WILLs Inc. | 4482 (TSE Growth)Company Report

Strategy Advisors, Inc.
Takao Kanai, Senior Analyst

September 1, 2023

“Premium Benefit Club" and “IR-navi"
which digitally connect companies andinvestors, jointly drive growth

Share Price and Volumes (The Past 1 Year)(shares)(¥)
800

Trading Volume (RHS)

500,000

Stock Price (LHS)

450,000750- ‘‘Premium Benefit Club’’ steadily expanded amid the increasing
importance of individual shareholders- “IR-navi’’ aims to enter a new phase of growth with theintroduction of a new model- ESG solutions are also on a growth trajectory due to expanding
demand for sustainability information

400,000
350,000

700

300,000
650

250,000

200,000600

150,000
100,000

550

50,000

500

0
22/8

22/9

22/10

22/11

22/12

23/1

23/2

23/3

23/4

23/5

23/6

23/7

Source: Strategy Advisors

The company’s mission is to ‘‘support the realization of efficient capital markets andmaximization of corporate value’’. The company’s core businesses are the ‘‘Premium
Benefit Club’’, ‘IR-navi,’ and ESG solutions that operate in line with the company’s mission
statement. Under the government's policy of "shift from savings to investment," all of thesebusinesses meet the needs of listed companies and investors and are expected to grow. In
addition, ‘‘Premium Benefit Club’’ and “IR-navi” are ‘stock-type’ businesses and are
expected to generate stable earnings growth.

Key Indicators

The largest sales contributor and growth driver is the ‘‘Premium Benefit Club’’. It was initiallyconceived out of a need for listed companies to digitalize the process of identifying andmanaging individual shareholders. Companies can design the system to encourage
investor behavior to achieve their desired composition of individual shareholders by
granting shareholder benefits in the form of points. The number of participating companies
has steadily increased, reaching 87 at the end of June. The stock price performance ofparticipating companies has generally been good and volume tending to increase. We
expect that companies seeking to increase their stock prices and liquidity will continue toparticipate in response to requests from the TSE.
Launched in 2005, “IR-navi" creates a list of shareholders of listed companies based on
management reports of investment management firms and reveals the persons responsiblefor investment management, fund types, etc. It can also manage records of interviews withanalysts and fund managers. The number of listed companies adopting this system isincreasing every year, having reached 329 at the end of June 2023. The new version of "IRnavi", currently under development will enable communication between both companies
and shareholders; with the company aiming to increase the number of registered investors
by launching an English version.

Stock Quote (8/25)
Year-to-Date High (1/5)
Year-to-Date-Low (4/10)

579
702
541

52-Week High (22/12/28)
52-Week Low (23/4/10)
Number of Shares Issued and Outstanding
Shares (mn)Market Capitalization (\ bn)
Enterprise Value (\ bn)
Equity Ratio (Actual, %)FY12/23 P/E Ratio (CoE, Times)
FY12/22 P/B Ratio (Actual, Times)
FY12/23 Dividend Yield (CoE, %)

720
541
20.7
12.0
10.3
51.0
24.3
7.27
1.2

Source: Strategy Advisors

About Company
The company was founded as Investor Networks, Inc in
2004 by President Mitsuo Sugimoto. In 2005, "IR-navi" wasreleased, which allows users to maintain data such as
shareholder composition of listed companies and manage
IR activity history, etc. In 2015, ‘‘Premium Benefit Club’’ waslaunched, which is now the largest contributor to sales. The
firm changed to its current company name in 2017; andexpanded its ESG solutions business with its merger with
Alex Net, Inc. in 2018. In December 2019, the company
was listed on the Tokyo Stock Exchange's Mothers. COVID19 also helped put focus on operating virtual shareholder
meetings and online information sessions.

With the growing need for sustainability information, the company has also expanded its
ESG solutions business by absorbing Alex Net, Inc. The company provides support forcorporate websites and integrated reports. The company's integrated reports have won
various awards and are renowned for their quality.
The company expects net sales to increase by 6.1% to 4,049 billion yen and operating
profit by 6.8% to 750 million yen in FY12/23. 2Q cumulative sales and operating profit for
FY12/23 increased by 18.1% YoY and 30.7% YoY respectively, exceeding the full-year plan.

JP GAAP - Consolidated BasisFY end

Sales

YoY

OP

YoY

RP

YoY

NP

YoY

EPS

DPS

(\ mn)(%)(\ mn)(%)(\ mn)(%)(\ mn)

(%)

(\)

(\)

FY12/20

2,433

-

399

-

401

-

279

-

14.9

0.0

FY12/21

3,378

38.8

522

30.6

520

29.6

349

25.1

17.9

2.5

FY12/22

3,816

13.0

702

34.6

693

33.2

417

19.5

21.0

7.0

FY12/23 CoE

4,049

6.1

750

6.8

745

7.5

389

-6.7

19.9

7.0

Note: YoY comparison is not available for FY12/20 because the previous year was on non-consolidated basis
Source: Strategy Advisors - Based on Company Data

1

WILLs Inc. | 4482 (TSE Growth)◼

Three core businesses
provide solutions to thechallenges of listedcompanies; thereby,
meeting the needs ofthe stock market

All Three Main Shareholder Management Platform
Businesses Are on a Growth Trajectory

