Company Research and Analysis Report
FISCO Ltd.
http://www.fisco.co.jp

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

6-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato伪伪Core business in franchise store operation, promoting
direct sales of agricultural products and overseas
expansion
G-7 HOLDINGS INC. (hereafter, “G-7” or “the Group”) is a holding company that owns
subsidiaries operating the largest franchisee of AUTOBACS stores and Business Supermarkets
in Japan. It is also promoting the development of agricultural, foodstuffs and restaurant
businesses, as well as overseas businesses, utilizing M&A to promote operational expansion.
Consolidated FY3/15 results showed higher revenues but lower earnings, with net sales up
0.1% YoY to ¥88,261 mn, while ordinary income declined 20.0% to \2,512 mn. Despite BusinessSupermarket and quality food businesses showing an increase in both revenues and earnings,
the impact of the hike in consumption tax lingered and, apart from lower revenues and earnings
in AUTOBACS and car-related businesses, factors such as increased upfront investment
costs were behind profit declines.
In FY3/16 the Group is aiming for net sales to increase 13.3% YoY to \100,000 mn and ordinary
income to increase 59.2% YoY to \4,000 mn. Apart from opening 15 new AUTOBACS and carrelated business locations and around 10 new Business Supermarkets locations, it is promoting
a strengthening of profitability at existing stores by putting into practice “cost reductions,improved per capita productivity and appropriate inventory (levels).” In respect of the startfrom April, G-7 appears to be performing soundly overall, with, for example, net sales exceeding
those of two years ago and an improvement in the consumer mindset.
In overseas business, apart from planning to open new restaurants in Indonesia, under a plan
to expand operations to countries including Taiwan, the Philippines, Laos and Cambodia, theGroup is aiming for net sales from overseas operations of \10,000 mn in five years’ time. Given
that, for the time being, the investment phase is continuing, their contribution to earnings is stillsome way off, however, it is hoped in the long-term that they will grow into businesses thatdrive the Group’s (overall) results.

伪伪Check Point
・ Higher revenues but lower earnings in FY3/15, Business Supermarket and quality foodbusinesses drive results
・ AUTOBACS-related net sales sound in April, significant growth in both revenue andearnings targeted in FY3/16
・ Establishing operations in multiple countries to take advantage of economic growth inSoutheast Asia

We encourage readers to review our complete legal statement on “Disclaimer” page.
1

㻺㼑㼠㻌㻿㼍㼘㼑㼟㻌㼍㼚㼐㻌㻻㼞㼐㼕㼚㼍㼞㼥㻌㻵㼚㼏㼛㼙㼑㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼞㼐㼕㼚㼍㼞㼥㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻝㻞㻜㻘㻜㻜㻜

㻔¥㼙㼚㻕

㻠㻘㻜㻜㻜

㻠㻘㻡㻜㻜
㻠㻘㻜㻜㻜

㻝㻜㻜㻘㻜㻜㻜

G-7 HOLDINGS INC.

