COMPANY RESEARCH AND ANALYSIS REPORT

RenetJapanGroup,Inc.
3556
Tokyo Stock Exchange Mothers

17-Feb.-2021
FISCO Ltd. Analyst

Ikuo Shibata

FISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Company profile.. ................................... ......................................................................................................

01

2. Overview of FY9/20 results.................... ......................................................................................................

01

3. FY9/21 outlook...................................... ......................................................................................................

02

4. Growth strategy...........................................................................................................................................

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Business overview................................. ......................................................................................................

03

2. Characteristics of the Company. . ........... ......................................................................................................

06

3. History................................................... ......................................................................................................

09■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 10
1. Past results trends................................. ......................................................................................................

10

2. Overview of FY9/20 results.................... ......................................................................................................

12

3. Review of overseas business in the COVID-19 pandemic............................................................................

15

4. Overview of FY9/20.. .............................. ......................................................................................................

16■Main activity results------------------------------------------------------------------------------------------------------------------------------------------------- 16■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 17
1. Forecast for FY9/21.....................................................................................................................................

17

2. Analyst view.................................................................................................................................................

17■Longer-term growth strategy------------------------------------------------------------------------------------------------------------------------- 18■Shareholder returns------------------------------------------------------------------------------------------------------------------------------------------------- 19

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html█ Summary
Domestic business delivered all-time high results in FY9/20 driven
by stay-home demand
Aims to accelerate growth by flexibly responding to changes in themarket environment while limiting risk
1. Company profile
RenetJapanGroup,Inc. <3556> (hereafter, also “the Company”) operates three businesses in its mission to “solve
social issues by harnessing the power of business”: the Reuse Business, Small Household Appliance Recycling
Business, and Overseas Business. The Reuse Business, the Company’s main business since it was founded, handles
buying and selling services under the internet-specialized NET OFF brand and has about 3.0mn members, as oneof the largest domestic operators. The Small Household Appliance Recycling Business, which it started in 2014,
meanwhile, provides a collection service utilizing the ReNet brand’s parcel delivery infrastructure with certification
under the Act on Promotion of Recycling of Small Waste Electrical and Electronic Equipment. Key features arealliances with local government entities nationwide and a proprietary platform. The Company expects this area tobe a new pillar of revenue because of the scale of the potential market known as the “urban mine.” Additionally, theOverseas Business in Cambodia, where the Company made a full-scale entry in FY9/18, offers robust growth andscale through initiatives in vehicle sales, used vehicle leasing, microfinance and dispatching technical intern trainees.
While the COVID-19 situation is favorably affecting domestic business and hurting overseas business, the Company
does not plan to significantly alter its direction of pursuing three main businesses. It aims to accelerate growth byflexibly responding to changes in the market environment while limiting risk.
2. Overview of FY9/20 results
In FY9/20, the Company reported lower sales and profits on weakness in overseas business accompanying the
COVID-19 outbreak with ¥6,836mn in net sales (-20.2% YoY), ¥214mn in operating profit (-50.2%), ¥241mn inordinary profit (-37.4%), and a ¥1,602mn loss attributable to owners of parent. In net sales, the Reuse Businessset an all-time high on growth driven by stay-home demand related to the COVID-19 situation and other factors,
and the Small Household Appliance Recycling Business also improved substantially. However, overall value still
declined due to a sharp slowdown in overseas vehicle sales business from 3Q amid the COVID-19 situation. In
earnings, meanwhile, despite the downturn in profit due to weakness in overseas vehicle sales business, income
contributions from domestic business and microfinance business supported operating profit (as well as ordinary
profit). Nevertheless, the Company booked a hefty net loss due to recording an extraordinary loss (allowance
inclusion) of about ¥1.71bn based on a conservative assessment of overseas vehicle sales business value to avoid
future pressure on earnings.

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01 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.

17-Feb.-2021

3556 Tokyo Stock Exchange Mothers

https://corp.renet.jp/en/index.html

Summary

3. FY9/21 outlook
In FY9/21 guidance, the Company forecasts sales and profit improvements such as ¥7,807mn in net sales (+14.2%
YoY), ¥355mn in operating profit (+65.8%), ¥310mn in ordinary profit (+28.3%), and ¥249mn in profit attributableto owners of parent (vs. a ¥1,602mn loss in the previous year). It expects continued healthy growth in the Reuse
Business and Small Household Appliance Recycling Business and hopes to secure overall sales growth exceeding
14%, despite likely sluggishness in overseas vehicle sales business. In earnings, while losses should persist inoverseas vehicle sales business until restructuring finishes, the Company anticipates steep increases led by profit
growth in domestic business. Furthermore, it factors in profit increase of just over 50% in microfinance businessand fiscal-year (FY9/21) profitability in personnel dispatching business.
4. Growth strategy
The Company aims to transform its income structure and accelerate growth with longer-term growth drivers ofsustainable growth (share expansion) in the Reuse Business, further expansion (new market creation) in the Small
Household Appliance Recycling Business, and initiatives to solve societal issues (acquisition of market opportunities)
in the Overseas Business. Despite recent pressure from the COVID-19 situation, we maintain our view that theOverseas Business is likely to be an important source of longer-term growth because of strong economic growthprospects and advantages in the Company’s proprietary network and know-how. We also see substantial growth
leeway for the Small Household Appliance Recycling Business, which has a large potential market, high entry
barriers, and a business model with few rivals, facilitated by the Company’s unique initiatives, including assistancefor recycling programs at various companies and creation of employment opportunities for disabled people.
Key Points
Posted lower sales and profits in FY9/20 due to setback in overseas vehicle sales business
Reuse Business and Small Household Appliance Recycling Business reached all-time highs thanks to stayhome demand and other factors• Forecasts higher sales and profits in FY9/21 on continued upbeat growth in the Reuse Business and Small
Household Appliance Recycling Business despite ongoing sluggishness in overseas vehicle sales business• Aims to accelerate growth premised on “profits” and “social contributions” by implementing initiatives to solve
societal issues••

Results trends(¥mn)

Net sales (left)(¥mn)

Ordinary profit (right)