The company's three main shareholder management platform businesses, ‘‘Premium
Benefit Club’’, “IR-navi,” and ESG Solutions, are all on a growth trajectory. The company's
clients, listed companies, are often faced with issues such as the DX-ing of shareholder
management, increasing the number of individual shareholders with a long-term
perspective, enhancing integrated reports and Web disclosure. The company's businessprovides solutions to these stock market issues and is in line with the government's policy ofstimulating the stock market by encouraging individuals to invest their ¥2,043 trillion inpersonal financial assets. The company’s ‘‘Premium Benefit Club’’ is a unique service that isparticularly unique to the company and should be a growth driver, as there is not muchcompetition in the market. “IR-navi," whose growth has been slowing recently, is expected toenter a new growth phase with the launch of a new model currently under development. In
addition, the company's shareholder management platform utilizes blockchain, which
ensures a high degree of confidentiality of information.
Figure 1: Overview of Shareholder Management Platform Business
Service Name‘‘Premium Benefit
Club’’

Services‘‘Premium Benefit Club’’: A company-specific shareholder management platformthat enables shareholders of listed companies to exchange their benefits points forbenefits products and exercise their electronic voting rights through "WILLsVote".
“Premium Benefit Club PORTAL”: A shareholder benefits portal site that allows
shareholders to exchange their shareholder benefits points issued by listedcompanies into "WILLsCoin" and add them up to exchange them for over 7,000
benefits products.

“IR-navi”

Institutional investor marketing platform with a database of more than 100,000
global fund managers and analysts, as well as the status of investments in listedcompanies by domestic and foreign institutional investors.

ESG Solutions

Planning and production of communication tools with investors such as integrated
reports and annual reports

Source: Strategy Advisors - Based on Company Data.

The company believes that since the main investors of a listed company change according
to its stage of maturity, it is efficient to conduct IR activities appropriate for each stage. As
shown in Figure 2, the company believes that it is effective to approach individual investors
with market capitalization of up to 20-billion-yen, domestic institutional investors with market
capitalization of up to 50-60 billion-yen and overseas institutional investors with market
capitalization above that amount. The company will connect individual investors through its“Premium Benefit Club” and domestic institutional investors and companies through "IRnavi”. With the new "IR-navi," the company plans to strengthen its contacts with overseas
institutional investors.

2

WILLs Inc. | 4482 (TSE Growth)Figure 2: Change in Investment Entity by Stage of Company
Overseas Institutional Investors
Major
Investors

Domestic Institutional Investors
Individual Investors

Main
Targets of IR

Market cap.

Individuals< ¥ 5bn

Individuals / Large Sized
Funds / Overseas
Institutional Investors

Individuals / Small &Medium Sized Funds< ¥ 20bn< ¥ 50bn< ¥ 100bn¥ 100bn <Source: Strategy Advisors - Based on Company Data

Figure 3: Breakdown of the Shareholder Management Platform Business
12/18

12/19

12/20

12/21

12/22

671

1,225

1,535

1,839

2,494

100.2%

82.6%

25.3%

19.8%

35.6%

232

260

283

286

274

Sales (¥ mn)‘‘Premium Benefit Club’’YoY change“IR-navi”
YoY change-14.4%

12.1%

8.8%

1.1%

-4.2%.

ESG Solutions

231

286

345

422

548

YoY change

1,969.1%

23.8%

20.6%

22.3%

29.9%

Other

25

20

32

75

77

Total

1,161

1,793

2,196

2,623

3,381

78.6%

54.4%

22.5%

19.4%

28.9%

26

43

58

71

80

44.4%

65.4%

34.9%

22.4%

12.7%

231

281

302

316

318

9.0%

21.6

7.5%

4.6%

0.6%

Companies (¥ mn)‘‘Premium Benefit Club’’

25.84

28.50

26.47

25.91

31.18

“IR-navi”

1.01

0.93

0.94

0.91

0.86

YoY change
Number of Clients‘‘Premium Benefit Club’’YoY change“IR-navi”
YoY change
Net Sales/Number of Client

Source: Strategy Advisors - Based on Company Data

3

WILLs Inc. | 4482 (TSE Growth)◼ ‘‘Premium Benefit Club’’ Expanded Rapidly Thanks to Digital
Management of Individual Shareholders and Investment
Incentives for Individuals
Enables digitalmanagement of
individual shareholders
and can be designed toencourage increased
unit holdings, longer
holding periods, etc.

The “Premium Benefit Club” is a service released in 2015. It was originally launched as ameans of digitally managing individual shareholders in listed companies. It was meant toprovide preferential treatment as an incentive for individual shareholders to register theiremail addresses, investment history and other information. B2C companies also hoped toturn individual shareholders into loyal customers by sending them their own products as a
special benefit. Furthermore, the company is promoting this business based on the belief
that encouraging individual investors to participate in the stock market from a medium- tolong-term perspective, rather than for short-term capital gains purposes; will help revitalize
the Japanese stock market. Against this backdrop, the importance of individual investors inthe stock market is growing and the ‘‘Premium Benefit Club’’ which offers benefits to bothcompanies and individual investors, is showing steady expansion.
As seen in Figure 4, the bursting of the asset bubble in the 1990s and the Japanese versionof the financial Big Bang led to a rapid contraction of financial institutions' crossholdings,
which were absorbed by foreign investors who became the recipients. Today, foreign
investors account for about 30% of the total and have reached a plateau and there are
expectations that the role of individuals will increase in the future. Japanese individuals'
financial assets reached ¥2,043 trillion at the end of March 2023, of which stocks and othersecurities and investment trusts together account for only 15.4%. This is very small
compared to the United States, where about half of all personal financial assets are invested
in stocks and investment trusts. This suggests that there is tremendous room for potential
expansion of services for individual shareholders.
Figure 4: Shareholding Ratio by Investment Sector
(%)
35
30
25
20
15

