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Copyright© 2012 Stock Research Center. All Rights Reserved. This report is the intellectual property of The Stock Research Center and may not be copied, reused, quoted or used in any other way without permission.

Up-date Report Issued: Sept. 5, 2014

Holistic Company Report

Startia

3393 TSE First Section

The Stock Research Center

Holistic company report (by The Stock Research Center)

The contents of this report are based on information as of the date this report was prepared and may be revised without prior notice. The Stock Research Center makes no statement or guarantee whatsoever regarding the accuracy, reliability, completeness, suitability and applicability of the information in this report and assumes no responsibilities or obligations whatsoever. The Stock Research Center assume no responsibility whatsoever regarding any results, including but not limited to direct and indirect losses, lost earnings, and damages, that are associated with the use of this report or the information by investors who read this report. Final investment decisions are the sole responsibility of the investor, and the investor shall bear all related risks. This report is the intellectual property of The Stock Research Center and may not be copied, reused, quoted or used in any other way without permission.

2／17

Startia (3393 TSE １ｓｔ) Issued：Sept. 5, 2014

201420145,20142014/9/5

Up-date Report

【3393 Startia Industry：Wholesaling】

◆ Business Operations

・Startia (hereinafter the “Company”) provides communication connection services and sells stationery equipment, network equipment and Web applications to middle-market companies and SMEs, providing one-stop solutions related to information & communication technology (ICT).

・The Company’s basic strategy for expanding revenues is cross-selling of products and services to same customers, focusing on steady-revenue businesses like maintenance and rental. It also expands its line-up of merchandise through alliances and in-house development, widens operational areas including overseas, and increase personnel.

◆ Business Results

・ In FY3/14, Startia saw its net sales and operating income rise 23.0% and 26.5% from a year earlier, respectively, continuing to post new record highs since FY3/11. Sales of E-book production software, multifunction printers and network equipment performed well, all of them marking double-digit growth of revenues.

・In Q1 FY3/15, sales grew10.6% from a year earlier. The company managed to bear the burden of heavy personnel costs as a result of hiring many new college graduates (the number of them accounts for 17.8% of the total in FY3/14) and marked operating income of ¥6 million (vs operating loss of ¥15 million a year earlier).

◆ Outlook for FY3/15

・Management forecasts a 13.2% rise for net sales and a 1.3% gain for operating income in FY3/15. An expected fall in the operating income-to-net sales ratio is due to the strengthening of security in hosting services and active investments in overseas and other operations.

・The Stock Research Center (hereinafter, the “Center”) projects a similar level of profit to the Company’s forecast. The Center judged that the burden of security-related costs (up ¥120 million YoY) can be absorbed by growth of the steady-revenue businesses and the sales-boosting effect of strengthening the Company’s sales ability and merchandise line-up.

◆ Points to Note for Investment

・Startia has decided to pay interim dividend and raised its per-share dividend from a level equivalent to 10% of its consolidated EPS to 15%.

・Considering that the Company will resume growth trend in FY3/16 and onward after its security-related investments has peaked out, the Center sees that the valuation indicators are not so high.

Analyst：Shigeki Kousaka

+81 (0)3-6858-3216

[email protected]

FY Net sales yoyOperating

incomeyoy

Ordinary

incomeyoy

Net

incomeyoy EPS BPS

Dividends

per share

(million yen) (%) (million yen) (%) (million yen) (%) (million yen) (%) (yen) (yen) (yen)

2012/3 5,084 27.1 459 68.0 475 71.1 278 115.2 56.2 534.9 5.62

2013/3 6,640 30.6 656 42.9 655 37.8 391 40.4 78.6 605.7 7.86

2014/3 8,167 23.0 829 26.5 856 30.6 432 10.5 85.5 689.7 15.00

2015/3 CE 9,248 13.2 840 1.3 866 1.2 433 0.2 85.5 - 12.83

2015/3 E 9,600 17.5 850 2.5 880 2.8 440 1.9 86.9 761.7 13.03

2016/3 E 11,000 14.6 1,100 29.4 1,200 36.4 600 36.4 118.5 867.1 17.77

2017/3 E 12,500 13.6 1,300 18.2 1,450 20.8 720 20.0 142.2 991.5 21.33

(Note) CE: company estimate, E: estimate by The Stock Research Center

2014/8/29

Stock price (yen) 1,695

5,120

Market capitalization (million yen) 8,678

FY3/14(A) FY3/15(E) FY3/16(E)

PER（times） 19.8 19.5 14.3

PBR(times) 2.5 2.2 2.0

Dividend yield（％） 0.9 0.8 1.0

【Stock price performance】

1 month 3 months 12 months

Return （%） 7.3 16.3 45.4

vs TOPIX (%) 8.3 9.4 25.8

【Major Indicators】

Shares outstanding (share)

One-stop source of IT products and services for middle-market companies and SMEs Security investment to weigh on biz results for FY3/15, growth trend to restart in FY3/16

＞ Summary

(yen)

【Stock Price Performance】

Note: Share price relative to TOPIX, from a baseline as of August 30, 2013

Relative share price (RHS)



トライステージ（2178 東証マザーズ）

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◆ Providing Solutions to ICT-Related Need to Small and

Medium-Sized Enterprises on One-Stop Basis Startia provides a complete line of products and services involving

information & communication technology (ICT) to middle-market

companies and SMEs (generally companies with fewer than 300

employees) that are unable to establish a department of their own for ICT

systems.

The Company does not engage in simple expansion of sales of

products and services, but provides regular maintenance services and

makes efforts toward cross-selling of products to same customers to

establish continuous transaction relationship. By listing all expenses in

a single invoice, Startia streamlines accounting procedures for client

companies and cuts the cost of making payments. The Company has

three business segments.

1) Web Solutions: Development and provision of ActiBook*1 e-book

production software, electronic in-house documentation using the

software, provision of marketing solutions, and assistance in the

production of company websites. This segment is operated by Startia Lab, Inc.*2 a subsidiary

2) Network Solutions: Selection of communication environments for

offices, assembly of networks, introduction of equipment like routers and

firewall devices, the rental of hosting and cloud computing storages, and

system integration. Also provides “Net ResQ*3,” a fixed-rate total support

service system that covers not only network devices installed by Startia,

but also the rest, comprising ones installed by the Company’s peers.