9,000

900

8,000

800

8,569
7,807

7,000
6,836

6,000

5,000

3,000

500
400

4,535
3,226

3,729

241

3,708

1,000

300

310

2,000

0

600

386

4,000

171

47

48

FY9/16

FY9/17

FY9/18

200
100

107
FY9/15700

0FY9/19FY9/20FY9/21 E

Source: Prepared by FISCO from the Company’s financial results

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html█ Company profile
In addition to the Reuse Business and Small Household Appliance
Recycling Business, focusing on the Overseas Business (vehicles,
finance, and personnel)
1. Business overview
The Reuse Business, the Company’s main business since it was founded, handles buying and selling services under
the internet-specialized NET OFF brand. It has built a foundation of about 3.0mn members, as one of the largest
domestic operators, with tailwinds from reuse market expansion and internet inroads and by providing excellent
convenience with a one-stop service for a wide range of items (particularly used books) and running a low-cost
operation.
The Small Household Appliance Recycling Business, which it started in 2014, meanwhile, provides a collection
service utilizing the ReNet brand’s parcel delivery infrastructure with certification under the Act on Promotion of
Recycling of Small Waste Electrical and Electronic Equipment. Key features are alliances with local government
entities nationwide that include this business as part of public services and a proprietary platform supported bya variety of service revenue streams. Due to the scale of the potential market (known as the “urban mine”), toughentry barriers, and rising awareness among the general population, it has gradually grown as a new pillar of growth.
The number of collaborating local government entities reached 283 sites as of November 2, 2020 and continues
to increase.
Additionally, the Overseas Business, which the Company has ramped up since FY9/18, offers robust growth andscale through initiatives in vehicle sales, used vehicle leasing, microfinance, and dispatching technical intern trainees.
The breakdown of net sales by business area in FY9/20 was well balanced with the Reuse Business at 57.2%, Small
Household Appliance Recycling Business at 17.0%, and Overseas Business at 25.8%.
Below we review the Company’s various businesses.
(1) Reuse Business
The Company operates a “parcel-based purchase” service in which it receives requests to purchase a wide
range of products from members, including used books, CDs, DVDs, game software, brand products, precious
metals, cameras, and model figures, through its website under the NET OFF brand, collects the items via a parcel
delivery service, and pays the appraised value to a designated bank account. It also engages in e-commerce
to sell purchased items through an internet used bookstore that it operates and sites run by Amazon and otherpartners. This model runs exclusively on the internet via internet and parcel delivery services and does not haveactual stores. There are two large product centers (with space totaling 4,000 tsubo) to manage the Company’s
massive inventory.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Company profile

Overall diagram of Internet reuse business

Source: From materials explaining growth potential(2) Small Household Appliance Recycling BusinessIn this business, the Company directly collects small electronic equipment that is no longer used for a fee in
response to user requests received through its website under the ReNet brand and also offers data elimination service for users concerned about personal information leaks when getting rid of PCs and mobile phones
and other optional services. It then conducts reuse sales or platform business that involves selling rare metals
contained in parts from collected small electronic equipment to intermediate processing firms (this businessmodel avoids the Company’s backyard by connecting various players). The Company entered this business after
obtaining certification under the Act on Promotion of Recycling of Small Waste Electrical and Electronic Equipment
in January 2014. It is currently the only firm with a collection scheme that utilizes parcel delivery service. Thisbusiness has substantial room for expansion beyond the local government channel as seen in recent collaboration
with large electronics volume resellers and electronic equipment manufacturers that are promoting developmentof a cyclical society. The Company launched its own PC processing center (about 1,000 tsubo) and is creating
employment opportunities for people with intellectual disabilities through recycling. It aims to create jobs andpromote recycling (gaining access to PC collection routes) by working together with private-sector companies
and others that must meet requirements related to employing disabled people.

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04 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Company profile

Image of the business model for the Small Household Appliance Recycling Business

Return to customers
Customers
Recycling collection
requestSmall electronicequipment

Recycling flow for small electronic equipment
Manufacturers

ReNet

Reuse as a raw
material

Disassemble,
crush, and sort

Metal resources

Metal refining business

Smelting raw
material

Resource removal

Source: Company website(3) Overseas Business
The Company operates five businesses in automobile, finance, and human resources markets with opportunities
for healthy growth and scale in Cambodia, a country making substantial economic advances – vehicle sales, used
vehicle leasing, microfinance, micro insurance and dispatching technical intern trainees. It is also participating
in international cooperation activities in Cambodia jointly with the Cambodian government, Japanese government, and the Japan International Cooperation Agency (JICA), mainly in the area of human resource training.
In Cambodian business, while recent results have dropped considerably with some impact from the COVID-19
pandemic, this business remains an important component of the Company’s longer-term growth prospects. The
Company intends to strengthen operations for further business expansion and social contributions by flexibly
responding to market environment trends while limiting risk. Below is a review of overseas business areas.
a) Vehicle sales business
The Company began vehicle procurement and installment sales with the launch of RENET JAPAN (CAMBODIA)CO., LTD. on November, 2017. While this business expanded considerably on robust demand for used vehicles
and farming equipment and tools, it has rapidly slowed amid the COVID-19 pandemic and the Company decided
to freeze new sales activities for the time being.
b) Used vehicle leases
The Company agreed to purchase shares of Cambodia-based leasing firm ELIN Leasing Plc. (ELIN) jointly withSBI Holdings Inc. <8473> on October, 2019 with stakes of 51% for the Company and 49% for SBI Holdings,
thereby entering the vehicle leasing business. However, it is restructuring by significantly scaling back operations
on the prospect of COVID-19 pandemic impact and purchased SBI Group’s 49% stake.
c) Microfinance business
The Company acquired all outstanding shares in Chamroeun Microfinance Plc.*, a social microfinance entity in
Cambodia operated by a French NGO, on February, 2018, entering the microfinance business that caters to poor
people (consolidated since October 2018). This business has an important social role and is doing well even with
the COVID-19 pandemic.
*	Chamroeun has 21 branch offices and about 40,000 borrowers with outstanding loan value of roughly US$28mn.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Company profiled) Micro insurance business
The Company concluded a stock transfer contract (100% stake) for social micro insurance provider Prévoir
(Kampuchea) Micro Life Insurance Plc. (below, Prévoir) in February 2019 and consolidated this business fromJanuary 2020.
e) Dispatching technical intern trainees
The Company founded METREY HR Co., Ltd. in April 2018 with a local partner (the Company owns a 36.5% stake)as a local corporation to arrange Cambodian technical students for programs in Japan. Its catalyst in this business
was provision of human resource training with a machinery course at job training school (NPIC) managed by the
Cambodian government at the request of the government. The Company intends to begin training and placement
for auto mechanics, an area with strong demand in Japan and Cambodia, and later develop a business modelthat connects to 39 schools nationwide overseen by the Ministry of Labor & Vocational Training and broadens toa wide range of job types (not only auto mechanics). The Company is also planning to build a training center anddormitory for dispatching that handles 1,500 people. While Japan temporarily halted visa issuance to foreigner
workers because of the COVID-19 pandemic, the Company resumed dispatches of technical intern trainees toJapan in October 2020.

