Alpha-Win Company Research Report
CUBE SYSTEM INC.
(2335 TSE First Section)

Issued: 2/3/2020

Research Dept., Alpha-Win Capital Inc.
http://www.awincap.com/● Summary◆ Independent, mid-tier system integrator with long-term, stable growth・CUBE SYSTEM INC. (hereinafter, the “Company”) is an independent, mid-tier system integrator (SI) listed on
the First Section of the TSE. Its main customers include Nomura Research Institute (NRI) and Fujitsu Group. It
provides services and develops systems mainly for the finance, distribution, and telecommunications industries.
Its strengths are its excellent customer base, extensive experience, strong trust from its customers, and the skill
and know-how that it has built up over the years. Founded in 1972, it has 47 years of history.
・With the exception of one fiscal year, the Company has been continuously increasing sales YoY for the past 18
years. During this period, its annual sales growth rate (simple average of the rate of increase in sales) was +6.4%
and its annual recurring profit growth rate (simple average) was +6.0%; the Company has been steadily expanding
its business and keeping its business in the black over many years. The recurring margin has been stable at around
7% and the increase in sales has been contributing directly to increases in profit, dividend, and market
capitalization.
・On April 1, 2020, Mr. Sakiyama, the current representative director and president, will became chairman. On thesame day, the current executive managing officer Mr. Nakanishi will instead become the president and executive
officer, and then become the representative director after approval at the general meeting in June. Mr. Nakanishi
used to work at Nomura Research Institute and is 61 years old. He joined the company in 2017. Going forward,
he plans to focus on the Digital Transformation (DX) business. He will concurrently serve as the CDO (Chief
Digital Officer) and lead the expansion of services providing solutions using digital technologies.

◆ This fiscal year’s Q3 (YTD) results: sales +1.3% YoY and operating profit +2.1% YoY
・In Q3 FY 2020 YTD (Apr-Dec 2019: hereinafter, “Q3 YTD”), sales were Y10,535 million (+1.3% YoY),
operating profit was Y618 million (+2.1% YoY), recurring profit was Y628 million (-0.6% YoY), and quarterly
profit attributable to owners of the parent (hereinafter, “net profit”) was Y392 million (+2.3% YoY) (note that all
fiscal years in this report are March-ending; e.g. FY 2020 ends in March 2020) (Figure 1).
・Q3 YTD sales were firm, although the increase itself was small, and a record high was achieved for anotherconsecutive fiscal year. Regarding profit, although the profitability of some projects had worsened since the endof last fiscal year, the Company was able to improve the profit margin through sales growth and cost control. As
a result, an increase in operating profit was achieved. Although the profit did not reach a Q3 YTD record high, itreached the second highest level in the Company’s history. However, due to a decrease in the gain on sale ofsecurities, recurring profit decreased slightly and net profit resulted in a slight increase.
[Figure 1] Quarterly Transition in Financial Performance(Note) Prepared by Alpha-Win Research Dept. based on the financial results summary and financial results briefing supplemental materials. Due to rounding during calculations, etc.,
values for the same item may differ (applies to the rest of the document).

By Service Category

Total

Quarterly Results

Q1 FY 2019

Q1 FY 2020

Q2 FY 2019

Q2 FY 2020

Q3 FY 2019

Q3 FY 2020

Q3 FY 2019

Q3 FY 2020

Q3 YTD% Composition

Q3 YTD% Change

Q3 YTD
Change (in amount)

Q3 YTD: % Share of
Change (in amount)

Q4 FY 2019

Q4 FY 2020

YoY % Change

Full FY 2020
Company Plan

YoY % Change

Unit: million yen

Apr-June 2018

Apr-June 2019

July-Sept 2018

July-Sept 2019

Oct-Dec 2018

Oct-Dec 2019

Apr-Dec 2018 (YTD)

Apr-Dec 2019 (YTD)%

YoY: %

YoY: million yen / %%Jan-Mar 2019

Jan-Mar 2020

YoY: %

Apr 2019 - Mar 2020

YoY: %

3,082
2,164
556
361
344
93
58
15.9
16.7
16.1
856
695
472
297
220
539
131
128
70
48
36
79
15.4
18.5
14.9
16.4
16.6
14.8
496
16.1
386
12.5
109
3.6
133
4.3
76
2.5