10
5
0
1990

1995

2000

2005

2010

2015

2020

Trust Banks
Cities Banks, Regional Banks, Insurance, other Financials
Business Corporations
Foreign Institutions
Individuals and Others
Note: From FY2004 to FY2009, the figures include companies listed on the JASDAQ stock
exchange; from FY2010 onward, the figures are for companies listed on the JASDAQ stock
exchange Included as JASDAQ on either of the Osaka Securities Exchange or Tokyo Stock
Exchanges.
Source: Japan Exchange Group

4

WILLs Inc. | 4482 (TSE Growth)Currently, 87 companies are participating in the “Premium Benefits Club” and shareholdersof these companies can accumulate points awarded by the company if they hold a certain
number of shares. The points can then be exchanged for products deal in by the company.
In addition, shareholders of more than one of the 87 companies can combine their points
and convert them into "WILLsCoin" through the “Premium Benefit Club PORTAL” andconvert the total points into products.
If a company wants to increase the number of individual shareholders who hold more than acertain number of units in consideration of the efficiency of shareholder relations, it canencourage an increase in the number of investment units by offering more generous benefits
for a range of holdings commensurate with that number. If the company wants to increase thenumber of individual investors who hold shares over the medium to long term, it can design
the benefits to increase according to the length of holding period. Based on the company's
knowledge to date, it is also proposing point designs that are suitable for the shareholder
composition desired by client companies. In the future, the company intends to use AI to createeven more effective designs.
Each company decides when shareholders are entitled to shareholder incentive points, but inmost cases, it is either once a year at the end of the fiscal year or twice a year at the end of
the fiscal year plus an intermediate point in the middle of the year. In addition, companies havea great deal of latitude in determining the number of units held and the holding period, which
are part of the conditions for the granting of points.
Figure 5 shows the point list for WILLs' own ‘‘Premium Benefit Club’’. The company grants
points only to shareholders who hold 7 units (700 shares) or more and they must hold WILLs
shares for at least 6 months from the end of December each year to the end of June thefollowing year. In particular, the company grants large points to shareholders in the range of
3,000 shares or more but less than 4,000 shares in the most favorable manner. Figure 6 shows
the yield of points that a shareholder who purchases WILLs stock at the closing price of 579
yen on August 25 and continues to hold the stock until the end of June next year will receive.
The benefit of these measures through ‘‘Premium Benefit Club’’ is that the number of large-lot
shareholders will increase and shareholder management will become more efficient. It is also
believed that these measures induce large-lot purchases, leading to higher share prices andincreased trading volumes.
Figure 5: WILLs Points Awarded by Number of Shares Held
Number of Ｓhares Ｈeld

700 shares - 799 shares

Number of Points AwardedFirst Year

2nd Year Onwards

6,000 points

6,600 points

800 shares to 899 shares

7,000 points

7,700 points

900 shares to 999 shares

10,000 points

11,000 points

1,000 shares - 1,999 shares

12,000 points

13,200 points

2,000 shares - 2,999 shares

25,000 points

27,500 points

3,000 shares - 3,999 shares

60,000 points

66,000 points

4,000 shares - 9,999 shares

60,000 points

66,000 points

10,000 shares - 99,999 shares

80,000 points

88,000 points

100,000 shares or more

100,000 points

110,000 points

Source: Strategy Advisors – Based on the WILLs Premium Benefit Club website.

5

WILLs Inc. | 4482 (TSE Growth)Figure 6. Points per Share and Yield of “WILLs Premium Benefit Club”
Number of Shares Held

700 shares - 799 sharesFirst Year¥579 (8/25)

Points Per Share

Benefit Yield

8.6

-

7.5

1.5%

-

1.3%

800 shares - 899 shares

8.8

-

7.8

900 shares - 999 shares

11.1

-

10.0

1.5%

-

1.3%

1.9%

-

1.7%

1,000 shares - 1,999 shares

12.0

-

6.0

2.1%

-

1.0%

2,000 shares - 2,999 shares

12.5

3,000 shares - 3,999 shares

20.0

-

8.3

2.2%

-

1.4%

-

15.0

3.5%

-

2.6%

4,000 shares - 9,999 shares

15.0

-

6.0

2.6%

-

1.0%

10,000 shares - 99,999 shares

8.0

-

0.8

1.4%

-

0.1%

100,000 shares or more

1.0

-

0.2%

-

Source: Strategy Advisors - Based on the “WILLs Premium Benefit Club” Website.

For companies introducing the ‘‘Premium Benefit Club’’ benefits include the electronic
provision of business reports and notices of convocation of general shareholders' meetings,
distribution of IR news and other information to shareholders, and facilitation of the exercise
of voting rights (using blockchain technology, which is highly confidential).
Currently, there are 1,475 listed companies (according to the company's survey) that offer
shareholder special benefit programs at the end of 2022. While some companies have stopped
offering special benefits due to requests from investors, mainly institutional investors, toincrease dividends instead of special benefits; many companies intend to better serve theirindividual shareholders. In addition, it appears that an increasing number of companies wish
to use the ‘‘Premium Benefit Club’’ as a communication tool with individual investors.
Furthermore, there is a persistent desire to improve efficiency by communicating toshareholders electronically as described above. Therefore, even if the number of companies
offering shareholder benefits does not grow, there is still much room for growth given that the
87 companies participating in the company's ‘‘Premium Benefit Club’’ account for only about
5% of the total market share.