3) Business Solutions: Sale, rental and maintenance of business

phones, multifunction printers and other office equipment and resale of

the "OTOKU Line" direct access wireline telephone service of Softbank

Telecom

◆ Characteristics in Operations 1：Focus on Steady-Revenue

Business

Startia employs two sales approaches. The first is its one-time sales

business, through which the company generates revenues through

leasing companies. The second is its steady-revenue business*4,

through which it charges equipment rental fees and monthly software

usage and

(*1) “ActiBook” is e-book production software that makes it easy for those without expertise to use text files and image data to create electronic publications. It is possible in a single editing operation to simultaneously create e-books viewable on multiple platforms, and it features many functions like attaching tags and searching. Since it was launched in August 2006, ActiBook has been adopted by over 2,300 companies (as of July 2014), including more than 1,000 in the publishing and printing industries and other users like manufacturers and trading houses. (*2) Startia Lab, which develops, sells and maintains ActiBook, is a wholly-owned subsidiary spun off in 2009. It had 149 employees as of the end of June 2014 (Startia’s employees totaled 550 on a consolidated basis).

(*3) Startia provides security measures for client firms by installing routers and UTM

equipment (Unified Threat Management: integrated management of several

security functions like those for anti-virus and hacking and filtering of Web content).

When client have networking troubles, Startia provides remote support on

the phone and other measures or on-site support if necessary.

The maintenance service cost is ¥3,000 a month per customer irrespective of the

number of provided support. The service started in September 2012.

Exhibit 1: Business segments in FY3/14

Note: Operating income is before deducting companywide and other expenses. Source: The Stock Research Center, based on Startia’s FY3/14 Financial Results Report.

One-stop provider of ICT-

related devices and services for SMEs, focusing on cross-selling

to same clients

＞ Business Operations業内容

Web

Solution

Network

Solution

Business

Solution

Sales

Segment Profit




4／17


Up-date Report

maintenance fees on a SaaS (Software as a Service) basis. Startia has

prioritized its steady-revenue business since 2009.

The steady-revenue business entails forward expenditure for sales

activities, generating results over several years after the company

concludes contracts with customers (the early termination rate is only

around 5%). This approach benefits customers by averaging costs,

covering the risks of asset obsolescence owing to technological progress,

and conserving involvement in maintenance, while benefiting Startia by

stabilizing its revenues and earnings. In FY3/14, steady-revenue

businesses recorded sales of ¥2,594 million, up 15.8 % from the previous

year, and accounted for 31.8% of sales*5.

◆ Characteristics in Operations 2: Target Clients Are SMEs

Nationwide

There are some 5.42 million business entities with less than 300

employees nationwide, Startia’s targets – 1.38 million in the Kanto

metropolitan area, 800,000 in the Kinki metropolitan area, 390,000 in the

Chukyo metropolitan area and 220,000 in the Kitakyushu and Fukuoka

metropolitan area. (According to the 2012 Economic Census by the MIC,

see Exhibit 2). The reasons for not targeting large companies are: 1)

SMEs usually have no departments for ICT systems and have a strong

need for ICT-related one-stop venders; and 2) since the sales amount per

project is small, both major system integrators and sales agencies of

network equipment have difficulty in meeting the need.

On top of the headquarters in Shinjuku, Tokyo, Startia has two branches

in the Tokyo metropolitan area, the Yokohama branch office (opened

October 2012) and the Eastern Tokyo branch (April 2013); the Osaka

head office (opened as a branch in November 2002 and upgraded to a

head office in 2007) and the Kobe office (opened June 2014) in the Kinki

area; the Nagoya branch office (opened October 2011) in the Chukyo

area; and the Fukuoka branch office (July 2006) in the Kitakyushu and

Fukuoka area. Startia used to open offices in areas with a sufficient

number of SMEs, found all possible clients that can be visited within an

hour, provided monthly-based rental and maintenance services and sold

related products to establish customer bases, in a bid to promote a

business strategy to boost the unit price per customer. The strategy is

supported by the structure of employees. Of 550 employees as of the end

of June 2014, it had a sales staff of 301 (accounting for 54.7% of the total),

156 engineers (28.4%, engaged in installment of equipment, construction

of local area networks, maintenance, along with system engineers of

Startia Lab), and 93 managers (16.9%).

Nationwide Kanto Kinki ChukyoKitaKyushu/

FukuokaSapporo Hiroshima Sendai

Total 5,453,635 1,392,179 811,387 394,135 230,365 97,255 90,737 86,203

more than 300 employees 11,952 4,778 1,870 937 481 228 188 188

loaned/dispatched employees only 21,049 5,124 3,547 1,576 931 477 384 386

1 to 300 employees 5,420,634 1,382,277 805,970 391,622 228,953 96,550 90,165 85,629

more than 5 2,224,582 605,831 333,254 368,651 98,994 41,892 38,082 37,805

Cities covered -

Tokyo

metropolitan

area and 7

major cities

Kyoto,

Osaka,

Sakai and

Kobe

Nagoya Kitakyushu

and FukuokaSapporo Hiroshima Sendai

(*4) Following are products and services of the steady

revenue business in each segment: ＜Web Solutions＞

Maintenance service (version upgrading) and cloud computing use of

ActiBook COCOAR (described

later)

＜Network Solutions＞

Hosting service

Rental of network

equipment Net ResQ

＜Business Solutions＞

Counting service for copiers

Rental of multifunction

printers Rental of business

phones

Incentive for continuing OTOKU Line

(*5) Sales from the steady-revenue business totaled

¥1,148 million and accounted for 28.7% of total sales in FY3/11, prior to a three-year

medium-term plan to FY3/14. In FY3/08, the ratio was 9.5%. Though sales of the business

grew 31.2% a year on average during the period of the previous medium-term

plan, the one-time sales business also fared well and the proportion of the steady-

revenue business rose only slightly.

Exhibit 2 Distribution of middle to small enterprises in major large urban

area

Source: The Stock Research Center based on "2012 Economic Census for Business Activity - Tabulation of Establishment" issued by MIC




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◆Characteristics in Operations 3: Differentiation via Self-developed

Products

Though Startia belongs to the wholesaling industry, the Company not only

acts as a sales agency, but it develops original software products and

cloud services and provides various solutions to customers.

(1) E-book Production Software ActiBook

More than 2,300 companies have introduced ActiBook and there have

been more than one million downloads of e-book viewing applications for

devices like smartphones and tablets*6.

Of the companies that have adopted ActiBook, those in the publishing

and printing sectors are around 1,000 and those in other industries like

manufacturers, retailers and trading firms are more than 500. Startia has

expanded software functions, considering not only uses for publishers,

but also those for management of in-house documentation and

marketing*7. The Company assumes that ActiBook can be used for

paperless offices, lessening the burden of sales persons of carrying

heavy documents, and the assistance in sales promotion by analyzing

page viewing logs of viewers who visit web sites for company introduction

and selling goods.

(2) COCOAR Service for Using AR

COCOAR is a cloud-style service to provide abundant information through

smartphones. Unlike in sales promotion campaigns that use 2D bar codes

as markers for reading information, the COCOAR service enables users

to use any images printed on paper media as markers.