3,379
2,411
520
447
354
95
73
14.7
18.4
16.5
993
771
485
396
245
486
181
122
74
45
34
66
18.2
15.9
15.2
11.6
14.1
13.6
524
15.5
424
12.5
100
3.0
107
3.2
50
1.5

10,404
7,177
1,676
1,549
1,120
300
327
15.6
17.9
21.1
2,854
2,141
1,780
1,387
705
1,535
438
405
335
222
116
229
15.3
18.9
18.8
16.0
16.5
14.9
1,749
16.8
1,144
11.0
605
5.8
632
6.1
384
3.7

10,535
7,404
1,788
1,342
1,255
307
236
17.0
17.2
17.6
3,193
2,485
1,364
1,102
626
1,761
616
415
219
142
96
308
19.3
16.7
16.1
12.9
15.3
17.5
1,799
17.1
1,181
11.2
618
5.9
628
6.0
393
3.7

Consolidated Sales
Sales

Gross Profit

Gross Margin (%)

By Industry

Sales

Gross Profit

Gross Margin (%)

Total

Name of Service/Industry

System Integration: SIS
System Outsourcing: SOS
Professional: ProS
System Integration: SIS
System Outsourcing: SOS
Professional: ProS
System Integration: SIS
System Outsourcing: SOS
Professional: ProS

Finance
Distribution
Telecommuications
Manufacturing (other)Government (other)
Other (other)
Finance
Distribution
Telecommuications
Manufacturing (other)Government (other)
Other (other)
Finance
Distribution
Telecommuications
Manufacturing (other)Government (other)
Other (other)

Total Gross Profit

Gross Margin (%)
SG&A Expenses

SG&A Expenses Ratio (%)
Operating Profit

O.P. Margin (%)
Recurring Profit

R.P. Margin (%)
Net Profit

N.P. Margin (%)

Short Report

3,770
2,587
564
620
403
96
136
15.6
17.0
21.9
1,092
738
700
482
237
522
159
133
136
77
38
93
14.6
18.0
19.4
16.0
16.0
17.8
636
16.9
387
10.3
249
6.6
244
6.5
149
4.0

3,691
2,532
691
469
470
130
84
18.6
18.8
17.9
1,125
916
432
417
209
593
228
165
66
62
34
127
20.3
18.0
15.3
14.9
16.3
21.4
684
18.5
392
10.6
292
7.9
291
7.9
192
5.2

3,552
2,426
556
568
373
111
133
15.4
20.0
23.4
906
708
608
608
248
474
148
144
129
97
42
57
16.3
20.3
21.2
16.0
16.9
12.0
617
17.4
371
10.4
247
6.9
255
7.2
158
4.5

3,464
2,461
577
426
431
82
79
17.5
14.2
18.5
1,075
798
447
289
172
682
207
128
79
35
28
115
19.3
16.0
17.7
12.1
16.3
16.9
591
17.1
365
10.5
226
6.5
230
6.7
151
4.4

100.0
70.3
17.0
12.7
69.8
17.1
13.1

30.3
23.6
12.9
10.5
5.9
16.7
34.3
23.1
12.2
7.9
5.3
17.1

1.3
3.2
6.7
-13.4
12.1
2.3
-27.8
8.6
-4.1
-16.7
11.9
16.1
-23.4
-20.5
-11.2
14.7
40.6
2.5
-34.6
-36.0
-17.2
34.5
25.7
-11.7
-14.7
-19.5
-6.8
17.2
2.9
3.3
2.1
-0.6
2

131
227
112
-207
135
7
-91
1.3
-0.7
-3.5
339
344
-416
-285
-79
226
178
10
-116
-80
-20
79
3.9
-2.2
-2.8
-3.1
-1.1
2.6
51
0.3
38
0.2
13
0.1
-4
-0.1
9
0.0

100.0
173.3
85.5
-158.0264.7
13.7-178.4258.8
262.6-317.6-217.6
-60.3
172.5
349.0
19.6
-227.5-156.9
-39.2
154.9

3,921
2,678
676
569
457
117
126
17.1
17.3
22.1
1,148
909
573

4,965

26.6

15,500

8.2

1,124
1,503
812

-2.1
65.3
41.7

4,317
3,988
2,176

7.8
30.7
7.5

3,531

3,917

10.9

5,019

2.0

472
9.5
462
9.3
291
5.9

49.4

1,090
7.0
1,090
7.0
684
4.4

18.3

222
138
106
581
19.3
15.2
18.5
16.5
699
17.8
384
9.8
316
8.1
327
8.3
212
5.4

41.3
37.2

1/6

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

13.6
14.6

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE First Section)

Issued: 2/3/2020

・Overall, a sales growth of Y131 million and a gross profit growth of Y51 million were achieved in Q3 YTD.
・By service category (three categories), sales of the System Integration Service (SIS) increased by Y227 million
YoY (+3.2%), which is greater than the overall sales growth. System development projects for home furnitureservices in the distribution industry, credit card companies in the finance industry, paper-processing companies,
and education-business companies grew and contributed to the sales growth. The gross margin of SIS rose from
15.6% in the previous Q3 YTD to 17.0% in the current Q3 YTD and its gross profit increased by Y135 million(+12.1% YoY), helping support the Company’s overall profit.
・Regarding the System Outsourcing Service (SOS), sales increased by Y112 million (+6.6% YoY) thanks to the
expansion of outsourcing services for the distribution industry. However, the gross margin slightly decreased,causing the gross profit to increase only by Y7 million (+2.2% YoY). With the Professional Service (ProS), sales
decreased by Y207 million (-13.4% YoY) and profit decreased by Y91 million (-27.9% YoY) due to thecompletion of system developments for telecom carriers.
・By industry (six industries), the results were split into two patterns: both sales and profit declined for thetelecommunications, manufacturing (other), and government-related industries due to the changeover period oflarge-scaled projects, while both sales and profit increased for the finance, distribution, and other industries. The
finance industry was especially strong, serving as the driver of overall growth in sales and profit (refers to grossprofit; the same applies below), thanks to the firm recovery and expansion of system development projects for
credit card companies, banks, and insurance companies. The distribution industry also contributed to the sales
growth with projects related to the consumption tax revision and the expansion of new projects in growth domains(digitalization support, etc.), but only limitedly contributed to profit due to the decline in gross margin. On theother hand, with the telecommunications industry, sales and profit declined at a double-digit rate due to the reason
described above. Both sales and profit decreased YoY for the other industries due to a decrease in the gross margin
as the project for construction machinery was finished and some of the projects had turned unprofitable.
・Thanks to improved performance of the SIS (by service category) and the finance industry (by industry), theoverall gross margin slightly improved from the previous Q3 YTD’s 16.8% to 17.1% for the current Q3 YTD andthe operating margin also improved by a small amount from 5.8% to 5.9% (in the same order). The factors thatcaused the current Q3 YTD’s operating profit to increase or decrease (a net increase of Y13 million) are describedin Figure 2. Sales growth from the strengthening of the Enhancement business and the increase in the number oforders received for the derivative projects, as well as cost reduction and efficiency improvement, helped
compensate for the rise in cost, resulting in a profit growth. The improvement in profitability of some of theunprofitable projects also had a positive effect.
[Figure 2] Factors that Increased/Decreased Q3 YTD Operating Profit
Inc. in cost due toworsened project
profitability
Quality- andmanagementimprovement strategies＋122(unit: million yen)

Increased labor
cost
Staff reinforcement:
SEs and DX-related
talents

Increase in HR
dev. and R&D
investment

Increase inotherexpenses

-24
-33

605

618

-26
-26
Rise in profit due to businessexpansion and improved
profitability of existing business
Next-level Enhancement strategy
Expansion of current business domains
Development of new growth domains

Dec. 2018+13 million yen YoY

Factors that increased/decreased operating profit, YoY (unit: million yen)
Increase in profit from business expansion & improved profitability of existing business
Increase in cost due to worsened profitability of projects
Increase in labor cost
Increase in HR development and R&D investments
Increase in other expenses
Total (net YoY change)

Dec 2019

Q2 FY 2020 YTD Q3 FY 2020 YTD
118
122
-42
-24
-8
-33
-25
-26
-8
-26
34
13

Diff.
4
18
-25
-1
-18
-21

(Note) Prepared by Alpha-Win Research Dept. based on the financial results summary and financial results briefing supplemental materials

