings mindset, will cause coating sales at KeePer Pro Shops to stagnate
• Dependence of the new car market on external factors: The risk that changes in the timing of vehicle deliveries due to automobile tax reform (abolition of the environmental performance tax) and reduced domestic sales and delivery volumes due to tariff issues will constrain growth in new car market sales
• Profit pressure from increased advertising expenses: The risk that expenses, such as TV commercial costs for Dia II KeePer, will grow faster than sales, causing segment profit margins to decline
• Instability of the 'non-automotive' business: The risk of large swings due to a sales structure dependent on lump-sum deliveries to major customers (cumulative Q3 recorded a 58.6% year-on-year decrease)
• Delay in overseas expansion: Sales are declining in overseas markets other than Taiwan, and establishing a KeePer LABO-style overseas expansion model remains a challenge

Business Details

Operates KeePer LABO, a 'car coating and car wash specialty store' where highly skilled staff apply KeePer coatings using in-house developed dedicated chemicals, through both directly-operated and franchise formats. Through direct service provision to general car users, the business pursues the simultaneous achievement of customer satisfaction and employee satisfaction. As of the end of April 2026, the network comprised 176 stores in total, consisting of 143 directly-operated stores and 33 franchise stores. The business also serves as a base for gathering consumer preference information for product development.

Recent Overview

Vehicles served increased 13%, but segment profit fell 45% due to growth investment expenses

Cumulative Q3 sales for the fiscal year ending June 2026 were ¥10,026 million (up 7.1% year on year), securing revenue growth. Total vehicles served increased significantly to 671,702 (up 13.1% year on year), while the average unit price declined to ¥16,196 per vehicle (down 4.5% year on year). Due to the recording of ¥1,093 million in growth investment expenses (company-wide total) in SG&A expenses, including a special bonus of ¥470 million funded by extraordinary income and TV commercial costs of ¥90 million, segment profit fell sharply to ¥1,122 million (down 45.4% year on year). In Q3, results in January and February fell below the prior year due to heavy snowfall in northern Japan, but the spring demand season began picking up from late March. A total of 25 new stores (12 directly-operated and 13 franchise) opened over the past year, and the company aims for early profitability of new stores through a 'customer acquisition' strategy that directs repeat customers from existing stores to new stores.

Key Products

Growth Drivers

• Launch of the new product 'Dia II KeePer' and demand stimulation through a large-scale TV commercial campaign (coating volume up 7.5% year on year)
• Steady growth in EX KeePer coating volume (up 7.1% year on year) and expanding factory-option adoption by new car dealers
• Accelerated franchise expansion growing the store network (30 new store openings planned for the fiscal year ending June 2026, progressing as planned)
• Early profitability of new stores through a 'customer acquisition' strategy that directs repeat customers from existing stores to new stores
• A strong customer base with a repeat rate of approximately 87% and steady accumulation of visiting customers through the 'customer acquisition' model
• Expanded capacity through large-scale renovations of existing stores, such as converting the Setagaya store into a mobility base (expanding bays from 8 to 20)
• Growing demand to 'keep one's car clean and drive it longer' and increased car wash demand (total vehicles served up 13.1% year on year)

Risks

• Significant pressure on segment profit from recording growth investment expenses (special bonuses, TV commercials, etc.) in SG&A expenses (down 45.4% year on year)
• Temporary decline in customer traffic at existing stores (approximately 5%-15%) and adverse impact on profitability due to accelerated pace of new store openings
• Deterioration in profitability due to a decline in average unit price (down 4.5% year on year, to ¥16,196 per vehicle)
• Fluctuations in vehicles served due to weather and seasonal factors (results fell below the prior year in January and February due to heavy snowfall in northern Japan, and reduced rainfall led to sluggish coating demand)
• Increased costs for hiring and training personnel associated with new store openings, and difficulty in maintaining uniform application quality
• Increased expenses due to a change in the estimate of asset retirement obligations (an addition of ¥546,004 thousand in the current Q3)
• Risk of consumers strengthening their savings mindset and refraining from visiting stores due to rising energy and food prices