User companies of the service prepare images to be used as markers

(they can use the markers not only on newly printed publications, but on

old ones), create movies, music, text information, sites to introduce their

merchandise and others, which will be displayed on smartphones for

sales promotion. Once they register themselves with the server for

COCOAR, user companies can engage in sales promotion activities via

AR*8 technologies. Individual users can watch or listen to objects prepared

by user companies by letting their smartphones, with the COCOAR

functions activated, read markers.

In conventional uses of AR, user companies had to develop special

applications with embedded objects, making their projects expensive

and limiting the scope of uses to major companies’ large-scale

campaigns. However, COCOAR, as a cloud-style service, is provided at

reasonable prices. Markers and objects can be replaced with others and

used for multiple campaigning projects. Since it was launched in

November 2012, the number of user companies (and other

organizations) smoothly increased, totaling more than 500.

(3) Rental server service Secure SAMBA

“Secure SAMBA” is a cloud-style file server service for corporations.

The number of users, including Japan Post Holdings Co., Ltd., and

(*6) The total number of companies that have introduced ActiBook is seen in a press release, “the coud version offered in Chinese and English,” in July 2014, and the breakdown by industry is on the top page of the latest version of the web site to introduce ActiBook, made by Startia Lab. The number of downloaded applications is seen in a press release in Feb 2014.

(*7) For example, “ActiBook Docs,” a system to distribute in-house information, transmits business manuals, catalogs, video and conference materials to multiple devices including smartphones, tablets and PC. Users of the system, launched in Nov 2013, can designate receivers according to their attributes and identify whether distributed materials are actually viewed. “ActiBooks,” is an e-book portal site opened in July 2014. Companies which have introduced ActiBook can upload their electronic books, catalogs, brochures, advertising flyers and others to the portal free of charge. As ActiBooks complies with search engines, Startia intends that publisher clients will use it for selling books and that other client companies will use it for marketing various goods and services. (*8) AR (Artificial Reality) is technology that adds new data to real images using computers. In this context, it means provision of various types of information by superimposing 3D images, made by smartphone cameras, and other virtual information onto images in the real world. COCOAR was originally developed as a derivative service of ActiBook to display e-book images using the AR technology. Today, the service is often provided independently. The number of user companies here is the latest one on the page to show examples of users in the COCOAR introduction site of Startia Lab.




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Up-date Report

Osaka Prefecture, has exceeded 30,000. The service provides not

only similar services to those by peers or better ones than them, but

also exclusive usefulness by linkage to printers of Sharp Corp.*9 (6753

TSE 1st section) , which are treated in the Business Solutions segment.

Secure SAMBA is thus a promising candidate for cross-selling to existing

clients of multi-function printers.

◆ Group Companies

The Company group includes two consolidated subsidiaries (Startia Lab

and STARTIA SHANGHAI INC.), three affiliates accounted for using the

equity method (MAC Office, Inc., Urban Plan Co., Ltd. and STARTIASOFT

INC.), and one company not accounted for using the equity method

(Horma Service Co., Ltd.).

STARTIA SHANGHAI was established in January 2013 to provide the

“Global Gateway*10” service, a high-speed and secure virtual private

network (VPN) service between Japan and China, for Japanese

companies advancing into China.

MAC Office and Urban Plan engage in designing office layout and interior

finishing for offices that moved. Startia injected capital into the two

companies in a bid to obtain information on moving plans of SMEs and

propose selling equipment related to office automation and IT.

STARTIASOFT, based in Xian, China, is an overseas development base

for software related to e-books. Hiring around 60 engineers with high

degrees of expertise, the company contributes to improving the efficiency

of software development. Taipei-based Honma Service sells software and

creates web sites for clients in Taiwan. It began full-fledged sales of

ActiBook in FY3/15.

◆ Companies’ Usage Trend of ICT and Cloud Computing

Exhibit 3 shows some features of ICT usage at SMEs and larger

companies in Japan, using data from the Ministry of Internal Affairs and

Communications’ “Communications Usage Trend Survey in 2013” and the

Survey in 2010. It reveals that most of companies use the Internet, 80%

of SMEs have opened web sites for introducing themselves, hiring

employees, and introducing goods and services they provide. The exhibit

also shows that SMEs lag behind larger companies in using cloud

services.

However, as there are signs that understanding of cloud services

deepened during the three years, the market for the services is

Using internet 98.6 (98.5) 97.1 (99.4) 97.2 (100.0)

Constracting website 82.0 (82.4) 90.2 (94.1) 97.2 (100.0)

Using cloud services 29.4 (10.3) 40.5 (21.7) 40.4 (33.1)

No. of responded companies 1,554 (1,457) 662 (641) 105 (104)

100 - 299 more than 300 more than 2,000

Note: The figures in a parenthesis are based on "Communications Usage Trend Survey in 2010" Source: The Stock Research Center based on "Communications Usage Trend Survey in 2013" and

"Communications Usage Trend Survey in 2010" issued by MIC

More and more SMEs

begin using cloud

services

＞Industrial Environment and Competition

(*9) In the service, users can directly store data they

scanned on multi-function printers and data they received by facsimile on a

cloud file server without output. They can also print data in smart devices on

multi-function printers directly.

(*10) The system provides transmission speed and stability needed for video

conferences and exchange of data files between Japan and China. Startia installs

equipment like routers at business bases of client companies operating in both

countries and transmits their data through a private line it procured in an alliance with

a major Chinese communications carrier. The Virtual Private Network

(VPN) is a network that is constructed by using public telecommunications lines,

such as the Internet, to connect to a company’s internal network.

Exhibit 3 Internet usage trend by number of employees (unit: %)




7／17


Up-date Report

expected to expand. Seed Planning, Inc., a private research agency,

projects that the cloud storage market in Japan will grow from ¥57

billion in 2012 to ¥80 billion in 2017 (average annual growth of 7.0%),

of which it forecast the market for corporations to grow from ¥30 billion

in 2012 to ¥50 billion in 2017 (average annual growth of 10.8%).

Impress Business Media estimates that the Japanese e-book market

totaled ¥93.6 billion in FY2013 (up 28.3% from the previous year) and the

e-publishing market including magazines totaled ¥101.3 billion (up

31.9%)*11. The high pace of growth was backed by the spread of new

platforms, such as smartphones and specific terminals. Impress Business

Media forecasts the e-book market to total ¥279 billion in FY2018, 2.9

times that in FY2013, and the e-publishing market to total ¥334 billion (see

Exhibit 4).

◆ Competitive Situation

Other companies that provide ICT-related equipment and services to

middle-market companies and smaller entities include Otsuka

Corporation (4768 TSE 1st), Hikari Tsushin, Inc. (9435 TSE 1st), Forval

Corporation (8275 TSE 2nd) and Recomm Co., Ltd. (3323 TSE JASDAQ).