㻞㻘㻥㻟㻟㻤㻜㻘㻜㻜㻜

7508 Tokyo Stock ExchangeFirst Section

㻟㻘㻝㻟㻥

㻞㻘㻡㻥㻝

㻟㻘㻡㻜㻜

㻟㻘㻜㻜㻜

㻞㻘㻡㻝㻞
㻞㻘㻞㻡㻜

㻞㻘㻡㻜㻜

㻢㻜㻘㻜㻜㻜
㻠㻜㻘㻜㻜㻜

6-Jul.-15

㻣㻝㻘㻠㻡㻣

㻣㻢㻘㻝㻟㻜

㻤㻞㻘㻢㻞㻟

㻤㻤㻘㻝㻣㻤

㻤㻤㻘㻞㻢㻝

㻝㻜㻜㻘㻜㻜㻜

㻞㻘㻜㻜㻜
㻝㻘㻡㻜㻜
㻝㻘㻜㻜㻜

㻞㻜㻘㻜㻜㻜

㻡㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻜㻜㻲㼅㻟㻛㻝㻝

㻲㼅㻟㻛㻝㻞

㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢㻱



伪伪Business Overview
AUTOBACS and Business Supermarket franchise operations
form the Group’s core
The Group’s operations are disclosed in three operating segments: AUTOBACS and carrelated businesses, Business Supermarkets and quality food businesses, and other businesses.
Looking at the FY3/15 composition of net sales by business segment, we see that AUTOBACS
and car-related businesses represented 37.5% and Business Supermarkets and quality foodbusinesses 59.4%, with these two business segments representing 96.9% of overall operations.
○AUTOBACS and Car-related Businesses
The Group’s AUTOBACS franchise business consists of activities including car product sales
and maintenance developed by G-7 AUTO SERVICE CO., LTD., and motorcycle product sales
and maintenance developed by G-7 MOTORS CO., LTD. AUTOBACS-related (sales) represent
approximately 90% of net sales (in this segment), with 67 AUTOBACS-related stores as ofend-March 2015 giving it the largest scale within (the 586) AUTOBACS Group stores; and witha key feature being that it enjoys the highest profitability among the Group’s stores. On theother hand, Bike SEVEN, which engages in direct sales of motorcycle products, operates 11
stores domestically and in Malaysia.
○Business Supermarket and Quality Food Businesses
These consist of Business Supermarket franchisee (operations) developed by G-7 SUPERMART CO., LTD., and food product and restaurant operations developed by G7 JAPAN FOODSERVICE CO., LTD. G-7 SUPER MART CO., LTD. represents more than 90% of net sales, withits 112 supermarket outlets as of end-March 2015 giving it the largest scale within (the 693)
Business Supermarket Group stores.
On the other hand, in April 2015, G7 JAPAN FOOD SERVICE CO., LTD., as well as acquiring
what was before G-7 FOOD SYSTEM CO., LTD. (which had operations including its quality foodbusiness, and the former UENO-SHOKUHIN and former Cold Family businesses), integrated
them with its domestic restaurant business, private label food product development business,
export/import, online sales and other businesses, seeking to strengthen organizational
structures.

We encourage readers to review our complete legal statement on “Disclaimer” page.
2

○Other Businesses
Apart from G-7 AGRI JAPAN CO., LTD., that operates the Megumi no Sato farmers’ market
chain, the Group’s main other business consist of multiple operations including recycling
stores, DAISO [4046] discount (100 yen shop) stores, and real estate leasing developed by G-7
DEVELOPMENT CO., LTD., as well as overseas operations undertaken by G7 INTERNATIONAL
PTE. LTD. (except for AUTOBACS and BIKE SEVEN operations in Malaysia).

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

伪伪Results Trends

6-Jul.-15

Higher revenues but lower earnings in FY3/15, BusinessSupermarket and quality food businesses drive results

Important disclosuresand disclaimers appear
at the end of this document.

(1) FY3/15 Results Overview

FISCO Ltd. Analyst
Yuzuru SatoIn the Group’s consolidated FY3/15 results announced on May 11, there was an increase in
net sales but declines in earnings, with net sales up 0.1% YoY to \88,261 mn, while operating
income declined 20.5% YoY to \2,306 mn, ordinary income declined 20.0% YoY to \2,512 mn
and net income was down 17.4% YoY to \1,272 mn; also coming in under the Company Plan.
While core Business Supermarket and quality food businesses maintained revenue and earnings
growth, the reason for lower earnings was deterioration in income from its AUTOBACS andcar-related and Other businesses. Trends by business are as set out below.
FY3/15 consolidated operating results(Unit: \mn)
FY3/14

FY3/15Results

vs. Sales

88,17864,487
20,790
2,900
3,139
-221
1,541

73.1%
23.6%
3.3%
3.6%
-0.3%
1.7%

Net sales
Cost of goods sold
SG&A expenses
Operating income
Ordinary income
Extraordinary gains/losses
Net income