Figure 7: Number of “Premium Preference Club” Customers (by Quarter)

100
90
80
70
60
50
40

30
20
10

0
2020

2021

2022

2023

Source: Strategy Advisors - Based on Company Data.

6

WILLs Inc. | 4482 (TSE Growth)
While some companies are canceling the ‘‘Premium Benefit Club’’ because they haveachieved their initial objectives, such as higher stock prices and trading volume, or for
financial reasons, new participants will continue to outperform them. One reason for thisbelief is the track record of stock price performance of the companies that have introduced
the program.
Companies that haveintroduced ‘Premium
Benefit Clubs’ havegenerally performed
well in terms of stock
price performance.

Figure 8 plots the performance of the closing price on August 25 against the closing price on
the day of the announcement of the introduction of the ‘‘Premium Benefit Club’’ forcompanies that announced the introduction of the ‘‘Premium Benefit Club’’ from the
beginning of 2022 through July of this year. 20 of the 25 companies saw their stock prices
increase, with an average increase of 17% (excluding ASNOVA, whose stock priceincreased 5.0x. The stock market, led by foreign investors, has risen rapidly since April of
this year, mainly in large-cap stocks. Since the companies participating in the ‘‘Premium
Benefit Club’’ are mainly small and mid-cap companies, it is assumed that many of them
have not benefited much from this trend, but they have outperformed the TOPIX, which hassoared sharply, by 3% on average. While the growth in corporate profits may of course be afactor, the introduction of the ‘‘Premium Benefit Club’’ is also expected to have a positiveeffect in many cases. In terms of trading volume, that increased rapidly for a few days after
the announcement of the ‘‘Premium Benefit Club’’ and then subsided, but many companies
maintained a high level of trading volume compared to the level before the introduction of the‘‘Premium Benefit Club’’.
Figure 8: Percentage Change in Stock Prices from the Date of the Announcement of
the Introduction of the "Premium Benefit Club" (companies that introduced theprogram in 2022 or later)
(%)
70.0
60.0
50.0
40.0
30.0

20.0
10.0
0.0
-10.0
-20.0
Order of introduction （January 2022 -） →Note: Stock prices are on August 25; ASNOVA (9223) is up 397% and is not included in the chart
above.
Source: Prepared by Strategy Advisors from WILLs and Other Companies' Websites.

The company's revenues from the “Premium Benefit Club” consist of system sales tocorporations and point sales when shareholders exchange their points for merchandise.
According to the company's “Premium Benefits Club” website, there are 6,000 products tochoose from, including a wide variety of foods, home appliances, sundries, and services.
The company's profitability to date suggests that gross profit margins are stable. It isestimated that the company has been able to keep costs down by partnering with many
suppliers and dealing directly with them instead of through wholesalers. The company will
likely continue to bring in stable revenues as the number of customers increases.

7

WILLs Inc. | 4482 (TSE Growth)
TSE restructuring toprovide positive
tailwinds

In January of this year, the Tokyo Stock Exchange (TSE) clarified the time schedule for thetransitional measures for listing criteria on the Prime and Standard Markets. As a result, it
appears that an increasing number of companies wishing to increase their market
capitalization and liquidity are attempting to use the “Premium Preferred Club” as an effectivemeans of doing so. In addition, with the end of September 2023 set as the deadline for primelisted companies to apply to be transferred to the Standard Market if they find that they cannot
meet the maintenance criteria, companies seeking to maintain their Prime Market listing areexpected to become more desperate to increase their market capitalization and liquidity from
October onward. In addition, the need to increase the corporate value of companies with P/Bratios below 1x, including large companies, is likely to be a tailwind for the ‘Premium
Preference Club’.
The company has obtained patents for its ‘‘Premium Benefit Club’’ system and program,
making it difficult for other companies to offer similar services. Therefore, there is little risk thatcompetition with other companies will reduce profitability. In addition, large companies suchas Ajinomoto, Nissin Foods Holdings, and Idemitsu Kosan are participating in the ‘‘Premium
Benefit Club’’, and the company's management intends to increase its presence in this fieldby encouraging more large companies to join.

◼ New Growth is Expected for “IR-navi,” a Founding Business,with the Introduction of a New Model with New Functions.
“IR-navi” is a systemthat shows theshareholder
composition and fundholdings of listedcompanies. Aiming toenter a new growthphase with theintroduction of a newmodel.

The company's ancestor service, “IR-navi” was born out of the need for companies tounderstand the status of their shareholders. Although shareholder identification surveys
based primarily on hearings have existed since that time, they were expensive forcompanies and a hurdle to implement. The company has developed a system that iscompetitive in terms of price, using a method of ascertaining each company's shareholders
from investment trust management reports in Japan and overseas.
“IR-navi" also shows the fund management style and investment managers of theshareholder management institutions. It has a database of approximately 4,000 domestic
and 100,000 overseas investors. It can distribute earnings presentation guides, annual
reports, and other information via e-mail, and it can also manage the history of meetings withinvestors. This makes it an effective tool for corporate IR activities. In addition, companies
can check the shareholder ownership not only of their own company but also of all listedcompanies in Japan and 32,000 major overseas companies, allowing them to explore theirown potential shareholders based on the composition of shareholders in the same industry,
etc. and target IR activities.
Currently, "IR-navi" has 329 clients, including many well-known companies with a market
capitalization of over 1 trillion yen and many other major companies. Its main competitor is
the U.S.-based Ipreo (now part of S&P Global), which has extensive information on foreign
investors. After the initial rapid spread of "IR-navi," competition intensified with the
emergence of Ipreo, which is believed to have taken some of the market share. The
shareholder identification surveys conducted by IR Japan and other companies arecustomized for each listed company, based mainly on interview surveys, but the unit price isestimated to be considerably higher than that of "IR-navi”.