Intends to accelerate growth with upfront investment of profits fromreuse business, a stable earnings source, in growth areas
2. Characteristics of the Company(1) Growth model
Income in the Reuse Business comes from selling used products that the Company purchased. Expansion ofmember volume and securing products hence drives results in this business. Efficient collection of the massive
amount of products (inventory) through expansion of purchases is a major factor. The Small Household Appliance
Recycling Business utilizes a multifaceted income model that consists of three methods. Specifically, this business1) generates resource sales income by collecting small electronic equipment from users and 2) generates reused
product sales income by reselling some of the collected small electronic equipment, and 3) obtains parcel
collection fees from users, and also earns fee income from various optional paid services*, such as elimination of
PC data. An important strategy therefore is finding ways to increase users through alliances with entities such as
local governments and electronics volume resellers nationwide. Key drivers are expansion of the number of partner
local governments (as well as the number of partner companies) and improvement in the collection (usage) rate.
In the platform-type Small Household Appliance Recycling Business, high-margin service income is an importantrevenue source. Additionally, the Company strives to create jobs for people with intellectual disabilities by launching
its own PC processing center. Collaboration with private-sector companies and others is an important strategy too.
*	Services include PC data elimination (PC data erasure service and issuance of an erasure certificate), data moving service(transferring data found on collected PCs to USB memory or other media and returning to users), cardboard box advancedelivery service (advance provision of collection cardboard boxes), and payment service (cash payment to the driver picking
up the equipment).

The Overseas Business in Cambodia, meanwhile, consists of the five businesses mentioned above. We expect
vehicle sales volume (vehicle sales business), vehicle lease volume (used vehicle leasing business), total loan value(microfinance business), and the number of arranged people (dispatching technical intern trainees) to serve as
the main growth drivers.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Company profile

While the Company obviously intends to achieve growth in each of the three business areas, its strategy pursues
an accelerated pace through a business portfolio approach of upfront investments of profits generated by the
Reuse Business, which is positioned to receive survivor profits, and the Small Household Appliance Recycling
Business, which has developed into a new earnings pillar, in growth areas.
(2) Business model advantagesa) Strengths of the Reuse Business
1) Low-cost operations
Product center operations are important because of low prices and the need to manage massive logistics
for books and media materials that are the Company’s expertise. The Company conducts rigorous low-cost
management using the Toyota production method and built a highly detailed operation that is unique to used
items. This format creates an entry barrier that cannot be easily matched by rivals. It is also why major internet
firms have teamed up with the Company. Furthermore, alliances with other companies are fueling a beneficial
cycle that further enhances efficiency through economies of scale.
2) High inventory turnover using system assessments
The Company has built a product database of over one million items for the books and media business andcontrols purchase and selling prices based on “popularity in the market” and “inventory volume.” This processfacilitates suitable inventory control and supports high inventory turnover of over 20 times a year* and betterpurchasing prices than peers for popular items.
*	Book and media sales ÷ average inventory value during the period3) One-stop purchases
The Company handles one-stop purchases of a wide range of genre (mainly books) as a service that accommodates room cleanup scenarios, in contrast to many internet-specialized rivals that limit their scope to a certain
category. Positive outcomes are excellent convenience for sellers and an extensive item line-up for buyers.
b) Strengths of the Small Household Appliance Recycling Business
1) Significant entry barrier
Entry into this service requires acquisition of a certified operator license under the Act on Promotion of Recycling
of Small Waste Electrical and Electronic Equipment, which is considered to be difficult. The Company becamea certified operator in January 2014. Recycling companies in the intermediate processing business are themain certified operators. At this point, the Company is the only entrant from a different industry with a collection
scheme utilizing a parcel delivery service through an alliance with Sagawa Express Co., Ltd. (SG Holdings Co.,
Ltd. <9143>) Furthermore, since it obtained an initial certification* that covers the entire country, the Company
managed to pursue economies of scale ahead of other firms utilizing wide-area collection via a parcel delivery
service and internet-based collection efficiency. It does not compete with other certified operators (intermediate
processing firms) because of having cooperative relationships with them (it sells collected products to thesefirms). The business model also poses strong entry barriers for new entrants, including acquisition of a license,
collaboration with a parcel delivery firm and local government entities nationwide, and economies of scale.
*	This certification removes the need to obtain licenses from the roughly 1,700 prefectures and municipalities nationwide
for general waste and industrial waste processing.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Company profile

2) Collaboration with local government entities nationwide
The Company offers this service as part of government service through collaboration with local governments
nationwide. Its ability to offer information and boost awareness of parcel collection service via public gazettes,
garbage separation charts, and other explanatory materials is a major advantage. The number of collaborating
local government entities reached 283 sites as of November 2, 2020 and continues to increase.
3) Platform business
Another key feature is the platform nature of this business that extends from collection to processing throughconnecting various players over the internet without going through the Company’s backyard. The business model
receives substantial early-mover benefits because of economies of scale and network externalities required inrecycling. As noted above, significant entry barriers exist for newcomers. We think this is a highly profitablebusiness model with its framework of multiple service revenue streams.
4) Synergies from the two businesses (mutual customer introductions, customer lifetime valueenhancement, etc.)
The Company intends to promote customer introduction synergies within the overall group by building a sharedmember base via integration of member IDs for NET OFF and ReNet sites. For example, it hopes to increasepurchase volume and lower customer recruitment costs by sending coupons for higher purchase pricing for books
and other items as a similar cleaning need to customers that are ReNet members through collaboration withlocal government entities nationwide. It also offers no-charge PC collection service to NET OFF members (mailmagazine subscribers) to promote use of its recycling business. These synergies seek to lift customer lifetime
value as a group.
c) Strengths of the Overseas Business
1) Building a network with local government, etc.
Business in Cambodia goes back to around 2012 when the Company developed an automotive-related program(cooperation with a car inspection program, mechanic training, etc.) in collaboration with the local government
and JICA as part of fostering new business and CSR activities. This initiative led to entry into vehicle sales andused vehicle leasing, microfinance, and dispatching technical intern trainee. The Company’s foundation for autoand other vehicle sales and leasing business, including a network with the local government and others, is asignificant advantage. In microfinance business, existing business in Cambodia works favorably and the alliancewith a Grameen Bank-affiliated financial institution (ability to utilize know-how and a broad overseas network)
should contribute to further expansion of the network.
2) Business areas with strong growth potential and profitability
The Company’s businesses are likely to achieve growth commensurate with advances in the Cambodian economy
and also strategically target highly profitable automobile, finance, and human resource segments. They have robust
potential and should also realize synergies*.
*	For example, the Company could provide funds for starting a business (microfinance) after a technical student sent toJapan for car mechanic training returns to Cambodia and arrange for a distributorship handling vehicle sales (leasing) in
the new business (network building).

