COMPANY RESEARCH AND ANALYSIS REPORT

Konoike Transport Co., Ltd.
9025
Tokyo Stock Exchange First Section

11-May.-2017
FISCO Ltd. Analyst

Noboru Terashima

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

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Maintained increase in profits in FY3/17 3Q while recording special expenses............................................

01

2. For the FY3/17 full year, the initial forecasts have been left unchanged and the target for
operating income remains ¥11,000mn... ......................................................................................................

01

3. Only slight progress has been made in achieving the targets set for the medium-term
management plan 1st stage, but it is progressing constitutional improvements. .........................................

01■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 02
1. Company profile.. ................................... ......................................................................................................

02

2. History................................................... ......................................................................................................

03■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Three main business segments. . ..................................................................................................................

03

2. The six segments by field.. ..................... ......................................................................................................

05

3. Features and strengths.......................... ......................................................................................................

07

4. Competition........................................... ......................................................................................................

10■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 10
1. Summary of the FY3/17 3Q results........ ......................................................................................................

10

2. Financial condition................................. ......................................................................................................

12■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 13
1. FY3/17 results outlook.................................................................................................................................

13

2. Outlook by segment and by field........... ......................................................................................................

14

3. Forecasts for capital investment and depreciation. ......................................................................................

15■Medium- to long-term growth strategy------------------------------------------------------------------------------------------------ 15
1. Has only made slight progress in achieving the targets in the medium-term management plan 1st stage....

15

2. The direction the Company is aiming for: attempting to acquire an evaluation as a service provider...........

16

3. Utilizing its strengths: developing “bundling”. ..............................................................................................

17

4. Aiming to improve capital efficiency. . ...........................................................................................................

17

5. Growth strategy...........................................................................................................................................

17

6. Organization changes toward improving corporate value. ...........................................................................

18■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 19

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

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/██Summary
A major comprehensive logistics company whose strength is
its “Integrated Solutions Business” that includes logistics at
customer sites
Konoike Transport Co., Ltd. <9025> (hereafter, also “the Company”) is a historic company founded in 1880 and
although “transport” is in its name, its main operations are not merely logistics, but rather an “Integrated Solutions
Business” in which it is contracted to undertake various kinds of work at the plants and premises of its customers.
With business relations of more than 50 years with its main customers, it has earned their deep trust, which is oneof its features and strengths.
1.Maintained increase in profits in FY3/17 3Q while recording special expenses
In the FY3/17 3Q results, net sales were ¥195,478mn (up 2.5% year-on-year (YoY)), operating income was ¥8,759mn(up 3.3%), ordinary income was ¥9,052mn (up 4.6%), and profit attributable to owners of parent was ¥6,050mn(up 4.1%). In the International Logistics Business, profits decreased YoY due to factors including the recording ofresearch expenses for the future in Q3, and the overall rate of increase in profits fell significantly. However, thesefactors were expected at the start of the period and are not a major cause for concern.
2. For the FY3/17 full year, the initial forecasts have been left unchanged and the target for operating income
remains ¥11,000mn
The forecasts for the FY3/17 full year results are net sales of ¥266,000mn (up 5.3% YoY), operating income of¥11,000mn (up 7.2%), ordinary income of ¥11,100mn (up 3.6%), and profit attributable to owners of parent of¥6,800mn (up 6.1%). As described above, the rate of increase in profits in 3Q (cumulative) slowed, but at the current
point in time there has been no change to the forecasts.
3. Only slight progress has been made in achieving the targets set for the medium-term management plan
1st stage, but it is progressing constitutional improvements
The targets for the medium-term management plan 1st stage are net sales of ¥300,000mn and operating incomeof ¥15,000mn in FY3/18, but based on the current situation, the Company has made only slight progress towardachieving these numerical targets. But on the other hand, it is currently progressing improvements to its corporate
structure, and we will be paying attention to developments in the future.
Key Points
Has a long history as a transport company and its strengths include its clients in its Integrated Solutions
Business• No changes to the initial forecasts for the FY3/17 full year, and the forecast operating income increase rate
remains at 7.2%
• Aiming to acquire an evaluation as a service provider in the medium-to-long term•

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

01 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Summary㻯㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㼞㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟(¥mn)

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕(¥mn)

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻞㻣㻜㻘㻜㻜㻜

㻝㻝㻘㻜㻜㻜

㻝㻞㻘㻜㻜㻜

㻝㻜㻘㻞㻢㻠
㻥㻘㻟㻢㻝㻞㻢㻜㻘㻜㻜㻜
㻞㻡㻜㻘㻜㻜㻜

㻣㻘㻥㻠㻢㻝㻜㻘㻜㻜㻜

㻣㻘㻥㻟㻤

㻣㻘㻢㻤㻤

㻤㻘㻜㻜㻜

㻞㻠㻜㻘㻜㻜㻜
㻞㻢㻢㻘㻜㻜㻜

㻞㻟㻜㻘㻜㻜㻜
㻞㻠㻠㻘㻥㻤㻞

㻞㻞㻜㻘㻜㻜㻜
㻞㻝㻜㻘㻜㻜㻜

㻞㻞㻢㻘㻥㻤㻠

㻞㻞㻣㻘㻣㻠㻥

㻞㻟㻝㻘㻡㻜㻠

㻲㼅㻟㻛㻝㻞

㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻞㻡㻞㻘㻡㻡㻜

㻢㻘㻜㻜㻜
㻠㻘㻜㻜㻜
㻞㻘㻜㻜㻜

㻞㻜㻜㻘㻜㻜㻜

㻜㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻔㻱㻕

Source: Prepared by FISCO from the Company’s financial results██Company profile
A major logistics company with a long history, with more than 3,500
customers, 180 domestic bases, and 39 overseas bases
1. Company profile
Konoike Transport Co., Ltd. is a historic company founded in 1880 and although “transport” is in its name, its main
operations are not merely logistics, but rather an “Integrated Solutions Business” (details to follow) in which it iscontracted to undertake various kinds of work at the plants and premises of its customers. With business relationsof over 50 years with its main customers, it has earned their deep trust, which is one of its features and strengths.
It currently has approximately 3,500 customers in Japan and overseas, but the top 20 customer companies accountfor around 40% of its net sales. As of November 1, 2016, it had 56 affiliated companies (of which, 39 wereconsolidated subsidiaries), 180 domestic bases (156 belonging to the Company and 24 to Group companies), 39
overseas bases, and approximately 22,000 employees on a consolidated basis.

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

02 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Company profile

2. History
The Company was founded a long time ago, in 1880. At that time, it was started as a transport business in Denpo(currently Konohana Ward), Osaka, by Mr. Chujiro Konoike. In 1900, it commenced “in-factory contract operations”
for Nippon Casting (currently, Nippon Steel & Sumitomo Metal <5401>), in which it undertook cargo handling andtransportation work. Then in 1945, Konoike Transport Co., Ltd., was established as a corporation, and in 1951, it
started “in-factory contract operations” in the food field, and in 1953 it received an order from a major beveragecompany for in-factory contract operations. These “in-factory contract operations” were the origins of the current“Integrated Solutions Business,” and even today, the same steel and food manufacturers remain some of theCompany’s major customers.
It subsequently gradually expanded the scope of the services it provided and its businesses, to warehousing operations in 1962, maritime cargo transport business in 1963, air cargo transport business in 1979, temperature-control(hereafter, “temp-cntl-related”) logistics services in 1985, airport-related business in 1991, and medical-related
business in 1994. Moreover, in 1984 it established a subsidiary in Singapore as its first overseas base, and subsequently accelerated the pace of its overseas development. In March 2013, in the 134th year since its foundation,
the Company was listed on the 1st Section of the Tokyo Stock Exchange (TSE).

██Business overview
The main business is the “Integrated Solutions Business,” which isprimarily logistics on the premises of its customers. Its strength is
its “bundling” of services.
1. Three main business segments
The Company has three business segments; “the Integrated Solutions Business,” “the Domestic Logistics Business,”and “the International Logistics Business.” In FY3/17 2Q, the Integrated Solutions Business provided 68.7% of total
net sales, the Domestic Logistics Business 18.9%, and the International Logistics Business 12.5%.

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

03 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Business overview

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼎㼥㻌㼟㼑㼓㼙㼑㼚㼠㻌㻔㻑㻌㼛㼒㻌㼠㼛㼠㼍㼘㻌㼟㼍㼘㼑㼟㻕㻌㻔㻲㼅㻟㻛㻝㻣㻌㻞㻽㻦㻌¥㻝㻟㻜㻘㻝㻝㻢㼙㼚㻕㻝㻞㻚㻡㻑㻵㼚㼠㼑㼓㼞㼍㼠㼑㼐㻌㻿㼛㼘㼡㼠㼕㼛㼚㼟㻌㻮㼡㼟㼕㼚㼑㼟㼟㻝㻤㻚㻥㻑㻰㼛㼙㼑㼟㼠㼕㼏㻌㻸㼛㼓㼕㼟㼠㼕㼏㼟㻌㻮㼡㼟㼕㼚㼑㼟㼟㻵㼚㼠㼑㼞㼚㼍㼠㼕㼛㼚㼍㼘㻌㻸㼛㼓㼕㼟㼠㼕㼏㼟㻌㻮㼡㼟㼕㼚㼑㼟㼟㻢㻤㻚㻣㻑

Source: Prepared by FISCO from the Company’s briefing materials(1) The Integrated Solutions Business
When it was first founded, the Company conducted a transportation business, but at the same time it was
engaged in a labor-supply business and its customer companies made various requests of it, and it responded
to these requests in the form of expanding its “in-factory contract operations.” This was the origin of the current
Integrated Solutions Business, and even today this business is still the Company’s main field and the mostprofitable.
Briefly stated, the Integrated Solutions Business involves “Uniting with customers and undertaking a series ofoperations in an integrated manner.” Its scope extends to the production process, the distribution process, andother specialized processes. In the production process, specialist staff from the Company’s Group companies aredispatched to a plant of the customer that they are responsible for, where they comprehensively undertake a range
of operations, from accepting materials and raw materials through to each manufacturing stage, transportation
operations within the plant, and product inspections.
For example, for a major customer of a steel manufacturer, the Company undertakes a wide range of operations,from receiving and transporting the raw materials (including iron ore and coke), various operations in the manufacturing process, the inspection and packaging of finished products (such as rolled products, hot-rolled products,
and cold-rolled products), and moreover the storage and delivery of these products and the handling of cargo at
ports. The Company has accumulated over 100 years of results and experience in conducting these outsourcing
operations, which constitutes a formidable barrier to entry for other companies.
The Company also has a history (association) of more than 50 years at the plant of another large customer of abeverage company, and in addition to logistics operations inside and outside of the plant. It also undertakes awide range of other operations, including receiving and preparing raw materials, packaging (bottling, canning,and cask filling), storage and picking, shipping, and delivery to stores. For its customer companies, outsourcing
these sorts of operations to the Company has the advantage of enabling them to concentrate on the operations
most important to them (such as product development, the core operations in the production process, and sales
strategies).

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

04 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Business overview(2) The Domestic Logistics BusinessWith the frozen and chilled storage warehouses and the dry (room temperature) warehouses that the Company
owns serving as the bases, it provides integrated services–from storage through to distribution processing anddelivery–for chilled foods, fresh foods, and general products that require temp-cntl-related management. Its
customers are in a wide range of industries, from food manufacturers, supermarkets, and wholesale companies
for convenience stores, through to manufacturers of various equipment and housing, and furthermore fashion- andapparel-related manufacturers.
As the Company handles a variety of products in this way, it is responsible for a diverse range of operations, including changing the number of products delivered, assortment (setting-up products), and attaching sales promotion
labels, while at its dry warehouses, it can respond in detail to requests from customers for distribution-process
operations for gift products, including mid-year and year-end gifts, and for apparel products.
(3) The International Logistics Business
Domestically and internationally, the Company conducts operations including sea and air cargo transportation
and warehouse operations for import and export cargo. It provides transportation services covering a wide rangeof products, from fresh foods through to parts for precision machinery, and in this way, it supports its customers’
overseas business development. Also, in response to the construction of plants overseas by its customers, theCompany provides transportation and construction services for plants that utilize its own independent solutions.
2. The six segments by field
In addition, and separate to the above-described business segments, the Company discloses information on six
segments by field (by destination); the “Steel-Related Business,” the “Food-Related Business,” the “Medical-Related
Business,” the “Life-Related Business,” the “Food-Related Business (Temp-Cntl-Related),” and the “OverseasRelated Business.”• Steel-Related Business: operations for the steel industry• Food-Related Business: mainly operations for the food industry• Medical-Related Business: medical operations relating to medical materials and pharmaceuticals, and logistics
within hospitals• Life-Related Business: Logistics related to life in general, and apparel-related and airport-related operations• F ood-Related Business (Temp-Cntl-Related): mainly logistics services, primarily from its frozen and chilledstorage warehouses• Overseas-Related Business: international logistics and port transport operations, air transport operations,engineering operations, temp-cntl-related logistics business in overseas subsidiaries, and consulting services
In FY3/17 2Q, in the percentages of total net sales provided by field-related segment, the Steel-Related Businessprovided 22.4%, the Food-Related Business 27.6%, the Medical-Related Business 6.4%, the Life-Related Business
24.0%, the Food-Related Business (Temp-Cntl-Related) 7.2%, and the Overseas-Related Business 12.5%. Moreover,in the Life-Related Business, this can be further subdivided by operations, with Life-Related Operations providing
6.8% (internal figure), Airport-Related Operations 5.5% (same), and Logistics and Apparel-Related Operations
11.7% (same).

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

05 19

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

Konoike Transport Co., Ltd.

11-May.-2017

9025 Tokyo Stock Exchange First Section

http://www.konoike.net/en/ir/

Business overview

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼎㼥㻌㼒㼕㼑㼘㼐㻌㻔㻑㻌㼛㼒㻌㼠㼛㼠㼍㼘㻌㼟㼍㼘㼑㼟㻕㻔㻲㼅㻟㻛㻝㻣㻌㻞㻽㻦㻌¥㻝㻟㻜㻘㻝㻝㻢㼙㼚㻕
㻝㻞㻚㻡㻑

㻞㻞㻚㻠㻑

㻿㼠㼑㼑㼘㻙㻾㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻲㼛㼛㼐㻙㻾㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻣㻚㻞㻑㻹㼑㼐㼕㼏㼍㼘㻙㻾㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻸㼕㼒㼑㻙㻾㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻲㼛㼛㼐㻙㻾㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌㻔㼀㼑㼙㼜㻙㻯㼚㼠㼘㻙㻾㼑㼘㼍㼠㼑㼐㻕㻻㼢㼑㼞㼟㼑㼍㼟㻙㻾㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟
㻞㻠㻚㻜㻑
㻞㻣㻚㻢㻑

㻢㻚㻠㻑
Source: Prepared by FISCO from the Company’s results briefing materials㻮㼞㼑㼍㼗㼐㼛㼣㼚㻌㼛㼒㻌㻸㼕㼒㼑㻙㻾㼑㼘㼍㼠㼑㼐㻌㻮㼡㼟㼕㼚㼑㼟㼟㻔㻲㼅㻟㻛㻝㻣㻌㻞㻽㻌㼕㼚㼠㼑㼞㼚㼍㼘㻌㼒㼕㼓㼡㼞㼑㼟㻕㻢㻚㻤㻸㼕㼒㼑㻙㻾㼑㼘㼍㼠㼑㼐㻌㻻㼜㼑㼞㼍㼠㼕㼛㼚㼟㻭㼕㼞㼜㼛㼞㼠㻙㻾㼑㼘㼍㼠㼑㼐㻌㻻㼜㼑㼞㼍㼠㼕㼛㼚㼟㻸㼛㼓㼕㼟㼠㼕㼏㼟㻙㻌㼍㼚㼐㻌㻭㼜㼜㼍㼞㼑㼘㻙㻾㼑㼘㼍㼠㼑㼐㻻㼜㼑㼞㼍㼠㼕㼛㼚㼟

㻝㻝㻚㻣

㻡㻚㻡

Note: percentages of Company-wide net sales (total is from the Life-related Business percentage of total sales, of 24.0%)
Source: Prepared by FISCO from the Company’s results briefing materials

As described above, the Company’s business can be classified into two sections (segments), with the Steel-Related
Business ,the Food-related Business, and the Medical-related Business and parts of the Life-related Business,being included in the Integrated Solutions Business, and the remaining parts of the Life-Related Business and the
Food-Related Business (Temp-Cntl-Related) being included in the Domestic Logistics Business.

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

06 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Business overview

3. Features and strengths(1) The provision of “bundling”: can provide integrated, one-stop solutions
One feature of the Company’s transportation and logistics services is that it provides these services in an integrated manner in relation to “the production process.” Specifically, compared to its industry peers, the Company
does not merely transport and deliver products and raw materials from one place to another, it also provides
its customers with “integrated solutions” by undertaking a variety of operations relating to “manufacturing andproduction” (including manufacturing process design, product control, and the production process).
Furthermore, the Company’s greatest strength would seem to be that it can undertake in an integrated mannera variety of outsourcing operations at its customers’ manufacturing plants and other premises. Seen from thecustomer’s side also, when outsourcing these respective operations, rather than having to outsource themseparately to different companies, it is more efficient if they can outsource them all to a single company thatprovides a one-stop service.
To summarize the Company’s features (strengths) described above, it can undertake a variety of operations not
only on the horizontal axis of “logistics” that runs from the delivery, storage and transportation of semi-finishedproducts and raw materials through to the storage, transportation, and delivery of finished products, but also on
the vertical axis of the manufacturing process, which includes manufacturing process design, production control,
and the production process. Moreover, in recent years it has also been undertaking “engineering” in logistics,
including repairs and maintenance operations within “automated warehouses.” There are few other companies
in the same industry that can provide integrated services to the same extent as the Company. In other words, thegreatest feature and strength of the Company can be said to be that it provides “a bundle” of integrated services,from logistics through to the manufacturing process and engineering.
￼“Bundling” is a strength of the business model

Source: Prepared by FISCO from the Company’s results briefing materials

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

07 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Business overview(2) Long associations with customers (partner relations based on trust)
As described above, the Company has already maintained associations with its main customers, like the former
Sumitomo Metal Industries, Ltd. and a major beverage company, for over 50 years. Maintaining business relations
over the long term in this way is the result of customers feeling completely satisfied with the services provided
by the Company, and it is a testimony to the trust that its customers place in it. Seen from the customers’ side,
outsourcing its peripheral operations to the Company allows them to concentrate on the business that is theircore competence.
On the other hand, it is true that within the continuing long business relations, the Company’s operations have
expanded to their current scale because it has responded to requests from customers for new services. For theCompany, expanding the scope of its operations while responding to customer requests makes it possible toaccumulate experience and expertise and develop horizontally and vertically for new customers. In this way, thelong business relations with its main customers and its deep relations of trust with them are not something thatcan be built overnight, and for the Company, they constitute its biggest asset and strength.
(3) Commitment to “safety and quality”
Safety and quality are important themes for any company, but particularly for the Company it has been positioned
as the most important theme and it is implementing the following policies for it.
The Company has established the Safety and Quality Training Center to facilitate the participation of all the Group
companies in safety- and quality-related training. The Center holds training in each region, such as learning from
accident case studies, danger-prediction training, and lectures and practical training on using forklift equipment.
It has also established and is operating the Konoike Techno Training Center to obtain the trust of customers
in the outsourcing operations in the production process. Here, with practical training as the foundation, theCenter provides practical guidance toward the acquisition of various qualifications and practical training towardlearning process management technologies on the production line. Furthermore, the Konoike Technology ResearchInstitute conducts survey research into the next generation of technologies, and at the same time it is conducting
research and development on themes that go beyond the boundaries of logistics, including on new logistics
technologies, technologies to reduce the burden on workers, and refrigeration-related technologies, as well as
developing products and services.
In such ways, the Company is actively conducting surveys, research, and development on “safety” and “quality”
that are not directly related to earnings in the immediate future, which can be said to be helping to build the long
relations of trust with customers described above. This is a feature and strength of the Company that is not clearlyvisible from the outside.
(4) A corporate structure to respond to changes
The Company has greatly changed its main operations over its long history. This is because it has responded inan agile and flexible manner to the changes it has experienced, including in the social environment, to economic
conditions, in its customers’ industry environments, and to the demands of its customers.

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

08 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Business overview

Examples of Past business opportunities

Source: From the Company’s materials

The Company’s ability to respond flexibly to changes in the economic environment and in the industry environments of its customers is one of its features and can be said to be one of its strengths.
(5) Its other strengths and features in each field
In the Food-Related Business (Temp-Cntl-Related), the Company has 15 bases (frozen and chilled storage warehouses) nationwide in locations close to the main consumption regions, and these are not merely “storage-type,”
but also “distribution-type” warehouses. This enables it to respond to the demands of major customers forthe transportation of frozen and chilled storage food on a nationwide scale, which is impossible for small- andmedium-sized operators.
For work that can be further automated, the Company is actively introducing automated warehouses that improvethe efficiency not only of the work, but also of the workers. As a result, it can accept the cargo of an unspecified
number of customers and divide their cargo and deliver it by region. This point is also a feature and a strength of
the Company in the Food-Related Business (Temp-Cntl-Related).
A feature of the Company in the Overseas-Related Business is that it can provide multiple land, sea, and airservices in an integrated manner. For example, in the case of a domestic buyer that purchases various products
from overseas, normally the production plants will be scattered across various regions, so the international
logistics will follow multiple routes. But if this buyer uses the Company’s Group, the products from each plant canbe consolidated at the Company’s warehouses, from where they can be efficiently transported to its domestic
warehouses through sea and land transportation after being containerized according to destination region within
Japan.
The Company also has staff who are fully versed in both sea and air transportation, including on custom clearance
for forwarding and the various tariff-exemption measures, and they can provide high quality and rapid responses
to customer demands.

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09 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Business overview

To further strengthen these services, in 1984 the Company established a subsidiary in Singapore, and sincethen it has been actively developing bases in the Asian region. It has particularly advanced ahead of its industry
peers into the ASEAN region, which is expected to grow in the coming years, and it is developing and providing
services in accordance with the “China plus one” strategies of its customer companies, which can be said to beanother of the Company’s features and strengths. It also opened its first base in Latin America in Mexico in April
2014. As described below, going forward developing international logistics will be one important strategy for theCompany, and we shall be paying attention to how it develops its overseas bases in each region in the future.
4. Competition
There are many companies that offer the same services as provided by the Company in its “Integrated Solutions
Business,” such as in the fields of receiving and inspecting raw materials, on-site transportation, services in the
manufacturing process, and the storage and shipment of products. However, there is no other company that
conducts all these operations by itself in an integrated manner and on the same scale as the Company. On this point,
it can be said that it does not have any competitors, but it can be regarded as competing with its own customers
when they decide to conduct these operations in-house.
It has many competitors in the logistics industry in general. For example, the Company often competes withcompanies such as Hitachi Transport System, Ltd. <9086>, Sankyu Inc. <9065>, and SENKO Co., Ltd. <9069>. It
also has many competitors in the temp-cntl-related logistics market that is growing significantly, including small- and-medium-sized companies. But as already explained, there are few companies that can respond to customer
requests and provide temp-cntl-related logistics services on a nationwide scale, and the Company can be said tobe the leader in this field.

██Results trends
While the growth rate slowed in FY3/17 3Q, the increase in profits
was maintained
1. Summary of the FY3/17 3Q results
In the FY3/17 3Q results, net sales were ¥195,478mn (up 2.5% YoY), operating income was ¥8,759mn (up 3.3%),
ordinary income was ¥9,052mn (up 4.6%), and profit attributable to owners of parent was ¥6,050mn (up 4.1%), forhigher sales and profits. However, the rate of increase of operating income slowed from the 1H results (up 9.8%),
and taken by itself, the 3Q result can be said to be not that impressive. Both sales and profits increased in the
Integrated Solutions Business, but they both decreased in the Domestic Logistics Business due to the sluggish
domestic logistic operations. Further, in addition to the economic slump in China, the Company recorded expenses
in investment for the future, and as a result sales and profits also declined in the International Logistics Business.

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10 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Results trends

FY3/17 3Q results(¥mn, %)
FY3/16 3Q

FY3/17 3Q

Amount% of total

Amount% of total

YoY change

YoY change
rate

Net sales

190,784

100.0

195,478

100.0

4,694

2.5

Gross profit

17,866

9.4

18,527

9.5

661

3.7

SG&A expenses

9,385

4.9

9,767

5.0

382

4.1

Operating income

8,481

4.4

8,759

4.5

277

3.3

Ordinary income

8,658

4.5

9,052

4.6

394

4.6

Profit attributable to owners ofparent

5,814

3.0

6,050

3.1

236

4.1

Source: Prepared by FISCO from the Company’s results briefing materials(1) Summary by segment
Net sales were ¥133,667mn in the Integrated Solutions Business (up 4.8% YoY), ¥37,496mn in the Domestic
Logistics Business (down 1.8%), and ¥24,314mn in the International Logistics Business (down 3.2%). Segment
income was ¥11,042mn in the Integrated Solutions Business (up 8.1%), ¥1,511mn in the Domestic Logistics
Business (down 10.9%), ¥711mn in the International Logistics Business (down 27.5%), and ¥27mn in Others(up 1.3%).
FY3/17 3Q trends by segment(¥mn, %)
FY3/16 3Q

FY3/17 3Q

Amount% of total

Amount% of total

YoY change

YoY change
rate

Net sales

190,784

100.0

195,478

100.0

4,694

2.5

Integrated Solutions Business

127,484

66.8

133,667

68.4

6,182

4.8

Domestic Logistics Business

38,17620.0

37,496

19.2

-680

-1.8

International Logistics Business

25,12213.2

24,314

12.4

-808

-3.2

-

-

-

-

-

-

Operating income

8,481

4.4

8,759

4.5

277

3.3

Integrated Solutions Business

10,217-

11,042

-

824

8.1

Domestic Logistics Business

1,695

-

1,511

-

-184

-10.9

International Logistics Business

980

-

711

-

-269

-27.5

Others

27

-

27

-

0

1.3

-4,439--4,533

-

-93

2.1

Others(Adjustments)

Source: Prepared by FISCO from the Company’s results briefing materials
Note: “Others” is a business segment not included in the reporting segments. It includes the Group’s asset management and other operations.

Sales and profits increased in the Integrated Solutions Business, including from the contribution of a newly
consolidated subsidiary in the Steel-Related Business, and the strong performances of the Food-Related Businessand Airport-Related Operations. Conversely, sales and profits decreased in the Domestic Logistics Business,because in addition to the slow-down in the movement of cargo by apparel customers, the start-up costs forthe new Center were higher than forecast. Sales and profits also fell in the International Logistics Business dueto the decline in the margin for forwarding and from the recording of special expenses on-location in preparation
for business development in the future. In particular, a loss was recorded in the Q3 accounting period, but this is
not considered a cause for concern as it included investment for the future.

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11 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Results trends(2) Overview by field
Looking at the situations in each of the fields, in the Steel-related Business, operations incidental to the production
process on the sites of customers were basically unchanged YoY, but the new subsidiary acquired from an
M&A contributed to results and net sales were ¥43,666mn (up 5.9% YoY). In the Food-Related Business also,
movement of cargo for customers was strong and net sales were ¥53,091mn (up 4.1%). In the Medical-Related
Business, net sales trended firmly, at ¥12,885mn (up 0.9%). While net sales in the Life-Related Business were¥47,378mn (up 3.1%), there were variations between the operations in this business. Breaking it down, net sales
for Life-Related and Airport-Related Operations were favorable, at ¥13,230mn (up 2.8%) and ¥10,794mn (up12.5%) respectively. On the other hand, due to the slump in the movement of cargo by customers, net sales from
Logistics- and Apparel-Related Operations were ¥23,354mn (down 0.6%).
In the Food-Related Business (Temp-Cntl-Related), due to factors including the withdrawal from unprofitablesectors, net sales were ¥14,142mn (down 3.7% YoY). In the Overseas-Related Business, in addition to thesluggishness in forwarding transportation operations, the sense of a slump was strengthened from the impact of
the economic slowdown in China, and net sales were ¥24,314mn (down 3.2%).
Overview of FY3/17 3Q net sales by field(¥mn, %)
FY3/16 3Q

FY3/17 3Q

Amount% of total

Amount% of total

YoY change

YoY change
rate

190,784

100.0

195,478

100.0

4,694

2.5

Steel-Related Business

41,23821.6

43,666

22.3

2,428

5.9

Food-Related Business

51,013

26.7

53,091

27.2

2,077

4.1

Medical-Related Business

12,767

6.7

12,885

6.6

117

0.9

Life-Related Business

45,95224.1

47,378

24.2

1,425

3.1

Life-Related operations

12,872

6.7

13,230

6.8

357

2.8

Airport-Related operations

9,592

5.0

10,794

5.5

1,201

12.5

Logistics- and Apparel-Related
Operations

Net sales

23,487

12.3

23,354

11.9

-133

-0.6

Food-Related Business (TempCntl-Related)

14,6897.7

14,142

7.2

-547

-3.7

Overseas-Related Business

25,12213.2

24,314

12.4

-808

-3.2

Source: Prepared by FISCO from the Company’s results briefing materials

The financial condition is stable: the equity ratio became 44.7%
2. Financial condition
The financial condition in FY3/17 3Q was as follows. Current assets were ¥80,077mn (up ¥9,391mn on the endof the previous fiscal year), which was mainly due to increases in cash and deposits of ¥6,559mn and notes andaccounts receivable-trade of ¥4,295mn. Non-current assets were ¥119,723mn (down ¥1,364mn), with the main
factors being decreases in property, plant and equipment of ¥1,847mn and intangible assets of ¥472mn (mainly
goodwill in consolidated subsidiaries). As a result, total assets were ¥199,800mn (up ¥8,026mn).

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12 19

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

Konoike Transport Co., Ltd.

11-May.-2017

9025 Tokyo Stock Exchange First Section

http://www.konoike.net/en/ir/

Results trends

Current liabilities were ¥54,850mn (up ¥ 6,121mn), due to factors including that current portion of bonds decreased¥3,000mn and current portion of long-term loans payable increased ¥1,994mn. Non-current liabilities were¥53,130mn (down ¥1,318mn), primarily because net defined benefit liability decreased ¥138mn and long-termloans payable fell ¥2,255mn. Consequentially, total liabilities were ¥107,980mn (up ¥4,802mn). Total net assets wereup ¥3,223mn on the end of the previous fiscal year to ¥91,819mn, mainly due to the increase in retained earnings
from the recording of quarterly net income. As a result, at the end of FY3/17 3Q, the equity ratio became 44.7%.
Consolidated balance sheet(¥mn)
End of FY3/16

End of FY3/17 3Q

YoY change

Cash and deposits

20,307

26,866

6,559

Notes and accounts receivable-trade43,51047,806

4,296

70,68580,077

9,391

99,32097,473-1,847-472

Total current assets
Property, plant and equipment
Intangible assets

3,599

3,127

Investments and other assets

18,16819,122

953

Total non-current assets

121,087

119,723-1,364

Total assets

191,773

199,800

8,026

Notes and accounts payable-trade

14,592

14,075-517

Short term loans payable

2,868

3,247

379

Current portion of bonds

4,000

1,000

-3,000Current portion of long-term loans
payable

4,691

6,686

1,994

Accrued expenses

9,468

6,368

-3,100Total current liabilities

48,72854,8506,121

Bonds payable

16,00016,000-Long-term loans payable

11,8049,549-2,255Net defined benefit liability

17,646

17,508-138

Total non-current liabilities

54,44853,130-1,318

Total liabilities

103,177

107,980

4,802

Total net assets

88,596

91,8193,223

Source: Prepared by FISCO from the Company’s results briefing materials██Business outlook
No changes to the initial forecasts for the FY3/17 full year and theforecast operating income increase rate remains 7.2%
1. FY3/17 results outlook
The forecasts for the FY3/17 full year results are net sales of ¥266,000mn (up 5.3% YoY), operating income of¥11,000mn (up 7.2%), ordinary income of ¥11,100mn (up 3.6%), and profit attributable to owners of parent of¥6,800mn (up 6.1%). As described above, the rate of increase in profits in 3Q (cumulative) slowed, but at the current
point in time there has been no change to the forecasts.

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13 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Business outlook

FY3/17 results forecast(¥mn, %)
FY3/16

FY3/17 (forecast)Amount% of total

Amount% of total

YoY change

YoY change
rate

Net sales

252,550100.0

266,000

100.0

13,450

5.3

Integrated Solutions Business

169,01466.9

181,100

68.1

12,086

7.2

Domestic Logistics Business

50,25019.9

51,700

19.4

1,450

2.9

International Logistics Business

33,28513.2

33,000

12.4

-285

-0.9

0

-

-

-

-

-

Operating income

10,2644.1

11,000

4.1

736

7.2

Integrated Solutions Business

12,827-

14,100

-

1,273

9.9

Domestic Logistics Business

2,089

-

2,000

-

-89

-4.3

International Logistics Business

1,301

-

1,300

-

-1

-0.1

36

-

0

-

-36

-

(Adjustments)-5,990--6,400--410-

Ordinary income

10,7144.2

11,100

4.2

386

3.6

Profit attributable to owners ofparent

6,411

2.5

6,800

2.6

389

6.1

OthersOthers

Source: Prepared by FISCO from the Company’s results briefing materials

2. Outlook by segment and by field
Both sales and profits are forecast to increase in the Integrated Solutions Business from the contribution of the newly
consolidated subsidiary and the opening of new bases, with net sales of ¥181,100mn (up 7.2% YoY) and segment
income of ¥14,100mn (up 9.9%). In the Domestic Logistics Business, net sales are forecast to rise to ¥51,700mn(up 2.9%) from the increase in online sales-related, but due to the start-up costs for the new centers, segment
income is expected to decrease to ¥2,000mn (down 4.3%). In the International Logistics Business, net sales are
forecast to decline to ¥33,000mn (down 0.9%) because of the reduction in the volume of cargo handled due to thestrong yen and the economic slowdown in China, but segment income is expected to remain basically unchangedat ¥1,300mn (down 0.1%) following the elimination of the problem at U.S. ports.
By field, in the Steel-Related Business, net sales are forecast to be ¥59,900mn (up 7.1% YoY) including from thefull year contribution of ASR Recycling Kashima Co., Ltd., that has newly entered the scope of consolidation. In the
Food-Related Business, net sales are expected to increase to ¥69,700mn (up 5.4%) including from the contributionsof the opening of new centers in Gunma and Okayama and the expansion of bases. In the Medical-Related Businessalso, net sales are forecast to increase to ¥17,600mn (up 4.4%) from the acquisition of new customers in thehospitals business.
In the Life-Related Business, net sales are forecast to increase to ¥66,800mn (up 9.2%) from the growth in online
sales-related logistics and Airport-Related Operations. Breaking this down, net sales in Life-Related Operations are
expected to be ¥19,200mn (up 12.5%), in Airport-Related Operations ¥14,500mn (up 11.2%), and in logistics- andapparel-related operations ¥33,000mn (up 6.2%). In the Food-Related Business (Temp-Cntl-Related), net sales are
forecast to fall to ¥18,600mn (down 3.0%) due to the withdrawal from unprofitable operations. In the OverseasRelated Business, they are set to decline to ¥33,000mn (down 0.9%).

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14 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Business outlook

FY3/17 net sales forecast by field(¥mn, %)
FY3/16

FY3/17 (forecast)Amount% of total

Amount% of total

YoY change

YoY change
rate

252,550100.0

266,000

100.0

13,450

5.3

Steel-Related Business

55,941

22.2

59,900

22.5

3,959

7.1

Food-Related Business

66,10426.2

69,700

26.2

3,596

5.4

Medical-Related Business

16,856

6.7

17,600

6.6

744

4.4

Life-Related Business

61,18324.2

66,800

25.1

5,617

9.2

Life-Related Operations

17,074

6.8

19,200

7.2

2,126

12.5

Airport-Related Operations

13,0375.2

14,500

5.5

1,463

11.2

Logistics- and Apparel-Related
Operations

31,071

12.3

33,000

12.4

1,929

6.2

Food-Related Business (TempCntl-Related)

19,1797.6

18,600

7.0

-579

-3.0

Overseas-Related Business

33,28513.2

33,000

12.4

-285

-0.9

Net sales

Source: Prepared by FISCO from the Company’s results briefing materials

3. Forecasts for capital investment and depreciation
The total amount of capital investment in FY3/17 is forecast to be ¥13,500mn (up 17.1% YoY). Breaking this down,
it is set to be ¥7,500mn (down ¥2,520mn) in the Integrated Solutions Business, ¥3,000mn (up ¥2,414mn) in theDomestic Logistics Business, and ¥2,300mn (up ¥1,805mn) in the International Logistics Business.
The main projects will include ¥1,110mn to expand the warehouse at the Kita Kanto Logistics Center, ¥1,317mn
for conveyors and other equipment at the Nishi Osaka Distribution Center, and US$19.25mn for the constructionof a new warehouse at KONOIKE-GENERAL, INC.
The total amount of depreciation expenses is forecast to be ¥8,400mn (up 14.6% YoY). Breaking this down, it isexpected to be ¥5,300mn (up ¥645mn) in the Integrated Solutions Business, ¥1,600mn (up ¥95mn) in the Domestic
Logistics Business, ¥800mn (up ¥89mn) in the International Logistics Business, and ¥500mn (up ¥48mn) for
common items.

██Medium- to long-term growth strategy
Aiming to achieve the targets in the medium-term management plan
1st stage, and advance improvements to the corporate structure
1. Has only made slight progress in achieving the targets in the medium-term management plan 1st stage
The Company has announced its medium-term management plan in which it sets the targets for FY3/21, which willbe the140th year since it was founded, of net sales of ¥350bn and operating income of ¥20bn. As the 1st stage
and with FY3/16 as the Plan’s first year, it has set targets for FY3/18 of net sales of ¥300bn and operating incomeof ¥15bn.

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15 19

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

Konoike Transport Co., Ltd.

11-May.-2017

9025 Tokyo Stock Exchange First Section

http://www.konoike.net/en/ir/

Medium- to long-term growth strategy

Medium- to long-term quantitative targets(¥bn)
FY3/15, the Express Plan
Vol. 2’s final year

Fiscal year
Net sales
Operating income (margin)
ROE

FY3/16, the medium-term
management plan’s firstyear

FY3/21 (targets) (140th
year since foundation)

FY3/18 (targets)

244.9

252.5

300.0

350.0

9.3 (3.8%)

10.2 (4.1%)

15.0 (5.0%)

20.0 (5.7%)

6.9%

7.6%

8.7%

9.6%

Source: Prepared by FISCO from the Company’s results briefing materials㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼎㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕
㻞㻜㻚㻜㻌

㻠㻜㻜㻚㻜

㻔¥㼎㼚㻕

㻞㻜
㻝㻡㻚㻜㻌

㻟㻜㻜㻚㻜

㻞㻜㻜㻚㻜

㻝㻡

㻝㻝㻚㻜㻌
㻥㻚㻟㻌

㻝㻜㻚㻞㻌
㻝㻜
㻟㻡㻜㻚㻜㻌

㻝㻜㻜㻚㻜㻞㻠㻠㻚㻥㻌

㻞㻡㻞㻚㻡㻌

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻞㻢㻢㻚㻜㻌

㻟㻜㻜㻚㻜㻌㻡㻜㻚㻜㻜㻲㼅㻟㻛㻝㻣
㻲㼅㻟㻛㻝㻤
㻔㼒㼛㼞㼑㼏㼍㼟㼠㻕 㻔㼒㼛㼞㼑㼏㼍㼟㼠㻕㻲㼅㻟㻛㻞㻝
㻔㼒㼛㼞㼑㼏㼍㼟㼠㻕

Source: Prepared by FISCO from the Company’s results briefing materials

In fact, based on the progress made toward achieving the FY3/17 forecast for operating income of ¥11bn, it ispossible that the Company will soon have to reconsider the targets in the medium-term plan. However, it can besaid that the important goal in the medium-term management plan is not necessarily only achieving the quantitative
targets, but also that the Company changes qualitatively. To achieve such a qualitative goal, the Company isadvancing the following strategies
2. The direction the Company is aiming for: attempting to acquire an evaluation as a service provider
As a long-term target, in the future the Company intends the percentage of all operations provided by “conventional
logistics,” such as transportation and warehouse management, to be approximately 50%, and “the provision of
non-conventional services,” including outsourcing, to be around 50%.
Currently, the Company’s evaluation on the stock market (actual PBR) is 0.91 times (as of February 24, 2017), andthis around the same level as PBR 0.8 times, which is the simple average of the warehouse and transportationindustry within the TSE 33 industries (as of January 31, 2017, source: the Tokyo Stock Exchange). On the other
hand, the PBR (same) of the service industry within the TSE 33 industries is 2.1 times. Therefore, in the future, it isconsidered that the Company can obtain an evaluation of a PBR of approximately 1.5 times, which is the average of
the PBRs of the warehouse and transportation industry and the service industry, by maintaining a ratio of operationsof 50% from “conventional logistics” and 50% from “non-conventional logistics (outsourcing services).”

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16 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Medium- to long-term growth strategy

3. Utilizing its strengths: developing “bundling”
As previously explained, the greatest feature and strength of the Company’s business model is that it bundles andprovides “general logistics + production process services + engineering services.” By developing this business model
into new fields, the Company will increase the percentage of total operations that are services.
4. Aiming to improve capital efficiency
One financial issue for the Company would seem to be improving the Return on Invested Capital (ROIC). In FY3/16,
the Company’s ROIC (= net income / (shareholders’ equity + interest-bearing debt)) was 5.09%, which cannot be
said to be that high a level. Also, there are variations in ROIC between its operations and improving the return inbusinesses with low investment profitability will be necessary in the future.
Investment profitability–ROIC and measures for growth by business field

Source: Prepared by FISCO from the Company’s results briefing materials

5. Growth strategy
The Company has positioned the following as its three key strategies.
(1) Acquisition of outsourcing operations in the services industry
Following the Medical-Related Business and Airport-Related Operations, the Company is aiming to acquire newoutsourcing operations in the service industry.
(2) Further expansion of outsourcing operations in the manufacturing industry
In addition to expanding existing outsourcing operations for major steel and food manufacturers, the Company
is aiming to acquire new customers in these industries.
(3) Expansion of the domestic business model and shift to high profitability at the overseas bases
The Company will develop overseas the business model that is achieving success domestically, and it is aiming
to achieve high profitability for its overseas business.

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17 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Medium- to long-term growth strategy

6. Organization changes toward improving corporate value
The Company is working to “Formulate and realize a growth strategy,” “Improve capital efficiency,” and “Strengthen
corporate governance policy” toward improving corporate value. At a Board of Directors meeting held on March 16,
2017, it resolved to make organizational changes effective April 1, 2017, and these changes seem to be intended
to more strongly advance measures to improve corporate value.
First, to promote Company-wide growth, it is aiming to strengthen functions from the Sales Development Division
serving as the Business Development Division. The Sales Development Division was established on April 1, 2016,
with the objectives of creating synergies with the business divisions and creating new business opportunities froma long-term perspective. Following the current organization changes, in addition to consolidate the Company’s
M&A-related functions, it was newly established as the Business Development Division with the aim of strengthening
the function to create business opportunities by incorporating the function for new business development thatwas the responsibility of the former Corporate Planning Division. The Business Development Division includes
departments to research and introduce new logistics technologies. This Division supervise the strategies to acquire
new customers and for new business development for the entire Group, including overseas.
With regard to the airport business also, which is a growth field for the Company, previously it was under the jurisdiction of the Life-related Business Division, but following the current organization changes, it become independent
as the Airport Business Division. As a result of this, the airport business is expected to further expand.
Also, the Corporate Planning Division was dismantled, and from within it, the Corporate Planning Department andthe Strategic Transformation Division have been integrated and newly established as the Corporate Innovation
Promotion Division. Up to the present time, the Corporate Planning Department had been responsible for planningand drafting management plans and the medium-term management plan, while the Corporate Innovation Promotion
Division worked on management reforms to promote Group management. By integrating these two organizations,the aim is to link the formulation of the medium-term management plan to the management reforms and to further
increase the ability to implement company-wide management strategies.
In addition, the Corporate Strategy Office has been newly established as an organization that reports directly to theBoard of Directors. Strengthening governance is one of the most important issues for the Company and it is working
to reform the Board of Directors. Specifically, previously the Board of Directors was the highest organization for the
execution of operations, but the Company is attempting to reform it so that it instead it focuses on its management
supervisory function, of showing the direction for management, such as for the vision and corporate strategy, andsupervising the execution of operations. The Corporate Strategy Office has been established with the objective of
supporting the management supervision by the Board of Directors that is focus on the management supervisionfunction, in other words, serving as a monitoring board.
Through the current organizational reforms, the Company is also aiming to respond to another of the management
issues it is currently facing, of labor shortages and worker reforms. Previously, human resources management andthe recruitment of Division personnel in the Company was under the jurisdiction of the General Affairs / Personnel
Division, while the Labor Division was responsible for recruiting on-site personnel. But following the current organizational changes, both organizations have been integrated as the Personnel / Labor Division, toward establishingan integrated system to manage the personnel in the entire Group. Under the Personnel / Labor Division, thePersonnel Planning Department, the Recruiting Department, and the Personnel Trainning Department has been
newly established, in addition to strengthening the functions for personnel recruitment and training, the Company
actively implement measures for diversity. The General Affairs Department in the General Affairs / Personnel Division
has been made independent, with the aim of strengthening the governance function.

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

18 19

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

Konoike Transport Co., Ltd.
9025 Tokyo Stock Exchange First Section

11-May.-2017
http://www.konoike.net/en/ir/

Medium- to long-term growth strategy

FY3/18 is the final year of the Company’s current medium-term management plan, and it can be said that in thisone year it is preparing for the next medium-term management plan through the efforts described above. We arepaying attention to the reforms that it makes during this year.

██Shareholder return policy
Plans to maintain a dividend payout ratio of around 30%
The Company decides its dividend policy based on its basic policy of “Returning to shareholders the cash flow
realized through measures to improve corporate value.” Its dividend payout ratio results in the past 2 years were23.5% in FY3/15 and 29.3% in FY3/16, while the full year dividend for FY3/17 is forecast to be ¥35.0, and if it
achieves its income forecasts, the dividend payout ratio will be 29.3%. The Company plans to maintain the dividend
payout ratio at around 30% in FY3/18 also.

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

19 19

Disclaimer
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