Companies that offer hosting services include GMO Cloud K.K. (3788

TSE Mothers) and those providing cloud storage services include major

Internet service providers and U.S. cloud-computing company Box.

Companies that compete with Startia in e-book production software are

Voyager Japan Inc., Yappa Corporation, Morisawa Inc. and eBook Cloud,

all of which are not publicly traded.

As Otsuka’s main targets are middle-market companies, Startia, whose

sales efforts are also focused on smaller companies with tens of

employees, recognizes the difference from Otsuka. Startia also considers

that its steady-revenue business model focusing on maintenance services

and development of original services are more advantageous than other

companies that act mainly as agencies.

Note: E-book for new platforms is a delivery of e-book through smart

devices like smartphones and tablets and e-book readers

Source: The Stock Research Center based on “E-book Business

Survey Report issued in 2014” released by Impress Business

Media

(*11) In estimating the e-book market in Japan,

Impress Business Media defines the e-book as “book-like digital content whose

copyrights are managed.” The market is a sum of users’ purchases of

distributed e-books (books, comics and some others), excluding magazines,

newspapers, text books, information provided to companies, game-like

content, and academic journals. The market also excludes

users’ communication costs for downloading e-books, device-related costs,

expenses related to e-book production, such as authoring, and

advertisements at distribution sites. New platforms for

distribution of e-books are smart devices like smartphones and tablets

and e-book readers like the Kindle.

Exhibit 4 Growth forecast of the e-book market (unit: 100 million yen)

Excels competitors like

Otsuka, Hikari Tsushin,

Forval, in the steady-

revenue model

e-magazine

Total e-book

e-book for new platforms

e-book for future phone

e-book for PC

(FY)




8／17


Up-date Report

◆ Startia’s Strengths and Issues to be Tackled

First of all, the company focuses on middle-market and SMEs and

provides products and services meeting their needs, such as those that

are reasonable and easy to use, while lowering initial costs by the steady-

revenue (or cloud computing) style.

Second, unlike the ordinary agency business, Startia has established a

business model that it builds mutual trust with client companies through

maintenance services and talks on cross-selling and makes use of the

accumulated customer bases as invisible assets.

Moreover, as the Company holds a broad line-up of products and services

and promotes cross-selling, the sales staff can settle down to work and it

would be easy for the staff to keep their motivations. The Company is thus

considered being able to keep the job separation ratio low and steadily

expand the human resources.

As a weakness, the Stock Research Center once said that Startia has

disadvantage of being less known and having low brand value. However,

ActiBook can be regarded as a de facto standard among Japan’s e-book

production software products, considering that it has been adopted by

major publishers and printing companies and many other corporations.

While it marked sharp growth of operating income with an annual average

rise of 44.8% during the medium-term plan from FY3/12 to FY3/14, Startia

was transferred from the TSE Mothers market to the TSE first section in

January 2014, helping the company to significantly improve its name

value and creditworthiness. However, there is still wide room for finding

new clients both in Japan and abroad and the need for developing new

products and services. Expanding and fostering the human resources to

that effect would remain an important issue for the Company.

◆ FY3/14 Performance

In FY3/14, Startia generated ¥8,167 million in net sales (+23.0% YoY),

¥829 million in operating income (+26.5%), ¥856 million in ordinary

income (+30.6%), and ¥432 million in net income (+10.5%). Both net sales

and income surpassed the Company’s initial forecast (Exhibit 5). The

effect of sales growth offset a rise in expenses due to hiring as many as

87 college graduates, more than 20% of its existing employees, and one-

time expenses in the Network Solutions segment.

FY3/14 was the final year of the three-year medium-term plan, in which

management set a net sales target of ¥6.8 billion and an operating income

target of ¥800 million for the year. Startia marked the targets despite

advance investments for overseas operations, which were not included in

the medium-term plan. During the period, both net sales and operating

income posted new record highs each year, showing an annual average

growth rate of 26.9% and 44.8%, respectively.

In the Web Solutions segment, sales related to e-books fared well,

increasing 31.2% from the previous year, with operating income rising

95.2% YoY. The main sales growth drivers are as follows: 1) ActiBook was

adopted by 87 companies, including major manufacturers, for in-house

electronic documentation; 2) the number of printing companies that

introduced ActiBook grew 63% from the previous year; and 3) cross-

selling of the AR service, a derivative from development of ActiBook, saw

a good start as promoted well by new employees.

Posted record income

on high growth as

expected initially and

marked mid-term plan

targets

Expanding/fostering human resources would remain an issue

Strengths include long stable relations of trust with clients via cross-selling, others

＞ Business Results

Posted record income

on high growth as

expected initially and

marked mid-term plan

e-book-related sales

grew sharply in the

Web Solution segment




9／17


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In the Network Solutions segment, sales rose 17.2% YoY as the “Net

ResQ” support service, which was offered in tie-in sales with maintenance

services, performed well. However, operating income decreased 16.8%

from the previous year, because: 1) there were expenses for security

upgrade related to the hosting service (an increase of ¥50 million from an

ordinary year); and 2) there was advance investment into STARTIA

SHANGHAI (personnel costs for a staff of several employees, rents for

the office, costs for business trips by managerial officials and others).

In the Business Solutions segment, sales rose 22.6% from a year earlier

and operating income grew 50.2% as sales of multi-function printers fared

well. The Yokohama branch office, set up in October 2012, and the

Eastern Tokyo branch, opened in April 2013, succeeded in boosting sales

by concentrating their efforts on SMEs in the metropolitan area in and

around Tokyo.

Sales of the steady-revenue business rose 15.8% from the previous year,

with contracts for the rental of network equipment and the copy counting

service for multi-function printers expanding steadily. However, the ratio

of sales of the business accounted for 31.8% (down from 33.7% in

FY3/13) as one-time sales revenues grew 26.7% due partly to a rush of

demand prior to the hike in the consumption tax rate in April.

The YoY growth rate of ordinary income was higher than that of operating

income because the non-operating balance marked a black ink of ¥26

million (against a red ink of ¥551,000 in FY3/13). This turnaround came

as the equity in income of affiliates turned into a profit of ¥17 million

from a loss of ¥10 million in FY3/13. The lower growth rate of net

income than that of ordinary income was due to a loss from valuation

of securities worth ¥77 million, a major part of extraordinary loss.

Item FY 3/11 FY 3/12 FY 3/13

Actual Actual ActualInitial

planActual yoy % achieved

Estimate by

Center

unit \million \million \million \million \million changes % \million

Net sales 4,000 5,084 6,640 8,160 8,167 23.0 100.1 8,500

Web 701 1,073 1,482 2,283 1,943 31.2 85.1 2,200

NW 1,225 1,424 1,843 2,157 2,160 17.2 100.1 2,300

Business 2,073 2,585 3,314 3,720 4,063 22.6 109.2 4,000

Steady-revenu 1,664 1,664 2,240 2,775 2,595 15.8 93.5 2,800

One-time sales business 3,421 3,421 4,399 5,385 5,572 26.7 103.5 5,700

Cost of sales 2,305 2,305 3,152 N.A. 3,922 24.4 N.A. 4,240

SGA 2,319 2,319 2,831 N.A. 3,415 20.6 N.A. 3,430

Operating income 273 459 656 800 829 26.5 103.6 830

Web 113 220 165 N.A. 323 95.2 N.A. 250

NW 109 179 362 N.A. 301 -16.8 N.A. 450

Business 69 91 169 N.A. 254 50.2 N.A. 200

Adjustments -19 -33 -41 N.A. -49 － N.A. -50

Ordinary income 278 475 655 800 856 30.6 107.0 830

Net income 129 278 391 400 432 10.5 108.0 420

FY 3/14

Source: The Stock Research Center, based on Startia’s financial results and materials.

Network Solutions sales rose 17% YoY, led by Net ResQ, but income fell on increased expenses

In Business Solutions, concentrated sales promotion by the Eastern Tokyo branch succeeded

Exhibit 5 Financial results for the fiscal year ended March 31, 2014

Sales of the steady-revenue business posted double-digit growth, but some clients wanted one-time purchases before the consumption tax hike




10／17


Up-date Report

◆ Startia’s Forecasts for FY3/15 On its performance in FY3/15, Startia forecasts net sales of ¥9,248 million

(+13.2% YoY), operating income of ¥840 million (+1.3%), ordinary income

of ¥866 million (+1.2%) and net income of ¥433 million (+0.2%) (Exhibit

6).

Compared to the preceding three years, the pace of income growth

appears to decelerate sharply in FY3/15. Startia said that expenses for

advance investments will increase in FY3/15 but that it will recover the

force of growth in FY3/16 and onward. The heaviest part of the advance

investments will be expenses for strengthening security of the hosting

service in the Network Solutions segment (an increase of ¥120 million

from the previous year). Without them, operating income in FY3/15 would

grow around 16% YoY. However, the Company finds it difficult to delay

the investments amid the recent situation around network security.

Startia also plans to expand investments in overseas offices for such

purposes as increasing personnel and assist sales activities from Japan

for the network business (Global Gateway) at STARTIA SHANGHAI and

e-book-related operations at Honma Service in Taiwan. It also plans to

proceed with other advance investments for growth in FY3/16 and later,

such as opening new offices in Japan and considering to set up new

business bases abroad.

In April 2014, Startia hired 84 college graduates, the number and the ratio

to existing employees being lower than those a year before. In the

previous year, the company first assigned the new employees to on-the-

job trainings for three months at the Career Production Department of the

East Tokyo Branch, before attaching them to formal jobs, but 13 of them

had left the company as of the end of March 2014. Reacting to the

experience in the previous year, the company changed its program for

newcomers, giving them a one-year OJT course at the Career Production

Department for deepening intercourse among them. As a result, the

burden for investments in the human resources (such as tutors’ teaching

loads and rents for new employees) is seen at a similar level to that in

FY3/14 or heavier.

Year FY 3/12 FY 3/13

Item Acutual Acutual Acutual yoy CE yoy Estimate yoy Previous

estimate

unit \million \million \million changes % \million changes % \million changes % \million

Net sales 5,084 6,640 8,167 23.0 9,248 13.2 9,600 17.5 10,000

Web 1,073 1,482 1,943 31.2 2,202 13.3 2,400 23.5 2,800

NW 1,424 1,843 2,160 17.2 2,567 18.8 2,700 25.0 2,700

Business 2,585 3,314 4,063 22.6 4,479 10.2 4,500 10.8 4,500

Steady-revenue 1,664 2,240 2,595 15.8 3,016 16.2 3,000 15.6 3,300

One-time slaes business 3,421 4,399 5,572 26.7 6,233 11.9 6,600 18.4 6,700

Cost of sales 2,305 3,152 3,922 24.4 N.A. - 4,950 26.2 4,800

SGA 2,319 2,831 3,415 20.6 N.A. - 3,800 11.3 4,200

Operating income 459 656 829 26.5 840 1.3 850 2.5 1,000

Ordinary income 475 655 856 30.6 866 1.2 880 2.8 1,000

Net income 278 391 432 10.5 433 0.2 440 1.9 500

FY 2015/3 (E)FY 3/14

Source: The Stock Research Center based on Startia's financial results and materials

Operating income would mark two-digit growth without expenses to strengthen security, but postponement of the investments would not be possible

Another strategic issue is Investments for global operations and fostering human resources

Exhibit 6 Financial results forecast for the fiscal year ending March 31, 2015




11／17


Up-date Report

The Company expects the slight increase in income by absorbing the

advance investments mentioned above because it considers such

successful strategies as described below are keeping their effects: 1)

Startia has developed a series of products and services that can be

differentiated from competitors, such as ActiBook and the AR-related

COCOAR service in the Web Solutions segment, Net ResQ, the total

support business related to network equipment in the Network Solutions

segment, and sales of multi-function printers in the Business Solutions

segment in collaboration with the Secure SAMBA cloud file server service

in the Business Solutions segment; 2) the Company has firmly expanded

the base for its steady revenue business through the rental of equipment

and maintenance contracts based on the exclusive line-up of its

merchandise; 3) it has obtained new clients by hiring many new

employees and fostering them and expanding the network of branches,

while it continues promoting cross-selling.

◆ Q1 FY3/15 Performance

In Q1 FY3/15, Startia posted net sales of ¥1,991 million (+10.6% YoY),

operating income of ¥6 million (loss of ¥15 million in a year-before),

ordinary income of ¥18 million (loss of ¥20 million) and net income of ¥38

million (loss of ¥14 million).

Sales in the Network Solutions segment fared well with a 21.5% YoY rise.

The sharp growth was led by Net ResQ though cloud-related services,

such as hosting, failed to expand sharply due to ongoing measures to

strengthen security. Sales in the Web Solutions segment rose 8.0% from

a year earlier with the AR-related service performing well. The Business

Solutions segment suffered from a retreat in demand in April after the

consumption tax hike, but sales recovered in May and posted a 6.0% rise

in Q1.

Startia initially expected an operating loss of ¥99 million in Q1 due to

seasonal factors including employment of college graduates in April. A

reason why it posted operating income was that sales surpassed the

company’s forecast by ¥27 million. Another factor was that there was a

reversal of excess allowance for bonus payment in FY3/14 and there was

an excess estimate of the same allowance for the FY3/15 budget, both

totaling about ¥40 million.