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Company profile

Developed the market as a pioneer in parcel-based purchasing andinternet reuse
3. History
Current President (Representative Director) Takeshi Kuroda established Recycle Book Center Inc. (Yokkaichi, Mie),the Company’s predecessor, in July 2000 for the purpose of parcel-based purchasing service and sales of bookson the internet. Mr. Kuroda, who worked at Toyota Motor Corporation <7203> until 1998, founded Book Off Wave
Co., Ltd. to operate a BOOKOFF franchise store as BOOKOFF Corporation’s (currently BOOKOFF Group Holdings
Limited <9278>) first investment in its entrepreneur assistance program. However, he decided to proceed with a
new company concept in anticipation of growing demand for a highly convenient internet-based service, rather thanoperating through real stores, in the reuse market amid steady inroads by the internet and aging of society. Toyota
Motor and BOOKOFF Corporation invested (capital and business alliance) in the venture.
In August 2000, he began the business with a used-book site eBOOKOFF on the GAZOO mall run by Toyota Motor(in December 2000, he changed the company name to eBOOKOFF Co., Ltd.). The site subsequently broadened thescope of handled products to used CDs (February 2001), used game software (August 2001), and used DVDs (June
2002) and benefited from the branding effect through a licensing contract for use of the emblem with BOOKOFF
Corporation (this contract ended in March 2012). The Company developed the parcel-based purchasing service andinternet reuse market as a pioneer. It changed the company name to NETOFF Co., Ltd. in October 2005.
After opening the second product center (Obu, Aichi) in September 2009, the Company began parcel-basedpurchase service for brand products, cameras and musical instruments, sports equipment, and other items in
November and evolved into a comprehensive reuse company. It received the top award at the PACT2009 venture
content in Silicon Valley (US) in December 2009 on favorable assessment of its business model that generates profits
from low-priced used books utilizing a parcel delivery service. Furthermore, the Company obtained certification of a
Guinness world record for the largest number of used books sold online in a single year in February 2012.
The Company’s biggest turning point came with the establishment of ReNet Japan Co., Ltd. (now a consolidated
subsidiary, RenetJapanRecycle,Inc.) for the purpose of recycling small electronics equipment in March 2013 andmove into the recycling market. It saw an opportunity for recycling of rare metal resources utilizing a new collection
approach based on internet and parcel delivery services following implementation of the Act on Promotion of
Recycling of Small Waste Electrical and Electronic Equipment in April 2013. Key motives for entering this market
were obviously the large potential market from the “urban mine,” but also appeal of a higher barrier for new entrants
as a licensed business compared to the reuse business where competition had been getting tougher. In January
2014, the Company acquired a license as a certified operator under the above-mentioned law from the Ministry ofEnvironment and the Ministry of Economy, Trade and Industry and became the only firm with approval to collectequipment via a parcel delivery service with nationwide coverage. We think the government reacted positively tothe proposed scheme of collection through collaboration with individual local government entities. The Company
concluded an exclusive contract with Sagawa Express for consignment of collection and transportation of usedsmall electronics equipment. It cleared three major hurdles with acquisition of a license and formation of allianceswith a parcel delivery operator and local government entities throughout the country. In October 2014, the Company
renamed itself RenetJapanGroup,Inc. and arrived a second founding phase with the addition of Small Household
Appliance Recycling Business as a new growth driver.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Company profile

The Company launched its parcel-based purchase service for small electric equipment in Aichi Prefecture in July
2014 and has accelerated the increase in collaborating local government entities since then, including Kyoto in
October 2014 and Tokyo in February 2016. It began the “nationwide garbage day navigation” smartphone app in
April 2016 and also engaged in activities to raise awareness of the service jointly with local government entities.
Thanks to these efforts, the Small Household Appliance Recycling Business ramped up at a steady pace. The
Company listed shares on the TSE Mothers market in December 2016.
Furthermore, the Company established METREY HR Co., Ltd. for personnel dispatching business in Cambodia in
January 2018 and RENET JAPAN (CAMBODIA) Co., Ltd. (wholly owned subsidiary) for vehicle sales business in
February 2018. It subsequently acquired shares of a social microfinance business (Chamroeun) from a Grameenrelated financial institution in September 2018, purchased shares of a leasing company (ELIN) in October 2019,purchased shares of a social micro insurer (Prévoir) and added it as a consolidated subsidiary in January 2020, andestablished a joint venture with Soramitsu Holdings AG (headquarters in Zug, Switzerland; CEO Makoto Takemiya;
below Soramitsu) (FinTech venture) aimed at entering the internet bank business in Cambodia (announced in
February 2020). The Company is focusing on businesses in Cambodia, a fast-growing market, as a third pillar.