Company
plan
93,000
3,000
3,200
1,600

Results

vs. Sales

YoY

vs plan

88,261
65,372
20,583
2,306
2,512
-129
1,272

74.1%
23.3%
2.6%
2.8%
-0.1%
1.4%

0.1%
1.4%
-1.0%
-20.5%-20.0%-17.4%-5.1%-23.1%-21.5%-20.5%○AUTOBACS and Car-related BusinessNet sales declined 8.0% YoY to \33,095mn, and operating income fell 40.4% YoY to \1,124mn.
Depressed sales, as a result of the impact from the hike in consumption tax, have lingered
longer than expected, with both AUTOBACS and BIKE SEVEN suffering declines in revenues
and earnings.
Looking at the status of sales by category in its AUTOBACS businesses, we can see declines
in all categories, including year-on-year declines of 2.9% in tires and wheels, 22.7% in car
electronics, 10.7% in accessories and 4.6% for services such as statutory inspections and bodyand paint jobs. In respect of tires and wheels, low priced Chinese made products entering
the market and a lower number of days with snowfalls compared to last year were among
the reasons behind revenue declines. In the car electronics category, although affectedby sluggishness in car navigation, sales in some areas such as drive recorders and radars
expanded. In addition, in the category of services, an underlying increase in revenues fromstatutory inspections continued.
The number of new store openings, being three for AUTOBACS (two in Chiba, one in Okayama),
and two for BIKE SEVEN (one in Chiba, one in Malaysia) was an overall increase of five storescompared with the end of the previous period, making 104 stores.

We encourage readers to review our complete legal statement on “Disclaimer” page.
3

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

Moreover, in respect of Malaysia, the Group commenced AUTOBACS operations in 2012 (withtwo stores currently) and BIKE SEVEN in 2013 (also with two stores currently), and while
the scale of sales is small at less than 1% of the overall, they are expanding steadily with
AUTOBACS growth in the 10% to 20% range and BIKE SEVEN over the 20% mark. In respectof AUTOBACS, the demand for maintenance is robust, representing approximately half of net
sales. In addition, in respect of BIKE SEVEN, with an ample product line-up for items such asparts and accessories, and customer traffic that has been sound since opening it is expanding
steadily. However, the upfront investment, including new store opening costs, is high and, on a
profit basis, losses are continuing on par with FY3/14.

㻭㼁㼀㻻㻮㻭㻯㻿㻌㼍㼚㼐㻌㻯㼍㼞㻙㼞㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟

6-Jul.-15㻔¥㼙㼚㻕㻿㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻟㻢㻘㻡㻜㻜
㻟㻢㻘㻜㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.

㻞㻘㻜㻜㻜
㻝㻘㻣㻝㻤

㻝㻘㻤㻜㻜
㻝㻘㻤㻤㻡

㻟㻡㻘㻡㻜㻜

㻝㻘㻢㻜㻜㻟㻡㻘㻜㻜㻜

㻝㻘㻠㻜㻜
㻝㻘㻝㻞㻠

㻟㻠㻘㻡㻜㻜
㻟㻠㻘㻜㻜㻜FISCO Ltd. Analyst
Yuzuru Sato

㻝㻘㻞㻜㻜
㻝㻘㻜㻜㻜

㻟㻡㻘㻥㻡㻤

㻟㻟㻘㻡㻜㻜

㻤㻜㻜㻟㻟㻘㻜㻜㻜
㻟㻞㻘㻡㻜㻜㻔¥㼙㼚㻕㻢㻜㻜㻟㻟㻘㻝㻡㻞

㻟㻟㻘㻜㻥㻡

㻟㻞㻘㻜㻜㻜

㻠㻜㻜㻞㻜㻜㻟㻝㻘㻡㻜㻜

㻜㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡


○Business Supermarket and Quality Food Businesses
FY3/15 net sales increased 6.4% YoY to \52,420mn, with operating income up 3.7% YoY to\1,447mn. Within this business, apart from Business Supermarket sales, which represent morethan 90% of the overall, performing soundly, rising 5.1% YoY to \47,177mn, the quality foodproducts business performed well, rising 9.8% YoY to \4,673mn.
In respect of Business Supermarkets, due to a continuing consumer budget consciousness, asa result of the impact of a hike in consumption tax, net sales on an existing store basis rose
year-on-year. Further, compared to end of the previous period the total number of storesincreased by 6 to 112, with the number of new store openings including three in Hokkaido,
and one each in Hyogo, Kanagawa and Saitama prefectures. In the plan at the beginning of
the period around 10 new store openings had been planned, however, identifying properties
for candidate store sites became challenging, and the store opening pace slightly lower thaninitially expected.