ItemQ1

FY 3/14

Q2

FY 3/15yoy

Initial

plan

FY 3/15

target

Degree of

progress

Net sales 1,728 1,911 10.6% 1,844 9,248 20.7%

Web 371 401 8.0% - 2,202 18.2%

NW 459 558 21.5% - 2,567 21.7%

Business 898 952 6.0% - 4,479 21.3%

Cost of sales 918 1,006 9.6% - - -

SGA 826 898 8.7% - - -

Operating income -15 6 - -99 840 0.7%

Ordinary income -20 18 - -99 866 2.1%

Net income -14 38 - -49 433 8.8%

Exhibit 7 Financial results for Q1 FY 3/2015 （unit：million yen）

Source: The Stock Research Center based on Startia's financial results

Though income levels were low in Q1 FY3/15 due to seasonal factors, the results were better than initial forecasts

Sales growth backed by abundant merchandise and solid customer bases to absorb burden of advance investments




12／17


Up-date Report

◆ The Stock Research Center Projections for FY3/15

The Center forecasts net sales of ¥9,600 million (+17.5% YoY), operating

income of ¥850 million (+2.5%), ordinary income of ¥880 million (+2.8%)

and net income of ¥440 million (+1.9%). (Exhibit 6 on page 10).

The projections are generally similar to the Company’s forecasts, but both

sales and income levels were revised down from the previous projections

in December 2013. The main reasons are: 1) In the previous projections,

the Center overestimated sales in the Web Solutions segment for FY3/14,

and it has lowered its sales estimate in the segment for FY3/15 based on

the actual result; 2) the Center, which overestimated investments for

security reinforcement for FY3/14, has revised the previous projection for

FY3/15 of a slight rise from the overestimated figure for the previous year.

Though sales in Q1 accounted for 20.7% of the annual estimate, this can

be considered to be due to seasonal factors. For Startia, main seasonal

factors are that 1) college graduates are trained during Q1 and their

contribution is seen in Q2 and later; 2) companies tend to move their

offices in Q4; 3) companies whose unused budget is at relatively high

levels tend to settle their accounts and make payments near the end of

the business year. In FY3/14, sales in Q1 accounted for 21.2% of annual

sales, a similar ratio to that in Q1 FY3/15.

Exhibit 8 shows the term-end numbers of employees and the sales and

operating income per employee. The Company’s sales estimate divided

by the number of employees at the end of Q1 FY3/15 is lower than the

average sales per employee in the past three years and the operating

income estimate per employee as of the end of Q1 is 16% lower than the

operating income per capita in FY3/14. However, the Center sees the

likelihood that the fall in sales per employee will prove unfounded,

considering the expansion of popular products and services, such as the

AR-related service and the renewed Secure SAMBA service*12, and the

opening of new offices, such as the Kobe office.

◆ New 3-Year Plan Shows Ordinary Income Estimates to FY3/17 The Company has announced a new medium-term plan that includes

target figures for ordinary income to FY3/17, with ¥866 million for FY3/15

(+1.2% YoY), ¥1,134 million for FY3/16 (+30.9%) and ¥1,400 million for

FY3/17 (+23.5%). The figures are based on its commitment to a total of

¥3.4 billion in ordinary income for FY3/15 to FY3/17 as a condition for the

exercise of stock purchase warrants*13 (stock options at cost) announced

in June 2014. Unlike in the previous medium-term plan, Startia disclosed

its targets for only ordinary income, because 1) Urban Plan, an affiliate

accounted for using the equity method, showed good income in FY3/14

Fiscal term 2012/3 2013/3 2014/3 2015/3 CE 2015/3 E

Number of employees 310 382 472 550 550

Sales per capita 1,640 1,738 1,730 1,681 1,745

Operating income per capita 148 172 176 153 155

Exhibit 8 Number of employees and per capita indicators (unit: person, \10,000)

Note: Results are based on each end of the term. Number of employee for FY 3/15 is based on the number at the end of Q1. CE means company estimate and E is calculated based on the Stock Research Center estimates.

Source: The Stock Research Center based on Startia's financial results and materials

(*12) While the Company proceeded with investments

to enhance security of the hosting service, it fully renewed the cloud file server

service Secure SAMBA and launched the new version in July 2014.

Startia explained to prospective clients that the renewed version will help

them avoid so-called shadow IT, meaning that employees use personal

cloud storage services for their work without company permissions and enhance

security risks of their companies.

(*13) The number of new

shares to be issued by the

exercise of 6,000 stock-

purchase warrants will be

600,000 shares, accounting

for 11.7% of the total

outstanding shares as of the

date of the announcement.

The unit price of the

warrants is ¥143, the

allotment date is July 2,

2014, and the exercise

period is from May 15, 2017

to May 14, 2027.

In previous projections, Center misjudged timing of emergence of security investments and sales in Web Solutions business




13／17


Up-date Report

and is expected to contribute further; 2) the Company has decided not to

stick to holding consolidated subsidiaries, but found it acceptable to have

more affiliates with capital stakes of more than 20%, in a bid to proceed

with alliances with companies that have useful technologies and customer

bases for the Startia group.

As a key point of its growth strategy, Startia has cited reinforcement of

alliances and active implementation of mergers and acquisitions. Tie-up

offers to the Company have apparently increased sharply with its

creditworthiness rising on the transfer of the stock to the TSE first section.

In August 2014, Startia announced a business and capital alliance with

A.T. Works, Inc. (unlisted and based in Toyama) and a business alliance

with Japan PC Service Co., Ltd. (unlisted and based in Suita, Osaka).

Startia also expanded the scope of businesses to be engaged in its

articles of incorporation after it obtained approval at a general shareholder

meeting in June 2014. It added sale and installation of environment-

related equipment, such as LED lamps (in connection to businesses

engaged by its affiliate, Urban Plan), publication and sale of e-books, and

venture capital-related operations, such as investment, investment

advisory and introduction and brokerage of investment targets in Japan

and abroad. The last item apparently reflects the Company’s stance of

promoting business and capital alliances, fostering target companies with

sales support through its network and aiming at capital gains in the future.

Moreover, expansion of its product and service line-up through alliances

with other companies will lead to increasing opportunities for cross-selling.

◆ The Stock Research Center Medium-Term Projections

Exhibit 9 shows the Center’s forecast on Startia’s performance for the

medium-term. For FY3/16, it expects sales to rise 14.6% YoY, operating

income to increase 29.4% and ordinary income to climb 36.4%. The

Center forecasts that sales in the Network Solutions segment will post the

highest growth rate among the three segments on assumption that Secure

SAMBA, which was renewed in FY3/15, and Net ResQ will grow further.