█ Results trends
The Reuse Business, the founding area, is a stable income source
The Small Household Appliance Recycling Business as a new
earnings pillar
1. Past results trends
Looking back at the Company’s results, its founding Reuse Business has supported profits as a stable earnings
source. It also moved into the Small Household Appliance Recycling Business, which has steadily grown since
FY9/15, and the Overseas Business in FY9/18. With recent COVID-19 pandemic impact, it entered a new stage.
In earnings, the Company leveraged unit-cost reductions in the Reuse Business achieved via low-cost operations
and cutbacks in SG&A expenses (curtailing personnel costs, revising advertising and promotional costs, etc.) tosecure a certain amount of profit while covering upfront spending on the Small Household Appliance Recycling
Business. The setback in FY9/17, meanwhile, occurred due to one-time misreading of purchase price controls in
the Reuse Business (already resolved) and higher indirect costs accompanying the IPO. Profits were also somewhat
sluggish in FY9/18 because of one-time branding costs for the Small Household Appliance Recycling Businessand headquarters moving costs. In FY9/19, expansion of the Overseas Business and other developments provided
a large boost to profitability. However, in FY9/20, despite all-time high results in the Reuse Business and Small
Household Appliance Recycling Business, Overseas Business slumped significantly due to the COVID-19 pandemic.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.

17-Feb.-2021

3556 Tokyo Stock Exchange Mothers

https://corp.renet.jp/en/index.html

Results trends

In finances, the Company strengthened its financial base with the issuance of new shares for the IPO (it raised
about ¥260mn) in December 2016. Yet the equity ratio modestly declined to 35.4% at end-FY9/17 (vs. 37.7%
at end-FY9/16) because of locking in investment leeway (in-hand liquidity) to fun growth with a long-term loan. It
dropped further to 19.8% at end-FY9/18 because of substantial expansion of total assets with growth in vehicle
sales in the Overseas Business and consolidation of Chamroeun. The Company’s capital ratio improved to 33.8%
in FY9/19 on exercise of share acquisition rights through third-party allotment (raising about ¥1.5bn). In FY9/20,
meanwhile, the capital ratio dropped back to 15.7% as a result of putting priority on obtaining liquidity and conservative asset valuation (allowance inclusions) amid COVID-19 pandemic conditions.

T r e nd s i n n e t s a l es(¥mn)

Reuse Business
Small Household Appliance Recycling Business
Overseas Business

9,000

4,482

6,000

1

3,000

225

43

1,161

718

135

1,760

595

342

3,038

3,183

3,504

3,572

3,475

3,491

3,913

FY9/14

FY9/15

FY9/16

FY9/17

FY9/18FY9/19FY9/200
Source: Prepared by FISCO from the Company’s financial results, securities report, and supplementary results materials

Trends in ordinary profit
(¥mn)
500
386

400

300

241
171

200
100

107

100

48
47

0
FY9/14

FY9/15

FY9/16

FY9/17

FY9/18FY9/19FY9/20Source: Prepared by FISCO from the Company’s financial results and securities report

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11 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Results trends

Trend in equity ratio
37.7%

40.0%

35.4%

33.8%

35.0%
27.8%

30.0%
25.0%

15.7%

20.0%
15.0%

19.8%

12.7%

10.0%
5.0%
0.0%
FY9/14

FY9/15

FY9/16

FY9/17

FY9/18FY9/19FY9/20Source: Prepared by FISCO from the Company’s financial results and securities report

Overseas business slowed sharply due to the COVID-19 pandemic in
FY9/20.
Though domestic business reached all-time highs
2. Overview of FY9/20 results
In FY9/20, the Company reported lower sales and profits on weakness in overseas business accompanying the
COVID-19 outbreak at ¥6,836mn in net sales (-20.2% YoY), ¥214mn in operating profit (-50.2%), ¥241mn in ordinary
profit (-37.4%), and a ¥1,602mn net loss attributable to owners of parent. Net sales and profit values missed theinitial forecast. Nevertheless, profits exceeded the revised outlook (from August 14, 2020) on advances in domestic
business.
In net sales, the Reuse Business set an all-time high on growth driven by stay-home demand related to the
COVID-19 pandemic and other factors and Small Household Appliance Recycling Business also improved substantially. However, overall sales fell more than expected in the initial forecast, even though non-recurrence of
period discrepancy income in FY9/19* was within the anticipated range, because overseas vehicle sales businessslowed sharply from 3Q due to COVID-19 pandemic impact. Microfinance business, meanwhile, stayed healthy inthe overseas segment.
*	The Company’s FY9/19 results included three-month discrepancy in overseas business income. This meant that discrepancy accounted for about ¥600mn of sales decline (roughly ¥1,700mn) and about ¥80mn of ordinary profit decline(¥144mn) in FY9/20. We think these amounts should be taken into consideration in assessing the results trend.

In earnings, despite profit downturn on weakness in overseas vehicle sales business, sales contributions fromdomestic business and microfinance business supported operating (and ordinary) profits. Nevertheless, the Company
booked a hefty net loss due to taking an extraordinary loss (allowance inclusion) of about ¥1.71bn based on
implementing conservative assessment of operating assets (accounts receivables, etc.) in overseas vehicle sales
business to avoid future pressure on earnings.

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12 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.

17-Feb.-2021

3556 Tokyo Stock Exchange Mothers

https://corp.renet.jp/en/index.html

Results trends

In financial conditions, the Company reported a 24.7% YoY rise in gross assets to ¥9,500mn because of a large
boost in surplus cash with long-term loans and other measures as preparation for uncertainties related to the
COVID-19 pandemic and increases in “products” (purchased item volume) in the Reuse Business and “operating
loan value” in microfinance business. Capital, meanwhile, shrunk 42.2% YoY to ¥1,488mn, despite procurement of
about ¥500mn from exercise of share acquisition rights*, because of the hefty net loss, and the capital ratio dropped
to 15.7% (vs. 33.8% at end-FY9/19). However, since these setbacks stemmed from liquidity-related measures andconservative asset valuation (allowance inclusion and impairment charges) and the liquidity ratio is 224.3%, theCompany is not confronting financial soundness concerns (refer below for more details).
*	The Company issued share acquisition rights (26,000 units) through third-party allotment on March 9, 2020. The exerciseof share acquisition rights through end-September 2020 totaled 18,061 units (1,806,100 shares). The Company decided
on November 27, 2020 to suspend exercise of the remaining 7,939 units until March 2, 2021 on the basis that it alreadyobtained sufficient surplus cash.