Short Report

2/6This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE First Section)

Issued: 2/3/2020

・Due to the nature of the Company's business model, sales growth largely depends on the number of employees.
The number of domestic and overseas employees has increased from 698 in Dec. 2017 (at month-end) → 739 in
Dec. 2018 (+41; +5.9%) → 745 in Dec. 2019 (+6; +0.8%). Although the number of employees is still somewhat
short of the potential demand for systems, the productivity of each person such as sales and operating profit perperson has been gradually improving. The Company plans to continue to focus on productivity improvement andemployee recruitment and training, which are the key points in top-line and profit growth.
・The balance sheet at the end of Q3 does not show any significant change. The Company is essentially debt-lessand has ample liquidity at hand, with cash and deposits of Y3.3 billion. Its financial standing is also firm, with anequity ratio of 68.5%.
・Quarterly transition in financial performance is described in Figures 3-5. In Q3 (Oct-Dec 2019), sales were Y3,463
million, having decreased by about 2% YoY. Decreased profitability of business with the distribution,
telecommunications, and other (manufacturing) industries caused operating profit to decrease by about 9% YoY
to Y225 million.
[Figure 3] Quarterly Change in Sales[Figure 4] Quarterly Change in O.P.

(unit: million yen)(unit: million yen)

6,000

(unit: %)
12.0%

500
450

5,000

10.0%

400
4,000

[Figure 5] Quarterly Change in O.P. Margin

350

8.0%

300

3,000

250

6.0%

200

2,000

150
1,000

4.0%

100

2.0%

50

0
FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

0
FY 2014

Q1

Q2

Q3

Q4

FY 2015

FY 2016
Q1

FY 2017Q2Q3FY 2018
Q4

FY 2019

FY 2020

0.0%
FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Q1

Q2

Q3

Q4

FY

(Note) Prepared by Alpha-Win Research Dept. based on the financial results summary and supplemental briefing materials. In Figures 35, Q1 to Q3 of FY 2020 are actual results and Q4 and full-year values are based on the Company’s forecast.

◆ No change to the initial full-year forecast
・The Company has not changed its initial forecast on sales, profits, and dividend announced at the beginning of
the fiscal year. It expects sales to increase by 8.2% YoY to Y15,500 million and a double-digit growth for operating,recurring, and net profit. Dividend is planned to be raised by Y2 annually. Like the previous fiscal year, theCompany plans to increase sales and profits during this fiscal year and hit a record high in sales for consecutive
fiscal years, as well as achieving a record high in profit. The Company will also aim again to raise operating profit
and recurring profit so that they each exceed Y1 billion for the first time (this challenge had been attempted during
last fiscal year but could not be achieved).
・Q3 YTD's progress rate in terms of the full-year company forecast was 68% for sales and 57% for operating profit.
The simple average of Q3 YTD progress rates over the past six years, including the previous fiscal year, is 72%
for sales and 65% for operating profit; this Q3 YTD’s progress rate is below the average progress rate.
・When the Q3 YTD results are subtracted from the Company’s full-year forecast, we can see that in the fourth
quarter (Jan-Mar; hereinafter, “Q4”) the Company plans to achieve sales of Y4,965 million (+26.6% YoY) and an
operating profit of Y472 million (+49.4% YoY) – it plans for a double-digit YoY sales growth, a significant
improvement in profit, and an improvement in the operating margin (from last Q4 → this Q4: 8.1% → 9.5%).
The Company has been experiencing seasonal variability on a quarterly basis such that, in recent years, Q4 has
been generally contributing the most to the full-year results. At the moment, achievement of the Company’s fullyear targets seems somewhat difficult. However, with improved operation situation and cost reduction in Q4, asmall increase in sales and profit can also be expected for the full fiscal year.
・As for the Q3 YTD results (Apr-Sept 2019) of the Company’s competitors, HIMACS experienced an approx. 3%
sales growth but an approx. 15% decline in operating profit (some projects had turned unprofitable) and Toho
System Science posted a sales decline of approx. 7% and an operating profit decline of approx. 15%. Bothcompanies are also expecting a profit decline of nearly 20% for the full year. While the Company’s Q3 YTD
progress rate is smaller than the competitors, the Company has been maintaining a growth in sales and operating
profit up through Q3. If the Company could achieve a sales and profit growth again during this full fiscal year in
Short Report

3/6This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

FY 2020

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE First Section)

Issued: 2/3/2020

line with its plan, then its relative solidness in financial performance will become apparent. In Q4, the Company
expects a large sales growth for the distribution, telecommunications, and other industries, excluding the financeindustry, although the situation with receiving orders for the telecommunications industry is somewhat difficult.
・In the previous report (Dec 2019), Alpha-Win Research Department revised the full-year forecast upon taking
into account the occurrence of unprofitable projects and their effect on the actual results for H1 sales and profit(previous → current forecast made by our research department: sales of Y15.4 billion → Y15.2 billion,
operating profit of Y1,080 million → Y1,070 million, and no change to recurring profit and other items that
follow). However, this time, we did not make any revision and kept the previous forecast. Although the rise invarious expenses such as labor costs in the Q3 YTD results is a concern, we noted that costs of some of theunprofitable projects are improving (compared to Q2) due to various measures implemented by the Company (theeffect on profit/loss per quarter in the order of last Q4 → this Q1 → Q2 → Q3 in units of million yen: -52 →-15 → -27 → +18).
・The Company has been strengthening sales toward its main accounts (clients), expanding existing businesses, anddeveloping business in new domains and areas. The number of orders received in Q3 YTD and the order backlog
at the end of the same period have stayed mostly the same, having decreased by 0.8% YoY or increased by 3.4%
YoY, respectively. Although the actual situation will depend on the timing of delivery and of the posting of sales,
the Company is securing about 80% of the expected sales as order backlog.
・Going forward, the Company plans to prevent projects from becoming unprofitable by enhancing communication
with customers, accumulating and utilizing know-how, and implementing thorough quality control. The effects ofthese measures are key points to watch.
・Over the medium to long term, the Company’s users are expected to continue increasing their IT investments inorder to develop new business models, strengthen their competitive advantage, deal with the labor shortage,streamline and speed up operation, and promote DX. Consequently, the Company’s growth potential is large. We
expect that the Company’s profit and sales will grow stably at a rate of 8-10% per year by expanding its
Enhancement business, acquiring new customers, developing new and overseas businesses, and improving its
productivity through various measures.

◆ Stock price and characteristics: domestic-demand-related, stable growth stock where

the current and next fiscal year’s financial performance are the key points to watch
・The Company’s stock is a domestic-demand-related, defensive, stable growth stock that is little affected byinternational affairs (the new coronavirus, economic fluctuations, trade wars, and foreign exchange). However,the volatility of stock price has recently been increasing.
・In the past ten years or so, thanks to its positive financial performance over the long term (Figure 6), the Company’s
stock price had increased by about three times and has been significantly outperforming the TOPIX (the TOPIX
increased by about two times during the same period). Over the short term, this full fiscal year’s achievementswith regards to financial performance and the next fiscal year’s financial forecast (percent change in profit) are
expected to become the major factors affecting stock price. Other points of interest include the contents of the next
medium-term business plan, development of and achievements in new technologies and business domains,
shareholder return (dividend hike, share buyback, and stock splits), and the financial performance and IT
investment trends of the Company’s end users (Japanese companies).
Sales (left axis)(million yen)

Recurring Profit (right axis)(million yen)

18,000

1,200
1,090

16,000980

Consolidated since FY 2001

[Figure 6] Long-Term Transition in Financial
Performance

14,000(Note) Prepared by Alpha-Win Research Dept. based on thefinancial results summary and financial results briefing
supplemental materials. Estimates/forecasts (E) were madeby the Company.

10,000

960

959

1,000

893
811

12,000

550
445

550

583

606

597

302

533

12,623400

11,217 12,527

309

4,220 4,387 4,806

600

13,55912,899

432

4,000
5,598

6,244 6,575

800

14,325387

6,000

15,500

702

672

499

8,000

2,000

660

643

7,100

7,767 7,923 8,109

8,507 8,706

9,166

8,431

9,241
200

0

0
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(E)

Short Report

4/6

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE First Section)

Issued: 2/3/2020

・Compared to the average of the First Section of the TSE (based on the closing price on 1/31/2020: P/E of 15.8,
P/B of 1.2, and simple average of dividend yield of 1.9%) and its competitors (HIMACS and Toho System Science;
Figure 7), the Company’s valuation is about average. Going forward, we believed that if the Company could
maintain a stable, double-digit profit growth, then its stock price could potentially rise.
[Figure 7] Comparison of Financial Performance and Valuation Indicators with Competitors
Company Name

CUBE SYSTEM(CS: consolidated)

HIMACS(HM: consolidated)Toho System Science(TS: non-consolidated)

2335

4299

4333

Code
Stock Price (at 1/31 closing)Market Cap (million yen)
P/E (price-to-earnings ratio)
P/B (price-to-book ratio)
Dividend Yield (%)
EV/EBITDA
P/S (price-to-sales ratio)
Q3 FY 2020 YTD: Sales (million yen)
YoY Change (%)
Operating Profit (million yen)
YoY Change (%)
Operating Margin (%)
FY 2020 Forecast: Sales (million yen)
YoY Change (%)
Operating Profit (million yen)
YoY Change (%)
Operating Margin (%)
Sales Progress Rate in Q3 against Full-Year Target
O.P. Progress Rate in Q3 against Full-Year Target

765
11,689
15.4
1.9
2.4
8.7
0.8
10,535
1.3
618
2.1
5.9
15,500
8.2
1,090
18.3
7.0
68%
57%

1,960
12,165
17.8
1.2
2.6
6.8
0.8
11,368
2.9
641
-15.2
5.6
15,000
1.1
800
-18.9
5.3
76%
80%

904
12,535
19.2
1.6
2.8
5.1
1.1
8,695
-7.2
599
-14.8
6.9
11,600
-9.4
830
-19.5
7.2
75%
72%

Market cap= (shares outstanding) x (market share price [at 1/31/2020 closing])
The companies' planned EPS and dividend values for FY 2020 were used in all P/E and dividend yield calculations.
Actual BPS values of Q3 FY 2020 were used in P/B calculations.
EV/EBITDA=(market cap + interest bearing debt - cash&deposits)/(O.P. + depreciation + intangible fixed asset amortization)*Values for interest-bearing debt and cash & deposits are actual Q3 values.
P/S=market cap / sales [the companies' forecasts for FY 2020](Note) Prepared by Alpha-Win Research Dept. based on each company’s financial results summary and securities report 2335 CUBE SYSTEM Sector: Information & Communication Figure A
FY

2017
2018
2019
2020
2020
2021
2022
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020

CE
E
E
E
Q1
Q1
Q2
Q2
Q3
Q3
Q4
Q4 CE
Q3 YTD
Q3 YTD

Sales

YOY

O.P.

YOY

R.P.

YOY

N.P.

YOY

EPS

BPS

Dividend(million yen)（%）(million yen)（%）(million yen)（%）(million yen)

(%)

(Y)

(Y)

(Y)

12,89913,55914,325
15,50015,20016,50017,800
3,082
3,379
3,770
3,691
3,552
3,464
3,921
4,965
10,404
10,535

2.2
5.1
5.6
8.2
6.1
8.6
7.9
1.4
9.6
9.4
-2.1
16.3
-2.5
-2.4
26.6
9.0
1.3

781
855
921
1,090
1,070
1,200
1,320
109
100
248
291
247
226
316
472
605
618

-17.7
9.5
7.8
18.3
16.2
12.1
10.0
52.4
-8.8
6.4
17.3
80.3
-8.5
-23.5
49.4
36.6
2.1

811
892
959
1,090
1,080
1,200
1,320
132
107
243
290
256
231
327
462
632
628

-15.5
10.0
7.5
13.6
12.6
11.1
10.0
80.5
-19.0
4.8
19.3
77.8
-9.8
-26.0
41.3
40.4
-0.6

551
567
596
684
680
750
825
76
50
149
191
158
151
213
292
383
392

-12.3
2.9
5.1
14.6
14.1
10.3
10.0
131.3
-34.2
43.3
28.2
102.6
-4.4
-31.1
37.1
48.4
2.3

39.15
346.4740.59
372.2343.25
393.29
49.58
―
50.04
426.3855.20
463.5860.72
506.295.45
357.233.70
379.635.96
381.807.41
397.5911.41 393.29
11.11
4.3.7715.51 1,789.76
20.64―
27.74 393.29
28.94 403.77

14.0
16.0
16.0
18.0
18.0
18.0
20.0
0.0
0.0
0.0
8.0
0.00
0.00
16.00
10.00
0.00
8.00

(Note) CE: the Company's forecast. E: Alpha-Win Research Dept.'s forecast. Q1 (first quarter): Apr-June. Q2 (second quarter): July-Sept.

(Note) Q3
CE:(third
the Company’s
estimate/forecast.
E: Alpha-Win
Dept.’s estimate/forecast.
Q1 (first quarter): Apr-June. Q2 (second
quarter): Oct-Dec.
Q4 (fourth quarter):
Jan-Mar. Research
Q3 (third quarter)
YTD: Apr-Dec.
quarter): July-Sept. Q3 (third quarter): Oct-Dec. Q4 (fourth quarter): Jan-Mar. Q3 YTD: Apr-Dec.

Short Report

5/6This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE First Section)

Issued: 2/3/2020

 Stock Price and Valuation Indicators: 2335 CUBE SYSTEM Figure B
1/31/2020

Item

Item

P/E

P/B

Dividend Yield

Dividend Payout Ratio

765

Last FY (actual)

17.7

1.9

2.1%

37.0%

Shares Outstanding (thou.)

15,280This FY (est.)

15.3

1.8

2.4%

36.0%

Market Capitalization (million yen)

11,689Next FY (est.)

13.9

1.7

2.4%

32.6%

Equity Ratio at This Q3-End

68.5%

Last FY's ROE

11.4%

Stock Price (Y)0

Dilutive Shares (thou.)(Note) Estimates/forecasts were made by Alpha-Win Research Dept.
【 Stock Chart (end-of-week prices): 2335 CUBE SYSTEM 】 Figure C

(Y)
1,200

1.50
1.45
1.40
1.35
1.30
1.25
1.20
1.15
1.10
1.05
1.00
0.95
0.90
0.85
0.80
0.75
0.70
0.65
0.60

Stock price (left axis)

1,100

Price relative to TOPIX (right axis)
1,000
900
800
700
600

0

(Note) Reflects stock price and index values
up to the closing price on 1/31/2020

(M
M
/Y
Y
)

9

/2

01

9

/1

11

9

/1

09

/1

9

(Note) From the first week of September 2016 to the fifth week of January 2020

07

9

/1

05

9

/1

03

8

/1

01

8

/1

11

8

/1

09

8

/1

07

8

/1

05

8

/1

03

7

/1

01

7

/1

11

7

/1

09

7

/1

07

7

/1

05

7

/1

03

6

/1

01

/1

11

09

/1

6

500

【Performance】
PeriodReturn vs. TOPIX
1 month-3.9%-1.8%
3 months
-3.2%
-4.2%
6 months-12.3%-18.5%
12 months
2.8%
-4.3%

＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

Disclaimers
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-WinCapital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in this Report.
This Report is not to be construed as a recommendation or solicitation of investment. Alpha-Win shallnot be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on
all investment matters and take full responsibility regarding their investment.
This Report has been prepared with a focus on objectivity and neutrality based on the analysis of generally
accessible public information and supplemental information including interview(s) by the analyst. Alpha-Win,
the writer, and/or other persons involved in the publication of this Report may already hold, or buy and sell in
the future, the stock of the company presented in this Report.
Contents of this Report are based on information current as of the issue date and are subject to change
without notice. For the most recent (updated) version of this Report, please see our website（http://www.awincap.com/）. We do not warrant or represent that the information in this Report isaccurate, reliable, complete, appropriate, or fit for any purpose and do not accept any responsibility or
liability.
Copyright of this Report belongs to Alpha-Win and no part of the publication may be copied, photocopied,cited, or translated without our consent.
For inquiries regarding this Report, please send us an e-mail to info@awincap.com. However, Alpha-Win andthe writer of this Report do not have any obligation to reply to inquiries.
PSV20200211-12
Short Report

6/6This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.