The Center revised its estimate on the Web Solutions, putting forward the

previous sales projection of ¥3,300 million for FY3/16 to the

Year FY 3/12 FY 3/13 FY 3/14

Item Acutual Acutual Acutual Previous New yoy Previous New yoy New yoy

unit \million \million \million \million \million changes % \million \million changes % \million changes %

Net sales 5,084 6,640 8,167 10,000 9,600 17.5 11,500 11,000 14.6 12,500 13.6

Web 1,073 1,482 1,943 2,800 2,400 23.5 3,300 2,800 16.7 3,300 17.9

NW 1,424 1,843 2,160 2,700 2,700 25.0 3,200 3,300 22.2 3,900 18.2

Business 2,585 3,314 4,063 4,500 4,500 10.8 5,000 4,900 8.9 5,300 8.2

Cost of sales 2,305 3,152 3,922 4,800 4,950 26.2 5,300 5,600 13.1 6,300 12.5

SGA 2,319 2,831 3,415 4,200 3,800 11.3 5,000 4,300 13.2 4,900 14.0

Operating income 459 656 829 1,000 850 2.5 1,200 1,100 29.4 1,300 18.2(profit margin on sales) 9.0% 9.9% 10.2% 10.0% 8.9% -1.3% 10.4% 10.0% 1.1% 10.4% 0.4%

Ordinary income 475 655 856 1,000 880 2.8 1,200 1,200 36.4 1,450 20.8

Net income 278 391 432 500 440 1.9 600 600 36.4 720 20.0

FY 3/15 (E) FY 3/16 (E) FY 3/17 (E)

Exhibit 9 Medium-term results forecast

Sources: Results from Startia’s Financial Results and estimates from The Stock Research Center

Operating income to rise 29.4% in FY3/16 with security-related expenses peaking out

(*14) A.T. Works engages in

the hosting service and

development of servers.

With the alliance, Startia

aims at joint development of

new products and services

and technical cooperation.

Startia, which has acquired

around 10% of A.T. Works’

outstanding shares, plans to

raise its stake to 25% by the

end of FY3/17.

(*15) Japan PC Service provides home-visit services to individual and corporate

customers to solve troubles related to personal computers. It has 11 stores

in the Tokyo and Kinki metropolitan areas and Nagoya and Fukuoka.

Startia will dispatch several employees to Japan PC Service to promote sales of

its merchandise to PC Service’s client offices that total around 100,000.




14／17


Up-date Report

new estimate for FY3/17, reflecting its view that the steady-revenue

business will grow higher than the one-time sales business.

The Center also forecasts that the operating income margin will rise

1.1% point as investments to strengthen security in the Network

Solutions segment will peak out. As it assumes that spending on

revising software and refurbishing servers for the reinforcement of

security will be recorded as cost of goods sold, it expects the ratio of

cost of sales to fall from 51.6% in FY3/15 to 50.9% in FYT3/16. It also

assumes that selling, general and administrative expenses will

continue high growth on increasing costs for human resources, global

operations and strengthening alliances.

The Center expects that the YoY growth rate of ordinary income in

FY3/16 will surpass that of operating income because the non-

operating balance will improve on expansion of equity in net income

of affiliates.

In the newly launched forecasts for FY3/17, the Center projects that

the Network Solutions and Web Solutions segments will boost growth

of sales. SGA is expected to keep high growth on a continuing rise in

administrative expenses due to an increase in group companies on

the progress of alliances. The Center also expects the growth rate of

ordinary income will exceed that of operating income as in FY3/16 on

the continuing expansion of equity in net income of affiliates.

◆ Policy on Return to Shareholders

Startia has conducted return of profits linked to its business

performances, setting a target level for per-share dividends at 10% of

its consolidated EPS from FY3/11. The Company has bought back its

shares since FY3/08 though the size of each purchase was small. In

FY3/14, Startia paid ¥15 in per-share dividends, including a ¥6.45

commemorative dividend on the transition to the TSE first section (the

payout ratio was 17.6%).

In August 2014, Startia announced that it will change its dividend

policy in FY3/15 and onward, raising the target of 10% of consolidated

EPS, estimated at the beginning of the year, to 15%. It has also

decided to start paying interim dividends worth one-third of 10% of

estimated net income to shareholders as of September 30. In

FY3/15, it plans to pay interim dividends of ¥4.28 per share.

Startia’s payout ratio is not so high for a company listed on the TSE

first section. However, the Center recognizes the inevitable need for

increasing the Company’s internal reserves to proceed with its growth

strategy, including global operations and M&A activities, and judges

that the increase in the payout ratio is a sign of placing emphasis on

return to shareholders.

◆ Valuation in Comparison to Similar Companies

The Center compared Startia’s performance and valuation indicators

with those of Otsuka (4768 TSE 1st), Forval (8275 TSE 2nd) and

Hikari Tsushin (9435 TSE 1st), all of whom treat ICT-related

＞ Points to Note in Investment

Raises target payout ratio, to start interim dividend payment

Center sees double-digit growth of both sales and income for FY3/17




15／17


Up-date Report

equipment and services to middle-market companies and SMEs, and

those of GMO Cloud (3788 TSE Mothers), a hosting service company

(Exhibit 10). Startia’s PER multiple of 19.8x based on its FY3/15

estimates and a trailing PBR ratio of 2.5x based on the FY3/14 results

are at similar levels to the peers or slightly higher, but the estimated

dividend yield of 0.8% is lower than the others.

The Center does not consider that Startia’s valuation indicators give

an impression of a relatively high stock price, due to following

factors—its business result estimates for FY3/15 are almost flat from

FY3/14 due to advance investments and it is expected to resume the

power of growth in FY3/16 and later, partly backed by management’s

commitment to the earnings condition in issuing stock options at cost.

CompanyStock market

Stock code

Most recent FY

Stock price（8/29） yen 1,695 1,023 4,410 970 6,460

Market capitalization \million 8,678 11,961 418,954 13,450 308,462

Net sales (E) \million 9,248 10,524 600,000 44,000 580,000

yoy % 13.2 5.1 6.3 11.6 2.6

Operating income (E) \million 840 1,050 37,000 1,700 36,000

yoy % 1.3 11.0 9.1 14.8 13.3 Operating profit margin (E) % 9.1 10.0 6.2 3.9 6.2

PER forecast times 19.8 18.5 19.0 11.6 13.4

EPS (E) yen 85.5 55.4 231.9 83.7 480.8

yoy % 0.0 21.6 8.4 0.0 -22.9

PBR actual times 2.5 2.3 2.9 2.0 2.3

ROE % 13.2 11.2 14.9 18.4 23.9

Dividend (E) yen 12.83 19.5 80.0 22.5 160.0

Dividend yield (E) % 0.8 1.9 1.8 2.3 2.5

Hikari Tsushin ForvalOtsuka Corp.GMO Cloud Startia

TSE 1st section TSE Mothers TSE 1st section TSE 2nd section TSE 1st section

2014/32014/32013/122013/122014/3

3393 3788 4768 8275 9435

Note: Earnings forecasts are from financial results reports of companies in most recent fiscal years Source: The Stock Research Center based on financial results of companies

