HARIMA B.STEM CORPORATION

Business Details

The company provides five services—cleaning, engineering, facility maintenance management, security, and other services (repair works, reception, and management operations, etc.)—targeting public facilities, office buildings, medical facilities, and other properties. It comprises the parent company along with subsidiaries and affiliates, and is expanding its business base from a core focus on the Kanto region into the Kansai area as well. In FY2026 (ending March 2026), the company made Aiwa Service Co., Ltd. (Kansai region; hospital cleaning) and Musashino Tsushin Co., Ltd. (Tokyo metropolitan area; electrical work) wholly owned subsidiaries, expanding the scale of the group.

Recent Overview

Sales and profit both rose significantly, driven by the full acquisition of two companies through M&A and the full-scale operation of new properties

In FY2026 (ending March 2026), the company achieved significant growth in both sales and profit, with net sales of ¥30,944 million (up 10.4% year on year) and operating income of ¥1,516 million (up 33.5% year on year). The main drivers were the full-scale operation of new properties contracted in the prior period and strong performance in temporary work revenue. The company made Aiwa Service Co., Ltd. (acquisition cost of ¥1,464 million, goodwill of ¥388 million) and Musashino Tsushin Co., Ltd. (acquisition cost of ¥318 million, goodwill of ¥124 million) wholly owned subsidiaries, strengthening its business base in the Kansai and Tokyo metropolitan areas. On the other hand, the issuance of ¥1,004 million in convertible bonds with stock acquisition rights increased interest-bearing debt, causing the equity ratio to decline to 57.8% (from 62.2% in the prior period). For the next fiscal year (FY2027, ending March 2027), the company expects operating income of ¥1,300 million (down 14.3% year on year) due to upfront human capital investment costs.

Key Products

Growth Drivers

• Contribution to sales and profit from the full-scale operation of new properties contracted in the prior consolidated fiscal year
• Strong performance in temporary work revenue
• Strengthening of the business base in the Kansai area and group synergies from making Aiwa Service Co., Ltd. (Kansai region; hospital cleaning) a wholly owned subsidiary
• Expansion of service areas and group synergies from making Musashino Tsushin Co., Ltd. (Tokyo metropolitan area; electrical work) a wholly owned subsidiary
• Promotion of profitability improvement measures, including contract renewal activities
• Improvement in profit margins at group companies
• Business area expansion and proactive M&A strategy based on the Long-Term Vision 2026-2035 and Medium-Term Management Plan 2026-2028
• Improved operational efficiency through DX (digital transformation) promotion
• Expanding demand driven by growing customer interest in energy conservation and SDGs

Risks

• Upward pressure on personnel expenses from continued base pay increases (operating income for the next fiscal year is projected to decline 14.3% due to upfront human capital investment costs)
• Continued rise in raw material and energy prices
• Rising recruitment and labor costs due to chronic labor shortages
• Risk of contract price revisions and specification changes as customers increasingly seek to reduce facility maintenance management costs
• Increased amortization burden on goodwill and customer-related assets from M&A activity (Aiwa Service and Musashino Tsushin) (goodwill amortization: ¥12 million in the prior period to ¥62 million in the current period)
• Rising financial leverage and declining equity ratio (57.8%) due to the issuance of convertible bonds with stock acquisition rights
• Risk of economic downturn stemming from global instability, including U.S. tariff policy and geopolitical risks
• Future dilution risk from conversion of convertible bonds into shares (diluted EPS: ¥112.84)