Overview of FY9/20 results(¥mn)
FY9/20FY9/19ResultFY9/20Composition
ratio

8,569

Net sales
Reuse Business
Small Household Appliance
Recycling BusinessResultChangeComposition
ratio

6,836

Revised outlook(From August 14, 2020)

Initial forecast
Composition
ratio

Change %Composition
ratio-1,733-20.2%

7,568

3,491

40.7%

3,913

57.2%

422

12.1%

-

-

6,899
-

-

595

6.9%

1,161

17.0%

566

95.1%

-

-

-

-

4,482

52.3%

1,760

25.8%

-2,721-60.7%----

Operating unit costs

4,553

53.1%

2,398

35.1%

-2,154-47.3%----

SG&A expenses

3,586

41.8%

4,223

61.8%

637

17.8%

-

-

-

-

Operating profit

429

5.0%

214

3.1%

-215

-50.2%

383

5.1%

179

2.6%

Ordinary profit

Overseas Business

386

4.5%

241

3.5%

-144

-37.4%

412

5.4%

208

3.0%

Reuse Business

360

10.3%

551

14.1%

191

53.1%

-

-

-

-

Small Household Appliance
Recycling Business

36

6.1%

336

28.9%

300

833.3%----

Overseas Business

588

13.1%

-31

-1.8%

-619

-

-

-

-

-

Common costs

-457

-

-589

-

-132

-

-

-

-

-

Forex income

-140

-

-25

-

115

-

-

-

-

-

247

2.9%

-1,602-23.4%-1,849

-

259

3.4%

55

0.8%

Profit attributable to owners ofparentNote: Ordinary profit breakdown shows segment margins for each business.
Source: Prepared by FISCO from the Company’s financial results and supplementary results materials

Fiscal conditions at end-FY9/20 (abbreviated)(¥mn)
End-FY9/19

ChangeEnd-FY9/20

Change %

6,788

8,449

1,661

24.5%

Cash and deposits

1,031

2,897

1,865

180.9%

Accounts receivables

3,323

3,283

-40

-1.2%

219

286

67

30.9%
42.1%

Current assets

Products

2,036

2,893

856

-50

-1,487-1,437-

Fixed assets

822

1,032

209

25.5%

Total assets

7,621

9,500

1,879

24.7%

Capital

2,576

1,488

-1,088-42.2%

Capital ratio

33.8%

15.7%

-18.1pt-

Operating loans
Allowance for doubtful accounts

Source: Prepared by FISCO from the Company’s financial results and r supplementary results materials

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13 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.

17-Feb.-2021

3556 Tokyo Stock Exchange Mothers

https://corp.renet.jp/en/index.html

Results trends

Below we review results by the Company’s businesses.
(1) Reuse Business
Segment sales rose 12.1% YoY to ¥3,913mn, and segment ordinary profit increased 53.1% to ¥551mn. Withsales and profit increases, the segment climbed to all-time highs. In particular, results expanded rapidly from 3Q
on manifestation of “stay-home demand” related to the COVID-19 pandemic, and sales climbed by about 20%
YoY in 2H. In earnings, profit expanded even faster than sales because of high marginal profit ratio in this businesswith its large product center. Segment margin improved to 14.1% (vs. 10.3% in FY9/19).
(2) Small Household Appliance Recycling Business
Segment sales were up 95.1% YoY to ¥1,161mn, and segment ordinary profit expanded about 9.3-fold to¥336mn. Main growth drivers were wider collaboration with local government entities and electronics volume
resellers thanks to recruitment activities, success in efforts to strengthen advertisements and promotions, and thelift from “stay-home demand” related to COVID-19 pandemic from 3Q. In 2H, revenue climbed by about 130%
YoY. Since high marginal profit ratio is very high as a platform business, segment profit margin improved sharply
to 28.9% (vs. 6.1% in FY9/19). This segment genuinely emerged as an earnings pillar.
(3) Overseas Business
Segment sales dropped 60.7% YoY to ¥1,760mn, and segment ordinary profit had a ¥31mn loss (vs. a ¥588mn
profit in FY9/19). Segment results fell significantly, including a loss, because of COVID-19 pandemic impact.
While non-recurrence of period discrepancy income from FY9/19 was within the anticipated range as explained
above, vehicle sales business, which had contributed substantially to income, slowed sharply from 3Q becauseof heavy impact on Cambodia’s tourism business (and related transportation business) by the pandemic and led
the overall setback in overseas business. Additionally, micro insurance and personnel dispatching businesses thatare currently in a ramp-up phase faced delays. Microfinance business, meanwhile, has steadily grown, despite
the pandemic, and its advancement into a core business is a positive factor.

Trend in quarterly net sales by business area
Reuse Business
Small Household Appliance Recycling Business
Overseas Business

(¥mn)
2,500

2 , 147

2 , 252 2 , 183
1 , 988 1 , 996

2,000
1,186

1,500
1,000
500

1 , 218 1 , 217

1,196 1,135

1 , 602 1 , 632 1 , 606
966

928

1 , 133

968
89
34

218
106

266
95

144
106

845

893

855

1Q

2Q

3Q

416

217

200

353

336

243

124

172

158

141

230

882

837

884

890

881

839

943

1,062 1,070

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

0
FY9/18FY9/194Q

FY9/20Note: FY9/19 includes period discrepancy income in overseas business (three months)
Source: Prepared by FISCO from supplementary results materials

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14 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Results trends

3. Review of overseas business in the COVID-19 pandemic(1) Cambodian economy situation
Cambodia boasts strong growth potential even compared to major ASEAN countries*1, but is likely to wind up
at 2% negative growth in 2020 due to COVID-19 pandemic impact*2 with major setbacks in tourism (and relatedtransportation) and construction industries. Despite recovery signs, mainly in construction, since August 2020,
tourism still faces difficult conditions because of ongoing restrictions on travel by tourists. However, the basescenario forecasts rapid recovery at a +4.3% economic growth rate in 2021*2.
*1	Cambodia’s economic growth rates were 7.0% in 2017, 7.5% in 2018, and 7.1% in 2019, outpacing average growth
rates for major ASEAN countries (5.9% in 2017, 5.7% in 2018, and 5.2% in 2019).
*2	From the World Bank’s “East Asia and Pacific Region Half-Year Economic Report” issued in October 2020.

