Alpha-Win Company Research Report
PCA(9629 TSE First Section)● SummaryIssued: 6/29/2020

Alpha-Win Capital Inc. Research Department
http://www.awincap.com/

Business Description
・ PCA CORPORATION (hereinafter, the “Company”) is an independent software manufacturer specialized inpackaged enterprise system software. It is a major specialized player in the industry.
・The Company was founded in 1980. Since then, it has been providing on-premises or cloud-based software mainly
to small- and medium-sized companies. The Company’s mission is to contribute to society as a “Management Support
Company” that supports other companies conduct smooth management and operation, mainly by providing enterprisesystem software that realizes high-level automatization.
Current Financial Performance
・Last fiscal year (FY 2020: full year), the Company’s performance was remarkably excellent, achieving the fifth
consecutive increase in both sales and profit as well as record-high full-year sales and profit. Its sales were Y14,266
million (+24.7% YoY) and operating profit was Y2,781 million (+122.8% YoY). Sales of the cloud and the labor
management system businesses, which are its growth drivers, had continued to grow. In addition, the solutions andthe products also contributed significantly to the sales growth, thanks to an event-driven high demand (early demand
related to events such as the consumption tax revision and the termination of support for Windows 7). The Company's
business model has a high marginal profit ratio, so the increase in sales absorbed the increase in costs such as
personnel costs and led to a significant increase in profit. Both sales and profit were greater than the Company’s
upwardly revised forecast as well as Alpha-Win Research Dept.’s forecast.
・The Company announced that for this full fiscal year (FY 2021), it will post sales of Y13,280 million (-6.9% YoY),
an operating profit of Y2,034 million (-26.9% YoY), and a net profit of Y1,358 million (-25.2% YoY). Sales andprofit are expected to drop in a recoil from the event-driven high demand up through last fiscal year and due to therise in costs from investments for future growth. This Company’s forecast for profit is about the same level as our
profit forecast in our previous report.
Competitiveness・The Company has a customer base of approx. 240,000 companies. It has a high brand recognition and top-ranking
market share in the fields of accounting and finance toward small/medium-sized companies. The Company’s cloudbased enterprise system software business in those fields is especially strong, continuing to rank No. 1 in the industry
as a pioneer. Going forward, we should pay attention to how the Company competes with its major competitors who
have entered the cloud service business at a later stage and with competitors mainly in the low-price range.
・The Company’s strength is its ability to concentrate business resources in its field of expertise as a specialist to
develop products and services that meet various customer needs, including those related to changes in tax and otherregulations, ahead of its competitors. It also has a stable customer base and can provide high-quality products andservices at reasonable prices.
Business Strategy
・As the basic business strategies for its corporate group, the Company aims to create a strong earnings base for its
main businesses (reinforce and increase the sales of PCA Cloud and strengthen the PCA Subscription business forthe on-premises), create new business opportunities (development of new technology and businesses), and strengthen
the business structure to become a highly profitable company. As a new goal, it also plans to strengthen its
monozukuri (“creation of things”: foundation of development for unique products and services). Through thesestrategies, it hopes to enter another growth phase. On the other hand, its challenges are the acquisition of talents andgetting Keepdata and the new businesses (PCA Subscription, Hyper, etc.) on track.
・The consolidated targets for FY 2022, the final year of the medium-term management plan, were revised up. Sales
were revised from at least Y11.5 billion ⇒ at least Y13.5 billion (of which sales of the subscription-based businesses
are Y6 billion ⇒ Y7.5 billion), operating profit was raised from at least Y1.5 billion ⇒ at least Y2.1 billion, andoperating margin was revised from at least 10% ⇒ at least 15%. These are the minimum target values, although
1/40This 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 from the use ofor 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 thisReport 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
PCA (9629 TSE First Section)

Issued: 6/29/2020

COVID-19 may affect the results.

Alpha-Win Research Department’s Forecast on Financial Results
・The impact of COVID-19 is hard to speculate, but some points of concern over the short term are that it may causedelays in negotiations and new services and negatively impact the financial performance of small-to-medium-sizedcompanies which are the Company’s users. Taking this risk into account, we revised the sales forecast for thisfiscal year to a level below the Company’s forecast. In April and May, the Company seems to have made progresswith its financial performance mostly as it had been expected. However, we should closely watch its performancesince the impact of COVID-19 on sales/marketing activities and sales may start to become visible after June.
・A temporary sales and profit drop is inevitable this fiscal year. However, the cost assumptions are on the conservativeside, so the downside risk of the Company’s forecasted profit seems to be limited. Therefore, we kept our profit
forecast at about the same level as the Company’s. Since the Company is in a phase where its subscription-based
businesses are continuously expanding, if it conducts cost control appropriately, it should be able to suppress thenegative impact due to the recoil from the event-driven high demand compared to the past. Its business structure isindeed improving.
・Next fiscal year onward, although the impact of COVID-19 will remain, the situation should gradually return tonormal. We expect that the Company will then return to a trend of rising sales and profit. Over the medium to longterm, we expect the annual profit growth rate (on a normalized basis) to be 8-10%.
Stock Price・A defensive, domestic-demand-related, small-cap growth stock that is positively affected by the transition to a
subscription-based business model, the workstyle reform, and tax reforms. A majority of the companies listed on theFirst Section of the TSE with March-ending accounting period did not announce their full-year forecasts for this fiscal
year because of COVID-19. However, although expecting a sales and profit decline, the Company still announced its
forecast. Since this announcement, its stock price has been rising and significantly outperforming the TOPIX. The
valuation of its stock seems cheap compared to its competitors. Since it is a subscription-based business with highstability and continuity and can tolerate a certain amount of cost, the likelihood that it will achieve this fiscal year’s
profit targets seems high. In addition, the Company is expected to continue to enhance shareholder return throughdividend hike and stock splits and achieve solid financial performance over the medium to long term as it returns toa trend of growing sales and profit. Due to these factors, we believe that there is still an upside to the stock price.
Shareholder Return
・The Company has been stably paying dividend (a dividend payout ratio of about 33%) and has been buying back its
shares. Last fiscal year, it raised its dividend by Y23 per share per year (ordinary dividend of Y2 and commemorative
dividend of Y20) to Y54. This fiscal year, it plans to continue with the ordinary dividend of Y34. When the Quo Card
shareholder benefit plan is taken into account, the actual dividend yield comes out to be (at maximum) 1.6% for last
fiscal year and 1.2% for this fiscal year. With solid performance, further enhancement of shareholder return isanticipated over the medium to long term.
【 9629 PCA
FY
2018
2019
2020
2021
2021
2022
2023

Sector: Information & Communication 】 Figure A
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 ）

174.1
105.5
100.4
-25.2
-25.1
8.1
10.9

64.37
133.25272.92204.70204.36220.89244.94

1,644.39
1,789.76
2,027.42
2,177.77
2,364.67
2,575.60

31.00
31.00
54.00
34.00
34.00
34.00
36.00

CE
E
E
E

9,785
11,43914,266
13,28012,84013,50014,300

4.5
16.9
24.7
-6.9
-10.0
5.1
5.9

807
1,248
2,781
2,034
2,050
2,215
2,460

86.8
54.7
122.8
-26.9
-26.3
8.0
11.1

834
1,277
2,808
2,055
2,060
2,230
2,470

79.9
53.0
119.9
-26.8
-26.6
8.3
10.8

441
906
1,816
1,358
1,360
1,470
1,630

P/E

P/B

(Note 1) The Company’s fiscal
year is March-ending.
(Note 2) Hereinafter, differences
due to rounding, processing
during calculations, the methodof display, etc., may cause
values for the same item to notmatch completely.

(Note) CE: the Company's forecast. E: Alpha-Win Research Dept.'s forecast.

【 Stock Price and Valuation Indicators: 9629 PCA 】 Figure B
Dividend Yield

Dividend Payout Ratio

Stock Price (Y)4,610Last FY (actual)

16.9

2.3

1.2%

19.8%

Shares Outstanding (thou.)

7,700This FY (est.)

22.6

2.1

0.7%

16.6%

35,497

Next FY (est.)

20.9

1.9

0.7%

15.4%

Equity Ratio at Last FY-End

58.7%

Last FY’s ROE

14.3%

Item

Market Capitalization (million yen)
Dilutive Shares (thou.)

6/19/2020

0

Item(Note) Estimates/forecasts were made by Alpha-Win Research Dept.

2/40This 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 from the use ofor 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 thisReport 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
PCA (9629 TSE First Section)

Issued: 6/29/2020【Stock Chart (end-of-week prices) : 9629 PCA】

Figure C

(Y)

5.00

6,400

Stock price (left axis)

5,900
5,400

4.50

Price relative to TOPIX (right axis)

4,900

4.00

4,400

3.50

3,900

3.00

3,400
2,900

2.50

2,400

2.00

1,900

1.50

1,400
9

9

9

8

8

8

(M /20
M
/Y
Y
)

04

/1
12

/1
08

/1
04

/1
12

/1
08

/1

7

7

7
/1

04

12

/1
08

/1
04

/1
12

/1
08

6

1.00
6

900

(Note) From the fourth week of August 2016 to the third week of June 2020

【Performance】
PeriodReturn vs. TOPIX
1 month9.8%
8.4%
3 months
50.4%
33.3%
6 months
-9.8%
-1.9%
12 months
28.2%
25.7%
(Note) Reflects stock price and index
values up through 6/19/2020. The returnfor the 1-month period is calculated
from the difference between closing
prices on the last day of May and June
19. The same applies to the otherperiods. Prepared by Alpha-Win
Research Dept.

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

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 latest (updated) report, please see our website (http://www.awincap.com/). We
also 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.
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.
PFV2020-0629-0902

3/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020

Contents
1．Company Overview .......................................................................................................................... P5
Major Specialized Player in the Enterprise System Software Industry ............................................. P5
Business Philosophy .......................................................................................................................... P7
2．Business Description and Business Model ..................................................................................... P8
Enterprise System Software Necessary for Efficient Business Operations ....................................... P8
Business Model with High Continuity and Marginal Profit Ratio .................................................... P8
Expansion of Highly Stable and Profitable Subscription-Based Businesses .................................... P9
Cloud Business as the Growth Driver ............................................................................................. P10
Topic: Impact of COVID-19 and the Company’s Response ........................................................... P12
3．Shareholder Composition .............................................................................................................. P13
Change in Composition by Type of Shareholder ............................................................................ P13
Major Shareholder Composition ..................................................................................................... P13
4．ESG.................................................................................................................................................... P15
Environment, Society, and Governance .......................................................................................... P15
5．History of Growth .......................................................................................................................... P16
Company History ............................................................................................................................. P16
Past Transition in Financial Results ................................................................................................ P16
6．Business Environment ................................................................................................................... P19
Market Trend for Enterprise System Software ................................................................................ P19
Comparison with Competitors ......................................................................................................... P20
7．Last Fiscal Year’s Results and This Fiscal Year’s Forecast ...................................................... P23
Results for FY 2020 (last fiscal year) .............................................................................................. P23
PCA’s Financial Forecast for FY 2021 (this fiscal year) ................................................................ P27
Alpha-Win Research Dept.’s Financial Forecast for FY 2021 (this fiscal year) ............................. P30
8．Growth Strategy ............................................................................................................................. P31
Management Indicator Targets and Areas of Focus ........................................................................ P31
New Medium-to-Long-Term Vision“PCA Vision 2030: First Stage – 2022 Medium-Term Management Plan”......................... P31
Alpha-Win Research Dept.’s Financial Forecast for the Medium Term ......................................... P33
9．Analyst’s View ................................................................................................................................ P35
PCA’s Strengths and Challenges ..................................................................................................... P35
Shareholder Return and Shareholder Benefit Program ................................................................... P36
Stock Price and Factors that May Affect Stock Price ..................................................................... P37

Note: 1) Upon translating to English, when the page numbers differed from the original Japanese version, they were
adjusted to those of the English version of the report. 2) The Company’s fiscal year is March-ending; i.e. FY 2021
ends in March 2021.

4/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020

1. Company Overview
w Major specialized player
in the industry with 40
years of practice,developing andproviding packaged
enterprise system
software for domestic
small/medium-sizedcompanies(1) Enterprise system: a part ofa company’s information
system that deals with matters
directly affecting business, suchas financial accounting,production control, sales andinventory control, purchases,
HR, and payroll. A generalterm for back-officeapplications. Also called themission-critical system, it serves
as an important core system for
operations/services.
w The Group is composedof the Company and 3
subsidiaries.
(2) Labor management system:
also called the attendance
management system, it
manages/utilizes various info
on working hours. Can
automatically aggregate dataon working hours, etc., andprepare data to link withpayroll software. Provided as
on-premises or by cloud.
w Acquired Keepdata, acompany withtechnologicaldevelopment capability,
expertise, and provenrecord, as a foothold forthe data utilization
business

w The medical system
subsidiary was sold aspart of the restructuringof the business portfolio.

◆ Major Specialized Player in the Enterprise System
Software Industry
PCA CORPORATION (hereinafter, the “Company”) is an independent,
mid-tier, specialized company in the software industry. The Company is a
specialist in developing and selling packaged software (software preparedfor use in certain operations) for enterprise systems1, such as those foraccounting and tax. It is a major player as a specialist in such software forsmall/medium-sized companies.
About 240,000 companies are active users of the Company’s products.
Sales toward ordinary companies comprise greater than 90% of the total
sales. With regards to the size of the corporate customers, the Company isespecially strong in business toward small/medium-sized companies with50 to 100 employees. 80% of the Company’s sales are made via dealers (theremaining 20% are direct sales). It has the largest transaction with the dealer
RICOH (sells the Company’s software along with its own hardware suchas office appliances), which contributes to about 21% of the Company’s
total sales. The Company’s customers are diversified, with major
companies being its largest customers by monetary value. It ranks No. 1 in
the accounting software industry for public benefit corporations, as its
software is implemented by over 8,000 public benefit corporations.
As of the end of May 2020, the Company’s group is composed of a total offour companies: the Company and three consolidated subsidiaries. The
consolidated subsidiaries are Xronos Inc. (development/sales of labor
management system2 and time recorders; the Company founded thissubsidiary in 2001 and owns 80% of the shares), KEC Corporation(implementation support, operation, maintenance, and other services for
PCA’s products/services; wholly owned and founded in 1998 by theCompany), and the newly acquired Keepdata Ltd. (hereinafter, “Keepdata”).
The Company acquired Keepdata in March 2019 and made it its subsidiary(acquired 66.8% of the shares for approximately Y44 million). The
subsidiary has been included in the consolidated financial results starting
essentially last fiscal year (FY 2020). Keepdata’s strength is its originallydeveloped system (KeepData Hub: cloud service targeting large
companies) that enables real-time integration of various big data such as
IoT and one-stop management of the accumulation, aggregation, andvisualization of data to facilitate effective data utilization. As aManagement Support Company, the Company intends to use this system asa foothold for a new service that provides a platform for data utilization tosmall and medium-sized companies.
Keepdata posted sales of Y120 million, a net loss of Y262 million, andnegative net assets of Y66 million in FY 2018 (ended September); upfront
investment costs associated with system development had caused a net loss
and an excess of debt. With the development of the system alreadycompleted, the Company expected profit and loss to balance out in theprevious fiscal year after its acquisition. However, a net loss seems to havebeen posted as sales did not expand as expected. This loss may continue fora while, but most likely it will gradually become smaller and have limited
impact on the Group’s financial results.
Concerning MACS System Corporation (development/sales of computer

5/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
software for medical office use such as electronic medical records), it wasa consolidated subsidiary up through the fiscal year before the previous (FY2019), but the Company sold it in February 2019 since the business was
unprofitable. Thus, the Company is making progress with the restructuringof its business portfolio.

w Consolidated-toparent-company sales
ratio has stably stayedaround 1.1. The
summed recurring
profit of theconsolidated
companies(consolidated –parent) has been
positive.

The ratio of consolidated-to-parent-company sales has stably remained
around 1.1, indicating that a greater weight is placed on the parent
company’s financial results (Figure 1). Although the subsidiaries’ profits
and losses are not disclosed, the ratios of consolidated-to-parent-company
recurring profit have been in the range of 1.0-1.6 during the fiscal years that
the Company has been in the black (including this fiscal year’s forecast).
Additionally, the summed profit/loss of the three subsidiaries, calculated byconsolidated minus parent-company recurring profit, has been a surplus
since FY 2016 (Figure 2).
Among the subsidiaries, Xronos seems to be continuing to contribute themost to the financial results, thanks to the workstyle reform. Xronos’s sales
were Y1.5 billion in FY 2019 and Y2.1 billion in FY 2020. The Company
expects this solid trend to continue and has set a sales target of Y4 billion
for FY 2025 (from Xronos’s website). Profit has not been disclosed, but thesubsidiary is most likely contributing to consolidated profit with a net profit
like KEC.

[Figure 1] Ratio of Consolidatedto-Parent-Company Sales(ratios shown on upper portion of graph)

Unit: million yen

Sales of parent company

Consolidated sales minus parent company sales

16,000

1.1

1.1

1.1

1.1

1.1

1.1

1.1

14,000Consolidated
to parent
company
ratio

1.1

887
1,361

12,000712
10,000

782
732

8,000

681

825

680
13,379

6,000
9,693
4,000

11,91910,727
7,487

7,761

FY 2015

FY 2016

8,628

8,960

FY 2017

FY 2018

2,000
0FY 2014[Figure 2] Ratio of Consolidated-toParent-Company Recurring Profit

R.P. of parent company

FY 2019

FY 2020

FY 2021 (E )1.2

1.1 Consolidated

Consolidated R.P. minus parent company R.P.

Unit: million yen

3,000(ratios shown on upper portion of graph)

1.2

N.A

1.6

1.1

1.0

1.2

to parent
company
ratio

402

2,500

2,000

192

1,500

1,000

221

500

918

238

59
26

0

2,406
1,863

34

-139
-19

41

FY 2015

FY 2016

800

1,039

405

-500
FY 2014

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021 (E )(Ref) Figures 1 and 2 were both prepared by Alpha-Win Research Dept. based on the securities report. Estimates/forecasts (E)are from the Company’s business plan.

6/40
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
PCA (9629 TSE First Section)
w Founded by certified
public accountants in
1980
w Rich in cash. Debt-lessmanagement.

Issued: 6/29/2020
The name of the Company comes from the five founders who were certified
public accountants (CPA); the letters CPA were shuffled into themeaningful name P (Professional) C (Computer) A (Automation).
The Company’s finance is firm, rich in cash and debt-less. Relative to its
sales of Y14.3 billion (last fiscal year’s result), total assets of Y23.0 billion,
and market capitalization of Y23.6 billion, its cash and deposits areabundant, at Y10.7 billion, as well as increasing (values from the B/S as ofthe end of March 2020).
Free cash flow (FCF) has been positive except for a certain period, and cash
and deposits on the B/S have been increasing (Figure 3). The financial
ratios, including the equity ratio of 58.7% and the current ratio of 231.0%,
also indicate financial soundness (value as of the end of March 2020).

[Figure 3] Transition in Cash Flow (CF) (unit: million yen)
Unit: million yen
Operating CF ①
Investing CF
Financing CF
FCF ( ① +② )Cash and Deposits (on B/S)FY 2010
627
-405
-207
222
6,817

FY 2011
488
-127
-210
361
5,970

FY 2012
141
185
-205
326
5,493

FY 2013
847
-407
-215
440
6,621

FY 2014
1,048
-750
-216
299
6,606

FY 2015
547
-606
-284
-60
6,154

FY 2016
1,427
-627
-214
800
6,612

FY 2017
1,533
-395
-215
1,137
7,487

FY 2018
1,270
1,715
-216
2,985
7,269

FY 2019
2,141
-80
-572
2,061
7,280

FY 2020
3,328
-719
-225
2,609
10,716(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary.
(Note) Cash and deposits shown are values from the balance sheet, not values used in the CF calculation.

◆ Business Philosophy
w The Group’s basic
business policy is to“aim for a morerational business withclear vision.”w The mission statement
is to “contribute tosociety by developing
and providing
packaged enterprisesystem software thatrealizes advanced
automation.”

The Company’s business philosophy was announced as “customer-first”
when it made its first public offering in March 1994. Then, in 2010, theCompany laid out the three key ideas of its business philosophy and 34
rules for the code of conduct and announced that the basic business policy
for its corporate group is to “aim for a more rational business with clear
vision.”The Company’s mission statement is to “contribute to society by
developing and providing packaged enterprise system software that realizes
advanced automation.” While its corporate culture is down-to-earth andhomely, the Company is also characterized as having a pioneering spirit in
the rather conservative industry, conducting R&D and launching new
products ahead of its competitors.
The following are the three key ideas of the Company’s businessphilosophy:
1) We will always make our best effort to be customer-first.
2) We will aspire to become a highly profitable company over the long termwith sound management.
3) We will treat our employees like family members and create a company
with a homely culture.

7/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020

2．Business Description and Business Model◆ Enterprise System Software Necessary for Efficient
Business Operations
w Enterprise systems are
mission-critical.
Stability and reliability
are critical elements
since they are used
inside a company.

The Company’s core business is enterprise systems that support internalbusiness operations. Unlike systems that simply work on personal
computers, an enterprise system is a computer system that supports a seriesof processes throughout all business operation flows in a company. Since it
is mission-critical for business operations, it is required to be reliable,
efficient, stable, user-friendly, secure, and expandable.
The main methods for building an enterprise system are package-based
system development and original system development. Generally, themethod of combining sold packaged software into a system has advantages
such as short development time, cheapness, and having relatively few bugs.
On the other hand, its disadvantage is the difficulty in customizing thesystem to a company’s business conditions, operations, management styles,
and other specific needs.
As for original software development and implementation, outsourced
development and in-house development are the two options. In either case,the advantage of an original system is that it can be made user-friendly since
it can be customized to a company’s needs and operations. However,development cost and time are larger and longer, and it requires revisions,addition of functions, and maintenance after implementation. Micro-sized,
small-sized, medium-sized, and mid-tier companies will especially find thedevelopment, implementation, and operation of original software difficult
due to financial, staff, and time constraints.

(3) Accounting software:
application software forrecording, processing, andintegrated management ofaccounting data
(4) HR and payroll software:
software for payroll
calculations and HR
management

w Provides about 26 typesof originally developed
packaged enterprisesystem software
w About 70% of sales
comes from originallydeveloped products
and services

In response to such needs, the Company has been developing original
enterprise system software that especially meets the needs of one-person
businesses or micro-sized (SOHO), small-sized, medium-sized, and midtier companies in areas such as accounting3, finance, HR and payroll4, sales
management, purchasing and inventory management, and tax. The
enterprise system software is either packaged (on-premises: conventional
products operated in-house by a corporate customer) or cloud-based (aservice where the corporate customer can use the enterprise system
software via the Internet easily and at a low cost without having to prepare
its own server). The Company sells and provides its software either bydirect or indirect methods.
Additionally, the Company has not only been developing and sellingenterprise system software but has also been expanding its business byproviding consulting services based on solution proposals. With its
subsidiaries, the Company has also been providing various support services
such as maintenance service and implementation/operation support. Goingforward, the Company plans to further strengthen these businesses.

◆ Business Model with High Continuity and Marginal
Profit Ratio
The Company provides a total of about 26 types of software (counted byproduct name, including options) and its business model is based on themass production of a limited number of types of products. Due to the natureof its business, its marginal profit ratio is high. Its original products andservices (products/maintenance/cloud) account for greater than 70% of the

8/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
total sales, while the remaining 30% comes from other companies’ products(purchased goods) in the merchandise / other operating revenue categories.
From the development to the release of a new product, approximately two
years and a corresponding amount of cost are necessary per product.
Version upgrades (revision updates), which are prepared as needed, arereleased usually in a one- to two-year cycle. In recent years, software
functions have become so enhanced that the customers seem to bepurchasing less in response to this version upgrade cycle.

w Entry barrier is high,since reliability andproven track record are
required.

Since these types of software are related to operations that are required tobe highly reliable, and since software replacements give rise to issues ofcost, labor, and data continuity, their users show little interest in actively or
frequently replacing their current software with an alternative of a different
company. Therefore, customer loyalty is high, and contracts have highrepeat rates (50% to 90% or greater depending on the type of software). The
barrier to market entry is high because trust and brand recognition are amust in this industry and its companies are currently mostly being able toexist alongside one another by taking strong positions in different niches.

◆Expansion of Highly Stable and Profitable SubscriptionBased Businesses
w Sales are divided into
five segments. Focusedon the subscriptionbased business.

Until FY 2016, sales and profit/loss had been disclosed for the four businesssegments of “for ordinary companies,” “for non-profit organizations,”“medical,” and “cloud.” In FY 2017, all business segments became
consolidated. Sales are now disclosed for fives sales categories (types):“products,” “merchandise,” “maintenance service,” “cloud service,” and“other operating revenue (also called “solutions”)” (Figure 4). Profit andloss by segment are no longer disclosed.

[Figure 4] Sales Classification (by category)Sales Classification by
Category
Product ｓ
Merchandise
Maintenance Service
Cloud Service
Other Operating Revenue

Contents
Sales of original packaged software (accounting, sales management, purchasing and inventory
management, payroll, HR, etc.) (includes version upgrades)
Sales of other companies’ products such as ledger sheets
By signing up to PSS membership, one can receive inquiry and support services from call centers
Subscription service for software provided via the cloud
Sales of other companies’ products such as software/hardware combined with its original products; also
called “solutions”

Total & Average

FY 2020 (actual result)
Sales (million % of Total
Est. Gross
yen)
Sales
Margin3,166

22.2 approx. 70%

552
3,471
3,374

3.9
24.3
23.7

approx. 40
80-90%
60-70%

3,701

25.9 approx. 25%

14,266100.0 Actual: 60.3%(Ref) Prepared by Alpha-Win Research Dept. based on the securities report and interview. Includes estimates. Sales for each category arebased on the new standard.
(Note) Maintenance service and cloud service are the subscription-based businesses.

w Subscription-based
maintenance and cloudbusinesses account for
about 50% of the total
sales.

During FY 2020, the maintenance service was as a stable source of revenue
since it was the second largest contributor to the total sales (Figure 4, andFigure 5 on page 10), following solutions (other operating revenue). In
recent years, the sales of the cloud service for packaged software havelargely grown. In fact, the cloud service has become a growth driver for theentire company with regards to both sales and profits. Subscription-based
revenue (also called the “stock business” in Japanese), which is the sum of
the maintenance service and the cloud service, accounts for about 50% of
the total sales, contributing to a greater stability in management and profit.
Both the maintenance service and the cloud service have a high grossmargin and continuity.
Consolidated sales breakdown by the operation type of software is notdisclosed. However, sales seem to be diversified, with the sales for“accounting software” predicted to be the largest by composition (about

9/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
15% of the total sales), followed by “sales management and purchase &inventory management,” and then by “payroll and HR.”
Currently, the Company primarily sets internal management targets forsoftware sales (or the sold number of products) by operation type. Profit
and loss by the operation type of software are not targets of management.
However, in line with the medium-term plan, the Company has been
consulting with an external IT consultation firm and is now working on
creating and adopting new performance management indicators to make atransition from sales-based management to profit-based management. The
Company has commented that the profit/loss values for each software
operation type do not greatly differ between one another, but the main
accounting software business is assumed to be generally highly profitable.
The percentages of new software sales or version upgrade sales over the
total sales change every year, but the percentage of version upgrades has
always been greater than 50%. As a side note, the Company’s on-premises
products tend to be installed and used by users on a single PC (stand-alone).

[Figure 5] Change in Full-Year Sales and Sales Breakdown (unit: million yen, %)Cloud

Maintenance

Merchandise

Products

SolutionsYoY Change

16,00014,266% of Total Sales

124.7％
One-Time-Fee-Based Subscription-Based

14,00012,00010,0008,000
6,000

Full-Year

11,439
9,360

8,440
1,767
854
1,639

2,069
955
1,740

4,000
2,000
0

9,785

2,516

1,954

563

988

2,781

1,878

125.8％

552

98.1％

3,701

133.1％

3,471

111.1％

3,374

137.6％

3,124

3,098

3,109

1,152

1,496

1,854

2,452

FY 2016

FY 2017

FY 2018

FY 2019

3,026

3,166

52.0%

48.0%

FY 2020(Ref) Excerpt from the Company’s financial results briefing materials and financial results summary, reworked by
Alpha-Win Research Dept.
(Note) In FY 2020, the accounting standard for the products and solutions segments were partially changed (new standard).
This new standard was retroactively reflected in FY 2019. However, for the two segments, there is no continuity
with the period before FY 2018.

◆ Cloud Business as the Growth Driverw Rapidly shifting frompackaged software sales
to thecloud/subscriptionbased model

For many years, the Company had focused its business on selling
conventional packaged software, also known as on-premises. However, as
the Internet became more sophisticated and more widely used, theCompany predicted that the demand for the cloud will rise due to its userfriendliness and cost performance. Therefore, in 2008, the Company started
providing cloud-based services more than ten years ahead of its competitors.
Since then, it has been providing cloud versions for all of its on-premises
software.
This cloud business, where the users pay fees continuously for a certain
period of time to use the software (subscription-based business model), is

10/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
attractive as a stable, subscription-based business model similar to themaintenance service (average monthly payment of 20-30 thousand yen per
corporate user). As the cost of this cloud business is largely fixed and theamount of variable costs such as those related to server maintenance,
manufacturing, sales, and logistics is small, this business has a highmarginal profit ratio.

w The rapidly growing
cloud is based on a
subscription-based,stable business model.
Taking a lead in theindustry, the Company
has a high competitive
advantage.

The Company leads the industry as No. 1 in cloud-based enterprise system
software for small/medium-sized companies. The advantages listed below
seem to make the Company stand out from its competitors in the field. In
recent years (2017-2018), its competitors have entered the cloud market infull scale as their “first year of the cloud,” but the Company is expectedmaintain its advantage for the meanwhile.
・ Providing a wide variety of advanced software for business operations
・ Originally developed open architecture and low cost・ Economies of scale are in effect, with more than 14,000 companies alreadyusing the cloud as customers, contributing well to the Company’s profit
・ Consequently, it has a very strong price advantage compared to its
competitors
・ More than ten years’ worth of operation expertise・ User-friendly, with WebAPI5 allowing linkage with other companies on
the cloud (already linked with about 60 companies, including Kintone6 ofCybozu)(5) API (Application
Programming Interface):interface/network to operate
software; connects thesoftware and the program.
(6) Kintone: cloud service forbuilding business app on a
web database, provided by
Cybozu. Allows easy systembuild-up and linkage withother systems.

As shown in Figure 6, the Company has recently been focusing its businesson the cloud service, and the number of contracts as well as sales has been
growing steadily. The business’s growth rate has been accelerating alongwith the expansion of scale, making it the Company’s main driver ofbusiness growth.

[Figure 6] Transition in the Number of Companies that Have Implemented PCA Cloudand the Sales of PCA Cloud
18,0004,500

Sales of the cloud service (right axis: million yen)

16,0004,000# of companies that have implemented PCA Cloud (leftaxis: companies)

14,0003,500

12,0003,000

10,000

2,500

8,000

2,000

6,000

1,500

4,000

1,000

2,000

500

0

0

FY
2008

FY
2009

FY
2010

FY
2011

FY
2012

FY
2013

FY
2014

FY
2015

FY
2016

FY
2017

FY
2018

FY
2019

FY
FY
2020 2021 E(Note) Sales from FY 2008 to FY 2010 have not been disclosed. Estimates are partially included in the number of companies thathave implemented PCA Cloud.

(Ref) Prepared by Alpha-Win Research Dept. using information including those from the Company’s financial results
briefing materials and interviews. (E) represents estimates/forecasts made by Alpha-Win Research Dept.

w 製品開発は、あたり約年の期間と億円の開発費を要
する。

11/40

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
PCA (9629 TSE First Section)

Issued: 6/29/2020◆ Topic: Impact of COVID-19 and the Company’s
Responsew Due to the nature of its
business, overall, theimpact of COVID-19
has been minimal.
However, sales efforts
for new contracts,business development,
and support services
were somewhat
affected.
(7) New coronavirus diseaseor COVID-19: a viral
respiratory disease caused
upon the infection of humans
by the new coronavirus. It
has become a pandemic.

w The release of PCA
Subscription, its new
business, has been
pushed back by about
two months.

On February 26, 2020, the COVID-19 Response Headquarters wasestablished with President Sato as the chief director. Internally, theCompany has been encouraging remote work and staggered commuting
hours among its employees. Since the day after April 8th, when theemergency declaration on the new coronavirus disease7 (hereinafter,“COVID-19”) was made, the Company has been on remote work inprinciple. It replaced a few hundred PCs and improved the communication
infrastructure and remote-work environment. Currently, about 80 to 90%
of its officers and employees work from home. To fulfill its social mission
to provide enterprise system software while ensuring the safety of officers
and employees, it has been on a shift-work system.
Toward its customers and business partners, the Company has cancellingor postponing events, seminars, and in-person meetings, and has beenswitching them online.
Since the Company has been making a large shift to a subscription-based
business model and provides enterprise system software in cloud format aswell, the impact of COVID-19 has been small over the short term.
However, undeniably, there has been an impact on new customer
acquisition, support services (visiting customers to help implement
software), new business development, and version upgrades for the onpremises software. Its main users are small- to medium-sized companies
that are likely to be financially affected by the self-restraint request andstagnation of economic activities under the emergency declaration. If thesituation is prolonged, there is likely to be a negative impact on the sales
expansion of the existing services and the development of new businesses.
In fact, the Company had initially planned to launch the new business PCA
Subscription, the subscription version of its on-premises software, on May
11. However, due to the COVID-19 impact, it announced that it has decided
to push this back to July 1. It has not changed its plan to launch the Hyper
Series, a new product targeting mid-tier companies, but sales expansion
may be slower than anticipated.
PCA Subscription is an alternative to the conventional packaged versionsof software (one-time sales of PCA series products). By paying a monthly
or annual fee, the user becomes subscribed (subscription: selling/billing
method for software where usage right is periodically updated) and can use
the Company’s enterprise system software. The service’s features areshown below (edited/reworked excerpt from the Company’s news release).
The Company intends to actively expand the sales of this service.

(8) Client-API: an API(application interface) by
which PCA software
functions can be used fromexternal applications.

・Can use PCA software without initial cost・Latest program version always available
・Enhanced automatic updating function (download, not packaged)
・Client-API8 is a standard feature (need to pay in packaged version)・Operated under a public cloud environment (Iaas or Paas)
・Also provided as a complete model (all PCA software can be usedwithout limit)

12/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020

3． Shareholder Composition◆ Change in Composition by Type of Shareholder
Regarding shareholder composition by shareholder type as of the end of
March 2020 (Figure 7), the sum of “other corporate entities” and“individuals, etc.” accounts for approximately 80% of all shares. “Overseas
corporate entities, etc.” and “financial institutions, etc.” account for only
10% and 6%, respectively, but the share of “overseas corporate entities, etc.”
has been gradually rising.

w Shares weretransferred due toinheritance and otherevents, but the largest
shareholder has notessentially changed.

Individually owned shares were transferred upon inheritance from thefounder (Mr. Kawashima) and then transferred in FY 2017 to a generalincorporated association (the founder family’s asset management company,
categorized under “other corporate entities”). However, no substantialchange occurred in the composition of major shareholders.

[Figure 7] Change in Shareholder Composition by Type of Shareholder (unit: %)
90
80
70
60
50

45.27

40

31.14

30
20

10.30
6.00

10
0

FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

Other
corporate
entities
Individuals, etc.
Overseas
corporate
entities, etc.
Financial
institu tion s, etc.

at year-end(Ref) Prepared by Alpha-Win Research Dept. based on the securities report◆ Major Shareholder Composition
Major shareholders as of the end of March 2020 are shown on Figure 8 on
page 14.
w No change to thestable shareholders,
but several new
investors joined thew。
top list ofshareholders.

Compared to the end of March 2019, excluding the five shareholders who
seem stable, the top ten list of major shareholders has changed. The
Employee Stock Ownership Plan sold shares in response to the rising stock
price, causing its shareholding ratio to decrease. Other major shareholders
include the second largest shareholder (ranking excluding treasury shares;
the same applies below) Credit Suisse Securities, the third largest
shareholder MSIP CLIENT SECURITIES, the eighth largest shareholder
Japan Trustee Services Bank (trust account), and the ninth largest
shareholder SSBTC CLIENT OMNIBUS ACCOUNT. These shareholders’
final investors and purpose of investment are unknown. However, sincesome of the accounts have a history of investment in several Japan stocks,
they are expected to include a large amount of pure investment byinstitutional investors, funds, etc., through trustees. Also, the Company’s
stock is included in an index fund managed by Mitsubishi UFJ Kokusai
Asset Management, Nomura Asset Management, Sumitomo Mitsui Trust
Asset Management, and other companies.

13/40
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
PCA (9629 TSE First Section)
w The founder family’s
asset managementcompany is the largest
shareholder withgreater than 40% of allshares. This, combinedwith the treasury sharesand the Employee
Stock Ownership Plan,
amounts to more than
50% of all shares,
indicating stability.

w Its rival OBC is also amajor shareholder.

w Currently, there is noactivist-like behavior.
The Company has not
adopted anti-takeovermeasures.

Issued: 6/29/2020
The shareholding ratio of Credit Suisse Securities report exceeded 5% at
the end of January 2020 and therefore the company submitted a Report ofPossession of Large Volume. However, it has been incrementally selling its
shares such that its shareholding ratio decreased to 2.24% by the end of
April.
Below is supplemental information:
・The largest shareholder Kawashima Co., Ltd. is the asset managementcompany of two directors of the Company (president Sato and Mr.
Kumamoto) and their relatives (descendants to the founder Mr.
Kawashima).
・The Company itself is essentially the second largest shareholder. After
Kawashima Co., Ltd. indicated its intention to sell its shares, the Company
additionally acquired 200,000 shares (equivalent to 2.6% of outstanding
shares) by a tender offer by December 2018. As a result, the Company now
owns a total of approx. 13.6% of its own shares. Currently, the Company
has not yet decided on how to effectively use its treasury shares, but somepossibilities include stock-based renumeration for its officers andemployees, cancellation of stock, and stock-swap in a tie-up or an M&A.
・The fourth largest shareholder Obic Business Consultants Co., Ltd. (OBC)
is a competitor with no transaction with the Company. Mr. Shigefumi Wada,
the current president of OBC, had also been a major shareholder under his
personal account, but he has been gradually selling his shares. Meanwhile,
there has been no change in the number of shares held under the corporate
account. In either case, the purpose of shareholding is unknown.
・The fifth largest shareholder Logic Systems Co., Ltd. and the tenth largest
shareholder APPLIED SYSTEM LABORATORY Inc.’s purposes are also
unknown.
・The seventh largest shareholder Nagoya PCA Co., Ltd. is a company towhich software development (SHOKON and other products of theCompany) is outsourced.
・ Currently, there seems to be no major shareholder with activist-likebehavior. Also, the Company has not adopted any anti-takeover measures.

[Figure 8] Major Shareholders’ Status
End of Mar.
2015

Unit for shares owned: thou. shares
End of Mar.
2016

End of Mar.
2017

End of Mar.
2018

End of Mar.
2019

For ratios: %End of Mar.
2019

2,935
2,935
2,736
Kawashima Co., Ltd.
PCA CORPORATION (treasury shares)
848
848
848
849
1,049
Credit Suisse Securities
MSIP CLIENT SECURITIESObic Business Consultants Co., Ltd.
254
254
254
254
254
Logic Systems Co., Ltd.
114
114
114
114
114
PCA Employee Stock Ownership Plan
110
119
127
127
135
Nagoya PCA Co., Ltd.
100
100
100
100
Japan Trustee Services Bank, Ltd. (trust account)
SSBTC CLIENT OMNIBUS ACCOUNTAPPLIED SYSTEM LABORATORY Inc.
86
86
Mizuho Bank, Ltd.
121
121
121
121
121
BNYM SA/NV FOR BNYM FOR BNY GCM CLIENT ACCOUNTS MLSCB RD
Shigefumi Wada (individual)
181
181
181
151
112
303
GOLDMAN SACHS INTERNATIONAL
State Street Bank and Trust Company 505001
244
249
266
266
174
90
94
KBL EPB S.A. 107704
Reiko Sato (individual): Heir to the founder Mr. Kawashima
1,467
1,467
1,467
1,467
Tomoko Kumamoto (individual): Heir to the founder Mr. Kawashima
358
Hiroko Wada (individual)% of treasury shares over all outstanding shares
11.0
11.0
11.1
11.0
13.6
(Note) The percent of shares held by shareholders other than PCA (treasury shares) are the percent over all outstanding shares excluding treasury shares.

2,735
1,045
472
295
254
114
100
100
89
87
86

←% of Total Shares ←Ranking

41.12
13.57
7.09
4.44
3.81
1.71
1.50
1.50
1.34
1.32
1.30

13.6

(Ref) Prepared by Alpha-Win Research Dept. based on the securities report.
(Note) The official English name could not be verified for some.

14/40
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.

w。

1
―
2
3
4
5
6
7
8
9
10

Alpha-Win Company Research Report
PCA (9629 TSE First Section)

Issued: 6/29/2020

4． ESG
There have been no large changes with regards to ESG. The Company has
been conducting ESG activities on a steady basis as usual.
◆ Environment
Although the Company does not directly own any production facility andtherefore does not harm the environment, it still makes consideration forenergy/electricity conservation.

w Proactively supporting
the disabled and thespotting and trainingof IT talents◆ Society
In its mission statement, the Company has declared to “support its
customers’ business management through enterprise system software.” The
idea is that by contributing to the improvement of user convenience andefficiency, it is fulfilling its responsibility as a member of the society. It
plans to especially focus on supporting its small- and medium-sizedcorporate users in becoming a digitalized company (remote work, going
paperless, building digital infrastructure, etc.).

By sponsoring events, the Company supports the spotting and training oftalented programmers who will shape the future as well as the promotionof athletics such as the marathon.
In the past, it had also made a donation to the incorporated non-profit
organization Médecins Sans Frontières (MSF) Japan in order to support thereconstruction after the Great East Japan Earthquake and help the people
who suffered from it.
The Company also operates a farm in Chiba Prefecture where it proactively
hires physically disabled staff. It also purchases flowers, lunchboxes,
bakeries, etc., produced by a company that hires physically disabled staff.

w Promoting diversity by
improving gender mix.
Has set goals toincrease thepercentage of women.
Two out of ten
executive officers are
women.

In the general employer action plan based on the Act on Promotion of
Women’s Participation and Advancement in the Workplace, the Company
has set goals to “continue to hire new female employees at a ratio of 40%
or greater for new hires, raise the percentage of female full-time employees
from the current 25% to 30%, and create a foundation for raising thenumber of future female managers by raising the percentage of women in
the company.” The Company is promoting the workplace retention of
women and making efforts to promote greater female participation. One
outside director and one outside auditor are women.
◆ Governance
For internal control, the Company has set up an internal audit office,directly under the control of the president, that operates in cooperation with
two outside directors. It has also set up a risk-control committee with thepresident as the chairperson to create a risk control system that can flexibly,
quickly, and appropriately respond to risks.

As of June 2020, the Company does not have an executive officer system.
The management team consists of six directors (including two outside
directors) and four auditors (including three outside auditors, one tax
accountant, one CPA, and one lawyer).

15/40This 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
PCA (9629 TSE First Section)

Issued: 6/29/2020

5． History of Growth◆ Company History
w Founded uponrecognizing theimportance andpromising future ofcomputers andenterprise system
software in Japanw With a pioneering
spirit, became the firstto begin cloud services
in the industry(9) SaaS (Software as aService): software where, asa service, one can use thenecessary function in thenecessary amount whenneeded; or the method ofproviding such service.
Instead of the user installingthe software, the vendor
operates the software andprovides the necessaryfunction to the user via a
network.
w Changed its market
listing from the Second
to the First Section of
the TSE in Dec. 2014

w Has been generally
increasing sales overthe long term.
Meanwhile, profit had
not changed
significantly.

A group of five certified public accountants with the late Mr. Kawashima
as its leader founded the Company in 1980 upon recognizing theimportance and the promising future of computer and software businesses
in Japan. At first, they developed and sold business accounting software forsmall business computers. In 1995, in anticipation of making transition
from small business computer users in the future, the Company officiallybegan the development and marketing of packaged software for personal
computers (PC).
Then, with the emergence of the PC era, the Company has grown mainly
due to the following four efforts: 1) created a greater variety of and version
upgrades for packaged software in Japan, 2) expanded the maintenanceservice business, 3) developed the cloud business, and 4) expanded thesolutions business which includes providing other companies’ products.
Furthermore, by increasing the number of offices and cooperating with
manufacturers and dealers, the Company has developed a nationwide
sales/support system that has helped the rapid expansion of its business.
The Company is also seen as a pioneer in the rather conservative industry,
as it was the first in the industry to begin providing cloud services (SaaS9)
in 2008.
Regarding stock, the first public offering was made in 1994. The Company
became listed on the Second Section of the TSE in 2000 and then on theFirst Section in 2014. Upon becoming listed on the First Section of the TSE,
the Company changed its logo to the current one.

◆ Past Transition in Financial Results
Since foundation until now, the Company has been expanding its businessas a specialist in the development and marketing of enterprise system
software and related businesses, as described above. The transition in
financial results since its first public offering is described in Figure 9 on
page 17. The following is supplemental information on the financial results,
in chronological order:
・Aside from certain periods such as the post-Lehman economic downturnand the recoil from the high demand stimulated by revisions in tax and otherregulations, the Company has generally kept increasing sales since 1994.
On the other hand, no significant improvement had been made for profit,
being unable to maintain or exceed the level of profit that it had once
achieved.
・Consecutive decline in sales and profit from FY 2001 to FY 2002 occurred
due an economic downturn and the recoil from the high demand brought by
the year 2000 problem.

・The decline in sales for four consecutive years from FY 2007 to FY 2010,
as well as the decline in profit for seven consecutive years from FY 2007
to FY 2013, was caused by decreased demand (due to the post-Lehman
economic downturn, etc.) and increased personnel, R&D, and sales
promotion expenses, as well as worsened profitability due to intensifiedcompetition.

16/40
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
PCA (9629 TSE First Section)w Achieved record-highsales of Y10 billion in
FY 2014 thanks to theevent-driven highdemandIssued: 6/29/2020
・In FY 2014, record-high sales (Y10,475 million) were achieved thanks to
the high demand driven by two events: the termination of Windows XP
support (support ended in April 2014) and the change in consumption tax(from 5% to 8% in April 2014). The large growth of the cloud service also
contributed to the record-high sales.
・Decreased sales in FY 2015 are explained as a recoil from the high demandbrought by the two events as described above. From FY 2016 to this fiscal
year, the Company has been increasing sales again thanks to the continued
growth of the cloud, new products, strengthened sales force, and economic
recovery.
[Figure 9] Long-Term Transition in Financial Results
Sales (left axis)

Recurring Profit (right axis)(million yen)(million yen)

16,000

3,000

2,808
14,266

14,00012,00013,2802,500

11,4391,783

10,000

1,539
1,290

1,396

1,227

1,218

8,000

6,000 660 565

1,565

794

935

5,441
5,095
4,827
4,762
4,867
3,5414,551
4,000
3,232
5,026
3,017

9,785
9,360
8,441
1277
8,168

1,582
1,392
1,181

1,181

1,084

6,383
6,336

6,006
5,597

2,000

10,475

6,269

798

7,551
6,805

834

1,139

724

2,055

6,275

1,500

1,000

463
6,167
5,867
501

500
67

384

0

2,000
-158

-500

FY

1
FY 994
1
FY 995
1
FY 996
1
FY 997
1
FY 998
1
FY 9992
FY 0002
FY 001
2
FY 002
2
FY 003
2
FY 0042
FY 0052
FY 0062
FY 0072
FY 0082
FY 0092
FY 0102
FY 011
2
FY 012
2
FY 013
2
FY 0142
FY 0152
FY 0162
FY 0172
FY 0182
FY 019
FY 20
2
20 0
21
E

0

(Ref) Prepared by Alpha-Win Research Dept. based on the securities report. Estimate/forecast (E)for FY 2021 is from the Company’s business plan.

(10) ERP (integrated
enterprise system): stands
for Enterprise Resource
Planning. Management
concept based on the
integration and real-timeprocessing of core businessinformation to efficiently
optimize as a whole.
Provided as IT solutions
software for integrating
enterprise systems.
w Record-high operating
profit and recurring
profit in FY 2006

Regarding profit, record-high net profit (Y937 million) was achieved in FY
2000, thanks to the high demand brought by the year 2000 problem.
Additionally, in FY 2006, record highs were achieved for operating profit
and recurring profit (Y1,747 million and Y1,783 million, respectively).
These record highs were brought by the improvement in profitability due tothe demand stimulated by the revision of the accounting regulation for
public benefit corporations and the drastic change in regulations caused by
the new Companies Act, as well as the Company’s ERP10 (integrated
enterprise system) product Dream 21 (former product name).
For many years, the Company’s gross margin and operating margin had
been gradually decreasing (Figure 10). The gross margin declined due toincreased price competition from intensified competition among packaged
software developers during the economic downturn, worsened product mix
from a rise in the percentage of other companies’ less-profitable goods, andhigher costs especially for labor costs, production expenses (subcontractor
costs), and R&D costs.
Gross Margin（%）[Figure 10] Long-Term Transition in
Gross Margin and Operating Margin

Operating Margin

80.0
70.1

70.0

66.4

66.8

66.1

63.2

63.0

60.3

60.0

53.5

51.0

54.5

57.0

60.3

60.4

50.0
40.0

(Ref) Prepared by Alpha-Win Research Dept.
based on the securities report. The Company’s
estimate/forecast (CE) used for FY 2021.

30.0
20.0
10.0
0.0
-10.0

19.5

17.8
12.7

15.3
11.1
6.9

10.6
4.7

4.6
-2.2

8.2

10.9

0.5

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
E

17/40
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
PCA (9629 TSE First Section)
w A net loss was posted
for two consecutive
years in a recoil frompast event-driven highdemand.
w From FY 2016, began toconsecutively raisesales/profit, staying in
the black, thanks to
new products, growthof the cloud, and cost
reduction. Operating
margin improved.

w Thanks in part to thestructural reform,
financial performancerecovered in a Vshaped curve.

w Consecutive, large
growth in sales andprofit in FY 2019 andFY 2020 due to the highdemand driven by the
consumption tax
revision andtermination of
Windows 7 support.

Issued: 6/29/2020
Despite efforts to cut down on cost, a net loss was consecutively posted in
FY 2015 and FY 2016 (net loss for the year: Y207 million in FY 2015 andY93 million in FY 2016) due to decreased sales caused by the recoil fromthe event-driven high demand as described above and the postponed
revision of consumption tax to 10%.
However, since FY 2016, the Company has been increasing sales again andthe decline in gross margin had stopped. Operating margin bottomed out
and began to gradually increase thanks to increased sales of the new
products and the cloud and cost reduction. In recent years, the Company
has been working on a structural reform, including the disposal of assets
with impairment risk (real estate and securities) and shortened softwareamortization, and has started to see positive results from these efforts too.
When domestic sales were dwindling just below Y10 billion in recent years,
cost reduction and sales growth of the cloud and the maintenance service
supported the Company’s growth and recovery of financial performance.
Since FY 2017, the Company has been continuously making and increasing
profit. In FY 2019 (the fiscal year before the previous), the Company
achieved an increase in sales and a significant increase in profit for the
fourth consecutive year. Due to an event-driven high demand of about abillion yen in the second half of the previous fiscal year, the financial results
were revised largely upward during the fiscal year. Sales increased in all
categories, but the sales of the cloud service, the products, and the solutions
especially grew well – by about 20-30% each – thanks to the event-driven
high demand (rise in the consumption tax rate, termination of Windows 7
support, version upgrades related to the change in the name of the era, etc.,
led to an early demand of almost a billion yen, as estimated by theCompany). As a result, the Company achieved record-high full-year sales
for the first time in five years since the record of Y10,475 million attainedin FY 2014 when a high demand was induced by two events. This trend
continued into FY 2020, and record-high sales and profit were achieved.
As a reference, a comparison of the Company's initial forecast and theactual results in the past was made in chronological order (Figure 11).
Although the actual results have sometimes greatly deviated from theinitial forecast, since FY 2017, the actual profits have tended to largely
exceed the initial forecast. Past announcements of revisions to financial
forecasts have often been made in September or February to April of thefollowing year.

[Figure 11] Comparison of the Company’s Initial Financial Forecast and Actual Results in Chronological Orderw 過去の業績修正は、9Operating Recurring
Operating Recurring
Sales
Operating Profit
Consolidated
Sales
Net Profit
Sales
Net Profit
月あるいは翌年の
2～4 Recurring Profit
ProfitProfitProfitProfitInitialActualInitial
InitialActualInitialDifference
frominitialforecast
YoYchangeinactualresults
Unit: million
yen
ActualresultActualresult
月になされることが多forecast
resultforecast
forecast
resultforecast
FY 2001
5,026
1,224
1,227
695
い。直近の
FY 2002
5,634
4,762 3 期間は、
925
1,215
935
533
-15.5%-23.0%-5.3%-24.4%-23.8%-23.3%FY 2003
5,104
5,095
1,073
1,015
1,083
589
576
-0.2%
6.7%
-2.2%
7.0%
16.0%
15.8%
8.1%
FY 2004
5,521
5,595
1,170
1,125
1,181
653
682
1.3%
5.0%
4.4%
9.8%
9.0%
9.0%
18.4%
期初の利益計画を上回
FY 2005
6,096
6,005
1,551
1,293
1,565
769
915
-1.5%
21.0%
19.0%
7.3%
32.6%
32.5%
34.2%
FY 2006
6,870
6,383
1,747
1,780
1,783
1,059
327
-7.1%
0.2%
-69.1%
6.3%
12.6%
13.9%
-64.3%る実績。
FY 2007
6,860
6,336
1,533
1,550
1,582
922
852
-7.6%
2.1%
-7.6%
-0.7%
-12.2%-11.3% 160.6%(Ref) Prepared by AlphaNet Profit Attributable to
Owners of the Parent (hereinafter "netprofit")FY 2008
6,790
6,274
1,321
1,325
1,365
1,391
812
644
FY 2009
6,800
6,268
1,294
1,117
1,360
1,181
809
680
FY 2010
6,500
5,867
1,141
744
1,200
797
714
436
FY 2011
5,908
6,166
878
686
927
724
519
411
FY 2012
6,505
6,805
806
468
835
501
381
75
FY 2013
7,025
7,550
56
354
84
383
29
181
FY 2014
8,641
10,474
284
1,110
311
1,138
141
604
FY 2015
9,198
8,168
453
-179
483
-157
283
-207
FY 2016
8,880
8,440
242
40
272
66
131
-93
FY 2017
9,731
9,360
165
432
187
463
51
160
FY 2018
9,876
9,785
645
807
669
834
425
441
FY 2019
10,486
11,439
825
1,248
842
1,277
588
906
FY 2020
12,783
14,266
1,478
2,781
1,499
2,808
976
1,816
FY 2021 (CE)13,280
2,034
2,055
1,358
Simple average of difference (unit: %), calculated based on the longest period with available data for sales & profits(excluding this FY) →Blue highlight:
Green highlight:
From initial forecast, upward revision : downward revision (unit: # of times)→
Previous record
Record high

-7.6%
-7.8%
-9.7%
4.4%
4.6%
7.5%
21.2%
-11.2%
-5.0%
-3.8%
-0.9%
9.1%
11.6%

0.3%
-13.7%-34.8%-21.9%-41.9%
532.1%
290.8%-139.5%-83.5%
161.8%
25.1%
51.3%
88.2%

1.9%
-13.2%-33.6%-21.9%-40.0%
356.0%
265.9%-132.5%-75.7%
147.6%
24.7%
51.7%
87.3%

-20.7%-15.9%-38.9%-20.8%-80.3%
524.1%
328.4%-173.1%-171.0%213.7%
3.8%
54.1%
86.1%

-1.0%
-0.1%
-6.4%
5.1%
10.4%
10.9%
38.7%
-22.0%
3.3%
10.9%
4.5%
16.9%
24.7%

-13.6%-15.7%-33.4%-7.8%-31.8%-24.4%
213.6%-116.1%-122.3%980.0%
86.8%
54.6%
122.8%-12.1%-15.1%-32.5%-9.2%-30.8%-23.6%
197.1%-113.8%-142.0%601.5%
80.1%
53.1%
119.9%-24.4%
5.6%-35.9%-5.7%-81.8%
141.3%
233.7%-134.3%-55.1%-272.0%175.6%
105.4%
100.4%

-1.7%

60.5%

30.2%

32.2%

5.3%

55.8%

32.7%

10.3%

7 ： 12

7：6

12 ： 7

9 ： 10↑Win Research Dept. basedon the financial resultssummary and securities
report. The FY 2021
forecasts/estimates (CE) isfrom the Company’s plan.

Simple average for each period(excluding this FY)

18/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020

6．Business Environment◆ Market Trend for Enterprise System Software
w Decreasing number ofsmall/medium-sizedcompanies (potential
users) in Japan(11) Small-sized company:
diff. definition by eachindustry, but essentially thesame as “small/mediumsized companies” in staff
size and sales

The number of companies in Japan is on a downward trend, falling below
four million companies (Figure 12). The number of small/medium-sizedcompanies is especially declining because of small-sized companies11
closing their businesses. With the decreasing population and aging societyof Japan, the total number of small and medium-sized companies, or theCompany’s target customer zone, is decreasing. In fact, the total number ofcompanies as of June 2016 was approximately 3.59 million, which is about
0.62 million smaller (-14.7%) than 2009.
[Figure 12] Change in the Number of Companies in Japan(ten thou. companies)

500

4.21 million
comapnies-0.62 million
companies
3.59 million
companies

400

300

Small-sized

423

410

305
378

366

367

200

334

325
Midsized

100

0

53

61

59

55

53

54

51

56

54

1999

2001

2004

2006

2009

2012

2014

2016

Largesized

1.1(year)(Ref) Data aggregated by the Small and Medium Enterprise Agency based on the “2016 Economic Census for Business
Activity” by the Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade, and Industry

w Temporary downturnof the market forsmall/medium-sizedcompanies

w Enterprise system
software market size
will steadily grow overthe medium to longterm.

The Bank of Japan Tankan for March 2020 predicted that software
investment in the year 2020 (plan) by small/medium-sized companies of allindustries will decrease by 1.8% YoY (of which manufacturing will
decrease by 5.0% and non-manufacturing will decrease by 0.4%). Businesssentiment of small/medium-sized companies has worsened from +1 in the
December 2019 survey (“recent”) to -7 and “outlook” also worsened from-4 to -23; over the short term, the market environment is facing a downturn.
Meanwhile, facing aggravating needs for human resources, operational
efficiency, and improved corporate financial performance, companies andother corporate bodies have been working on rebuilding or strengthening
their enterprise systems. Although the number of small/medium-sizedcompanies will likely continue to decrease, we predict that the size of therelevant market will steadily increase over the medium to long term as thedemand for software to streamline business operations increases.
Also, according to the “WHITE PAPER Information and Communicationsin Japan” by the Ministry of Internal Affairs and Communications, the sizeof the packaged software market (excluding game software, embedded
software, etc.) in 2017 was approximately Y1.1 trillion and its size has been
gradually increasing in recent years.
We estimate Japan’s current market size for enterprise system software
specifically related to the Company’s business to be approximately Y500
billion and for ERP to be approximately Y100 billion. Annual growth rate
is forecasted to be about 3% for the former and 10% for the latter over the

19/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
medium term. The cloud-based enterprise system software market is
expected to have an especially high annual growth rate of 20-30% over thelong term, replacing a part of the packaged software (on-premises) market.
In fact, compared to the U.S. where the use of cloud-based enterprisesystem software is said to be several years ahead of Japan, the penetration
rate of such system in Japan is ½ to ⅓ (ref: “WHITE PAPER Information
and Communications in Japan” by the Ministry of Internal Affairs andCommunications, etc.). With regards to software development method inJapan, the share of packaged software in Japan is about 12%, and the
proportion of outsourced software development is still large compared to
the US (Figure 13). Therefore, the growth potential of the packaged
software market in Japan seems to be large (according to the year 2019
version of the “WHITE PAPER,” the penetration rate of the cloud in Japan
is approximately 26% for “payroll / financial accounting / HR” and only 68% each for “production management / logistics management / store
management,” “purchasing,” and “sales on orders”).

w Stably growing
enterprise system
software market.
Transitioning from onpremises to the cloud.
w Market potential of
cloud-based enterprisesystem software in
Japan is still large.

[Figure 13] Software Ratio in Japan and the USA
USA

Japan
Packaged

11.7%

In-house
Development

Outsourced
Development

33.8%

37.2%
Outsourced
Development

88.3%

Packaged

29.0%(Note) Monetary amount of software developed inhouse is not disclosed in Japan’s statistics (System
of National Accounts). Therefore, data fromsoftware providers are used, but these data do notinclude in-house developed software. When the
total of the US’s packaged software andoutsourced development software is set to 100% in
order to compare data between the two countries,
US’s proportion of packaged software comes out
to be 46.2%, which is about four times that ofJapan.

(Ref) Ministry of Internal Affairs and Communications: “WHITE PAPER Information and Communicationsfor 2019” (Japan: Ministry of Internal Affairs and Communications and Ministry of Economy, Trade, andIndustry) (USA: US Department of Commerce)◆Comparison with Competitors
Figure 14 portrays an overview of the various positions and main players
in the industry, categorized by target customer zone. The players in theindustry are mostly being able to exist alongside one another by taking
strong positions in different niches, segregated by the size of thecompanies/organizations that are their users or by the operation targeted by
the software.
[Figure 14] Customer Zones and Main Players of the Enterprise System Software Market(Ref) Excerpt from the financial results briefing material, partially edited by Alpha-Win Research Dept.

20/40
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
PCA (9629 TSE First Section)w Its key product, theaccounting software, isthird in the industry.
w OBC, MJS, Yayoi, and
OHKEN are its rivals.

w The Company provides
high-quality products
and services at areasonable price.

w In addition to OBC,
competing with Money
Forward and freee withregards to a part of thecloud accounting
business

Issued: 6/29/2020
The Company has different rivals for each type of operation targeted by its
software. Regarding its key accounting software and its business in general,
its rivals among listed companies are thought to be Obic Business
Consultants (OBC: 4733), directly, and Miroku Jyoho Service (MJS: 9928),
indirectly. In particular, OBC is the greatest rival, since it has a similar
product lineup and business model as the Company. Among unlistedcompanies, Yayoi (subsidiary of ORIX), OHKEN (independent company),
and OSK (subsidiary of OTSUKA CORPORATION) are its directcompetitors.
The Company is characterized by how it provides high-quality but
reasonably priced products and services to its customers.
The accounting software market size is approximately Y200 billion. The
market is reaching maturity and its size has not largely changed. In thismarket, the Company is estimated to be third from the top (about 10% of
total market share). The Company seems to have a similar level of market
share and be at a similar position with its payroll and HR software. In thecloud accounting market, the two companies described below join in asrivals among listed companies. Both target one-person businesses andcompanies that are small in scale such as small/medium-sized companies
and SOHOs. They directly compete with the Company in specific areas.
Money Forward (TSE Mothers 3994)
・Providing cloud services such as household accounting application for
individuals and accounting software, etc., for companies
・Market capitalization of Y145 billion based on a stock price of Y6,180（closing price on 6/19）
・FY 2020 (November-ending): the company expects sales of Y11,272
million and net loss of Y3,151 million (median values, since both wereannounced as ranges), and no dividend (P/S of 12.9 [reference: P/S =market cap / sales] and P/B of 17.4)
freee (TSE Mothers 4478; became listed in December 17, 2019)
・Providing ERP services for small businesses (cloud accounting software)・Market capitalization of Y231.2 billion based on a stock price of Y4,785（closing price on 6/19）
・FY 2020 (June-ending): the company expects sales of Y6,700 million, net
loss of Y3,135 million, and no dividend (P/S of 34.5 and P/B of 17.2)

w Margins and asset
efficiency largely
improved. Top-level
ROA and ROE among
the three companies.

A comparison of the long-term transition in gross margin and operating
margin of the three major listed companies (the Company, OBC, and MJS)
is shown in Figure 15 and Figure 16 on page 22. Compared to the Company,
both margins are stable for OBC and MJS, presumably due to the merit ofscale (the sales of OBC and MJS are about 2.3x and 2.7x greater than the
Company’s, respectively, and their operating profits are about 6.2x and 1.8x
greater, respectively, based on this fiscal year’s company forecasts) and thedifference in efficiency and sales composition. Both companies used tohave a lower contract rate for the maintenance support service but
succeeded in raising this rate, resulting in a greater earning capacity.
However, the Company’s profit margins have also bottomed out and areincreasing in recent years, and the Company is now aiming for a greater
earning capacity.

21/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
Similarly, the transition in the Company’s ROA and ROE in Figure 17
shows that the ratios have been sharply improving in recent years and thatits asset efficiency has also been significantly improving in addition to theearning capacity. In fact, this improvement in the most recent period brings
the Company to the top level among the three companies. (Actual resultsfor FY 2020, in the order of ROA to ROE: compared to 13.0% and 14.3%
for PCA, 9.9% and 8.5% for OBC and 13.9% and 9.9% for MJS.）[Figure 15] Long-Term Transition in the Gross Margin of Three Major Listed Companies (PCA, OBC, and MJS)
PCA

（%）

OBC

MJS

90.0
85.0
80.0

83.4

84.2

84.0

66.4

66.8

66.1

84.4

83.7

84.7

63.0

64.0

84.3

84.8

65.2

66.3

84.4

84.0

82.5

83.6

60.3

60.4

79.0

75.0
70.1
70.0
65.0

65.9

60.0
55.0

65.0

61.8

64.4
63.2

62.3

59.5

66.3

63.6

57.0
60.3

54.5

53.5

57.8

57.8

51.0

50.0
45.0
40.0

FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 E[Figure 16] Long-Term Transition in the Operating Margin of Three Major Listed Companies (PCA, OBC, and MJS)
PCA

（ %）

50.0

46.7

45.6

40.9

43.4

OBC

45.0

43.2

MJS
44.4

42.7

41.7

43.2

41.4

41.6

40.0

30.0

28.0

16.5

16.3

20.0

19.5

15.6
12.7

17.8
10.0

11.1

10.3

10.9

11.3

10.8

8.0

6.9

0.0

14.7

8.2

6.2

4.3

15.3

12.9
10.9

4.6

10.6

9.9

0.5

4.7
-2.2

-10.0

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020 FY 2021 E[Figure 17] Transition in the Company’s ROA and ROE
（ %）

ROA

16.0

ROE
14.3

14.0
12.0
10.0

13.0
8.8

6.0
4.0

5.8

5.2

6.3

4.8
3.5

4.0

2.0

4.0

0.0

0.7

2.6

FY
2010

FY
2011

FY
2012

FY
2013

1.5

-1.0
-1.8

FY
2009

3.9

0.4

1.7

FY
2014

6.8

2.9

5.2

-2.0
-4.0

7.8

7.2

8.0

FY
2015

-0.9
FY
2016

FY
2017

FY
2018

FY
2019

FY
2020

＊ROA is the ratio of recurring profit to total assets.

(Ref) Figures 15-17 were prepared by Alpha-Win Research Dept. based on the securities report. Estimates/forecasts (CE) are from the companies’ business plans.

22/40This 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
PCA (9629 TSE First Section)

Issued: 6/29/2020

7．Last Fiscal Year’s Results and This Fiscal
Year’s Forecast
w Last fiscal year, withthe event-driven highdemand, sales andoperating profit grewfor the 5th consecutive
year. Record-high sales
and profit wereachieved. Sales growth
and the improvement
in margins led to thelarge profit growth.
w Results were solid,
exceeding both thesecond upwardrevision made by theCompany during the
fiscal year as well as
our forecast.

◆ Results for FY 2020 (last fiscal year)
Overview
Full-year, consolidated financial results for FY 2020 indicated a significant
growth in sales and profit: sales were Y14,266 million (+24.7% YoY),
operating profit was Y2,781 million (+122.8% YoY), recurring profit was
Y2,808 million (+119.9% YoY), and net profit attributable to owners of theparent was Y1,816 million (+100.4% YoY, hereinafter “net profit”) (Figure18). For full-year results, the Company achieved sales growth and record
sales for the fifth consecutive term, and furthermore achieved operating
profit growth for the fifth consecutive term as well as record-high net profit
for the first time in 15 years since FY 2005 (Figure 11 on page 18).
Last fiscal year, the forecast announced at the beginning of the fiscal year
was revised upward twice, once on October 28, 2019 and once on January
24, 2020. The results exceeded the Company's second, upwardly revised
forecast as well as our previous forecast made on January 31, 2020. The
event-driven high demand was greater than expected, which had caused
sales to be significantly higher, also leading to higher-than-expected profit.

[Figure 18] Financial Results for FY 2020
Full-Year Results

FY 2019(unit: million yen, %)FY 2020

Unit: million yen

Consolidated Sales

Sales Category

Products
Merchandise
Maintenance Service
Cloud Service
Other Operating Revenue

Gross Profit
Gross Margin (%)
SG&A Expenses
SG&A Expenses Ratio (%)
Operating Profit
Operating Margin (%)
Net Profit
Net Margin (%)

11,439
2,516
563
3,125
2,452
2,781

14,266
3,166
552
3,471
3,374
3,701

6,522
57.0
5,274
46.1
1,248
10.9
906
7.9

8,599
60.3
5,817
40.8
2,781
19.5
1,816
12.7

% Change
Difference
YOY: %
YOY: million yen
24.7
2,827
25.8
650
-1.9
-11
11.1
346
37.6
922
33.1
920
31.8
10.3
122.8
100.4

2,077
3.3
543
-5.3
1,533
8.6
910
4.8

% of Total Sales Growth
%
100.0
23.0
-0.4
12.2
32.6
32.6

% of Total Sales
%
100.0
22.2
3.9
24.3
23.7
25.9

-

-

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary.
(Note) “Other operating revenue” is the same as the “solutions.” “Merchandise” and “other operating revenue” sales categories are based on the new standards.

w With the high demandbrought by two major
events, all sales
categories experienced
sales growth.
Products, solutions,and the cloud
especially grew.

Sales
Of the total sales growth (YoY) of Y2,827 million, sales growth by category
in descending order of percent contribution is as follows: cloud was +922
million yen (about 33% of total sales growth), solutions were +920 million
yen (33%), products were +650 million yen (23%), maintenance was +346
million yen (12%), and merchandise were -11 million yen. Excluding
merchandise, whose sales of ledger sheets decreased due the trend of going
paperless, sales increased in all categories.
Last fiscal year, two major events (early demand for software version
upgrades in response to the revision of the consumption tax rate and forsoftware replacements in response to the termination of support for
Windows 7) created a high demand of about Y1 billion mainly in the first
half, as estimated by the Company (event-driven high demand during the
fiscal year before the previous was estimated to be about Y800 million).
This demand contributed significantly to the results.

23/40
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.

w 足元の PCA クラウドの利Alpha-Win Company Research Report
PCA (9629 TSE First Section)

Issued: 6/29/2020
Cloud’s sales were firm and grew at 38% YoY, helped by the acquired
Keepdata Inc. (estimated to be about Y100 million). In addition, thanks tothe event-driven high demand, sales of the products and the solutions
showed a significant growth. Sales of the products (on-premises) increased
by 26% mainly for accounting and sales management software. Sales of thesolutions grew by 33% with the implementation support fee that increases
with increasing product sales and with the business of purchasing andselling other companies’ goods.
Sales growth rate of the maintenance service used to be in the low single
digit, but it grew by 11% thanks to the solid sales of the products and therise in the number of maintenance contracts (new purchases and version
upgrades almost always come with maintenance contracts).

w Corporate users of PCA
Cloud have beensteadily increasing.
Now over 14,000 users.
w From FY 2018 to FY
2020, sales growth ofthe cloud has been
accelerating from
+23.9% → +32.2% →+37.6%.

w The subscription-based
businesses account for
about 50% of the total
sales.

Cloud
The number of corporate users of PCA Cloud reached 10,000 on 1/11/2018.
Then, the number reached 11,331 by the end of September 2018, 12,313 by
the end of March 2019 (compared to half a year ago: +982), 13,343 by theend of September 2019 (+1,030), and 14,388 by the end of March 2020(+1,045). Over the past 12 months, the number of corporate users rose by
2,075 (Figure 6 shown previously on page 11). On a simple average, thenumber of corporate users increased at a pace of about 173 companies permonth. This net-increase trend seems to be continuing into this fiscal year,
but the pace may slow down temporarily due to the impact of COVID-19.
About 40% of new contracts are with new customers.
As a result, the cloud’s sales have been expanding, and the amount and rateof increase have been accelerating as well: its sales were Y1,496 million in
FY 2017 → Y1,854 million in FY 2018 (+358 million yen or +23.9% YoY)
→Y2,452 million yen in FY 2019 (the fiscal year before the previous)(+598 million yen or +32.3% YoY) → Y3,374 million yen in FY 2020 (lastfiscal year) (+922 million yen or +37.6% YoY).
Subscription-Based Business
Sales of the Company’s subscription-based businesses (combined sales ofthe maintenance service and the cloud), which are the Company's key
performance indicator, accounted for 48.7% of the total sales during the
fiscal year before the previous, but this percentage of contribution
decreased slightly to 48.0% last fiscal year. This is because customers who
still prefer to use stand-alone software purchased on-premises or othercompanies' products ahead of schedule in response to version upgrade
campaigns, etc., before the rise in the consumption tax rate. Consequently,
sales growth rate of the products and the solutions were greater than thesubscription-based businesses’ growth (Figure 19).

【 Figure 19 】Transition in Full-Year Sales by Category (unit: million yen, %)Sales by Category
Cloud
Maintenance
Subscription-Based Business (total)% of Subsc. Business over Entire Sales
Solutions
Merchandise
Products
Total

FY 2016
1,152
3,026
4,178
49.5%
1,639
854
1,767
8,440

FY 2017
1,496
3,098
4,594
49.1%
1,740
955
2,069
9,360

FY 2018
1,854
3,109
4,963
50.7%
1,878
988
1,954
9,785

FY 2019
2,452
3,124
5,576
48.7%
2,781
563
2,516
11,439FY 2020
3,374
3,471
6,845
48.0%
3,701
552
3,166
14,266% YoY Change
37.6%
11.1%
22.8%
33.1%
-2.0%
25.8%
24.7%

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials.
(Note) For the sales categories of merchandise and solutions (other operating revenue), new standards were retroactively reflected in FY 2019.

24/40
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.

（備考） 商品とソリューション（その他営業収入）のセグメント間の種類別売上高区分は新基準を適用

Alpha-Win Company Research Report
PCA (9629 TSE First Section)

Issued: 6/29/2020
XronosWith the workstyle reform, the labor management system of the subsidiary
Xronos also made a significant contribution. Sales of the product version
grew by Y275 million and sales of the cloud version grew by Y282 million,
totaling Y557 million in sales growth. In sum, the subsidiary contributed toabout 20% of the Group’s overall sales growth (Figure 20).

w The labor management
system also contributed
to both sales and profit.

【 Figure 20 】Factors that Increased/Decreased Sales in FY 2020 (last fiscal year) (unit: million yen)(million yen)

15,000

Increase

14,500Decrease

921

14,266

14,000921

13,50013,000345

12,500649

12,00011,500-10

11,43911,00010,50010,000

PCA+537
Xronos +282
Other +101

PCA
+415
Xronos +275
Other -41
FY 2019

Products

Merchandise

Main tenance

Cloud

Implementation
support +308
Other +613

Solutions

FY 2020(Ref) Prepared by Alpha-Win Research Dept. from the financial results briefing materials.

【 Figure 21 】Factors that Increased/Decreased Operating Profit in FY 2020 (last fiscal year)
Sales

Cost of Sales

Operating Profit

SG&A Expenses(million yen)

5,000
4,500

2,827

Increase

246

Decrease

4,000
3,500

-724

3,000

161

-272

2,781

-299

w Last fiscal year, thegross margin and
SG&A expenses ratio
largely improved.

-406

2,500
2,000
1,500

Cost of purchase
Cost of cloud
Maintenance expense
Royalties paid

1,248

-701
-6
+8
-25

1,000
500

Profit increased by Y1,533 million (122.8%) YoY!

0(12) PCA Hyper: a newsoftware for mid-tiercompanies as a successor toDream21. Targets theapprox. 90,000 companies
in Japan with sales of 1 to
10 billion yen, less than orequal to 1,000 employees,
and less than 10
subsidiaries in thecorporate group. A
superior version of the DX
Series. Its unique features
are how the user can
flexibly select between the
on-premises and the cloudaccording to their stage of
growth, make flexible
linkage with other systems
using API, and streamline
data management for theentire corporate group(consolidated accounting).

FY A2019

A in sales
IncreaseA
Decrease insoftwareamortization

A
Increase in cost ofpurchase and sales(royalties paid, etc.)

A
Increase inmaintenanceexpenseA
Increase inpersonnel
expenseA
Decreasein
R&D expenseA
Increase inother SG&A
expensesA
FY 2020(Ref) Prepared by Alpha-Win Research Dept. from the financial results briefing materials.
Partially added and reworked.

ProfitFactors that contributed to an increase or decrease in consolidated operating
profit are shown in Figure 21. Since the Company’s business model has ahigh marginal profit ratio, the sales growth directly led to a profit growth.
Since the cloud and the products, which presumably have high margins,accounted for a large portion of the sales growth (profit by category is notdisclosed), the gross profit margin rose by 3.3 points from 57.0% to 60.3%(Figure 18 on page 23). With the sales growth and improvement in grossmargin, gross profit rose by 32% or Y2,077 million YoY to Y8,599 million.
This increase in gross profit was caused by how, for the cost of sales, thepurchase cost and maintenance cost were held down relative to the increasein sales.
Regarding SG&A expenses, investments in R&D and development of new
software such as the Hyper Series12 have settled down for now, leading to
a decrease in the R&D expenses (-161 million yen). On the other hand,increase in personnel expenses such as raising the basic salary of its

25/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
employees (+299 million yen) and increase in other SG&A expenses suchas advertising expenses and IT-related investment (replacement of PCs andimprovement of the communication environment) (+406 million yen)caused the SG&A expenses to rise significantly by +543 million yen or+10.3% YoY. With solid financial performance, the Company seems tohave actively returned benefits to its officers and employees and madeinvestments for the future. Still, as sales had significantly increased, the
SG&A expenses ratio ended up improving by 5.3 points from 46.1% to40.8%.

w Looking at thequarterly results, sales
and profit reached apeak in Q2 due to therush of eventtriggered demand in
Septemberw Sales returned tonormal levels in Q3
and Q4 and the sales
growth momentum
decreased, but a highlevel was still
maintained.
w Sales of the cloud
were excellent,
maintaining a highsales growth rateduring all quarters.
w Gross margin is on a
downward trend, but
mostly stable ataround 60%.
w In Q4, SG&A expense
largely increased andprofit declined, butthese had been
expected.

As a result, operating profit increased significantly by Y1,533 million or
122.8% YoY and operating margin also improved by 8.6 points from 10.9%
to 19.5%. As no non-operating profit/loss or extraordinary profit/loss wereposted, recurring profit and net profit both doubled from the previous fiscal
year.
Quarterly Results
Analyzing the results on a quarterly basis (Figure 22 on page 27), we cansee that in the first quarter (April to June 2019: Q1), sales increased by 31%
YoY to Y3,073 million, and in the second quarter (July to September of thesame year: Q2), sales increased by 59% YoY to Y4,095 million. The sales
growth rate accelerated and the amount of sales also reached a peak. Then,
this momentum decreased, as sales grew by 21% YoY to Y3,538 million in
the third quarter (October to December 2019: Q3) and declined by 1% YoY
to Y3,560 million in the fourth quarter (January to March 2020: Q4).
However, considering that the event-driven high demand had alreadystarted in the second half of the year before this, the Company has arguably
succeeded in maintaining a high level of sales in the second half of theprevious fiscal year.
Looking at the change in the sales breakdown, the cloud business continued
to be excellent, with a sales growth rate of nearly 40% YoY during all
quarters from Q1 to Q4. Regarding the products and the solutions, theirsales doubled from Q1 to Q2 and then came back to normal levels in Q3
and Q4. This large fluctuation impacted the overall sales.
The gross margin generally decreased from Q1 to Q4: 60.8% → 60.4% →60.4% → 59.5%. However, the change was not large, staying mostly
around 60%. On the other hand, the SG&A expenses increased (in the sameorder as above) from Y1,281 million → Y1,291 million → Y1,359 million→ Y1,886 million, sharply increasing in the second half and especially in
Q4. As a result, the operating profit also showed a downward trend: Y587
million → Y1,185 million → Y776 million → Y233 million. In Q4, there
was a significant decline in profit on a year-on-year comparison as well ascompared to Q2 or Q3. This was caused by the sharp increase in SG&A
expenses, mostly for advertising expense and personnel expense (bonuses,etc.). The incurred expenses are in line with the budget plan; the Company
seems to have incorporated cost control as part of its plan in advance, sothat its financial results had room for adjustments in terms of profit and loss.

26/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020【 Figure 22 】Quarterly Transition in Financial Performance in FY 2020
Q1 Results
Unit: million yen
Consolidated Sales

Products
Merchandise
Maintenance Service

Sales Category

Cloud Service

Other Operating Revenue

Gross Profit

Gross Margin (%)
SG&A Expenses

SG&A Expenses Ratio (%)

Operating Profit
Operating Margin (%)

Net Profit

Net Margin (%)
Q2 Results
Unit: million yen

Consolidated Sales

Products
Merchandise
Maintenance Service

Sales Category

Cloud Service

Other Operating Revenue
Gross Profit
Gross Margin (%)
SG&A Expenses

SG&A Expenses Ratio (%)
Operating Profit
Operating Margin (%)

Net Profit
Net Margin (%)
Q3 Results
Unit: million yen
Consolidated Sales

Products
Merchandise
Maintenance Service

Sales Category

Cloud Service

Other Operating Revenue
Gross Profit
Gross Margin (%)
SG&A Expenses

SG&A Expenses Ratio (%)
Operating Profit
Operating Margin (%)

Net Profit
Net Margin (%)
Q4 Results
Unit: million yen
Consolidated Sales

Products
Merchandise
Maintenance Service

Sales Category

Cloud Service

Other Operating Revenue
Gross Profit
Gross Margin (%)
SG&A Expenses

SG&A Expenses Ratio (%)
Operating Profit
Operating Margin (%)

Net Profit
Net Margin (%)

Q1 FY 2019
Apr-June 2018
2,346
394
107
788
544
511
1,287
54.9
1,229
52.4
57
2.4
34
1.4
Q2 FY 2019
July-Sept 2018
2,569
419
100
765
585
704

Q1 FY 2020
Apr-June 2019
3,073
652
102
865
764
688
1,868
60.8
1,281
41.7
587
19.1
364
11.8
Q2 FY 2020
July-Sept 2018
4,095
1,190
117
833
804
1,153

% Change
Difference
YoY: %
YoY: million yen
31.0
727
65.3
258
-4.6
-5
9.8
77
40.3
220
34.7
177
45.1
581
5.9
4.2
52
-10.7
917.5
530
16.7
945.3
330
10.4
% Change
Difference
YoY: %
YoY: million yen
59.4
1,526
184.3
771
16.5
17
8.9
68
37.4
219
63.9
449

1,427
55.6
1,241
48.3

2,475
60.4
1,291
31.5

73.4

187
7.3
161.4
6.3
Q3 FY 2019
Oct-Dec 2018
2,921
521
253
765
634
746

1,185
28.9
842
20.6
Q3 FY 2020
Oct-Dec 2019
3,538
654
237
894
862
890

533.2

1,653
56.6
1,375
47.1
277
9.5
176
6.0
Q4 FY 2019
Jan-Mar 2019
3,603
1,183
103
807
689
820

2,137
60.4
1,359
38.4
776
21.9
440
12.4
Q4 FY 2020
Jan-Mar 2020
3,560
670
96
879
944
970

2,155
59.8
1,429
39.7
727
20.2
535
14.8

2,119
59.5
1,886
53.0
233
6.5
170
4.8

4.0

421.6
% Change
YoY: %
21.1
25.6
-6.2
16.9
36.0
19.3
29.3
-1.1
180.4
150.6
% Change
YoY: %
-1.2
-43.3
-6.4
8.9
37.0
18.3
-1.7
32.0
-68.0
-68.2

% of Total Sales Growth
%
100.0
35.5
-0.7
10.6
30.3
24.4
% of Total Sales Growth
%
100.0
50.6
1.1
4.5
14.4
29.4

% of Total Sales
%
100.0
21.2
3.3
28.1
24.9
22.4
% of Total Sales
%
100.0
29.1
2.9
20.3
19.6
28.2

1,048
4.9
50
-16.8

-

-

997
21.6
681
14.3
Difference
YoY: million yen
617
133
-16
129
228
144

-

-

% of Total Sales Growth
%
100.0
21.6
-2.6
20.9
37.0
23.3

% of Total Sales
%
100.0
18.5
6.7
25.3
24.4
25.2

484
3.8
-16
-8.6
500
12.5
265
6.4
Difference
YoY: million yen
-43
-513
-7
72
255
150

-

-

% of Total Sales Growth
%
100.0
-

% of Total Sales
%
100.0
18.8
2.7
24.7
26.5
27.2

-36
-0.3
457
13.3
-494
-13.6
-365
-10.1

-

-

(Ref) Prepared by Alpha-Win Research Dept. based on each quarter’s financial results summary in FY 2020

◆ PCA’s Financial Forecast for FY 2021 (this fiscal year)
This Fiscal Year’s Strategy
The Company’s strategy for this fiscal year is based on the following threepoints:・Enhancing the subscription business and improving its market prevalence(full-scale launch of PCA Subscription).
・Give another try at entering the mid-tier company market with the Hyper(planning to release Receivables Management Option and Debt
Management Option for PCA Accounting Hyper)
・Establish a workstyle reform (HR) solution businessw Will support thedigitalization of its
small/medium-sizedcorporate clients

The Company intends to strongly support and help promote businessdigitalization by its small/medium-sized corporate clients. Specifically, it
has declared that it will provide small/medium-sized companies withsolutions for starting remote work (work-at-home support) and digitalizing
information storage and replacement (from paper) in order to support thecompany or organization in building a digital infrastructure to respond tochanges in the society.
27/40This 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
PCA (9629 TSE First Section)w This FY, sales and profit
decline is expected in arecoil from the eventdriven high demand.
However, profit isexpected to be at a highlevel.
w Impact of COVID-19 isuncertain. Plans tocontrol expenses to attainthe profit target.

Issued: 6/29/2020
Summary of the Full-Year Financial Forecast
The Company announced its full-year financial forecast for FY 2021 (thisfiscal year). It expects sales and profit to decline YoY, with sales ofY13,280 million (-6.9% YoY), operating profit of Y2,034 million (-26.9%
YoY), recurring profit of Y2,055 million (-26.8% YoY), and net profit ofY1,358 million (-25.2% YoY) (Figure 23). During the announcement, theCompany said that “In making calculations in the first quarter, we took into
account the impact of COVID-19 on our financial results, but the actual
results may differ from the forecast figures due to various factors in the
future. Also, in order to achieve the final profit target, we may promote or
suppress the incurrence of expenses depending on changes in the internaland external environment.” The forecast for the interim period is notdisclosed.

w Significant sales decline
expected for solutions
and products (onpremises) due to a recoil
from the event-driven
high demand. On theother hand, the cloud is
forecasted to remain
excellent and help
support the overall
results.

Summary of the Full-Year Forecast (Sales)
Forecasts for full-year sales by category are shown in Figure 24 on page 29.
Of the expected overall sales decline of Y986 million (net amount), decline
in the sales of solutions (-812 million yen) is expected to account for 80%.
This is because the Company expects a large decline in the sales of othercompanies’ goods, etc., in the recoil from the event-driven high demand.
Similarly, the expected sales decline of the products (-627 million yen) is
equivalent to 60% of the total. Sales of maintenance and merchandise arealso expected to decrease. Only the sales of the cloud are expected toincrease by Y645 million (+19.1% YoY). The ratio of the subscriptionbased revenue, which is the total sales of the cloud and the solutions, over
the Company’s overall sales is expected to be 56% – a majority.

w Sales decline, but a risein SG&A expenses
expected.

Summary of the Full-Year Forecast (Profit)
This fiscal year’s gross margin is expected to be 60.4%, which is about thesame as the previous fiscal year’s 60.3%. Although sales will decrease by
6.9%, SG&A expenses are planned to increase by Y168 million or 2.9%
from Y5,817 million to Y5,985 million. As a result, the SG&A ratio will
worsen by 4.3 points from 40.8% to 45.1%, and the operating margin will
also decrease by 4.2 points from 19.7% to 15.5%. Non-operating profit andloss and extraordinary profit and loss are not expected to be large.

【 Figure 23 】Financial Forecast for this Fiscal Year (the Company’s plan)

Consolidated (unit: million yen)
Sales
Gross Profit
Gross Margin

SG&A Expense
SG&A Expenses Ratio

Operating Profit
O.P. Margin

Recurring Profit
R.P. Margin
Net Profit Attributable to Owners of the Parent

N.P. Margin
Annual Dividend per Share (yen)FY 2020
FY 2021
ResultCompany Forecast
Change/Diff.
% Change
14,266
13,280
-986
-6.9%
8,599
8,019
-580
112.4%
60.3%
60.4%
0.1%
ー
5,817
5,985
168
2.9%
40.8%
45.1%
4.3%
ー
2,781
2,034
-747
-26.9%
19.5%
15.3%
-4.2%
ー
2,808
2,055
-753
-26.8%
19.7%
15.5%
-4.2%
ー
1816
1,358
-458
-25.2%
12.7%
10.2%
-2.5%
ー
54
34
-

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials

28/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
Figure 25 shows the factors that are expected to increase or decrease (YoY)
the consolidated operating profit for this fiscal year. An increase will becaused by the decrease in royalty payments and software amortization
resulting in a net reduction in the cost of sales by Y406 million yen. On theother hand, a decrease will be caused by the increase in SG&A expenses,
such as the increase in personnel expense by Y144 million and R&D
expenses by Y33 million, of a total of Y187 million. Unable to offset thesales decline of Y986 million, operating profit is expected to decline by
Y747 million (-26.9% YoY).

【 Figure 24 】Factors that Are Expected to Increase/Decrease Sales in FY 2021 (this fiscal year)(the Company’s plan)
Cloud

Maintenance

Solutions

MerchandiseYoY Change

Products

16,000% of Total

14,266
14,00010,000

9,360

8,000

2,069

9,785

6,000

1,954

563

988

2,781

80.2％

445

80.6％

3,701

2,889

78.1％

1,878

1,740

3,471

4,000

44.2%
3,388

97.6％

4,019

119.1％

3,124

3,098

3,109

1,496

1,854

2,452

FY 2017

FY 2018

FY 2019

2,000
0

2,539

552

Subscription-Based

955

2,516

3,166

93.1％

One-TimeFee-Based

11,43912,00013,280

3,374

55.8%
FY 2020

FY 2021
Forecast(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials. From FY 2019, the newstandard has been applied to the sales by category.

【 Figure 25 】Factors that Are Expected to Increase/Decrease Operating Profit in FY 2021 (thisfiscal year) (the Company’s plan)
Increase(million yen)

4,000

Decrease

Cost of
Sales

Sales

Operating
ProfitSG&A Expenses

3,500

3,000

2,781

2,500

351
-47

102

2,000

2,034
-144

-33

-10

A
Increaseinpersonnel
expenseA
Increasein
R&D
expenseIncreaseA
inother SG&A
expenses

-985

1,500

1,000

500

0
FY A2020
ResultA
Increasein salesA
Decreaseinsoftwareamortization

A in
Decreasecost ofpurchase(royalties
paid, etc.)

A
IncreaseinmaintenanceexpenseFY A2021
Plan(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing materials.

29/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020◆ Alpha-Win Research Dept.’s Financial Forecast for
FY2021 (this fiscal year)
w This fiscal year’s
Company forecast for
profit seems to bewithin an achievable
range.

w Currently, COVID-19
has an effect on sales
and marketing
activities, but Q1 sales
and profit seem to bemostly in line with theplan. Prolongation of
COVID-19 is a risk
factor.

Summary
We updated our financial forecast for this fiscal year based on the previous
fiscal year's results and the current situation (Figure 31 on page 33). Thisfiscal year, due to direct and indirect effets of COVID-19 in addition to therecoil from the event-driven demand of just over 1 billion yen, we believethat a temporary decline in sales and profit is inevitable.
Compared to our previous forecast (in the report issued on January 31,2020), this fiscal year’s sales and profits were both revised slightly upwardin our current forecast (in the order of previous → current forecast: sales ofY12,600 million → Y12,840 million and operating profit of Y2,000 million→Y2,050 million). However, we reviewed the sales for each category
cautiously due to the COVID-19 risk – specifically the self-refraining fromsales and marketing activities causing cancellation and postponement ofnegotiations, launching of new products, software upgrades, software
implementation, and software implementation support. As a result, weended up predicting that sales will be Y440 million (3.3%) lower than the
Company's forecast of Y13,280 million. On the other hand, we expect profit
to be slightly above the Company's forecast of Y2,034 million. The
Company's cost assumption is rather conservative, so there seems to beroom for cost control, especially for the SG&A expenses. Therefore, we
believe that the Company’s forecasted profit can be achieved.
The cloud and the labor management software are continuing to grow. We
believe that these two could offset the decline that will occur for the
products and the solutions in a recoil. Therefore, compared to the past
period of recoil from event-driven high demand, we believe that the rate of
decline in sales and profit will be small this time. In the previous period ofrecoil after an event-driven high demand, from FY 2014 to FY 2015, sales
decreased from 10,425 million yen → 8,168 million yen (-22% YoY) andrecurring profit decreased from 1,139 million yen → -158 million yen. The
bottom line also turned into a net loss.
Amidst the workstyle reform, there are still many small- to medium-sizedcompanies that are not making use of labor management software, meaningthat the potential demand is large. Xronos can provide labor management
software as both on-premises or cloud-based software (service name:X’sion), so we expect its sales to grow by about 20% YoY.
Risk Factors
The main risk factors are those caused by the weak financial performanceof corporate users due to the prolongation of COVID-19, such as users
holding off purchases of products and services and the postponment ofsoftware implementation. In April and May, financial performance wasslightly above the plan due to businesses continued from the previous fiscal
year. In June, though, the Company may slightly underperform its plan due
to the impact of COVID-19. Q1 results overall seem to be in line with theplan. Especially since the weight of Q1 sales and profit in the full-year
result is low in the first place (average over the past three years: 21% of thewhole for sales and 16% of the whole for operating profit), we will most
likely not find the Q1 results as a big surprise.
From negotiation to receiving orders, there is usually a time lag of a few
months. Therefore, we need to pay careful attention since the impact of
COVID-19 will likely become visible in Q2 or later.
30/40

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
PCA (9629 TSE First Section)

Issued: 6/29/2020

8． Growth Strategy◆ Management Indicator Targets and Areas of Focus
In 2012, the Company announced its group’s management indicator targets
as Y20 billion in sales (as a reference, the actual result in FY 2020 was
Y14.3 billion), 2.5% in DOE (FY 2020 actual: 2.8%), and 80,000 corporate
customers of the cloud (a little over 14,000 as of the end of March 2020),
and has been developing its business in line with this plan. To achieve thesetargets, five areas of focus have been chosen: 1) become even greater as
No. 1 in the cloud-based enterprise system software market, 2) enhance thesolutions to provide more than simple functionality, 3) enhance PCA Cloudwith leading-edge technologies, 4) pursue new services, and 5) actively
conduct M&As.

w Management indicatortargets are sales, DOE,
and the number ofcloud users.
w Five areas of focus◆ New Medium-to-Long-Term Vision “PCA Vision 2030:
First Stage – 2022 Medium-Term Management Plan”
Since the Company will reach a milestone in the year 2030 as its 50th
anniversary, it announced the New Medium-Term/Long-Term Vision PCA
Vision 2030 (Figure 26). The Company has categorized the 50 years from1980 to 2030 into four phases of business development as follows: 1980 to1998 as “PCA1.0,” the period of transition from small business computers
to PCs; 1998 to 2008 as “PCA2.0,” the period of the flourishment of theinternet and client servers; 2008 to 2018 as “PCA3.0,” the period oftransformation of internet into infrastructure and popularization of thecloud; and 2018 to 2030 as “PCA4.0.”
In the Medium-Term Management Plan, the Company described its
medium-to-long-term vision that it will continue to be a company that
contributes to society as a Management Support Company that supports
other companies conduct smooth management and operation mainly byproviding enterprise system software that realizes high-levelautomatization.
[Figure 26] The New Medium-Term/Long-Term Vision PCA Vision 2030
Long-Term
Become a Management Supporting Company focusedon supporting the management of customer
companies by increasing the variety of one-stop
services for corporate management and operation

w 当調査部では、中期の年間利益成長率を 5~8％予想。

The 50 th anniversary
Medium-Term
Promote the development of an organization that isready to create new businesses/products/services
ahead of changes in the society

Short-Term“Plant the seeds” for reviving/strengthening our power
to earn money. Enrich and put onto growth track our
original products, the cloud, and maintenance service.
Target period of current mediumterm management plan

2018

2019

2020

2022

2023

2030
2029
2028

2025

2026

2027

2024

2021

⇒In the current medium-term plan, we are focused on strengthening the earnings base andmanagement base toward the realization of our medium- to long-term vision.

(Ref) Financial results briefing materials(Note) The years in this figure are such that 2019 stands for FY 2020 (the same applies to all years in this figure).

31/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020
In June 2018, Fumiaki Sato was promoted to president and created a new
operating framework for the Company. In November of the same year, heannounced PCA Vision 2030: First Stage – 2022 Medium-Term
Management Plan.

w Announced PCA
Vision 2030: First Stage– 2022 Medium-Term
Management Plan inNovember 2018

The Company’s basic policy over the medium term set forth in the First
Stage of the Medium-Term Management Plan (FY 2020 – FY 2022) is to“conduct structural reforms and develop a business foundation throughwhich business can continue to exist and develop stably over the long term.”
Aiming to become a solution-providing service providor, the Company’splan for the medium term is to focus on creating a firm earnings base andmanagement system for the realization of its medium-to-long-term vision.
The basic strategies and priority measures of the current medium-term planand their execution status are shown below (Figure 27). The Company has
created an executaion roadmap for each measure, giving its schedule moreclarity. It has been making steady progress with the execution of the priority
measures, for instance, by lauching the Hyper Series, starting the PCA
Subscription service, preparing for the introduction of a new KPI andmanagement system, and strengthening its R&D system.

w Steadily executing its
priority measures[Figure 27] Basic Strategies and Priority Measures of the Medium-Term Plan and Their Execution Status
Basic

I. Establish arevenue basefor the corebusinesses

Priority Measures
1. Strengthen/expand sales of PCA Cloud ⇒strengthen support for remote work
demand(1) Improve brand power based on PCA Cloud(2) Promote joint business development with prominent Web-API partners(3) Strengthen partnerships with professional expert (professional occupations)channels(4) Further strengthen PCA Cloud functions/services

FY 2020

FY 2021

Execute (promotion)

Strengthen

Execute (promotion)

Strengthen

Evaluate / re-srengthen

Consortium

Strengthen

Evaluate / re-srengthen

Strengthen services

Evaluate / re-srengthen

Full-scale implementation

Strengthen services

Strengthen

Strengthen/expand

Increase speed

2. Strengthen on-premise businesses ⇒Will start PCA Subscription (July)(1) Rethink business models (transition to subscription model)(2) Promote improvement of maintenance contract renewal rate and work
productivity

Prepare for
implementation
Account automoatictransaction update

FY 2022
Evaluate / re-srengthen(1) Identify seeds leading to the development of new products and businesses(2) Give another try at developing the support business for mid-sizedcorporations (Hyper Series) ⇒ Currently developing new areas (HR, Keepdata's
new service, etc.)

Survey/identify

Implement prototype

Release

Initial release

Release

ReleaseⅢ．Strengthen
the business
managementfoundation tobuild a highly
profitablestructure(1) Implement an annual plan system (strengthened coordination with theMedium-term Management Plan)(2) Strengthen profit management system to support strategic decision-making(3) Implement business evaluation indices which incorporate considerations forprofitability enhancement(4) Revise the personnel system ⇒ reforming the HR system; working with IT
consultants to introduce a management / business performance management
system and rebuiding business IT infrastructure

Implement/introduce

Strengthen (KPI
implementation)

Design/construct

Introduce

Evaluate/improve

Design/construct

Introduce

Evaluate/improve

Design/construct

Introduce

Evaluate/improve

Ⅳ．Strengthenmonozukuri(creation ofthings)（1）Recover product development power (tradition and innovation)（2）Development division's organizational system⇒ Shift to agile development (software development method where small units of
the whole are repeatedly implemented and tested)

Cultivate/prepare

Implement

Evaluate/improve

Cultivate/prepare

Implement

Evaluate/improve

Ⅱ．Create new
business
opportunities

w 当調査部では、中期の年間利益成長率を 5~8％予想。

Evaluate / re-srengthen(Ref) Based on excerpts from the financial results briefing materials, with information added by Alpha-Win Research Dept.

w Large upward revision
to the targets for FY
2022, the final year of
the current mediumterm management plan

Since last fiscal year’s results were much greater than the Company hadplanned, the Company revised up the targets for 2021 (FY 2022), the final
year of the medium-term plan (see Figure 28, and Figures 29 and 30 on
page 33).

[Figure 28] Targets of the Medium-Term Management Plan
Target Items of the Medium-Term PlanFY 2019 Result

FY 2020 Result

FY 2021 Target

・Consolidated Sales

Y 11.439 billion

Y14.266 billion

Y13.280 billion

Of which are sales from subscription-based businesses(maintenance & cloud)Y5.577 billion

Y6.845 billion

Y7.407 billion

・Consolidated Operating Profit

Y1.248 billion

Y2.781 billion

Y2.034 billion

・Consolidated Operating Margin

10.90%

19.49%

15.32%FY 2022 New Target

Diff. bet. Previous
and New≥ Y11.5 billion≥ Y13.5 billion

Y2.5 billion

Achieve Y6 billion

Achieve Y7.5 billion

Y1.5 billion≥ Y1.5 billion≥ Y2.1 billion

Y600 million

≥ 10%

≥ 15%

5%

FY 2022 Previous Target(Ref) Figures 28–30 were prepared by Alpha-Win Research Dept. based on the financial results briefing materials. Targets/estimates (E) arethose announced by the Company.

32/40
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.

w 当調査部では、中期の年

Alpha-Win Company Research Report
PCA (9629 TSE First Section)

Issued: 6/29/2020[Figure 29] Financial Forecast in the Medium-Term
Management Plan (consolidated)(million yen)

Sales (left axis)

O.P. (left axis)[Figure 30] Sales Forecast for the SubscriptionBased Businesses(million yen)Margin (right axis)

15,000

Y13.5+ billion

25.0%

10,000

20.0%

8,000

15.0%

6,000

10.0%

4,000

Total subscription-based sales

Main tenance fee (on-premises)

Cloud

Y7.5+ billion

10,000

15+ %

5,000
Y2.1+ billion
5.0%

0

2,000

0.0%
FY 2019

FY 2020

FY 2021 E

0

FY 2022 E

FY 2019

FY 2020

FY 2021 E

FY 2022 E◆Alpha-Win Research Dept.’s Financial Forecast for the
Medium Termw Made a medium-term
financial forecast for theupcoming three fiscal
years

We prepared a financial forecast for the three fiscal years of the mediumterm period including this fiscal year (Figure 31).
Next Fiscal Year (FY 2022)
Next fiscal year, although we took into account the fact that COVID-19 willcontinue to have an effect to some extent, since the recoil from the eventdriven high demand will have ended by then, we expect sales to increaseby 5.1% and profit to increase by about 8.0% compared to our forecast for
FY 2021. Compared to our previous forecast, this new forecast has beenrevised from Y13,360 million → Y13,500 million for sales and Y2,400→ Y2,215 million yen for operating profit. We had reviewed our cost
assumptions, sales growth rate by category, and sales breakdown by
category (also, expecting the on-premises in the products category to be
gradually be switched to PCA Subscription, we assumed that PCA
Subscription will be categoriezed under the “products” sales category). The
growth potential of the cloud and the labor management software is large,
so we believe that they will continue to be the growth drivers, absorbing
upfront investment, sales promotion expense, and personnel expense andcontributing to the growth in sales and profit.

w The cloud and labor
management software
will continue to be thegrowth driver. Expected
to return to a trend ofincreasing sales andprofit after FY 2022
when the recoil from theevent-driven highdemand will haveended and the COVID19 impact will havesettled down to someextent.

[Figure 31] Medium-Term Financial Forecast
Unit: million yen, %Sales
Category

Products
Merchandise
Maintenance Service
Cloud Service
Other Operating Revenue

Gross Margin
SG&A Expense

FY 2019 AR
11,439
2,516
563
3,125
2,452
2,780
57.0%
5,274
46.1%
1,248
10.9%
1,277
11.2%
906
7.9%

FY 2020 AR
14,266
3,166
552
3,471
3,374
3,701
60.3%
5,817
40.8%
2,781
19.5%
2,808
19.7%
1,816
12.7%

FY 2021 CE
13,280
2,539
445
3,388
4,019
2,889
60.4%
5,985
45.1%
2,034
15.3%
2,055
15.5%
1,358
10.2%

FY 2021 E
12,840
2,500
440
3,300
4,000
2,600
60.4%
5,705
44.4%
2,050
16.0%
2,060
16.0%
1,360
10.6%

FY 2022 E
13,500
2,550
400
3,200
4,700
2,650
60.4%
5,940
44.0%
2,215
16.4%
2,230
16.5%
1,470
10.9%

FY 2023 E
14,300
2,600
350
3,100
5,500
2,750
60.4%
6,180
43.2%
2,460
17.2%
2,470
17.3%
1,630
11.4%

FY 2020 PE
14,000
3,100
570
3,500
3,330
3,500
59.3%
5,600
40.0%
2,700
19.3%
2,730
19.5%
1,750
12.5%

FY 2021 PE
12,600
2,350
550
3,550
3,700
2,450
56.3%
5,100
40.5%
2,000
15.9%
2,030
16.1%
1,300
10.3%

FY 2022 PE
13,350
2,400
550
3,600
4,200
2,600
57.7%
5,300
39.7%
2,400
18.0%
2,430
18.2%
1,550
11.6%

16.9%
28.8%
3.2%
0.5%
32.3%
23.6%
2.5%
16.5%
54.6%
53.1%
105.4%

24.7%
25.8%
-2.0%
11.1%
37.6%
33.1%
3.3%
10.3%
122.8%
119.9%
100.4%-6.9%-19.8%-19.4%-2.4%
19.1%-21.9%
0.1%
2.9%-26.9%-26.8%-25.2%-10.0%-21.0%-20.3%-4.9%
18.6%-29.7%
0.1%-1.9%-26.3%-26.6%-25.1%

5.1%
2.0%
-9.1%
-3.0%
17.5%
1.9%
0.0%
4.1%
8.0%
8.3%
8.1%

5.9%
2.0%
-12.5%
-3.1%
17.0%
3.8%
0.0%
4.0%
11.1%
10.8%
10.9%

18.9%
22.4%
1.2%
12.0%
34.6%
15.1%
4.0%
6.2%
116.3%
113.8%
93.2%-10.0%-24.2%
-3.5%
1.4%
11.1%
-30.0%-2.9%-8.9%-25.9%-25.6%-25.7%

6.0%
2.1%
0.0%
1.4%
13.5%
6.1%
1.3%
3.9%
20.0%
19.7%
19.2%

w 中期的には、既存のクラOperating Profit
ウドビジネスの伸率に加Recurring Profit
え、新商品・新サービス
Net Profit for the Yearの成否が業績に影響。
(% over sales)(% over sales)(% over sales)(% over sales)

Sales (% YOY growth for all values)
Category

Products
Merchandise
Maintenance Service
Cloud Service
Other Operating Revenue

Gross Margin (% YOY diff.)
SG&A Expense (% growth)
Operating Profit (% growth)
Recurring Profit (% growth)
Net Profit for the Year (% growth)(Ref) Prepared by Alpha-Win Research Dept (E = new forecast; PE = previous forecast). CE = the Company’s estimate/forecast. AR= actual result. Accounting standards for the sales of merchandise and other operating revenue (solutions) had changed starting in FY
2020 and adjustments were retroactively made according to the new standard (includes estimates).

33/40
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
PCA (9629 TSE First Section)
w In FY 2023, the situation
is expected to return tonormal and a doubledigit profit growth isexpected. Upfront
investment in new tech,new products, newbusinesses, etc., willcontinue, but can be
managed through cost
control.

Issued: 6/29/2020
The Fiscal Year after the Next (FY 2023)
We have newly added the forecast for the year after the next. We expect
sales to increase by 5.9% to 14,300, operating profit to increase by 11.1%
to 2,460, net profit to increase by 10.9% to 1,630, and dividend to be raisedby Y2 per share to a total of Y36. We believe that the situation will havereturned to normal from the COVID-19 impact and the Company will haveentered a phase in which its subscription-based business continuously andstably expands. In addition, if the new businesses currently under progress
can be put on track, we believe that the Company will be able tocontinuously increase its sales and profit again.
Financial performance will most likely be affected by whether it will
succeed in PCA Subscription, Hyper, and Keepdata’s service that it plans
to develop in full scale, in addition to the growth rate of PCA Cloud.
Assumptions for Expenses and Profit
In making the forecast for FY 2022 and FY 2023, we assumed that the grossmargin will not change, and focused our analysis on the effect of sales
growth and decline in the SG&A expenses ratio. Although the Company
will continue its upfront investments, which include business foundation
reinforcement in preparation for future growth, new product development,
and technology research necessary for that development (virtualization
technology, AI, Web API, and FinTech-linked technology), we predict that
the SG&A expenses – especially the sales promotion, R&D, and personnel
expenses – are controllable to some extent.

w With the subscriptionbased businesses as thegrowth driver, annual
profit growth rate is
expected to be about 810% over the mediumterm.

w Potential for improved
profitability lies inincreasing themaintenance service
contract rate of the onpremises.

Profitability may be further improved (exceeding assumptions for grossmargin, etc.) by improvement of the product mix as the weight of cloud’s
sales increases, the shift from on-premises to the subscription-based
business model, and the increase in the maintenance service contract rate.
Shifting the on-premises to a subscription-based business gives users theadvantage of being able to use the latest software at a fixed, reasonable cost.
At the same time, it gives the Company the advantage of merging multiple
versions of software into one so that maintenance, development, andsupport can be made more efficient, consequently reducing the cost. It also
allows the Company to secure a stable source of revenue.
Maintenance service contracts were an issue because the proportion of users
subscribing to the service (including existing customers) was low, at 50%.
Therefore, the Company made maintenance service contracts a requirement
when newly purchasing on-premises software or when purchasing version
upgrades. Thus, the Company was recently able to raise the contract rate(for all current customers) to about 70%. Since OBC’s rate is about 80%
and MJS’s rate is almost 100%, the contract rate of the current on-premises
users could still be improved. An increase in the contract rate would help
the Company secure a stable revenue source and improve the profit margin.

Profit Growth Rate over the Medium/Long Term
Over the medium to long term, based on normalized figures excluding theeffect of the event-driven high demand, we are expecting an annual sales
growth rate of around 6-8% and an even greater net profit growth rate (810% per year). Since the Company’s business model has a high marginal
profit ratio, sales growth will directly contribute to profit growth, such thatthe profit growth rate will likely exceed the sales growth rate.
34/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020

9． Analyst’s View
◆ PCA’s Strengths and Challenges
The Company’s SWOT analysis results are listed in Figure 32.
[Figure 32] SWOT Analysis

Strength

Weakness

Opportunity

・ Brand recognition and trust earned over many years (major specialized player in the enterprise system software market forsmall/medium-sized companies)
・Firm financial standing (debtless management)
・Growth of the subscription-based business capable of generating stable revenue
・ Strong and diversified customer base (240,000 corporate users in total)
・Taking a lead with the cloud (top-level financial performance, know-how, number of customers, & years in business for enterprisesystem software business targeting small/medium-sized companies)
・High barrier to market entry
・Very experienced call center staff and engineers (non-price competition through services)
・Rich product lineup; provides products both as on-premises and by cloud (non-price competition through products)
・ Sales network (13 sales offices in Japan; 2,000 partnered companies)
・Relatively somewhat low margins
・Financial results susceptible to revisions related to accounting and tax laws, termination of OS support, etc. (consumption tax, change
in the name of the era, Windows 7, etc.)
・Maintenance service contract rate is improving but could still be improved
・Absence of a major, next-generation, growth-driving product/service
・Domestic-demand oriented; overseas expansion difficult
・Increased demand from lack of HR and need for efficient operation (for business software in general); work-style reform (labor
management system)

・Potential for cloud services to increase users; development potential (toward small/medium-sized companies and mid-tier companies)
・New products (Hyper & utilization of Keepdata), new services (transition of on-premises to subscription-based model), and technology
innovations
・Revisions related to accounting and tax laws, etc.
・Emergence of an alternative as advanced AI technology becomes widely used, delayed product development, defects in products, etc.
・High competition (mature on-premises product market; other companies catching up with the Company in the cloud business)

Threat・COVID-19 outbreak/prolongation
・Contract termination risk, etc.
・Information leakage
・Rise in personnel and development costs(Ref) Prepared by Alpha-Win Research Dept.

w Trust and track record
built over long years,
customer base, andtechnological skill are
its strengths.
w Leading the market
with the cloud, its
strengths are its highcompetitive edge andto-level achievements.
The cloud market has ahigh growth potential.

w Business volatility
increases before andafter events.
w Prefers non-pricecompetition, butcompetition with its
competitors should be
noted.