We encourage readers to review our complete legal statement on “Disclaimer” page.
4㻮㼡㼟㼕㼚㼑㼟㼟㻌㻿㼡㼜㼑㼞㼙㼍㼞㼗㼑㼠㻌㼍㼚㼐㻌㻽㼡㼍㼘㼕㼠㼥㻌㻲㼛㼛㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㼑㼟㻔¥㼙㼚㻕㻿㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻡㻟㻘㻜㻜㻜

㻝㻘㻡㻜㻜
㻝㻘㻠㻠㻣

㻡㻞㻘㻜㻜㻜

㻝㻘㻠㻡㻜㻡㻝㻘㻜㻜㻜

G-7 HOLDINGS INC.

㻝㻘㻟㻥㻢
㻝㻘㻠㻜㻜

㻡㻜㻘㻜㻜㻜

7508 Tokyo Stock ExchangeFirst Section㻠㻥㻘㻜㻜㻜

㻝㻘㻟㻡㻜㻠㻤㻘㻜㻜㻜
㻠㻣㻘㻜㻜㻜

6-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato㻡㻞㻘㻠㻞㻜
㻝㻘㻞㻡㻡㻠㻥㻘㻞㻢㻞

㻠㻢㻘㻜㻜㻜

㻠㻡㻘㻜㻜㻜

㻔¥㼙㼚㻕

㻝㻘㻟㻜㻜
㻝㻘㻞㻡㻜

㻠㻢㻘㻠㻢㻝

㻝㻘㻞㻜㻜㻠㻠㻘㻜㻜㻜
㻠㻟㻘㻜㻜㻜

㻝㻘㻝㻡㻜㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

On the other hand, in the quality food business, the acquisition of new accounts and unearthingof new products, focusing on Eastern Japan, proceeded, with both sales and profits performing
soundly. Further, both the former UENO-SHOKUHIN and former Cold Family businesses, whichhave struggled in the first half of FY3/15 recovered in the second half of the year.
○Other Businesses
FY3/15 net sales decreased 7.1% YoY to \2,746 mn, while operating losses were \249 mn(compared to a loss of \62mn in the previous period). Within this, in respect of the Megumi
no Sato farmers’ market chain, including the impact of a surge in vegetable prices, net sales
performed soundly, and from a profit perspective also, as a result of a revision of commission
rates and other factors, there was a shift, albeit slight, into the black.
On the other hand, in respect of its recycling, restaurant and other businesses, sales weresluggish due to the impact from the consumption tax hike, (with these operations) posting
losses. Further, its agri businesses being developed in Vietnam and Myanmar, and restaurant
businesses being developed in Malaysia and Vietnam are in the investment phase, and continued
to post operating losses.
In Vietnam, the Group is currently undertaking the production of chrysanthemums at a scale ofaround 400,000 plants per annum, and selling them through the Megumi no Sato farmers’ market
chain. Further, in Myanmar it is undertaking the cultivation of strawberries, and is currently
at the stage where it is aiming to tackle the establishment of the means of transportation to
distribute from the agricultural production sites to urban areas that have supermarkets andother facilities.

We encourage readers to review our complete legal statement on “Disclaimer” page.
5㻻㼠㼔㼑㼞㻌㻮㼡㼟㼕㼚㼑㼟㼟㼑㼟㻔¥㼙㼚㻕㻿㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

㻟㻘㻜㻡㻜

㻜

㻟㻘㻜㻜㻜

G-7 HOLDINGS INC.

