Aqualine Ltd.

Business Details

A mail-order-style business model in which the company's call center receives orders for emergency trouble repair services for toilets, kitchens, bathrooms, washrooms, and water supply/drainage pipes, sales and installation of water-related products, and other repair and construction support, and provides these services to franchise stores. The company fully transitioned from in-house construction to a franchise support model following the Consumer Affairs Agency's administrative disposition in August 2021. It maintains 24/7/365 response capability by utilizing a nationwide network of franchise stores. The business has a structural characteristic of sustained market demand against the backdrop of aging housing stock and the rising average age of existing housing.

Recent Overview

Segment loss improved by ¥47 million year on year due to advertising expense reductions and franchise store review

Following the management overhaul in May 2025, advertising expenses centered on listing advertisements were drastically reduced (from approximately ¥1.4 billion to approximately ¥900 million). As a result, although the number of calls received and visits decreased significantly year on year, the visit rate improved to 59.0% (from 51.1% in the prior period), and the segment loss improved by ¥47 million to ¥370 million (from ¥418 million in the prior period). The company terminated transactions with major franchise stores JUN Corporation and ROY Co., Ltd., while starting new transactions with Ad Network Co., Ltd. (revenue of ¥294 million), reviewing its franchise store base. The company's main customers are now UB Partner (¥567 million) and Ad Network (¥294 million).

Key Products

Growth Drivers

• Structural increase in demand for water-related trouble repairs due to progressing housing deterioration (rising average age of existing housing)
• Trend toward reduced monthly operating loss due to cost optimization effects from reduced advertising expenses
• Improved call center efficiency through improvement in visit rate (51.1% → 59.0%)
• Review and expansion of the franchise store network (start of new transactions with entities such as Ad Network Co., Ltd.)
• Room for recovery in the number of calls received through medium- to long-term strategic reallocation of listing advertising expenses
• Improvement in visit rate and customer unit price through full-scale introduction of a call center system
• Future concept of monetizing adjacent businesses through SOS app deployment and customer data utilization
• M&A and alliance strategy in fields such as energy, healthcare, real estate, and insurance, with a view to becoming an integrated daily-life infrastructure platform

Risks

• Significant doubt exists regarding the going concern assumption, posing high business continuity risk
• Risk related to designation as a securities under special attention by the Tokyo Stock Exchange and compliance with listing maintenance criteria (tradable share market capitalization and net assets criteria)
• Sharp decline in revenue and recording of a ¥184 million allowance for doubtful accounts (extraordinary loss for FY2026, ending February 2026) due to termination of transactions with a major franchise store (JUN Corporation)
• Significant decrease in the number of calls received and visits (down approximately 46% year on year) due to reduced listing advertising, and uncertainty regarding revenue recovery
• Risk of delayed recovery in the number of calls received due to franchise store staff shortages
• Revenue sharply declined 38.9% year on year to ¥1,551 million, with downside risk to the FY2027 (ending February 2027) forecast (revenue of ¥1,178 million, a further 35.8% decline)
• Remaining compliance and governance risk stemming from the 2021 Consumer Affairs Agency administrative disposition
• Customer concentration risk (top two franchise stores account for approximately 55% of segment revenue)