ENVALITH
株式会社ナガセ logo

Nagase Brothers Inc.

9733・Standard Market・Services

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株式会社ナガセ logo
Nagase Brothers Inc.9733

Business

Nagase Co., Ltd. is a comprehensive education company established in 1976. Its core business is the high school segment, which includes Toshin High School, Toshin Satellite Preparatory School, and Waseda Juku. It also operates an elementary/junior high school segment through Yotsuya Otsuka and Kimura Juku, a sports business segment including Itoman Swimming School, a business school segment through Toshin Business School, and other segments encompassing publishing, online schools, children's English schools, and international business. Across the group, including 14 consolidated subsidiaries, the company upholds the educational philosophy of "cultivating talented people who contribute to a society and world of independence and self-respect," providing educational services to a wide range of customers from young children to working adults. Consolidated net sales for FY2026 (ending March 2026) reached a record high of ¥64,183 million.

Business Model

In the high school segment, in addition to 96 directly operated Toshin High School branches, the company provides system packages to 920 Toshin Satellite Prep School franchise-affiliated schools (as of end-March 2026) and earns royalty income. In the elementary and junior high school segment, the company achieves wide-area expansion through the provision of teaching materials and tests via 815 affiliated classrooms of YTnet and Yotsuya Otsuka NET. The sports business segment secures stable revenue through the operation of monthly-fee-based swimming schools and fitness clubs. Each segment has a structure in which it continuously receives tuition fees and membership fees from students and members.

Company Strengths

In FY2026 (ending March 2026), the company achieved 906 first-time University of Tokyo admissions (the highest in its history). A strong track record of producing numerous successful applicants to elite universities—including the former Seven Imperial Universities, national/public university medical schools, and Keio/Waseda—underpins its student acquisition capability. The company also operates Japan's largest network of university-specific mock exams, held 69 times across 12 universities, and the accumulated educational content and know-how, which is difficult for competitors to replicate in a short period, supports its differentiation.

The number of Toshin Satellite Prep School (Toshin Eisei Yobiko) franchise-affiliated schools reached 920 as of the end of March 2026, forming a nationwide video-lecture distribution network. Yotsuya Otsuka's YTnet and Yotsuya Otsuka NET affiliated classrooms number 815, achieving broad expansion in the junior high school entrance exam market, mainly in the greater Tokyo area. These networks form a stable revenue base underpinned by long-term contractual relationships (5-year franchise contracts with automatic renewal).

Through a series of M&A transactions—the acquisition of Yotsuya Otsuka in 2006, Itoman Swimming School in 2008, Waseda Juku in 2014, Itoman Sports School in 2022, Humaledge in 2023, and Itoman Sports Wellness in 2024—the company has built a comprehensive education group covering "knowledge, body, and mind." In FY2026 (ending March 2026), the addition of Itoman Sports Wellness alone contributed ¥5,931 million in incremental revenue, demonstrating the scale-expansion power of M&A.

ENVALITH's Perspective

FY2026 (ending March 2026) revenue of ¥64,183 million (up 16.2% year on year), operating profit of ¥5,979 million (up 22.9%), and profit attributable to owners of parent of ¥3,983 million (up 103.6%) all reached record-high levels. The sharp increase in net profit is mainly attributable to the disappearance of one-off factors recorded in the previous period—an equity-method investment loss of ¥659 million and an impairment loss of ¥387 million—so it is more appropriate to assess the underlying improvement on an operating profit basis (up 22.9% year on year). The FY2027 (ending March 2027) forecast (revenue of ¥67,123 million, operating profit of ¥6,552 million) appears conservative.

The Sports Business segment expanded revenue by 50.0% year on year to ¥17,798 million following the group's addition of Itoman Sports Wellness, but segment profit remained limited at ¥548 million (profit margin of 3.1%), pressured by goodwill amortization (¥126 million for Itoman Sports School and ¥144 million for Itoman Sports Wellness, totaling ¥270 million). While there are favorable market tailwinds such as the increasing outsourcing of swimming classes at elementary and junior high schools to private operators and growing health demand among senior citizens, the pace of profitability improvement in this facility-based business with a heavy fixed-cost burden warrants close monitoring.

The period-end valuation of investment securities increased by ¥6,057 million, from ¥19,360 million in the prior period to ¥25,417 million, while unrealized gains on other securities (valuation difference) expanded from ¥9,293 million to ¥13,467 million. The equity ratio improved from 34.6% to 37.7%, and the market-value-based equity ratio rose from 53.1% to 63.2%. While this improvement in financial soundness is commendable, the structure is such that fluctuations in the stock market (an external factor) directly affect net assets and the equity ratio, so attention should be paid to the risk of net asset erosion during periods of market downturn. The dividend payout ratio is expected to normalize from 99.1% (FY2026, ending March 2026) to 72.1% (FY2027, ending March 2027 forecast).

Growth Strategy

Multi-axis growth driven by AI utilization, M&A, an integrated elementary-junior high-senior high system, and capturing reskilling demand

The company continues to evolve AI-personalized content each year, such as the Target School-Specific Unit/Genre Practice Course and the First-Choice School Preparation Practice Course, and has accumulated strong admission results including 906 University of Tokyo current-year successful applicants (highest in company history), thereby maintaining and strengthening its student acquisition capability. The company also continues to expand university-specific mock exams (a total of 69 sessions across 12 universities).

Leveraging the expanded sales territory resulting from the group entry of Itman Sports Wellness, the company is expanding its kindergarten/nursery school partnerships and contracted business with municipalities and elementary/junior high schools. It is also promoting diversification into physical education businesses beyond swimming, such as Pilates 30 Style (Tsujido store opened September 2025, Fujisawa store opened February 2026). The Asahikawa branch is scheduled to newly open in April 2026.

Against the backdrop of a market environment driven by government-led reskilling promotion, the company is strengthening DX talent development education for corporations through Toshin Digital University. It is building up large-scale corporate projects, including the joint development of a digital education program for all employees with a major automobile manufacturer, and is also capturing new demand from university students through Toshin AI School, which opened in April 2025.

The company is deploying the teaching know-how of its elementary and junior high school segments, including Yotsuya Otsuka and Kimura Juku, as well as Humaledge, across group companies to enhance synergies. It is promoting wide-area expansion utilizing the network of 815 classrooms affiliated with YTnet and Yotsuya Otsuka NET, and acquiring student segments beyond geographical constraints through Toshin Online School.

From FY2027 (ending March 2027), the company plans to set the ordinary dividend per share at ¥120 (an increase of ¥20 from the ¥100 ordinary dividend in FY2026, ending March 2026), and to introduce an interim dividend (¥60), enhancing opportunities for profit return to shareholders. The dividend payout ratio is expected to normalize from 99.1% in FY2026 (ending March 2026) to a forecast of 72.1% in FY2027 (ending March 2027).

Last updated: July 19, 2026