㻞㻘㻥㻡㻜

7508 Tokyo Stock ExchangeFirst Section

㻞㻘㻥㻜㻜

㻔¥㼙㼚㻕

㻙㻢㻞

㻡㻜
㻝㻜㻜

㻞㻘㻤㻡㻜

㻙㻝㻡㻠

㻞㻘㻤㻜㻜

㻟㻘㻜㻝㻜

㻝㻡㻜

㻞㻘㻥㻡㻣

㻞㻘㻣㻡㻜

6-Jul.-15

㻞㻜㻜
㻙㻞㻠㻥

㻞㻘㻣㻜㻜

㻞㻡㻜
㻞㻘㻢㻡㻜

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

㻞㻘㻣㻠㻢

㻞㻘㻢㻜㻜

㻟㻜㻜
㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

AUTOBACS-related business sound in April, significant revenue
and earnings increases are targeted in FY3/16(2) FY3/16 Results Outlook
FY3/16 consolidated results anticipate net sales up 13.3% YoY to \100,000 mn, operating
income up 60.4% YoY to \3,700 mn, ordinary income up 59.2% YoY to \4,000 mn and net income
up 65.0% YoY to \2,100 mn. These figures are at the same levels as those targeted in the Midterm Management Plan. Holding the key to achieving the plan are its core AUTOBACS andBusiness Supermarket businesses. The outlook by business is as set out below.
○AUTOBACS and Car-related Businesses
It is planned that FY3/16 net sales from AUTOBACS and car-related businesses will show
double-digit revenue growth of 17.8% YoY to \39,000 mn. The main reason for this is that
new AUTOBACS-related store openings will be in the order of 15, a significant increase over
the three in the previous period. Apart from AUTOBACS, the Group will expand the numberof AUTOBACS Express gasoline stands, BP body works and paint job centers and otherbases. Currently, three AUTOBACS Express sites have been decided, while, in respect of theremaining 12 sites, they are planned to be identified going forward, including M&A.
From a profit perspective, while there are cost increases associated with new store openings,
increased profits are expected as a result of strengthening profitability at existing stores. Apartfrom continuing to put into practice “cost reductions, improvements in per capita productivity
and appropriate inventory levels”, by proactively holding Thanks Fairs, G-7 Mall Festivals andother events, the Group will expand net sales. Further, apart from continuing to also tackle
maintaining selling prices, by raising the ratio of sales for high-value-added services (such as
statutory inspections, body works and paint jobs) from the current 20%, the Group is promoting(other) improvements in profitability. In respect of the April start, it appears that the Group is
performing soundly, with indications including improvement in the consumer mindset and net
sales exceeding levels of two years ago.
Moreover, overseas the plan is to open one AUTOBACS and one BIKE SEVEN store each in
Malaysia in Q4 (Jan-Mar 2016). The Group also intends to enter Vietnam if it can secure good
locations, with a plan to promote store development from 2016 onwards.

We encourage readers to review our complete legal statement on “Disclaimer” page.
6

○Business Supermarket and Quality Food Businesses
Net sales from Business Supermarkets and the quality food businesses are expected to rise
10.6% YoY to \58,000 mn. Within this, the outlook is for core Business Supermarket businessnet sales to rise 12.3% YoY to \53,000 mn. Apart from the fact that the pace of new store
openings will accelerate from six in the previous period to 10, it is premised on net sales atexisting stores performing soundly with a 2% YoY rise.