(2) Overview of individual businesses and loss processinga) Vehicle sales businessThis business faced many repayment delays for vehicle installment accounts receivables in the tourism industry
due to the COVID-19 pandemic. The Company halted new contracts from 3Q because of these conditions. In
the absence of near-term prospects of market recovery, it intends to continue the freeze on new sales and focus
on credit collection for the time being. It also booked a valuation loss and provision of allowance for doubtful
accounts totaling about ¥1.65bn for vehicle sales business with conservative mark-to-market valuation of accounts
receivables and inventory vehicles (totaling about ¥3.22bn) in order to alleviate burden on future earnings.
b) Used vehicle leasing business
The Company sharply scaled back this business too on the prospect of COVID-19 pandemic impact and aims
to reach profitability. It acquired a 49% stake from SBI Group and intends to monitor business activities for thetime being.
c) Microfinance businessResults have remained upbeat despite pandemic conditions. The business reported 40,292 customers and $28mn
in loan value as of end-September 2020. Since the acquisition in 2018, outstanding loan value has grown at avery rapid 47% average annual pace, and the delinquency rate has been roughly halved and stabilized at a low
level of less than 1%. With 21 sites (headquarters and branches), the business covers 16 states of Cambodia’s 25
states. Focus on suburban and rural areas differentiates it from peers that compete in urban areas. Furthermore,value per loan is in the $600 range (vs. the $2,000 level at major peers) with emphasis on the poorer segment.
Financing hence is highly distributed in small sums.
d) Micro insurance business
Micro insurance business has not attained the goal of profitability because COVID-19 impact curtailed sales
contacts with customers. The Company abandoned an upgrade to a full-license non-life insurer premised on
capital expansion. Furthermore, it plans to take impairment charges on related goodwill (about ¥34mn) and
implement bold restructuring toward reaching profitability.
e) Dispatching technical intern trainees
Japan temporarily halted visa issuance to foreigner workers, delaying ramp-up of this business. However, it
resumed dispatches of technical intern trainees in October 2020 and is aiming for profitability in FY9/21.

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15 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Results trends

4. Overview of FY9/20
As seen in the review of FY9/20 results presented above, overseas business weakened due to COVID-19 pandemic
impact, while domestic businesses grew more than expected. Assessment of this disparity in trends is a key point.
Our analyst takes the position from the standpoint of the Company’s strategic business portfolio that rather thanoverseas business cancelling out growth in domestic business, this was a case of domestic business with a stablefoundation offsetting weakness in overseas business that has strong growth prospects but also faces a high levelof uncertainty. In particular, the Company’s ability to secure a profit in ordinary profit, despite adverse conditions
caused by a “force majeure” external factor, indicates that its build-up income model and diversified businessportfolio provided valuable support. Looking ahead as well, while the slump in overseas vehicle sales business canbe attributed to a temporary issue until the COVID-19 pandemic settles down, domestic business growth involved
structural changes (uncovering latent markets) and is likely to result in sustainable growth (accelerated growth).
Financial risk (balance sheet risk) accompanying the slump in overseas vehicle sales business, meanwhile, is apossible concern. Three potential risks are 1) risk of bad credit losses, 2) risk of funding shortfall, and 3) risk ofcapital erosion. For 1), the Company has allocated sufficient allowances based on conservative asset valuation andlimited risk of new losses. For 2), losses from allowance inclusions (or valuation losses and impairment charges)
occur in asset valuation and do not result in cash outflow. Since the Company also has obtained adequate surplus
cash holdings and generates stable cash flow in domestic business, funding risk should not trigger concern at thispoint. For 3), decline in the capital ratio reflected surplus cash acquisition and one-time loss recognition related toallowance inclusion, and there is not much likelihood of further losses that lead to surplus liabilities. Nevertheless, it isimportant to closely monitor progress in restructuring efforts aimed at achieving early recovery in overseas business.

█ Main activity results
Preparing to establish a joint venture company for internet banking
in Cambodia
Targeting initiatives related to the Bakong digital currency too
The Company reached a basic agreement on February 13, 2020 to establish a joint venture company in Cambodia
with the aim of entering internet banking with Soramitsu, a venture company that develops FinTech and blockchain
technologies and developed the Bakong* digital currency for the National Bank of Cambodia, which is Cambodia’s
central bank. While the COVID-19 pandemic delayed progress, preparations are moving forward to establish thejoint venture within a few months (with investment stakes planned at 80% for the Company and 20% for Soramitsu).
Through this initiative, the Company aims to launch big data business utilizing Bakong, including collaboration withits microfinance business already ramped up mainly in Cambodia’s rural areas, and enter internet banking businessin the future and promote financial inclusion in rural areas.
*	The National Bank of Cambodia developed a digital currency payment system that utilizes blockchain ahead of the worldand started operating it in October 2020. Increased use of this digital currency could boost financial inclusion by providing
financial service usage opportunities to people living in rural areas who lacked access to these services up to now.

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16 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html█ Outlook
Expects continued sluggishness in overseas business, though
forecasts higher sales and profits in FY9/21 on growth in domestic
business
1. Forecast for FY9/21
In FY9/21 guidance, the Company forecasts sales and profit improvements to ¥7,807mn in net sales (+14.2% YoY),¥355mn in operating profit (+65.8%), ¥310mn in ordinary profit (+28.3%), and ¥249mn in profit attributable to ownersof parent (vs. a ¥1,602mn loss in the previous year).
It expects continued healthy growth in the Reuse Business and Small Household Appliance Recycling Businessdriven by aggressive marketing activities and capacity enhancement, along with sluggishness in overseas vehicle
sales business, and hopes to secure overall sales growth exceeding 14%.
In earnings, while losses should persist in overseas vehicle sales business until restructuring finishes, the Company
anticipates steep increases led by profit growth in the Reuse Business and Small Household Appliance Recycling
Business with high marginal profit ratio. Furthermore, it factors in profit increase of just over 50% in microfinancebusiness and fiscal-year (FY9/21) profitability in personnel dispatching business due to increased loan amounts.
These trends should support improvement of ordinary margin to 4.0% (vs. 3.5% in FY9/20).
Forecast for FY9/21(¥mn)
FY9/20Results

FY9/21

Composition
ratio

6,836

Forecast

ChangeComposition
ratio
970

14.2%

Operating profit

214

3.1%

355

4.5%

140

65.8%

Ordinary profit

241

3.5%

310

4.0%

68

28.3%

-1,602-23.4%

249

3.2%

1,851

-

Net sales

Profit attributable toowners of parent

7,807

Change %Source: Prepared by FISCO from the Company’s financial results and supplementary results materials

2. Analyst view
Our analyst believes that while it is important to closely monitor the extent of COVID-19 impact, the Company
is sufficiently capable of attaining its guidance based on current conditions. In fact, these levels seem modestly
conservative judging from the growth rate in domestic business since 3Q. Among potential scenarios of 1) healthy
growth in domestic business and early recovery in the Cambodian economy and overseas business (best scenario),2) healthy growth in domestic business but continued weakness in overseas business (second scenario), and3) exhausted (stalled) domestic business and continued weakening of overseas business (worst scenario), theCompany’s guidance applies conditions similar to the third scenario. This puts focus on curtailing downside risk
while pursuing upside as much as possible. Therefore, it is necessary to closely follow the situation from standpointsof domestic business growth and recovery process in overseas business.