Both P/E ratio (FY 3/15E), P/B ratio (FY3/14A) similar to Otsuka’s

Exhibit 10 Comparison of business results and valuation indicators with peer companies




16／17


Up-date Report

１．会社概要１．会社概要

企業価値企業価値

ESG活動• 環境対応

• 社会的責任

• 企業統治


• 社会的責任

• 企業統治

知的資本• 関係資本

（顧客、ﾌﾞﾗﾝﾄﾞなど）

• 組織資本

（知的財産、ﾉｳﾊｳなど）

• 人的資本

（経営陣、従業員など）



• 組織資本


• 人的資本


２．財務資本• 企業業績

• 収益性

• 安定性

• 効率性


• 収益性

• 安定性

• 効率性

３．非財務資本３．非財務資本

４．経営戦略／

ビジネスモデル• 事業戦略

• 中期経営計画

• ビジネスサイクル





５．アナリストの評価５．アナリストの評価

１．会社概要１．会社概要

企業価値企業価値


• 社会的責任

• 企業統治


• 社会的責任

• 企業統治



• 組織資本


• 人的資本




• 組織資本


• 人的資本



• 収益性

• 安定性

• 効率性


• 収益性

• 安定性

• 効率性



















５．アナリストの評価５．アナリストの評価

Holistic Company Report The Holistic Company Report is a company survey report issued by the Stock Research Center. The report provides the results of a comprehensive analysis of such items as the sustainability of corporate value creation for the medium and long term and the evaluation of stock prices, based on materials disclosed by companies and interviews with them.

Identifying attractive listed companies We look for enterprises that do not have analyst coverage, primarily in emerging markets, and which have distinctive proprietary products and technologies.

Evaluating the hidden strengths and growth potential of enterprises As well as presenting financial analysis, this report uses intellectual capital analysis techniques to assess the strengths of enterprises and convey their growth prospects. The report also provides key performance indicators to measure future growth as part of efforts to provide broad-based information for making investment decisions.

Neutral and objective analysis from a third-party Neutral analysts produce company research and reports and draw on supervision for reports, thereby providing high-quality, objective corporate information.

This report provides a comprehensive analysis and evaluation of corporate value from “financial capital” and “nonfinancial capital” perspectives.

Corporate value comprises financial and nonfinancial capital. “Financial capital” refers to performance stemming from corporate activities—operating results presented in

financial statements— presenting a visible valuation of an enterprise. “Nonfinancial capital” describes intangibles about an enterprise’s value. This encompasses management

strategies and business models that are central to corporate activities; organizational capital that includes operational foundations, IT systems, and other business processes and intellectual capital; human capital, such as in terms of an organizational culture, motivated employees, and the management team; relationship capital in terms of customer ties and brands; and environmental, social, and governance initiatives. This report aims to present both financial and nonfinancial capital and comprehensively evaluate the true growth potential of enterprises.

Primary Features of this Report

Report Structure

3. Nonfinancial Capial

Corporate Value

1. Corporate Overview

Corporate Value

2. Financial Capital

・Corporate results

・Profitability

・Stability

・Efficiency

4. Management strategies and

business models

・Business trategies ・Medium-term

business plans

・Business cycle

Intellectual capital ・Relationship capital

(including customers and brands) ・Organizational capital (including intellectual assets and expertise)

・Human capital

(including management teams and employees)

ESG activities

・Environmental

initiatives

• Social

responsibility

• Corporate

governance

5. Analyst evaluations




17／17


Up-date Report

PER (Price Earnings Ratio)

Calculated by dividing the stock price by

net income per share. This ratio shows

the stock price as a multiple of net

income per share.

PBR (Price Book Value)

Calculated by dividing the stock price by

net assets per share. This ratio shows

the stock price as a multiple of net

assets per share.

Dividend yield

Calculated by dividing the annual

dividend by the stock price. The yield

shows how much dividend income is

received in relation to the amount

invested.

ESG

ESG stands for information about the

environment, society and governance. In

recent years, there has been growing

public interest in environmental issues

and the need for companies to fulfill their

social obligations. As a result, ESG is

often used as one way to reach an

investment decision about a company,

primarily by overseas pension funds.

SWOT analysis

This is a comprehensive method for

evaluating companies that includes four

elements: strengths, weaknesses,

opportunities and threats.

KPI (Key Performance Indicators)

Indicators used to determine a

company’s progress in reaching its

strategic goals.

Intellectual capital

Intellectual capital is “hidden company

resources” such as customer

relationships, business models and

human resources that support financial

performance but do not appear in

financial statements.

Relationship capital

Relationships with customers and

suppliers, brand equity and other

external relationships.

Organizational capital

Intellectual property, knowledge,

business processes, organizational units,

corporate culture and other elements

that exist in an organization.

Human capital

The executives and employees of a

company.

Disclaimer

・ This report was prepared for the purpose of providing a broad range of investors with useful information concerning stock

investments. This report was written by securities analysts at The Stock Research Center. This report is not a recommendation

to buy or sell or a solicitation concerning a particular security or financial instrument.

・ The contents of this report are based on information that is available to the public and includes additional information as required

that was obtained by analysts. The individuals who prepared this report are prohibited from using insider information and from

receiving insider information. We believe that the information in this report is accurate and reliable, but the accuracy has not

been objectively verified. In addition, this report is not intended to include all information that is required by investors.

・ Information in this report may no longer be up to date because of changes in financial markets, the economy and other items.

The value of stocks discussed in this report either directly or indirectly may fall below the cost of the original investment due to

stock price movements, changes in the business or financial status of the issuer, movements in interest rates and foreign

exchange rates, and other causes. Past performance is not an indicator or guarantee concerning future performance. Unless

specified otherwise, forecasts concerning future performance are the forecasts of each analyst based on reasons that the

analyst believes are proper. Actual performance may differ from these forecasts. Consequently, these forecasts, whether stated

or implied, are not guarantees concerning future performance.

・ Opinions and other views in this report may be revised at any time without prior notice. The Stock Research Center has no

obligation to update the information of views in this report.

・ The Stock Research Center assumes no responsibility whatsoever regarding any results, including but not limited to direct and

indirect losses, lost earnings, and damages, that are associated with the use of this report or the information in this report.

Investors must reach final investment decisions themselves and investors who use this report are completely responsible for

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Holistic Company Report2016/3 E 11,000 14.6 1,100 29.4 1,200 36.4 600 36.4 118.5 867.1 17.77 ... are associated with the use of this report or the information by investors who read