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

6-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru SatoOn the other hand, from FY3/16 net sales at G7 Japan Food Services, which will integrate foodand domestic restaurant businesses, are expected to be \5,000 mn. It is expected that revenue
will continue to expand due to ongoing expansion in quality food accounts and the unearthing of
new products. Further, the Group intends to tackle exports to Asia also of agricultural, fisheries
and livestock products, and has positioned FY3/16 as a year for focusing on acquiring (new)sales channel.
○Other Businesses
Revenue and earnings growth are expected in respect of other businesses. In respect of
its Megumi no Sato business, apart from opening several new stores in the Kansai region,
nationally the Group’s policy is for mass store deployment via partnership contracts. Given
that these are not franchise agreements, but only gain membership income at the time ofcontract, the direct impact on results will be slight. However, by expanding its procurement
network nationwide, it may reduce the risk of stock shortages for products in Megumi no Satostores, where concerns arise in instances of, for example, unseasonable weather.
As the counterparty for its first round of licensing agreements, it has concluded a contract with
Furusato Farms K.K. of Miyagi Prefecture. Apart from plans to open Megumi no Sato storeswithin Miyagi Prefecture, it is considering supplying fresh, safe fruit and vegetables to Megumi
no Sato stores in the Kansai area from the Tohoku area. Further, in the Kanto area also, theGroup is moving ahead on partnership agreement negotiations with multiple companies, and
it is expected that the number of partnership agreement counterparties will keep increasing.
Further, in respect of overseas operations (restaurants, imports and exports of food products,
agri business etc.), despite expecting 15-20% growth in net sales it is expected that operating
losses will continue, due to an increase in upfront capital costs, such as new store openings.
Tropical fruit known also as pitaya. On its surface, it has protuberances that are a green color
like that peculiar to the leaves of cactus fruits. The skin is typically a brilliant, glossy red.
However, because the surface looks like the scales of a dragon, it is called dragon fruit.
Halal is a generic term for “healthy foods and activities” allowed by the teachings of Islam(Sharia Law and the tenets of Islam). Muslims must avoid all foods and beverages apart fromthose officially recognized as halal products. Halal denotes guidelines for indicating a safe
lifestyle, and are for Muslims essential standards that are applied in cosmetics, pharmaceuticals,
nursing care equipment, as well as finance and a range of services.

We encourage readers to review our complete legal statement on “Disclaimer” page.
7

伪伪Overseas Business Strategy
Establishing businesses in multiple countries to achieve economic
growth in Southeast Asia

G-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

6-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Yuzuru Sato

Domestically, the Group has continued to grow by promoting mass store development as an
AUTOBACS and Business Supermarkets franchisee, however, in the long-term, to continue
sustainable growth expansion, it feels it is crucial to create a new earnings channel, and is
beginning to focus on overseas businesses as one such channel.
As noted above, the Group has begun to establish, simultaneously and in parallel, operations
including AUTOBACS and car-related businesses, agri businesses, imports and exports offood products and restaurants in multiple countries. Going forward, it also plans to expand toIndonesia, Taiwan, the Philippines, Laos, Cambodia and other countries, the strategy being toengage with economic growth in Southeast Asia. The Group has cited net sales of \10,000
mn in five years’ time in FY3/20 as a numerical business target. Given that going forward
investment at a pace of around \400-500 mn will continue annually, a contribution from a
profit perspective will be some way off, however, looking at the long-term it will be a focus ofattention as it grows into a business that drives (overall) Group results expansion.
Following Malaysia the Group plans to expand its AUTOBACS and car-related businesses
to Vietnam, with a policy of promoting mass store expansion. Further, it is also considering
expansion into other countries where the automobile and motorcycle markets are expected
to expand.
In its agri businesses, it is expected that means of transportation, which became an issue
in its strawberry cultivation in Myanmar, will be established. In FY3/16, by introducing 2-3
refrigerated trucks and seeking to expand possible transport time from growing areas, it plans
to start shipping to CityMart affiliated stores in urban areas. Further, the Group is engaged
in chrysanthemum cultivation in Vietnam, and in FY3/16 will commence cultivation of dragon
fruit in collaboration with a local fruit producer. It plans to sell the fruit harvested at Megumi
no Sato stores.
In its restaurant operations, following on from its Malaysian ramen shop and Vietnamese curryhouse, the company plans to open one ramen shop in Indonesia in FY3/16. In Indonesia also it
will not be halal compliant, but have Chinese and Japanese as its target customer group. In the
future also it is considering entering into licensing agreements and expanding stores into Asia
in respect of those types of businesses where demand is expected.
Moreover, in respect of restaurant operations, its policy is to open one or two directly held
shops in each country, and after that expand by entering into a franchise agreement with alocal company.
Further, in respect of its food product exporting businesses, it is already exporting, albeit on asmall scale, kamameshi (pots with rise, meat and vegetable) and meat products to Singapore,
Hong Kong and other locations. From FY3/16 apart from concentrating on developing costcompetitive private label products, it will strengthen exports of agricultural, fisheries andlivestock products. In respect of agricultural, fisheries and livestock products, apart fromproceeding with acquiring suppliers by itself, it has positioned FY3/16 as a year to focus on
expanding new routes for gaining accounts in relation to sales channels.
Additionally, in respect of its M&A strategy, there is no change in the policy adopted to datethat it will proactively consider in all of its businesses any deal where it is expected that it willbring synergistic benefits.

