ENVALITH
株式会社第一興商 logo

DAIICHIKOSHO CO. , LTD.

7458・Prime Market・Wholesale Trade

Official website
株式会社第一興商 logo
DAIICHIKOSHO CO. , LTD.7458

Business

Daiichikosho commenced its commercial-use karaoke business in 1976 and is currently a group of companies comprising the Company and 38 subsidiaries. In its core Commercial-Use Karaoke business, it sells and leases equipment under the "DAM" brand and provides communication karaoke content distribution nationwide. The group also comprises the Karaoke & Restaurant Outlets business, which operates directly-managed "Big Echo" karaoke outlets (521 outlets) and restaurant outlets (167 outlets); the Music Software business, which includes Nippon Columbia and Teichiku Entertainment (Tokuma Japan); and the parking business under the "The Park" brand (approximately 4,400 facilities, 51,000 vehicle spaces), forming a total of four segments. Its main customers span operators in the karaoke box and nightlife markets, the elder market including nursing care facilities, and general consumers.

Business Model

In Commercial-Use Karaoke, stock-type revenue—collected monthly at fixed rates from equipment rental fees and communication karaoke information provision fees—forms the foundation of stable cash flow. At directly operated Karaoke & Restaurant Outlets, cash sales account for the majority of revenue, and the company leverages its strength as a manufacturer-operated business to immediately introduce the latest machines and enhance customer appeal. The parking business pursues scale expansion through facility growth, including M&A, while improving profitability by streamlining unprofitable facilities. These segments complement one another, generating net sales of ¥162,950 million (FY2026, ending March 2026).

Company Strengths

The company holds a high market share in the commercial-use karaoke market, having built a nationwide network comprising 25 domestic sales subsidiaries, 36 retail business locations, and 9 wholesale sales offices. In FY2026 (ending March 2026), the Commercial-Use Karaoke segment recorded net sales of ¥65,278 million with an operating margin of 18.3%, maintaining a distribution infrastructure and customer base that competitors cannot easily replicate in the short term.

By directly operating 521 "Big Echo" outlets as the manufacturer, the company was able to install its new flagship model "LIVE DAM WAO!" across all outlets immediately after launch, achieving a 4% year-on-year increase in existing-store karaoke sales. The vertically integrated model combining equipment development, content production, and outlet operations serves as a key differentiator versus competitors.

Equipment rental and information provision income represents recurring revenue collected as fixed monthly fees. In FY2026 (ending March 2026), cash flow from operating activities totaled ¥25,096 million, and cash and cash equivalents at fiscal year-end reached ¥48,475 million, giving the company a financial foundation capable of funding capital expenditures, M&A, and shareholder returns from internal resources.

ENVALITH's Perspective

In FY2026 (ending March 2026), revenue rose to a record ¥162,950 million, while operating profit declined to ¥17,917 million (down 0.2% year on year), marking the second consecutive year of profit decline. Promotional expenses associated with the launch of "LIVE DAM WAO!" (advertising expenses rose from ¥1,605 million in the previous period to ¥2,214 million in the current period), head office relocation costs, and increased personnel expenses (salaries and bonuses rose from ¥14,619 million to ¥15,164 million) pushed SG&A expenses up from ¥35,811 million to ¥38,261 million. The gross profit margin declined from 35.1% in the previous period to 34.5% in the current period, leaving cost structure improvement as a remaining challenge.

Net income attributable to owners of the parent declined significantly to ¥15,889 million (down 12.6% year on year), but this was mainly due to the reversal of the previous period's increase in deferred tax assets (income taxes-deferred of ¥-2,658 million in the previous period versus ¥-696 million in the current period). Meanwhile, gains on sale of fixed assets increased from ¥4,415 million in the previous period to ¥7,663 million in the current period, and the structure in which fluctuations in extraordinary income/loss significantly affect net income continues. On a pre-tax profit basis, profit increased to ¥23,636 million (versus ¥22,911 million in the previous period), so caution is warranted when assessing recurring earnings power.

The company's forecast for FY2027 (ending March 2027) projects revenue of ¥168,700 million (up 3.5% year on year) and operating profit of ¥18,500 million (up 3.3% year on year), indicating increased revenue and profit, while net income attributable to owners of the parent is forecast to decline sharply to ¥12,200 million (down 23.2% year on year). This is mainly attributed to the reversal of the ¥7,663 million gain on sale of fixed assets recorded in the current period, with the anticipated reversal of extraordinary gains expected to significantly reduce net income. Regarding dividends, the company plans to pay ¥68 per share (ordinary dividend only), continuing a substantive dividend increase excluding the ¥10 special dividend commemorating the company's 55th anniversary (ordinary dividend: ¥57 in the previous period → ¥67 in the current period → ¥68 in the next period), resulting in a high payout ratio of 57.6%.

Growth Strategy

Sustainable growth driven by three pillars: strengthening the DAM brand, enhancing the value of Big Echo, and expanding the parking business

Through appeal to features and content of the new flagship model launched in April 2025, the company aims to promote penetration into the karaoke box market and the night market, thereby improving revenue per DAM unit and accelerating replacement of older models. During the current period, the Commercial-Use Karaoke segment achieved a 4.8% year-on-year increase in revenue and a 2.1% increase in profit, driven mainly by an increase in wholesale product sales.

The company is promoting sales expansion of FREE DAM LIFE, a dedicated unit for the elder market, through door-to-door sales activities and online concerts at nursing care facilities and similar venues. By emphasizing its contribution to addressing social issues such as extending healthy life expectancy and reducing the workload of nursing care facility staff, the company aims to increase the number of operating DAM units in the growing elder market.

The company continues to open stores in densely populated areas, including replacements, and as a manufacturer-operated store, aims to enhance karaoke equipment, sound quality, and aesthetics to improve customer satisfaction. During the current period, the company actively opened new stores, including the acquisition of 16 karaoke outlets through M&A, and same-store sales grew steadily, up 4% year-on-year for karaoke and 2% for dining.

The company continues to develop new facilities, including through M&A, aiming for further business expansion beyond the approximately 4,400 facilities and 51,000 parking spaces held as of the end of FY2026 (ending March 2026). It is also promoting profitability improvement through the enhancement and consolidation of unprofitable facilities. During the current period, the business achieved a 13.9% year-on-year increase in revenue and an 18.5% increase in profit, establishing itself as a new pillar of earnings.

In February 2026, the company completed the consolidation of head office functions, previously spread across three locations, into a single location. It aims to enhance corporate value through improved productivity from increased inter-departmental communication and the creation of new innovation. During the current period, head office relocation costs contributed to an increase in SG&A expenses, but cost efficiency effects are expected to materialize from the next period onward.

Last updated: July 19, 2026