8

WILLs Inc. | 4482 (TSE Growth)
The number of clients and sales of “IR-navi” has been slowing recently, and in FY12/22 sales
declined YoY. One of the reasons for this is a bottleneck in sales staffing. The company has
a limited number of sales staff who are engaged in a wide range of sales activities, including"IR-navi," "Premium Benefit Club," and others; but the number of sales staff has become
quite tight as the scale of each business has expanded.
The company intends to enter a new phase of growth by introducing a new model as well as
replenishing its workforce. The new “IR-navi” is planned to add new functions and enhance
added value. Specifically, the company plans to: (1) expand its global presence by launching
an English-language version; (2) strengthen functions to enable two-way communication
between companies and institutional investors; and (3) enhance information on overseas
institutional investment.
The launch of the new "IR-navi" has been delayed from the original plan and may be pushed
back to 2024, compared to the planned 2023 launch. Until the new “IR-navi” is actually
launched, we will not know the specifics of the new functions or how the new “IR-navi” will bereceived by corporate clients, but the fact that the new “IR-navi” is expected to be asignificant upgrade should help to boost its growth potential once again.

Figure 9: Number of "IR-navi" Clients (by Quarter)
330
320
310

300
290

280
270
2020

2021

2022

2023

Source: Strategy Advisors - Based on Company Data.

◼ ESG Solutions Business Continues to Expand in Line with
Global Trends
Demand is growing due
to the trend of
expandingsustainability
disclosure. Reputation
for high quality,
focusing on quality overquantity, specializing in
the high-end market.

ESG solutions is an area that President Sugimoto was involved in prior to founding thecompany through IR consulting and other work. 2018 saw the company begin to focus on
this area as a full-fledged business with the absorption of Alex Net, Inc. ESG solutions
include integrated reports/annual reports, CSR/ sustainability reports and website
development.

9

WILLs Inc. | 4482 (TSE Growth)
The company has a proven track record of producing high-quality integrated reports/annual
reports, and as seen in Figure 10, integrated reports for Hitachi, NSK, and MS&AD
Insurance Group Holdings have won awards from WICI Japan and Nihon Keizai Shimbun
awards on an annual basis. TOMY's annual report and Credit Saison's integrated report
have also received awards from overseas awards such as the ARC Award. A look at the
ESG Solutions business results section of the company's website shows that, in addition tothese companies, the company has experience in preparing integrated reports for INPEX
and Pigeon, shareholder communications for Nippon Telegraph and Telephone and ShinEtsu Chemical's Web site amongst others.
Figure 10. Main Awards for Integrated Reports Prepared by WILLs (2022)
Hitachi

WICI Japan

Bronze AwardNSKWICI Japan

Gold Award

MS&AD Insurance Group HD

WICI Japan

Gold AwardTOMY COMPANY

ARC Awards

Bronze in the Summary Annual Review
category

Credit Saison Co.

ARC Awards

Honors et al. in the Summary Annual
Review category

Source: Strategy Advisors - Based on Company Data.

With growing interest in corporate sustainability worldwide and the increasing importance of
non-financial information in addition to financial information, the number of companies
preparing integrated reports is rapidly increasing. In addition, companies that have alreadypublished such reports are strongly trying to improve the quality of their reports. Similarly,
there is a growing need to enhance sustainability information on websites. These trends are
expected to continue. At the same time, the number of companies supporting these efforts isincreasing, including financial institutions, consulting firms and printing companies; andcompetition is intense.
The company's strategy is clear: it limits itself to high quality products and undertakes
contracts at a unit price that is commensurate with the quality of the product. The company isoriented toward boutique management that does not necessarily pursue acquisition of
volume. The company's business will remain highly competitive given its track record of
producing integrated reports/annual reports that have already received high praise both
domestically and internationally, as well as its credibility as a publicly traded company.
Figure 11 shows the trend of ESG solution sales and the number of projects. Although thenumber of orders received may vary greatly depending on the size of the project, it isestimated that larger sales per project are more efficient and often a positive factor in terms
of profitability. The company's average unit price has been on an upward trend over the past
three years.
ESG solutions are labor-intensive, and therefore, an increase in personnel and outsourcing
will be necessary to expand the business. For this reason, the marginal profit margin is
estimated to be lower than that of "Premium Benefit Club" and "IR-navi," but it is a steadyand solid business. Going forward, steady growth is expected to continue as demand
increases.

10

WILLs Inc. | 4482 (TSE Growth)Figure 11: ESG Solutions Revenue Trends(¥ mn, No. of
Projects)(¥ 1,000)

600

1,600
1,400

500

1,200
400

1,000

300

800
600

200

400

100

200

0

0
FY12/20

FY12/21

Sales (LHS)

No. of Projects (LHS)

FY12/22
Average Price (RHS)

Source: Strategy Advisors - Based on Company Data.

◼ Explore Synergies While Maintaining Profitability in theAdvertising Business
Advertising businessaims to stabilize
earnings

The advertising business began in October 2020 when the company made Netmiles a wholly
owned subsidiary. Netmiles operates point sites such as "Sugutama" and is also involved in
the digital advertising business. Competition is fierce in this field and current earnings are
weak. The company is aiming for synergies by advertising on the "Premium Benefit Club"
domain and other activities. Most recently, the company launched a service that allows users
to exchange "WILLsCoin" for Netmiles.
The company intends to reform its business model and stabilize earnings in the advertisingbusiness. The company's recent efforts, including a review of its Web content, have been
bearing fruit, with operating profit returning to the black in Q2 FY12/23.

◼ Performance Continues to Expand Steadily
Continuous increase insales and profit due toexpansion of ‘stocktype’ businessIn Q2 FY12/23, cumulative sales increased 18.1% YoY to 2.054 billion yen and operating
profit rose 30.7% YoY to 496 million yen. The company did not change its initial forecast of
4,049 billion yen in sales and 750 million yen in operating profit, but the progress rate ofoperating profit in the first half of the year amounted to 66% of the full-term amount. Although
operating profit tends to be biased toward the first half of the year, even taking this into
account, the company is likely to exceed its initial forecast.
As mentioned earlier, "Premium Benefit Club" and "IR-navi" are stock-type businesses andas the number of customers grows, sales tend to grow almost in tandem. Currently, thegrowth of "IR-navi" has slowed somewhat due to the pre-launch of a new model andbottlenecks in sales staff; but "Premium Benefit Club" sales are expected to grow steadily inthe second half of FY12/23. The company expects that the increase in sales will outweighthe increase in costs, which will be caused by the expansion of the company-wide workforce
and system investment associated with the development of the new "IR-navi" system.

11

WILLs Inc. | 4482 (TSE Growth)
Progress in hiring tostrengthen sales

On August 28, the company held an extraordinary shareholders' meeting and resolved toappoint Toshiaki Kaida, a longtime corporate sales executive at Nomura Securities, as adirector. As the director in charge of sales, Mr. Kaida is expected to be responsible foracquiring customers, especially for "Premium Benefit Club" and "IR-navi". At the same time,
the company will strengthen its sales structure by hiring new staff. The current bottleneck insales staff is affecting the acquisition of contracts for both "IR-navi" and "Premium Benefit
Club," so we will closely watch these future trends.
The new "IR-navi" is expected to have a major impact on the company's performance in
FY12/24 and beyond. If, as the company expects, the enhanced functions can significantly
increase the number of clients and raise unit prices, it will make a significant contribution toearnings. On the other hand, if the effect is limited, the increase may be limited to a cruising
speed. In such a case, development costs may slightly reduce earnings growth.

Growth is expected in
all three businesses
over the medium to longterm.

In the medium to long term, the company sees significant growth potential in all threebusinesses in the Shareholder Management Platform segment. The "Premium Benefit
Club" meets the needs of companies to digitally manage their individual shareholders andincrease the number of individual shareholders. With a market share of only about 5% ofcompanies offering shareholder benefits, the upside is significant. The introduction of the
new "IR-navi" is expected to broaden the range of services and open up new markets,
such as overseas investors, etc. ESG solutions are expected to continue to grow as theneed for sustainability information disclosure increases on a global scale.

Figure 12: Quarterly Earnings Trends
2022(¥ mn)

Q1

2023
Q2

Q3

Q4

Q1

Q2

520

1,001

1,038

820

659

1,081

12.3%

28.7%

35.9%

33.1%

26.7%

8.0%

395

811

780

507

514

915

22.7%

37.5%

57.9%

17.4%

30.1%

12.8%

Shareholder Management Platform
Sales
YoY change“Premium Benefit Club”
YoY change“IR-navi”
YoY change

59

101

50

62

61

99

-4.8%

-2.9%.

-3.8%

-6.1%

3.4%

-2.0%

ESG Solutions

55

46

203

242

79

32

YoY change

-20.3

15.0%

-2.9%.

137.3%

43.6%-30.4%

79

309

240

101

122

356

Sales

98

119

103

112

128

183

Operating Profit

-12

3

-12

-6

0

183

Sales

618

1,121

1,142

933

788

1,265

Operating Profit

67

312

227

95

122

374

Operating Profit
Advertisement

Total

Source: Strategy Advisors - Based on Company Data.

12

WILLs Inc. | 4482 (TSE Growth)Figure 13: Semi-Annual Earnings Trends
2021

2022

2023

(¥ mn)

H1

H2

H1

H2

H1

H2CoE

Sales

1,633

1,744

1,740

2,075

2,054

1,995

% of fiscal year

48.4%

51.6%

45.6%

54.4%

50.7%

49.3%

Operating Profit

294

227

379

322

496

254

% of fiscal year

56.4%

43.6%

54.1%

45.9%

66.1%

33.9%

Source: Strategy Advisors - Based on Company Data.

◼ Competitive Comparison and Valuation
High profitability andgrowth potential as an
IR-related informationcompany

Among the company's businesses, the "Premium Benefit Club" is the company's proprietaryservice and has no competitors. The "IR-navi" service is currently being offered by Ipreo, asubsidiary of S&P Global, which offers a similar service. Detailed trends of foreign investors
are considered one of the reasons for the slowdown in the growth of "IR-navi. In Japan, IR
Japan is highly recognized for its shareholder identification surveys and many Japanesecompanies are believed to request individual surveys from the company. However, the priceis estimated to be much higher than WILLs, which collects data based on management
reports of mutual funds and other investment trusts, because it uses more manpower.
Another advantage of “IR-navi” over shareholder identification surveys is that it provides aview of the shareholder structure of all listed companies, which can be used to provide
implications for the company's future IR activity strategy.
While the market for ESG solutions, such as integrated reporting is also expanding,competition on the supply side is also intensifying. Financial institutions, printing companies,
and other consulting firms are battling it out. However, the company intends to focus on thehigh-end of the market which is less prone to price competition; on the strength of the highquality reputation it has earned.
As outlined above, there are virtually no companies that can be seen as direct competitor in
the same business category. As a reference, Figure 14 lists IR-related information service
companies that connect listed companies with investors. WILLs has the highest ROE and
ROIC, giving it an advantage in terms of profitability. It also has the highest sales growth rateover the past five years. Therefore, a key factor in looking at the company will be how it cangrow its top line while maintaining its current high profitability.
In terms of valuation, although it is difficult to compare with other companies in the same
industry; the relatively high level of valuation is justified considering the high levels of
profitability, such as ROE, the high growth levels in the IR market that connects companies
and investors and the stable growth of stock-type earnings. The company's valuation isjustified by the high growth in the IR-related market, which connects companies andinvestors.

13

WILLs Inc. | 4482 (TSE Growth)Figure 14: Profitability Comparison with Peers
Code

FY

Sales

Company Name

Sales

OP

CAGR over the
past 5 years

OP Margin

ROE

ROIC

EquityOver Sales

Ratio(¥ mn)(%)(¥ mn)

(%)

(%)

(%)

(%)

702

18.4

27.9

23.3

51.0

WILLs Inc.

4482

2022/12

3,816

42.5

MINKABU THE INFONOID, Inc.

4436

2023/3

6,836

37.9

111

1.6

9.6

0.5

47.0

IR Japan Holdings, Ltd.

6035

2023/3

6,012

7.8

1,116

18.6

10.0

10.1

82.6

IFIS Japan Ltd.

7833

2022/12

5,381

1.8

827

15.4

11.9

11.8

86.5

Source: Strategy Advisors - Based on Company Data.

Figure 15: Comparison of Valuations with Peers
Code
Company Name

Stock Prices

Market Cap.

(8/25)PER

PBR

Dividend Yield

ROE

FY2023 CoE

FY 2022 Actual

FY2023 CoE

FY 2010 Actual(¥)(¥ mn)(Multiples)(Multiples)

(%)

(%)
27.9

WILLs Inc.

4482

579

12,098

24.3

7.3

1.2

MINKABU THE INFONOID, Inc.

4436

1,613

24,156

26.8

3.1

1.6

9.6

IR Japan Holdings, Ltd.

6035

2,245

39,878

NA

6.6

5.0

10.0

IFIS Japan Ltd.

7833

584

5,641

13.0

1.1

3.2

11.9

Source: Strategy Advisors - Based on Company Data.

◼

Risk Factors

The first risk we see for the company is the possibility of a decline in the market's preference
for shareholder benefit plans in general. Shareholder benefits are well-established in Japan,
and we do not expect the current situation to change significantly. However, as mentioned
earlier, institutional investors and foreign investors generally hold the opinion thatshareholder benefits should be paid out in the form of dividends instead of being otherofferings to shareholders, in many cases. For this reason, it appears that some companies
are actually leaving the "Premium Benefit Club" as a result of pressure from these voices. As
a result, it is possible that the number of companies offering shareholder benefits, which has
been on the rise, will either slow down or gradually decline in the market as a whole.
However, only about 5% of companies that offer shareholder special benefit programs haveintroduced "Premium Benefit Club," so even if the number of shareholders does notincrease, there is a strong possibility that the market share will expand. The reason for this isthat participation in the "Premium Benefit Club " has many original benefits for companies,
such as making it easier to communicate with individual shareholders and enabling them tomanage their individual shareholders digitally. This is evidenced by the fact that major
companies such as Nissin Foods Holdings and Idemitsu Kosan are participating. The
company also pays attention to the sustainability of the service by advising companies thatparticipate in the "‘Premium Benefit Club’" not to overpay for benefits as a percentage of
their earnings, in order to balance the benefits with dividends.

14

WILLs Inc. | 4482 (TSE Growth)
The second risk is that a company may compete with "IR-navi" by developing andintroducing a new system. However, since the company already has a long track record andhas been making improvements to meet customer needs, the risk of a system that greatly
surpasses it is not significant at this point. In addition, as mentioned above, the company andthe stock market are presumably anticipating renewed growth with the introduction of a newmodel. Therefore, if the new "IR-navi" is not accepted as highly by the market as expected,
the growth potential of the "IR-navi" business may diverge from the market's expectations.

Figure 16: Trends by sector(¥ mn)

FY12/19
Non-Consolidated

FY12/20
Consolidated

FY12/21
Consolidated

FY12/22
Consolidated

1,793
1,225
260

2,196
1,535
283

2,623
1,839
286

3,381
2,494
274

286
-

345
237

422
754

548
434

Net Sales
Shareholder Management Platform“Premium Benefit Club”“IR-navi”
ESG Solutions
Advertisement
Total

1,793

2,433

3,378

3,816

Operating Income
Shareholder Management Platform
Advertisement

310
-

402
-3

507
12

730
-28

Total

310

399

522

702

Source: Strategy Advisors, Based on Company Data.

15

WILLs Inc. | 4482 (TSE Growth)Figure 17. Income Statement(¥ mn)

FY12/19
NonConsolidated

FY12/20
Consolidated

FY12/21
Consolidated

FY12/22
Consolidated

FY12/23 CoE
Consolidated

Net sales

1,793

2,433

3,378

3,816

4,049

Cost of sales
Gross profit
Gross profit margin
SG&A expenses
Operating profit
Operating profit margin

957
835
46.6%
524
310
17.3%

1,360
1,073
44.1%
673
399
16.4%

1,931
1,446
42.8
924
522
15.5%

2,095
1,720
45.1%
1,018
702
18.4%

750
18.5%

Non-operating income
Interest and dividend income

7
0

3
0

3
0

0
0

Other
Non-operating expenses
Interest expense and discount
Other

7
8
1
7

3
1
1
0

3
5
3
1

0
10
4
5

309
17.2%

401
16.5%

520
15.4%

693
18.2%

0
5

0
3

0
5

0
38

304
89

398
120

514
169

654
263

Income taxes-deferred
Total income taxes
Effective tax rate
Net income attributable to noncontrollinginterests

13
103
33.9%
-

-1
118
29.6%
0

-4
165
32.1%
0

-26
237
36.2%
0

Net income attributable to owners of the parent
Ratio of net income to net sales

201
11.2%

279
11.5%

349
10.3%

417
10.9%

497
12.3%

12.2

14.9

17.9

21.0

23.8

98

368

185

215

Depreciation and amortization of goodwill
Cash Flow
CFPS (¥)
Dividend (¥)
ROE
ROIC
Average number of shares outstanding during

45
247
13.2
0.0
42.5%
32.4%
16,413

68
347
18.6
0.0
28.8
23.1%
18,700

91
440
22.5
2.5
30.3%
23.9%
19,516

103
520
26.0
7.0
27.8
23.3%
19,981the period (thousand shares)
Number of shares outstanding at end of period

18,39019,286

19,72920,894

Recurring profit
Recurring profit margin
Extraordinary income
Extraordinary loss
Pretax profit
Income taxes

EPS (¥)
Investment in tangible and intangible fixed assets

745
18.4%

7.0

(thousand shares)
Source: Strategy Advisors - Based on Company Data.

16

WILLs Inc. | 4482 (TSE Growth)Figure 18. Balance Sheet(Yen mn)
Current Assets

FY12/19
Non-Consolidated

FY12/20
Consolidated

FY12/21
Consolidated

FY12/22
Consolidated

1,141

1,473

1,929

2,367

Cash on hand and in banks
Bills receivable
Electronically recorded monetary claim
Accounts receivable
Inventories
Other
Allowance for doubtful accounts

788
43
14
269
9
15
-

1,135
57
14
225
15
33
-6

1,642
25
0
231
9
29
-7

2,065
5
11
253
8
27
-2

Fixed Assets
Property, plant and equipment
Intangible fixed assets

288
11
252

625
11
550

719
13
636

yakuza55
671

Software
Goodwill
Customer-related assets

168
49
35

232
284
32

343
261
30

404
238
27

Investments and other
Allowance for doubtful accounts
Total Assets

23
1,430

64
-36
2,098

69
-36
2,649

166
-2
3,261

Current Liabilities

592

1,017

1,222

1,535

Accounts payable
Short-term debt

223
26

274
126

262
298

272
301

Accounts payable and accrued expenses
Accrued income taxes and consumption taxes
Advance received
Other

74
135
116
18

75
158
166
218

65
159
289
149

105
221
0
636

Fixed Liabilities
Long-term debt

138
138

112
112

88
85

62
60

Net Assets
Capital Stock
Capital & Surplus

698
698
380

969
969
418

1,338
1,337
436

1,662
1,662
493

Retained earnings
Treasury stock
Total Liabilities and Net Assets

317
0
1,430

550
0
2,098

900
0
2,649

1,269
-99
3,261

BPS (¥)
Interest-bearing debt
Shareholders' equity ratio

38.0
164
48.8%

50.2
238
46.2%

67.8
384
50.5%

79.6
362
51.0%

Source: Strategy Advisors - Based on Company Data.

17

WILLs Inc. | 4482 (TSE Growth)Figure 19: Statement of Cash Flows(¥ mn)

FY12/19Non-

FY12/20
Consolidated

FY12/21
Consolidated

FY12/22
Consolidated

Consolidated
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Working capital
Income taxes paid
Other

304
39
6
-12
-15
36

398
57
10
143
-140
7

514
67
23
148
-142
-74

654
80
23
172
-212
79

Total amount

358

475

536

796

0
0
-97

-20
-3
-130

0
-4
-181

20
-8
-176

Cash flows from investing activities
Sales and acquisitions of investment securities
Purchases of property, plant and equipment
Payments for acquisition of intangible assets
Other

14

-37

-9

-94

Total amount

-83

-190

-194

-258

Net increase (decrease) in short-term loans
payable

0

100

172

4

Repayment of long-term debt
Proceeds from issuance of shares upon
exercise of stock acquisition rights
Payments for purchase of treasury stock
Dividends paid
Other

-71
156

-26
37

-26
18

-26
55

0
0
85

0
-45
-4

0
0
0

-99
-49
1

Total amount

170

62

164

-114

Cash Increase/Decrease
Cash Beginning balance
Cash Ending balance

444
343
788

347
788
1,135

506
1,135
1,642

423
1,642
2,065

Cash flows from financing activities

Source: Strategy Advisors - Based on Company Data.

18

WILLs Inc. | 4482 (TSE Growth)Disclaimer

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and analysts as the primary authors.
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In principle, the publisher does not review or approve the content of the report (although we will point out obvious errors or
inappropriate language to the authors).
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19