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17 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html█ Longer-term growth strategy
Targeting conversion to an income structure led by three businesses
and faster growth
Strategy for harnessing initiatives to solve societal issue to realize
growthThe Company aims to transform its income structure and accelerate growth with longer-term growth drivers ofsustainable growth (share expansion) in the Reuse Business, further expansion (new market creation) in the Small
Household Appliance Recycling Business, and initiatives to solve societal issues (acquisition of market opportunities)
in the Overseas Business. This direction has not changed. The Company wants to achieve sustainable growthpremised on “profits” and “social contributions.” The following section reviews longer-term strategies in major
businesses.
(1) Reuse Business
While the used books and media market as a whole has been flat, the internet reuse market is expanding, and“stay-home demand” related to the COVID-19 pandemic has accelerated the shift from real-world stores to theinternet. The Company forecasts expansion of the internet reuse market from ¥50bn now to ¥100bn by 2025.
With its aim of raising market share from 8% currently to 10%, the plan targets ¥10bn in net sales and ¥1bn inoperating profit in 2025. In other words, the Company has depicted a strategy of realizing growth at a faster pacethan the market amid rapid growth in the internet reuse market with aggressive advertising, recruitment of latentcustomers prompted by “stay-home demand,” and expansion of product centers.
(2) Small Household Appliance Recycling Business
While the Small Household Appliance Recycling Business has moved onto a full-fledged growth trajectory thanks
to results from past measures, it still offers substantial expansion room. Furthermore, the Company plans to
expand capabilities with a new center to address additional growth in demand after collection request volume
reached an all-time high in May 2020 and in light of current recycling centers running at full capacity. The Company
aims to become a leader in PC collection by bolstering collection of commercial PCs in FY9/23 and is targeting¥4bn in net sales and ¥1bn in ordinary profit in FY9/25 by setting up “urban mine” collection infrastructure
through increased collaboration with manufacturers and retailers. It also intends to conduct activities that address
employment for disabled people and help solve the issue of manpower shortages by promoting jobs for disabled
people at PC disassembly sites.
(3) Micro finance business
The Company wants to develop itself further as a business that generates stable income and is highly consciousof social challenges. Specifically, its strategy targets pursuit of possibilities, such as boosting productivity with
deployment of a core banking system* and collaborating with Soramitsu through a joint venture on business
related to Bakong, the world’s first central bank digital currency, and expansion of outstanding loan value at apace of over 40% a year.
*	It is currently in the final stage of deploying a new core banking system jointly with India-based NELTO.

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18 19

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

RenetJapanGroup,Inc.
3556 Tokyo Stock Exchange Mothers

17-Feb.-2021
https://corp.renet.jp/en/index.html

Longer-term growth strategy(4) Dispatching technical intern trainees
Despite ramp-up delays caused by the COVID-19 pandemic, the Company aims to quickly get the personnel
dispatching business in Cambodia on track amid worsening manpower shortages in Japan. Its strategy sees
growth potential through having this business serves as a bridge between Japan and Cambodia and resolving
Japan’s manpower shortages with work assistance anticipated by Cambodia. To increase the number of dispatched interns, it plans to broaden the scope of job types covered and source countries. Regarding job types,
besides the existing auto mechanic category, it envisions prepared food plants and other food processing andalso restaurants, lodging, and nursing care. Regarding source countries, it is already taking steps to develop
programs in Indonesia and Myanmar. In particular, it will focus on nursing care personnel with high demand inJapan, similar to auto mechanics.
FISCO believes that even though COVID-19 impact caused disparities in progress by growth strategies in the
Company’s business areas, it does not significantly alter the longer-term direction. In particular, we retain ourview of the Overseas Business in Cambodia as a longer-term growth driver, despite disruption by the pandemic
at this point, because of Cambodia’s strong economic growth prospects and the Company’s advantages with its
proprietary network and know-how. The Small Household Appliance Recycling Business, which has significant
market potential as an “urban mine,” tough entry barriers, and a unique business model with no rivals, possesses
robust growth opportunity too from unique initiatives, such as assistance for recycling programs that are attracting
heightened social interest and job creation for intellectually disabled people. Profitability might sharply rise if the
Small Household Appliance Recycling Business, a high-earnings model, advances to a growth trajectory. A key
theme at this point is the extent to which the Company succeeds in building up base profits toward attaining
the near-term goal of ¥1bn in ordinary profit. From a longer-term perspective, the Company’s core challenge iswhether it can effectively incorporate solutions to societal issues, including reutilization of resources via reuse andrecycle processes, microfinance business, personnel dispatching business, and job creation for disabled people,
into real-world business and thereby realize growth. We will be looking for value creation and social contributions
suited to the Company through innovations that include utilizing IT.

█ Shareholder returns
Likely to continue postponement of dividends for the time being
There is a shareholder benefit program aimed at reinforcing themember base
The Company has not paid dividends in past years because of emphasis on accelerating growth in an investment
phase, and it is continuing the stance of no dividends in FY9/21. We do not expect shareholder return as dividends
for the time being due to being in a stage of giving priority to investments in growth areas and partial restructuringof the Overseas Business.
Nevertheless, the Company has introduced a shareholder benefits program to foster its relationship with shareholders
and strengthen the member base. It gives as much as ¥11,000 in benefits (¥10,000 increase in assessment value+ ¥1,000 purchase coupon) per half year for ownership of one unit (100 shares). (Further benefits are given forownership of the shares for two consecutive years or longer.)

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19 19

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
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This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
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Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp