COMPANY RESEARCH AND ANALYSIS REPORTE∙J Holdings Inc.
2153
Tokyo Stock Exchange First Section

23-Oct.-2018
FISCO Ltd. Analyst

Yuzuru SatoFISCO Ltd.
http://www.fisco.co.jp

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. FY5/18 results overview......................... ......................................................................................................

01

2. Outlook for FY5/19.. .....................................................................................................................................

01

3. The medium-term management plan...........................................................................................................

02

4. Shareholder return policy....................... ......................................................................................................

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company history. . ........................................................................................................................................

03

2. Business overview................................. ......................................................................................................

03

3. Corporate philosophy............................ ......................................................................................................

06■Result trends------------------------------------------------------------------------------------------------------------------------------------------------------------------ 07
1. Overview of the FY5/18 results....................................................................................................................

07

2. Trends in the orders-received and net sales.................................................................................................

08

3. Financial position and management indicators. ...........................................................................................

11■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 12
1. FY5/19 outlook...................................... ......................................................................................................

12

2. FY5/19 sales policy................................ ......................................................................................................

14■4th medium-term management plan------------------------------------------------------------------------------------------------------- 15
1. Basic policy of the medium-term management plan. ...................................................................................

15

2. Numerical management targets...................................................................................................................

16

3. Business strategy.. .......................................................................................................................................

16■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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/██SummaryTarget higher sales and profits in FY5/19 through increasing orders
for technical proposal-type projects
E∙J Holdings Inc. <2153> (hereinafter referred to as “the Company”) is a major, comprehensive construction consultant whose strength is that it is able to provide services in every process for social infrastructure, from planningand development through to plan formulation, surveys and design, construction management, and operations andmaintenance management, with its subsidiary Eight-Japan Engineering Consultants Inc. as the core company.
Sales to central and local government offices and agencies account for nearly 90% of its total sales, and overseas,
it has a track record of projects in Africa and Southeast Asia. The Company is also involved in the planning andmanagement of renewable energy and regional revitalization projects. In July 2018, its listing was upgraded fromthe Second Section to the First Section of the Tokyo Stock Exchange (TSE).
1. FY5/18 results overview
In the FY5/18 consolidated results, sales and profits increased by double digits, with net sales rising 12.4% year
on year (YoY) to ¥25,819mn and ordinary income growing 30.1% to ¥1,639mn. Moreover, both results were above
the Company forecasts (net sales of ¥25,000mn and ordinary income of ¥1,450mn). Ordinary income increased forthe first time in four fiscal years, which was mainly because, in addition to the increase in the volume of operations
carried over from the previous fiscal year, domestic orders trended steadily. SG&A expenses increased, mainly
personnel expenses, but due to the effects of the higher sales and the improvement in the cost ratio from the higher
productivity, the ordinary margin rose by 0.9 of a percentage point to 6.4%. Also, due to the end of the provision fora litigation loss of ¥1,490mn, which was posted as an extraordinary loss in the previous fiscal year, the Company
recorded net profit attributable to the owners of the parent of ¥966mn (compared to a net loss of ¥293mn in theprevious fiscal year), which was the first net profit in 2 fiscal years.
2. Outlook for FY5/19
The outlook for FY5/19 is for the higher sales and profits to continue, with net sales to rise 2.6% YoY to ¥26,500mn
and ordinary income to grow 3.1% to ¥1,690mn. The Company is aiming to achieve steady growth by working toincrease orders for technical proposal-type projects and other high value-added operations, order-support services,and overseas projects. At this stage, it seems that the impact on results of the heavy rainfall and flooding inwestern Japan in July 2018 will be neutral. This is because on the one hand, in addition to being required to deal
with emergency projects, such as surveys of local damage conditions, going forward projects will be launched forthe recovery, including flood control measures, and the Company expects to acquire orders related to this. But
on the other hand, it is possible that the disaster will delay the progress of existing projects. However, due to theoccurrence of successive natural disasters, the importance of disaster prevention and mitigation measures is starting
to be recognized once again, and it is considered that this will lead to greater opportunities to increase orders in
the medium term.

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01 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

Summary

3. The medium-term management plan
In the 4th medium-term management plan started in FY5/18, the Company has set numerical management targets
of consolidated net sales of ¥30,000mn, ordinary income of ¥2,100mn, and ROE of above 8% for FY5/21, and it
would appear to have made a steady start in the plan’s first year. Going forward, it will further progress businessexpansion in the domestic construction consultancy field, which is the business it is focusing on, and also increase
sales, including by developing new businesses in peripheral areas and expanding its overseas business. In terms of
profits, it is thought that the Company is aiming to increase profitability by improving operational efficiency throughintroducing IT within the Company and by improving productivity per consultant through human resources training
and development.
4. Shareholder return policy
The Company returns profits to shareholders through dividends, and its basic policy is to pay stable dividends whileconsidering factors such as the results trend, the dividend payout ratio, and the ratio of dividends to shareholders’equity. The dividend per share in FY5/19 is set to be unchanged YoY at ¥30.0 (dividend payout ratio, 19.2%). But
as the FY5/18 dividend included a commemorative dividend of ¥4.0, it will be higher on an ordinary-dividend basis.
The Company also introduced a shareholder benefits program from 2017 and in 2018, it changed one part of thisprogram’s content. Specifically, it gifts a QUO card to shareholders registered at the end of November according to
the number of shares they hold, and it raised the value of the card from the previous ¥500 to ¥1,000 for shareholders
holding 100 or more but less than 1,000 shares (it also improved the benefits for shareholders holding 1,000 sharesor more).
Key Points
Its strength is the ability to provide a one-stop service for all the processes in public works projects, from projectplanning and concepts, through to operations and maintenance management• Achieved double-digit increase in sales and profits in FY5/18 from larger volume of operations carried forwardfrom the previous fiscal period and steady performance of domestic orders• For FY5/21, it is targeting net sales of ¥30bn or more and ordinary income of ¥2.1bn or more•㻾㼑㼟㼡㼘㼠㻌㼠㼞㼑㼚㼐㼟㻔¥㼙㼚㻕
35,000

1,986

Net sales (left)

1,639

1,630

28,000㻔¥㼙㼚㻕Ordinary income (right)

1,293

1,690

1,600
1,260

21,0001,200

14,00022,14722,74722,47022,97825,81926,500

7,000
0

2,000

800

400

FY5/14

FY5/15

FY5/16

FY5/17

FY5/18

FY5/19 E0

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

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

02 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/██Company profile
Established in 2007 through integration of the management of two
construction consultancy companies
1. Company history
The Company is a holding company that was established in June 2007 by a joint share transfer between Eight
Consultants Co., Ltd. and Japan Engineering Consultants Co., Ltd.--two companies that primarily operated
construction consultancy businesses. After this development, in January 2008, Eight Consultants’ measurement
equipment rental business was succeeded by Japan Infrastructure Management Co., Ltd., and then in June 2009,
Japan Engineering Consultants’ construction consultant business was succeeded by Eight Consultants. After thesesuccessions, Eight Consultants changed its company name to Eight-Japan Engineering Consultants, and Japan
Engineering Consultants changed its company name to EJ Business Partners Co., Ltd. (in May 2015, EJ Business
Partners was merged into Eight-Japan Engineering Consultants through an absorption merger). In addition, in June
2010, the Company conducted a share exchange to make a subsidiary of Kindai-Sekkei Consultant, Inc., which isa construction consultant specializing in bridges, structures, and urban infrastructure.
In July 2018, the Company’s listing was upgraded from the Second Section to the First Section of the TSE.
Company history
Date

Major events

June 2007

Eight Consultants Co., Ltd. and Japan Engineering Consultants Co., Ltd. conducted a share exchange to establish E∙J Holdings
Inc., as the parent company.
Listed on the Tokyo Stock Exchange Second Section.

January 2008

Japan Infrastructure Management Co., Ltd. succeeded the measurement equipment rental business of Eight Consultants throughan absorption split, while at the same time, the company acquired the shares of Japan Infrastructure Management held by Eight
Consultants.

June 2009

Eight Consultants succeeded the construction consultancy business of Japan Engineering Consultants and changed its company
name to Eight-Japan Engineering Consultants Inc., and Japan Engineering Consultants changed its company name to EJ
Business Partners Co., Ltd.

June 2010

Kindai-Sekkei Consultant Inc. was made a subsidiary through a share exchange.

May 2015

Eight-Japan Engineering Consultants merged with EJ Business Partners through an absorption merger.

December 2017
July 2018

Established Hokkaido Kindai-Sekkei Consultant Inc. from a company split from Kindai-Sekkei Consultant, Inc.
Listed on the First Section of the TSE.

Source: Prepared by FISCO from Company materials

Its strength is the ability to provide a one-stop service within thegroup for all the processes in public works projects, from projectplanning and concepts through to operations and maintenancemanagement
2. Business overview
The Group’s strength is its ability to provide a one-stop service for all the processes in a project, from planning andconcepts through to plan formulation and project creation, surveys and design, construction management, andoperations and maintenance management. This is mainly for the public works projects of government offices andagencies. The Group is comprised of seven consolidated subsidiaries (also seven non-consolidated subsidiaries,
one affiliate, and one other affiliate).
We encourage readers to review our complete legal statement on “Disclaimer” page.

03 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

Company profile

Eight-Japan Engineering Consultants, which is the main subsidiary that contributes not less than 70% of total
consolidated net sales, provides construction consultancy services, including for planning, design, diagnosis, andmanagement, while it also provides overseas consultancy services and the development of businesses leading toregional creation, such as tourist farms and agri-businesses. Its subsidiaries, KYOURITSU ENGINEER CO., LTD.,
and Kyoritsu Kouei Co., Ltd., conduct surveying, geological surveys, and design work, while Toshi Kaihatsu Sekkei
Corporation primarily provides construction consultancy services that are tailored to individual regions, including forthe designs of water supply and sewer systems. Also, Japan Infrastructure Management mainly conducts surveying,
construction management, and measurement equipment rental sales businesses, while Kindai-Sekkei Consultant
provides construction consultancy services for roads and urban structures. In December 2017, the Sapporo branch
office of Kindai-Sekkei Consultant was spun off to newly establish Hokkaido Kindai-Sekkei Consultant. This was
because it was judged that it would be more effective to locate the head office in Hokkaido to increase orders within
Hokkaido.
The Group’s business fields

Source: The Company's website

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

04 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

Company profile

Overview of the GroupE・J Holdings Inc.

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㻿㼡㼎㼟㼕㼐㼕㼍㼞㼕㼑㼟㻦㻌㻱㻚㻌㻷㼥㼛㼡㼞㼕㼠㼟㼡㻯㼛㻚㻘㻌㻸㼠㼐㻚㻘㻌㻷㼥㼛㼞㼕㼠㼟㼡㻌㻷㼛㼡㼑㼕㻯㼛㻚㻘㻌㻸㼠㼐㻚㻘㻌㼀㼛㼟㼔㼕㻌㻷㼍㼕㼔㼍㼠㼟㼡㻿㼑㼗㼗㼑㼕㻌㻯㼛㼞㼜㼛㼞㼍㼠㼕㼛㼚㻿㼡㼎㼟㼕㼐㼕㼍㼞㼕㼑㼟㻦㻌㻴㼛㼗㼗㼍㼕㼐㼛㻌㻷㼕㼚㼐㼍㼕㻙㻿㼑㼗㼗㼑㼕㻌㻯㼛㼚㼟㼡㼘㼠㼍㼚㼠㻌㻵㼚㼏㻚

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

Nearly 90% of the Company’s net sales are provided by sales to government offices and agencies, and within them,a high percentage of projects are related to traffic infrastructure, such as roads and ports, and to the conservationof national land, including river and mountain management. In FY5/18, 23.7% of net sales were for projects for the
Ministry of Land, Infrastructure, Transport and Tourism. Also, looking at the orders-received by region in the last
3 fiscal periods, it was highest in the Chugoku area, which is where the head office is located, and in FY5/18, thisregion provided 24.2% of the total orders-received balance, followed by the Kanto area at 20.4%, and the Kinki areaat 16.2%, and the Company receives orders from all over the country. In addition, the large majority of its overseas
projects are through the Japan International Cooperation Agency (JICA), such as road improvement projects, watersupply projects and waste management projects in Africa and Asia, and therefore it tends to be affected by changes
to JICA’s budget. As JICA’s budget was small in FY5/18, the value of its orders decreased and its percentage of
total orders fell from 4.5% in the previous fiscal year to 1.0%. such as road improvement projects, water supply
projects and waste management projects in Africa and Asia, and therefore it tends to be affected by changes to
JICA’s budget. As JICA’s budget was small in FY5/18, the value of its orders decreased and its percentage of totalorders fell from 4.5% in the previous fiscal year to 1.0%.
Annually, it receives around 2,600 orders for projects, and the average value of the order-received per project is ona scale of ¥9mn to ¥10mn. Although most of the projects are completed within a year, in the case of continuous
projects in which the design and construction management period is split into several phases that can last 3 to 4
years in total. Looking at the results, nearly 70% of net sales are concentrated in Q4 (March to May), so it is necessary to be aware of this seasonal factor that means in a typical year results will be in a deficit until the end of Q3.

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

05 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

Company profile㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㼛㼞㼐㼑㼞㼟㻙㼞㼑㼏㼑㼕㼢㼑㼐㻌㼎㼥㻌㼞㼑㼓㼕㼛㼚㻔¥㼙㼚㻕

FY5/16

FY5/17

7,000
6,000

4,000

6,193
5,912

5,480
5,223
4,868

5,000

3,723
3,333 3,528

FY5/18

5,342
4,175
3,414
3,152
3,071

3,578
2,763
1,970
1,825 1,939

3,000
2,000

1,411
962 1,200951
574 268

1,000
0

Hokkaido/Tohoku

Kanto

Chubu

Kinki

Chugoku

Shikoku

KyushuOversea

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

3. Corporate philosophy
The Group’s management mission is to “contribute to the creation of a truly affluent society through using ourtechnological and decision-making capabilities that are kind to the global environment.” Its management vision is“aiming to be a leading solution group for infrastructure in Japan by continuing to pursue sustainable growth andimproving corporate value.”
In order to realize its management vision, the Company conducts its business activities in accordance with its Codeof Conduct* that it has formulated from the four viewpoints of innovation, professionalism, integrity, and teamwork.
* 1)	Innovation: Aiming to ascertain changes in society and the environment and to solve problems in all infrastructure fields
by acting based on “glocal” (from global to local) thinking2)	Professionalism: As a group of professionals with excellent skills who are able to respond precisely to diverse and highlevel needs, and who possess an abundance of sensitivity and sincere personalities, to work toward self-improvements
in order to increase the value of our human resources and our corporate value3)	Integrity: Observing not only the relevant laws, but also corporate and professional ethics, and fulfilling our social
responsibilities from a fair and neutral standpoint4)	Teamwork: Aware of being Japan’s leading infrastructure solutions consultancy group, always aiming for high targets,and taking on the challenge of achieving these targets using the Group’s comprehensive strength

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

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

E∙J Holdings Inc.

23-Oct.-2018

2153 Tokyo Stock Exchange First Section

http://www.ej-hds.co.jp/██Result trends
Achieved double-digit increase in sales and profits in FY5/18 fromlarger volumes of operations carried forward from the previous fiscal
period and steady performance of domestic orders
1. Overview of the FY5/18 results
In the FY5/18 consolidated results, net sales increased 12.4% YoY to ¥25,819mn, operating income rose 25.1% to¥1,594mn, ordinary income grew 30.1% to ¥1,639mn, and net profit attributable to the owners of the parent was¥966mn (compared to a loss of ¥293mn in the previous fiscal year). Net sales were a new record high for the second
consecutive fiscal year, ordinary income increased for the first time in four fiscal years, and net profit attributable tothe owners of the parent was profitable for the first time in two fiscal years, so it is clear that the results recovered.
Compared to the initial Company forecasts also, all of the items exceeded their forecasts, except for net profit
attributable to the owners of the parent.
Business performance for FY5/18 (consolidated)(¥mn)
FY5/17

FY5/18Results

Ratio to net
sales

Forecast

Results

Ratio to net
sales

Orders-received

26,430115.0%

25,34025,704

99.6%

-2.7%

1.4%

Net sales

22,978100.0%

25,00025,819100.0%

12.4%

3.3%

Cost of sales

16,49471.8%

18,22018,279

70.8%

10.8%

0.3%

SG&A expenses

5,208

22.7%

5,380

5,946

23.0%

14.2%

10.5%

Operating income

1,274

5.5%

1,400

1,594

6.2%

25.1%

13.9%

Ordinary income

1,260

5.5%

1,450

1,639

6.4%

30.1%

13.0%

Profit attributable to theowners of the parent

-293

-1.3%

1,000

966

3.7%

-

-3.4%

YoY

Vs forecast

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

Although the impact of the decline in overseas projects meant orders received decreased 2.7% YoY to ¥25,704mn,
the volume of operations carried over from the previous fiscal period increased and domestic orders during the period
trended steadily, so net sales were strong, increasing 12.4%. Also, the cost of sales ratio declined 1.0 percentage
point compared to in the previous fiscal year to 70.8%, due to the effects of the measures to improve productivity
in the Group as a whole, in addition to the effects of the higher sales. The measures to improve productivity include
strengthening the production cooperation system through collaborations between companies within the Group,working to thoroughly manage the progress of projects and to shorten delivery times while maintaining the qualityof services, and aiming to further improve operational efficiency by introducing CIM*.
*	CIM (Construction Information Modeling/Management) is an IT system that introduces three-dimensional (3D) models
into the planning, survey, and design stages of construction projects to facilitate the sharing of information between therelated parties throughout the entire project through coordinating and developing 3D models during each stage of thesubsequent processes and maintenance management, with the goal of increasing the efficiency and sophistication of theseries of construction and production systems. The Ministry of Land, Infrastructure, Transport and Tourism has formulated
guidelines to introduce CIM toward reducing the cost of public works projects.

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07 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

Result trends

On the other hand, the SG&A expenses ratio rose from 22.7% in the previous fiscal period to 23.0%, mainly due topersonnel expenses increasing ¥500mn following the progress made in actively recruiting young human resources(an increase of around 60 people in the Group). But this increase was exceeded by the effects of the improvementin the costs of sales ratio, so the operating margin rose from 5.5% in the previous fiscal year to 6.2%. Net profit
attributable to the owners of the parent improved greatly following the end of the extraordinary loss recorded in theprevious fiscal year, of a provision for a litigation loss of ¥1,490mn*. The fact that net profit was slightly below the
Company forecast was because the income tax adjustment amount was higher than expected.
*	This relates to the discovery of damage after the completion of a leachate adjustment reservoir and of deficiencies with thechloride treatment capacity of the facility. This was part of the “Eco Clean Plaza Miyazaki” waste disposal facility projectthat was ordered by Miyazaki Prefecture Environment Development Corporation (hereinafter referred to as “MPEDC”) from1999 to 2002 to Eight-Japan Engineering Consultants (hereinafter referred to as “EJEC”), a subsidiary of the Company.
In 2010, MPEDC filed a lawsuit to demand ¥1,014mn in compensation from EJEC and three construction companies fordamages following the completion of the facility, and ¥573mn in compensation from EJEC (which was changed to ¥705mn
in 2015) for the deficiency in leachate chloride processing capacity. In May 2017, it was ruled that EJEC must pay MPEDC
compensation of ¥1,490mn. In June 2017, EJEC appealed to the Fukuoka High Court for this ruling to be overturned(MPEDC also appealed against the three construction companies to be dismissed). The case is still on trial at present.

2. Trends in the orders-received and net sales(1) Trends in the orders-received
In FY5/18, orders-received decreased 2.7% YoY to ¥25,704mn. Looking at the breakdown by ordering institution,
they increased by 9.0% to central government ministries and agencies, by 7.0% to municipalities, and by 24.4%
to private-sector companies, to ¥3,397mn. However, they decreased by 11.8% to prefectures and by 77.6% tooverseas. This result for prefectures was a reaction to the high level achieved in the previous fiscal period, and it
is an increase compared to the level of two fiscal years ago. Conversely, it seems that the reason for the majordecline from overseas was the impact of the reduction of the JICA budget. The double-digit growth for the private
sector continued, mainly for expressway management companies, and its percentage of total orders rose from
6.4% in FY5/15 to 13.2% in FY5/18, and its strong performance stands out. Looking at the ordering conditions
by region, as previously mentioned, orders from the Chugoku area trended steadily, up 4.7%, while they also grewfor the Shikoku and Kinki areas, up 8.3% and 16.7% respectively. However, they decreased for the other regions,and within them, they declined greatly for overseas, which was the main reason for the decline in total orders.
Although the order backlog decreased slightly at the end of the previous fiscal year, down 0.8% to ¥14,149mn,
it continues to be maintained at a high level.

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08 20

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

E∙J Holdings Inc.

23-Oct.-2018

2153 Tokyo Stock Exchange First Section

http://www.ej-hds.co.jp/

Result trends㻻㼞㼐㼑㼞㼟㻙㼞㼑㼏㼑㼕㼢㼑㼐㻌㼎㼥㻌㼛㼞㼐㼑㼞㼕㼚㼓㻌㼕㼚㼟㼠㼕㼠㼡㼠㼕㼛㼚㻔¥㼙㼚㻕

FY5/16

12,0009,886

10,000
8,000

7,020

7,559

8,236

7,857

FY5/17

FY5/18

8,715

6,000

4,989

5,0515,086

4,000
2,289

2,000
0

3,397
2,731
574

Centralgovernment
ministries andagencies

Prefectures

Municipalities

Private sector

1,200

268

Overseas

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

Looking at the ordering conditions in the five fields that the Company positions as priority fields, in total their orders
decreased 13.1% YoY to ¥9,168mn, which is the first decline in 2 fiscal years, while their percentage of totalorders also fell from 39.9% to 35.7%. Although orders increased by 35.8% in the urban and regional revitalization
field, this was the only increase, and they decreased in each of the other four fields, of environment and energy,
natural disaster risk mitigation, infrastructure management, and information and communication. Within them,
they decreased 4.7% for the largest-scale field of natural disaster risk mitigation, because orders relating to therecoveries from the Great East Japan Earthquake and the Kumamoto earthquakes have peaked out.
Orders for technical proposal-type projects also decreased, down 7.0% YoY to ¥8,237mn. In a situation in which
the Company has many backlog orders, a factor behind this is that it is focusing on projects that are highly likely tobe adopted, from the perspective of its human resources. The number of technical proposal-type projects adopted
decreased 9.3% to 243, although the adoption rate increased from 20.1% in the previous fiscal year to 21.6%.
(2) Trends in net sales
Looking at net sales by ordering institution, they grew by double digits for prefectures, up 20.0% YoY, and foroverseas, up 17.9%. In addition, sales increased in every category, up 7.0% for central government ministries
and agencies, 8.1% for municipalities, and 9.8% for the private sector. The main reason for the higher sales forprefectures was the increase in operations carried forward from the previous fiscal period.
By region also, sales increased in every region, except for Kyushu, in which they fell 6.3% YoY due to the peak-out
of projects related to the recovery from the Kumamoto earthquakes. Moreover, within them, there were regionsthat achieved double-digit growth, with sales increasing 23.6% in the Kinki area, 17.2% in the Chugoku area, and14.0% in the Kanto area. Sales to overseas also steadily rose, up 17.9%.

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09 20

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

E∙J Holdings Inc.

23-Oct.-2018

2153 Tokyo Stock Exchange First Section

http://www.ej-hds.co.jp/

Result trends㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼎㼥㻌㼛㼞㼐㼑㼞㼕㼚㼓㻌㼕㼚㼟㼠㼕㼠㼡㼠㼕㼛㼚㻔¥㼙㼚㻕

FY5/16

12,000FY5/18

9,542

10,0008,000

FY5/17

7,359 6,979 7,469

8,015
7,950

5,174
4,949 4,784

6,000
4,000

2,6492,909
1,772

2,000
0

372

Centralgovernment
ministries andagencies

Prefectures

Municipalities

Private sector

613 723

Overseas

Source: Prepared by FISCO from the Company's results briefing materials㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼎㼥㻌㼞㼑㼓㼕㼛㼚㻔¥㼙㼚㻕

FY5/16

FY5/17

FY5/18

7,000

5,918

6,000

5,000
4,000

3,702
3,561
3,376

5,266
5,051

5,418
4,752
4,490

3,000

3,914

1,957

3,336
3,102
3,126

3,166
2,775

1,771
1,625

2,000

1,103
1,104 1,033

1,000
0

Hokkaido/Tohoku

Kanto

Chubu

Kinki

Chugoku

Shikoku

Kyushu613723372

Oversea

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

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10 20

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

E∙J Holdings Inc.

23-Oct.-2018

2153 Tokyo Stock Exchange First Section

http://www.ej-hds.co.jp/

Result trends

Disposed of 1.15 million treasury shares and allocated approximately¥1.5bn to capital investment and development funds
3. Financial position and management indicators
Looking at the Company’s financial condition at the end of FY5/18, total assets were up ¥1,403mn on the end of
the previous fiscal year to ¥24,860mn. The main increase and decrease factors were that in current assets, cash
and deposits decreased ¥1,472mn, while accounts receivable for completed operations increased ¥413mn. In
non-current assets, tangible non-current assets increased ¥1,067mn due to the construction of the new building
for the Okayama head office, and the Company also recorded ¥1,498mn in long-term provisional payments for alitigation-related loss.
Total liabilities were up ¥425mn at the end of the previous fiscal year to ¥9,109mn. Alongside the construction of the
new building and the increase in the allowance for bonuses, accrued payments and expenses increased ¥1,213mn,
while uncompleted projects money received decreased ¥341mn and interest-bearing debt declined ¥285mn. Net
assets were up ¥978mn at the end of the previous fiscal year to ¥15,751mn. Dividend payments of ¥149mn wasa decrease factor, but this was covered by the recording of net profit attributable to the owners of the parent of¥966mn and the ¥161mn increase in other accumulated comprehensive income.
Looking at the management indicators, the equity ratio, which is an indicator of management stability, increased
from 63.0% at the end of the previous fiscal year to 63.4%, while the interest-bearing debt ratio decreased from
7.1% to 4.8%, and the Company’s financial condition improved. Net cash (cash and deposits – interest-bearingdebt) declined ¥1,187mn at the end of the previous fiscal year, because within cash and deposits, ¥1,498mn wastransferred to long-term provisional payments. But when compared to the standard, it maintained its high level andit can be judged that the Company is maintaining a sound financial condition. On the other hand, looking at theindicators of profitability, each of ROA, ROE, and the operating margin rose due to the growth in results. In terms of
productivity also, net sales per employee increased 4.6% YoY, and it would seem that the effects of the measures
to improve productivity are being realized.
Consolidated balance sheet(¥mn)
FY5/15

FY5/16

FY5/17

FY5/18

14,46814,255

16,20015,085

9,977

9,901

11,461

9,989-

Non-current assets

7,533

7,095

7,256

9,775

2,518

Total assets

22,002

21,351

23,457

24,8601,403

Total liabilities

7,295

6,163

8,684

9,109

425

650

450

1,043

758

-

14,707

15,187

14,772

15,751

978

Equity ratio

66.6%

70.8%

63.0%

63.4%

0.4pt

D/E ratio

4.4%

3.0%

7.1%

4.8%

-2.3ptNet cash

9,327

9,451

10,4189,231-1,187

ROA

7.5%

6.0%

5.6%

6.8%

1.2pt

ROE

10.1%

6.3%

-2.0%

6.3%

8.3pt

Operating margin

6.8%

5.6%

5.5%

6.2%

0.7pt

20.20

19.01

18.74

19.60

4.6%

Current assets(Cash and deposits)(Interest-bearing debt)
Net assets

YoY-

Management indicators(Stability)(Profitability)(Productivity)
Net sales per employee

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

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11 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

Result trends

In July 2018, the Company disposed of 1.15 million treasury shares and raised funds of approximately ¥1.5bn.
It plans to allocate the funds raised mainly to the subsidiary Eight-Japan Engineering Consultants, including forinvestment toward improving productivity and for R&D funds; for the costs of seismic reinforcement work for theCompany’s own assets based on its business continuity plan (BCP); and to repay borrowing. It is aiming to improve
profitability in the medium to long term and to strengthen its financial base.
Uses of funds raised
(¥mn)
Usage

AmountPeriod(IT investment)

781

August 2018-May 2021

(Purchases of survey and inspection equipment)

110

August 2018-May 2020

R&D funds, including for disaster prevention and mitigation measures, and for surveys, inspections
and countermeasures for aging infrastructure facilities

170

August 2018-May 2020

Funds for capital investment for seismic reinforcement work based on the BCP and for work tomaintain functions, such as interior refurbishments

238

August 2018-May 2020

217

August 2018-May 2022

Improving productivity through increasing
the sophistication of system usage

Repayment of long-term borrowing

1,516

Total
Source: Prepared by FISCO from Company materials██Business outlook
Strengthen orders in technical proposal-type projects and ordersupport services to increase sales and profits for FY5/19
1. FY5/19 outlook
The outlook for the FY5/19 consolidated results is for the higher sales and profits to continue, with net sales toincrease 2.6% YoY to ¥26,500mn, operating income to rise 2.3% to ¥1,630mn, ordinary income to grow 3.1%
to ¥1,690mn, and net profit attributable to the owners of the parent to climb 8.6% ¥1,050mn. Without taking into
consideration any special factors, such as a supplementary budget, orders-received are forecast to increase 3.5% to¥26,600mn due to the increase in orders for technical proposal-type projects and other high value-added operations,order-support services, and overseas projects. Within this amount, the Company is aiming for orders-received fromthe 5 priority fields to increase 9.1% to ¥10,000mn. Earnings per share (EPS) is forecast to decrease from ¥168.45
in the previous fiscal period to ¥156.69, mainly due to the increase in the average number of shares during theperiod due to the disposal of treasury shares in July 2018.

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12 20

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

E∙J Holdings Inc.

23-Oct.-2018

2153 Tokyo Stock Exchange First Section

http://www.ej-hds.co.jp/

Business outlook

FY5/19 outlook (consolidated)(¥mn)
FY5/18Results

FY5/19Ratio to net
sales

Forecast

Ratio to net
sales

YoY

Orders-received

25,70499.6%

26,600100.4%

3.5%

Net sales

25,819100.0%

26,500100.0%

2.6%

Cost of sales

18,27970.8%

19,370

73.1%

6.0%

SG&A expenses

5,946

23.0%

5,500

20.8%

-7.5%

Operating income

1,594

6.2%

1,630

6.2%

2.3%

Ordinary income

1,639

6.4%

1,690

6.4%

3.1%

966

3.7%

1,050

4.0%

8.6%

Profit attributable to theowners of the parent

168.45

EPS (¥)

156.69Source: Prepared by FISCO from the Company's financial results and results briefing materials

Looking at the sales forecasts by ordering institution, the outlook is for the higher sales to continue to central
government ministries and agencies, up 7.1% YoY, mainly to the Ministry of Land, Infrastructure, Transport andTourism; to municipalities, up 4.4%; and to the private sector, up 6.6%. However, sales to prefectures are forecast
to decline by 5.7%. This can be seen to be a reaction to the fact that in the previous fiscal period, sales increased
through the recording of the portion from operations carried forward. Moreover, the outlook for overseas is for the
double-digit increase in sales to continue, rising 38.3%.
Net sales by ordering institution(¥mn)
FY5/16

FY5/17

FY5/18

FY5/19Central government
ministries and agencies

7,359

6,979

7,469

8,000

7.1%

Prefectures

8,015

7,950

9,542

9,000

-5.7%

Municipalities

4,949

4,784

5,174

5,400

4.4%

Private sector

1,772

2,649

2,909

3,100

6.6%

372

613

723

1,000

38.3%

22,47022,97825,81926,500

2.6%

Overseas
Total

YoY

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

The cost of sales ratio will rise from 70.8% in the previous fiscal year to 73.1%. But this will mainly be because in
the previous fiscal year, the cost ratio fell more than expected due to the increase in operations carried forward andother factors, that personnel expenses will increase alongside the recruitment of personnel, and that part of thedevelopment expenses recorded in SG&A expenses has been transferred to cost of sales from FY5/19. The SG&A
expenses ratio will decline from 23.0% in the previous fiscal period to 20.8% because of the transfer of development
expenses to cost of sales, and also on the end of the expenses relating to the construction of the head office thatwere recorded in the previous fiscal year. As a result, the operating margin is forecast to remain unchanged YoY,
at 6.2%. The Company plans to increase the number of consolidated employees by 60 on the end of the previous
fiscal year to 1,377.

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13 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

Business outlook㼀㼞㼑㼚㼐㻌㼕㼚㻌㼠㼔㼑㻌㼚㼛㻚㻌㼛㼒㻌㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㼑㼙㼜㼘㼛㼥㼑㼑㼟㻔㼜㼑㼛㼜㼘㼑㻕Engineers

Administration/sales

1,600
1,400

1,200
1,000

1,377

1,317

1,182

1,226

360

376

771

822

850

910

957

FY5/15

FY5/16

FY5/17

FY5/18

FY5/19 E

1,126
355

420

407

800
600
400
200

0

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

2. FY5/19 sales policy
As its sales policy for FY5/19, the Company is particularly focusing on the following three points: Increasing orders
for technical proposal-type projects, strengthening Group collaborations, and expanding the overseas consultancy
services field. Each of the policy points are as follows.
(1) Increasing orders for technical proposal-type projects
Under the concept of a “Do Tank,” a think tank that moves towards action on issues, the Company is demonstrating its individuality and developing nationwide its search to find projects toward solving problems that are
specific to regions (such as renewable energy and PPP projects, “People, Towns, and Work Creation” projects, andmanagement projects). In addition, for the nationwide disaster prevention response, it is focusing on advancing
technological proposals with “natural disaster risk mitigation” at their core, while for measures for aging social infrastructure, such as roads and bridges, it is focusing on technological proposals with “infrastructure management”
at their core. The forecast for orders-received in FY5/19 is for double-digit growth, up 26.2% YoY to ¥10,396mn,
and for an adoption rate of 28.3% (compared to 21.6% in the previous fiscal period).
(2) Strengthening Group collaborations
The Company will expand orders for one-stop services from upstream to downstream, for infrastructure projects,
regional revitalization projects, and social capital maintenance projects through utilizing the expertise of eachGroup company, and also through technological collaborations between these companies. It also intends to use
Group collaborations to strengthen in those fields in which it currently has weak points.

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14 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

Business outlook(3) Expanding the overseas consultancy field
The Company plans to utilize its track record in the various countries of Africa and Southeast Asia to strengthen
the development of a wide-area infrastructure connecting countries and for developments in the urban lifeline field
and other fields. It also intends to expand the volume of operations in Southeast Asia, using its representative
office in Thailand and the newly established Myanmar office as the sales bases. For overseas projects, because
the majority of the grant-aided projects via JICA have low added value, going forward it intends to increase thenumber of directly-ordered project from collaborations with the governments of the relevant countries throughforming alliances with universities and other organizations. Already in Thailand, it is collaborating with the Asian
Institute of Technology to provide technical proposals in various fields, including disaster mitigation, tunnels,
and waste and energy, and it is thought it plans to do the same in other countries through collaborations with
universities and companies.

██4th medium-term management plan
Become a leading solution group for infrastructure
1. Basic policy of the medium-term management plan
The Company is currently implementing EJ Glocal Challenge 2020, its four-year medium-term management planthat it started in FY5/18. It made a smooth start in the plan’s first year, with both net sales and ordinary income
exceeding their targets. In the medium-term management plan, the Company is aiming to build “a rock-solidmanagement foundation” on which to actively advance its Group vision of being “a leading solution consultancy
group for infrastructure by continuing to pursue sustainable growth and improving corporate value.” Toward this,
it is working on the following four basis policies.
(1) Deepen the core businesses: In the construction consultancy field in Japan, aim to create a solutions andservices brand and become the leading company within the industry as a comprehensive construction consultancy by focusing on technical proposal-type projects(2) Strengthen new businesses: Strengthen new businesses in peripheral areas and aim to develop fully fledged
businesses(3) E xpand business volume by promoting globalization: Increase the recruitment of engineers able to workoverseas and advance their development as human resources, and also aim to increase orders by expanding
the overseas business and promoting alliances with local companies and universities(4) Promote the establishment of a management infrastructure able to respond immediately to environmental
changes: Implement various measures, including to promote improved operational efficiency through process
innovation (reforming business and production processes), to realize higher quality and improved productivity
through product innovation (reforming the production foundation through utilizing IT), and to improve the vitalityof employees by advancing a work-life balance and reforms to ways of working.

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15 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

4th medium-term management plan

Targeting net sales of not less than ¥30bn and ordinary income of
not less than ¥2.1bn in FY5/21
2. Numerical management targets
The numerical management targets in the medium-term management plan are consolidated net sales of not less than
¥30bn, ordinary income of not less than ¥2.1bn, and net income attributable to the owners of the parent of ¥1.4bn
in FY5/21. Also, as its capital policy, the Company is aiming to improve its corporate value and achieve ROE of alevel of 8% or above through improving capital efficiency and expanding its business through investing in growth.
Consolidated numerical management targets(¥mn)
FY5/18

FY5/19 (forecast)

FY5/21 (target)

Comments

Net sales

25,81926,50030,000 or above

Promoting alliances

Ordinary income

1,639

1,690

2,100 or above

Profit margin, 7.0% or above

966

1,050

1,400 or above

ROE, 8% or above

Profit attributable to theowners of the parent

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

3. Business strategy
In order to achieve the targets in the medium-term management plan, the Company has divided the comprehensive
construction consultancy field into four sub-fields and is pursuing strategies to expand its business in each of thesefields.
(1) Domestic construction consultancy field
For the domestic construction consultancy field, on dividing the market into fields, such as roads and bridges,
rivers, ports, waste disposal, and renewable energy, it can be divided into approximately 20 fields. Within these,
the Company is aiming to double the fields in which it is in the top 5 for net sales, from the current 5 fields to 10
fields, and also to enter into the top 5 for total sales to all fields.
The Company’s management technologies constitute its core competencies of environment, disaster prevention
and conservation, and government support, which can differentiate it from its competitors. The Company isworking to improve profitability by focusing on is five priority fields (environment and energy, natural disaster risk
mitigation, urban and regional revitalization, infrastructure management, and information and communication),and increasing orders for problem-solving-type, high value-added projects.

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

16 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

4th medium-term management plan

Group business strategy in the construction consultancy field

Source: The Company’s results briefing materials

The Company is actively utilizing the latest IT technologies and other technologies toward increasing orders fortechnical proposal-type projects. To give some specific examples, in the natural disaster risk mitigation field, it
is utilizing augmented reality (AR) and virtual reality (VR) technologies for evacuation simulations that assume
the occurrence of tsunamis in local disaster prevention plans. Further, in the field of technologies for electricity
networks that do not use utility poles, in which it has a strong track record, it has developed an undergroundspace management system that utilizes IC tags, and this system has been registered in the Ministry of Land,
Infrastructure, Transport and Tourism’s New Technology Information System (NETIS). This system makes visible
the positions of pipes by attaching IC tags to them at the time they are buried. It is a technology that achieves
safety and lower costs, such as by reducing the number of exploratory surveys and eliminating the risk of wires
being severed when conducting shallow burial installation work, and it is expected to be increasingly adopted in
the future.
In the information and communications field, the Company is utilizing drones to conduct 3D measurements ofdisaster sites. The 3D measurements of the damage situation, such as at sites of landslide disasters caused byheavy rain, enables the damage situation to be ascertained precisely, and they are also being used for technologies
to predict damage in the future. Currently, the Group as a whole owns six drones, but it plans to increase thisnumber as demand for these services is increasing. Moreover, in FY5/18, it became the first consultancy company
in Japan to introduce an unmanned submersible. This submersible is able to automatically and simultaneously
acquire high-resolution data measurements (such as on position, topography, water quality, and flow conditions)and underwater images, and it makes possible the provision of optimal solutions proposals by carrying out detailed
analyses of the various problems that occur underwater, such as at dams, rivers, and harbors.

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17 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

4th medium-term management plan(2) Overseas consultancy field
The Company plans to raise the percentage of total net sales provided by overseas sales from 3.8% in FY5/18
to 10% in FY5/21. In terms of the scale of sales, it is estimated they will expand from ¥723mn to around ¥3bn. It
is actively expanding its overseas bases and pursuing alliances (including with companies in the same industry,
local companies and universities, and research institutions) and aiming to grow its business in the Asia and Africa
regions. In terms of fields, in addition to the road and transport, water supply, and waste and renewable energy
fields, it also intends to actively develop its business in fields in which demand is expected to grow in the future,including disaster prevention (measures for earthquakes and floods), and urban planning.
(3) Infrastructure management field
The Company is aiming to increase the percentage of total net sales provided by the infrastructure management
field to the 20% level by FY5/21. The level in FY5/18 was 11.3% on an orders basis, while the orders-received
was ¥2,889mn, but it plans to increase sales to a scale of ¥6,000mn by FY5/21. For social infrastructure, demandis strong for anti-aging measures such as for roads and bridges, and in particular the need for bridge surveys
utilizing drones is growing. Also, against the backdrop of the landslide disasters that have been frequently
occurring due to the heavy rain, it is forecast that in the future, demand will increase for soundness surveys for the
maintenance and management of ground anchor devices installed on the road surface. In addition, it intends toincrease orders targeting not only government offices and agencies, but also for private-sector projects (including
for expressway management companies) from construction management; customer support; measurements,
surveys, and analysis; and rental of measurement equipment, through to facilities management.
(4) Business development field (establishing new businesses)
The Company is expanding its clean development business and advisory business as new businesses in peripheral
areas. By collaborating with companies in different industries, such as trading companies, mainly for private-sector
projects, it intends to develop projects for the operation and management of infrastructure-related projects and toinvest in businesses, including in regional revitalization businesses toward regional creation, and thereby expand
its business area.
The Company is involved via its relevant subsidiaries in pilot projects, including for regional revitalization. From2012 onwards, as part of a series of regional revitalization projects in Okayama Prefecture, Akita Prefecture, andTokushima Prefecture, it is conducting measures for sixth-sector industrialization in the agri-business throughjoint investment with local public bodies, companies, and other organizations.
Enjoy Farm Co. Ltd. in Okayama Prefecture concluded the designated management operations for the 5 years
from April 2013 for Suisha no Sato Fruitopia, which is a facility for visitors to experience fruit cultivation andagricultural work in its gardens, and it has newly entered into a contract for another 5 years. The facility has
been profitable since the third year of the designated management, and in May 2018, the upgraded facility was
re-opened, including with a newly established refreshments corner and a larger strawberry greenhouse, andvisitor numbers are increasing.

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18 20

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

E∙J Holdings Inc.
2153 Tokyo Stock Exchange First Section

23-Oct.-2018
http://www.ej-hds.co.jp/

4th medium-term management plan

Strawberry Farm Co., Ltd. in Akita Prefecture is working on the sixth-sector industrialization of summer strawberry
agriculture. Summer strawberries currently depend on imports for around 90% of their total, and their distribution
price is also high, at around 4 to 5 times the normal price. Strawberry Farm cultivates the rare Natsu Akari (summer
light) strawberry variety and has become able to harvest it stably, and it has therefore begun to sell it on theInternet in 2017. The farm is planning to double the number of greenhouse installations in 2018 in order to meetincreased demand. If it can build a profit model, the Company plans to sell its shares in a local company and willsubsequently only manage this facility. Also, it will continue to conduct joint research with a national research
institute up to 2018, and if a mass production model can be built, it plans to transition this model to the businessand area expansion phase.
Nakawood in Tokushima Prefecture is working on the sixth-sector industrialization of the forestry industry. As a partof the projects to promote the utilization of timber and for regional development, it sells high quality wood powder
from Tokushima Prefecture as “wood plastic,” which is a material used in engineering and construction work, andalso as a raw material for “plastered walls” and other structures. Currently, the price and quality requirementsfrom home-builder customers are severe, so it is also selling it for niche applications, such as cat litter and forthe wooden tables and wooden decks of public facilities. In the future, it intends to continue to collaborate withgovernment agencies and related business groups and to work to promote the sixth-sector industrialization of
the forestry industry.
Regional development projects in Japan
Company nameEnjoy Farm Co., Ltd.

Strawberry Farm Co., Ltd.

Nakawood Co., Ltd.

Date ofestablishment

Location

Description of businessAugust2012

OkayamaPrefecture

Started business activities as the designated manager of “Suisha no Sato Fruitopia”
Sales of fruits harvested locally, and public relations and event activities that will lead toregional revitalization

November
2012

Akita
Prefecture

Established to cultivate and sell summer strawberries
In the future, it will develop multiple businesses, including a tourism business, with theaim of contributing to regional revitalization.

April
2014

Tokushima
Prefecture

Established to manufacture and sell cedar wood powder. It sells wood powder tocustomers including plastic manufacturers as the raw material of wood plastic. Also, in
April 2017, it opened the Naka Town Forestry Business Center as a base to promote
the forestry industry, and it is aiming for the sixth-sector industrialization of this industry
through cooperation with local businesses.

Source: Prepared by FISCO from the Company materials██Shareholder return policy
Secure a dividend of ¥30.0 per share for FY5/19 and enhance theshareholder benefits program
The Company pays dividends and has introduced a shareholder benefits program in order to return profits toshareholders. Its basic dividend policy is to continuously pay dividends from a medium- to long-term perspective.
While supplementing internal reserves to strengthen its corporate structure and for business development, it determines the dividend by taking into consideration not only the results of a single fiscal year, but also factors such as
the market environment, the results trends, the dividend payout ratio, and the ratio of dividends to shareholders’equity. In FY5/19, it plans to pay a dividend per share of ¥30.0, the same as in the previous fiscal year (dividend
payout ratio, 19.2%). But as the FY5/18 dividend included a commemorative dividend of ¥4.0, it will be higher onan ordinary-dividend basis.

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19 20

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

E∙J Holdings Inc.

23-Oct.-2018

2153 Tokyo Stock Exchange First Section

http://www.ej-hds.co.jp/

Shareholder return policy

Further, in 2017 the Company introduced a shareholder benefits program, and then in August 2018, it changed apart of the content of the program. Each year at the end of November, shareholders are given a QUO card according
to the number of shares that they hold, and the Company changed the program to increase the value of the QUO
card it gives them. Specifically, it raised the value of the card from the previous ¥500 to ¥1,000 for shareholders
holding 100 or more but less than 1,000 shares, from ¥1,000 to ¥3,000 for shareholders holding 1,000 or more but
less than 5,000 shares, and from ¥2,000 to ¥5,000 for shareholders holding 5,000 shares or more.

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㼍㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻔¥㻕

Dividend (left)

Payout ratio (right)

35.0
15.8%

28.0
21.0

19.2%

17.8%

16.0%
12.0%

9.0%

14.0

26.0

22.0

26.0

30.0

30.0

7.0

0.0

20.0%

8.0%
4.0%

FY5/15

FY5/16

FY5/17

FY5/18

FY5/19 E

0.0%

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

Details of the shareholder benefits program
Shareholder benefit

No. of shares held

Before the change

After the change

100 or more to less than 1,000 shares

QUO card worth ¥500

QUO card worth ¥1,000

1,000 or more to less than 5,000 shares

QUO card worth ¥1,000

QUO card worth ¥3,000

5,000 shares or more

QUO card worth ¥2,000

QUO card worth ¥5,000*For shareholders registered at the end of November
Source: Prepared by FISCO from the Company website

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

20 20

Disclaimer
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