We encourage readers to review our complete legal statement on “Disclaimer” page.
8

伪伪Shareholder Returns Policy
Underlying Group policy of stable dividends, with a payout ratio of
30% as the yardstickG-7 HOLDINGS INC.
7508 Tokyo Stock ExchangeFirst Section

6-Jul.-15

The Company’s underlying policy is to return profits to shareholders in accordance withbusiness performance, premised on maintaining stable dividends, making a comprehensive
determination, while taking into consideration factors including capital required for futurebusiness expansion and its financial condition. The company generally aims to maintain adividend payout ratio of around 30%. For FY3/16 the dividend has been set at \34.0 per share,
yielding a dividend payout ratio of 19.7%, with it expected that this will be topped up by way ofa special dividend, if results achieve the Group’s its planned targets.

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㻿㼔㼍㼞㼑㻌㼍㼚㼐㻌㻰㼕㼢㼕㼐㼑㼚㼐㻌㻼㼍㼥㼛㼡㼠㻌㻾㼍㼠㼕㼛

Important disclosuresand disclaimers appear
at the end of this document.

㻔¥㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

㻠㻡㻚㻜㻜

㻠㻜㻚㻜
㻟㻟㻚㻣

㻠㻜㻚㻜㻜

FISCO Ltd. Analyst
Yuzuru Sato

㻟㻜㻚㻤
㻟㻜㻚㻤

㻞㻤㻚㻣

㻟㻡㻚㻜㻜
㻟㻜㻚㻜㻜

㻟㻜㻚㻜

㻞㻞㻚㻤

㻝㻥㻚㻣

㻞㻡㻚㻜㻜

㻞㻜㻚㻜

㻞㻜㻚㻜㻜
㻟㻠㻚㻜㻜

㻝㻡㻚㻜㻜
㻝㻜㻚㻜㻜

㻡㻚㻜㻜

（％）

㻟㻥㻚㻜㻜

㻟㻜㻚㻜㻜

㻟㻠㻚㻜㻜
㻝㻜㻚㻜

㻞㻜㻚㻜㻜
㻝㻟㻚㻜㻜

㻜㻚㻜㻜

㻜㻚㻜
㻲㼅㻟㻛㻝㻝

㻲㼅㻟㻛㻝㻞

㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢㻱

We encourage readers to review our complete legal statement on “Disclaimer” page.
9

Disclaimer
FISCO Ltd. (the terms "FISCO", "we", mean FISCO Ltd.) has legal agreements with the Tokyo
Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock price and index
information. The trademark and value of the "JASDAQ INDEX" are the intellectual properties of
the TokyoStock Exchange, and therefore all rights to them belong to the Tokyo StockExchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use thisreport and take full responsibility for such use. We shall not be liable for any result of its use.
We provide this report solely for the purpose of information, not to induce investment or any
other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on information thatwas current at the time the report was produced, but this information and the content of thisreport are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplications of thereport, without the express written consent of FISCO, is strictly prohibited. Any transmission,
reproduction, distribution or transfer of the report or its duplications is also strictly prohibited.
The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.