Describing the strengths listed in Figure 32 in more detail, the Company iswell known due to its long years of practice in the industry and the trust thatit has earned over those years. It is especially strong in certain areas ofbusiness (such as accounting software for small/medium-sized companies).
Its customers also have high loyalty, as there is little incentive to frequently
change enterprise system software. Additionally, the Company has beendeveloping a subscription-based business model with high continuity andstability by providing maintenance support, the cloud, and version upgrades
to its customers. It is leading the market with the cloud, which has a highgrowth potential, and its high competitive edge and top-level achievements
have become its strengths.
On the other hand, looking at the weaknesses in more detail, profitability
had been an issue as the margins had been gradually decreasing over many
years. This may have been due to how the Company had not been constantly
developing major new products (not being able to fully benefit from theadvantage of scale) and how the contract rate for the profitable maintenanceservice had been low for the Company compared to its listed competitors.
In recent years, the Company has been working on shifting to subscriptionbased businesses. This has helped raise its profitability, but it could still be
improved.
As for the opportunity and weakness (or threat), occurrence of events suchas the consumption tax revision and workstyle reform as we have seen in
the past will induce a high demand before and after those events, which
tend to cause a higher volatility in financial performance. In the cloudservice that it is taking a lead, the Company prefers to engage in non-pricecompetition through product strength, service, and support. However, itscompetition with major competitors taking a later start in the business andwith low-price-range service providers should be carefully followed.

35/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020◆ Shareholder Return and Shareholder Benefit Program
The Company’s basic policy is to stably, constantly pay dividend while
improving the ratio of net profit for the year to shareholders’ equity (ROE)
under effective business management. In returning profit to its shareholders,
its policy is to determine the level of dividend to be paid based on acomprehensive analysis of elements such as its financial results anddividend payout ratio.
Regarding dividend, ever since the first public offering of the Company’s
stock, the ordinary dividend has not been decreased and has been gradually
increasing over the long term with several years of no change in between(Figure 33).
[Figure 33] Change in Dividend and Dividend Payout Ratio
Dividend (right axis)（ %）Commemorative Dividend (right axis)

Dividend Payout Ratio (left axis)

(Y)

300.0

60

54

281.1

250.0

50

41
200.0

20

150.0

30

132.0

100.0

30

31

30.9

47.8

47.2

FY 2009

FY 2010

FY 2011

30

31

31

31

31

31

31

31

50.0
0.0

40

10

116.9

31
23.3

46.5
FY 2012FY 2013

FY 2014ＮＡFY 2015

48.2

ＮＡ
FY 2016

FY 2017

FY 2018

FY 2019

34

34

34

36

12.5

16.6

15.4

14.7

FY 2020 FY 2021
(E)

FY 2022(E)

FY 2023(E)(Ref) Prepared by Alpha-Win Research Dept. based on the securities report. Estimates/forecast (E) were made by Alpha-Win Research Dept.

Excluding commemorative dividend, the ordinary dividend had been kept
at Y31 per share per year since FY 2011. Commemorative dividend was
paid only in FY 2014 in celebration of “the achievement of consolidated
sales of Y10 billion,” when Y10 was added to the ordinary dividend of Y31
to an annual total of Y41 per share. Even in FY 2015 and FY 2016 when anet loss was posted, the Y31/year dividend was maintained in line with theCompany’s stable dividend policy.
w Last FY, it paid acommemorative
dividend and raised its
ordinary dividend.
w The target dividend
payout ratio is 33% andthe target DOE is 2.5%.
Their differences fromthe actual results arelarge. Over the medium
to long term, dividend
hike is possible.

In FY 2020, the Company conducted a dividend hike (ordinary dividend
was raised by 3 yen from Y31→ Y34) and also included a commemorative
dividend (40th foundation anniversary: Y20 per share) .
The target dividend payout ratio is 33%. Although the actual ratio was
48.2% in FY 2018, it was 23.3% in FY 2019, 19.8% in FY 2020, andexpected to be 16.7% in FY 2021 (the Company’s plan) – all below target.
In order to achieve the target of 33% in dividend payout ratio during thisfiscal year, the Company will need to pay an annual dividend of Y67 (evenbased on the ordinary dividend of Y34 after the dividend hike, an additional
hike of Y33 would be necessary). As for dividend yield, it would be about
0.7% this fiscal year when calculated based on a stock price of Y4,610(based on the closing price on June 19, 2020 and a dividend of Y34).

36/40
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.

20
10
0

Alpha-Win Company Research Report
PCA (9629 TSE First Section)

w Anticipating dividend
hike, stock split, andshare buyback

Issued: 6/29/2020
Also, the DOE, which is one of the KPIs (key performance indicators) that
the Company focuses on, was 1.9% and 1.8% in FY 2018 and FY 2019,respectively, both below the Company’s target of 2.5%. In FY 2020, due toa dividend hike including a commemorative dividend, the DOE reached2.8%, exceeding this target. However, this fiscal year, the target will most
likely not be achieved if only an ordinary dividend of Y34 is paid as planned.
Compared to the past, the level of profit has become structurally higher.
Therefore, upon also considering the level of dividend payout ratio and
DOE, we believe that the Company has enough capacity to raise its
dividend every few years over the medium term.

w The actual annual net
yield including theshareholder benefit plan
is about 1.2% (atmaximum).

A shareholder benefit program was started in 2013, and its partial revision
was announced in July 2017. Spcifically, a Quo Card is granted toshareholders based on the number of shares held at the end of March of
every year. For example, shareholders with equal to or greater than 100
shares and less than 300 shares are granted Y2,000 worth of Quo Card.
Assuming that the stock price is Y4,610, then the actual annual net yield
for a shareholder with 100 shares is about 1.2% (at maximum) including
the ordinary dividend of Y34 and the shareholder benefit (Figure 34). Undersimilar conditions, the actual annual net yield for OBC is about 1.3%
(including shareholder benefit program), and for MJS it is about 1.6%
which is the same as the dividend yield since MJS has no shareholder
benefit program.

[Figure34] Shareholder
Benefit Program and Net Yield
w 目標配当性向は33％、純資産配当率は2.5％が目
Numberof Shares Owned(less than) Shareholder Benefit (Quo Card: Y)(greater
than
or
equal
to)
標。実績と乖離が大き
100
300
2,000
く、中長期的には増配余
300
500
3,000
地がある。
500
4,000

Dividend: Y

Net Yield (maximum): %

34
34
34

1.17
0.95
0.91

Net yield = (dividend + benefit value) / (stock price) was calculated for the minimal amount of stock owned in each range
Stock price: Y4,610 (closing price on 6/19/2020)(Ref) Prepared by Alpha-Win Research Dept.

The Company’s financial standing is firm with essentially no debt. Its stock
price has increased by three times over the past three years. Since its stock
price has reached the Y4,000 level and it is rich in cash, stock splits (1-to2 or 1-to-3) as well as additional share buybacks in terms of raising the total
return ratio are anticipated this fiscal or later over the medium term. A stock
split has not been conducted since the 1-to-1.3 stock split in May 2000.
w With excellent
performance, has beensignificantly
outperforming the
TOPIX for the past 4
years
w 目標配当性向は 33％、純資産配当率は 2.5％が目標。実績と乖離が大きく、
w Relatively
firm stock
中長期的には増配余地が
price
even
after
ある。
COVID-19◆ Stock Price and Factors that May Affect Stock Price
The Company’s stock price and relative stock price compared to the
TOPIX for the past approximately four years are described in the summary
section (Figure C on page 3). The stock price has been rising since around
October 2018 and significantly outperforming the TOPIX.
In particular, after the announcement of a significant upward revision to
the financial results in October 2019, the stock price soared again, reaching
Y6,240 as the closing price on January 24, 2020, the highest price since thebeginning of the fiscal year and since becoming listed on the First Sectionof the TSE. After that, the stock price went through large fluctuations until
the middle of March, but after the announcement of results on April 27, it
returned to a rising trend and has been significantly outperforming the
TOPIX again.
37/40

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
PCA (9629 TSE First Section)w This FY, sales and profit
decline is forecasted,
but is temporary andexpected.
w The shift to thesubscription-based
business model and theworkstyle reform works
positively. Defensive,
domestic-demandrelated growth stock.

Issued: 6/29/2020
This rise had been caused by how the Company had announced solid
financial forecasts for FY 2021 (this fiscal year), although forecasting asales and profit decline, while a majority of the companies listed on theFirst Section of the TSE had kept their forecast undetermined out ofconcern for the impact of COVID-19. This seems to have given a good
impression to the market’s investors. Although there are still someuncertainties with the economic situation, the Company is most likely
evaluated as a domestic-demand-related stock characterized by the strengthof its subscription-based business (shifting from packaged to cloud-based
enterprise system software), the growth potential of this business, and how
it can benefit from the government’s workstyle reform.
Currently, a meaningful comparison of valuation between the Company
and the average of the First Section of the TSE cannot be made (since many
companies have not disclosed their financial forecasts). Instead, we
compared the major valuation indicators and business outline with its listedcompetitors (Figure 35, and Figure 37 on page 40).

[Figure 35] Comparison of Valuation with Competitors
Company Name

PCA (consolidated)

Obic Business Consultants(OBC: non-consolidated)

Miroku Jyoho Service(MJS: consolidated)

4733

9928

[Figure 27] Comparison of Valuation Indicators with Competitors
Code
Stock Price (at 6/19 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)

9629

4,610
35,497
22.6
2.3
0.7
8.2
2.7

5,970
481,803
45.1
3.8
0.8
28.2
15.8

2,359
82,108
29.4
3.8
1.6
10.4
2.3

Market cap = shares outstanding x market stock price [at 6/19 closing]
EV/EBITDA = (market cap + interest-bearing debt - cash & deposits) / (O.P. + depreciation + intangible fixed asset amortization, etc.)
P/S = market cap / sales [the companies' estimate for FY 2021]
The companies' estimated EPS for FY 2021 used in all P/E calculations(Ref) Prepared by Alpha-Win Research Dept. based on information including securities reports and financial results summary

The Company’s P/E forecast for this fiscal year is about 22.5 (based on the
EPS that the Company predicts for FY 2021). Our forecast is that it will be
22.6 this fiscal year, 20.9 next fiscal year, and 18.8 the year after that.
w Relative cheap
valuation compared toits competitors.
Considering the growthpotential over the
medium term, there is
still an upside to thestock price.

Compared with its competitors (4733 Obic Business Consultants or OBC
and 9928 Miroku Jyoho Service or MJS), main valuations indicators suchas P/E, P/B, and EV/EBITDA of the Company is relatively low and seems
cheap. Money Forward (TM: 3994) and freee (TM: 4478) described in theprevious section are also listed competitors, but since they have been
posting net losses and paying no dividend, they are not good comparison
targets regarding valuation (these companies’ P/S and P/B are way too
expensive).
Financial performance in the next fiscal year onward may still be affectedby COVID-19, but it will probably return to a growth track as businesssituation returns to normal after the recoil from the event-driven highdemand settles down. We believe that the cloud and the labor management
system will be the growth drivers and the Company will return to a trendof rising sales and profit. Therefore, predicting that the stock price will only
potentially drop to limited levels, we believe that the stock price still has
an upside over the medium term.

w 株主優待制度を、一部拡
38/40充。優待を含めた実質年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 thisReportfor 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
間利回りは、約3％dateinformation
current as of the issue
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
PCA (9629 TSE First Section)w Its performance over the
recent 2 years stands out
from its competitors. Its
stock price has beensignificantly
outperforming its 2
competitors.

Issued: 6/29/2020
Over the past approximately two years, the Company’s stock price has
increased by about 2.5 times, significantly outperforming its competitors
OBC and MJS by 91% and 192%, respectively (Figure 36).

[Figure 36] Comparison of Stock Performance with Competitors(Note: stock price as of the end of March 2018 was set to zero upon creating the graph. Reflects
prices up through the closing price on June 19, 2020)
250%

PCA (9629)

OBC (4733)

MJS (9928)

200%

150%

100%

50%

0%

03
/2
01
04 8
/2
01
05 8
/2
01
06 8
/2
01
07 8
/2
01
08 8
/2
01
09 8
/2
01
10 8
/2
01
11 8
/2
01
12 8
/2
01
01 8
/2
01
02 9
/2
01
03 9
/2
01
04 9
/2
01
05 9
/2
01
06 9
/2
01
07 9
/2
01
08 9
/2
01
09 9
/2
01
10 9
/2
01
11 9
/2
01
12 9
/2
01
01 9
/2
02
02 0
/2
02
03 0
/2
02
04 0
/2
02
05 0
/2
02
06 0
/2
02
0

-50%

(Ref) Prepared by Alpha-Win Research Dept.

Going forward, the following events or factors may have an impact on thestock price.
w This FY’s quarterly
financial performance
will affect the stock
price.

w Should watch how thecloud businessexpands, whether the
new businesses will
succeed, shareholder
return measures, andintroduction ofbusiness management
systemThe first key point is this fiscal year’s financial performance. As describedabove, it is still uncertain how much sales will be affected by the recoil
from the event-driven high demand and COVID-19. Q1 accounts for onlya small portion of the full-year results, but depending on the quarterly
financial performance, the stock price volatility may increase and thereby
affect the stock price.
Over the medium to long term, the key points are 1) development of thecloud and the labor management software businesses (the cloud’s numberof contracts with companies and sales growth rate, etc.), 2) whether thetransition of on-premises to the subscription-based business model (PCA
Subscription) will succeed, and 3) creation of new products and businesses
using new technology and the development of those businesses (especiallyregarding the direction and financial progress of the business utilizing
Keepdata’s data, Hyper’s sales situation, etc.). The contribution of each ofthese points to profit and their competition in the market should be noted.
Other points of interest are the improvement in margins; the subsidiary
Xronos’s situation with its labor management system business; shareholder
return measures such as dividend hike, stock split, and share buyback; newtax reforms or changes in regulations; progress with the M&A strategy; andthe introduction of business management and profit management systems.

39/40
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
PCA (9629 TSE First Section)

Issued: 6/29/2020【 Figure 37 】Summary of the Comparison of the Three Competing Companies
Company Name

PCA

Code

9629

Obic Business Consultants
（OBC）
4733

Miroku Jyoho Service （MJS）
9928

Development and sales of packaged
enterprise system for small/mediumDevelopment and sales of packaged
Top market share (25%) in software
sized companies. Became top-ranking inenterprise system for mainly
for accounting firms. Recently, also
the industry from rapid growth in thesmall/medium-sized companies.
strengthening development/sales of
early days of the OS W95, NT, etc.
Second-tier in the industry. Taking asoftware for mid-tier andHighly profitable structure; largest
lead in cloud services. No. 1 insmall/medium-sized companies.
player in the industry by profit. No. 1
industry in sales toward public
Largest player by sales among thein packaged software for financial
benefit corporations.
three companies.
accounting, payroll, HR, and labor
management.

Characteristics

FoundedAug. 1980

Dec. 1980

Jan. 1977

Date of Becoming Listed on the Market

Mar. 1994

Oct. 1999

Aug. 1992

Sales Categories/Breakdown (FY 2020)

Sales Method

Number of Bases

・ Solutions 25.9%
・ Maintenance Service 24.3%
・ Cloud Service 23.7%
・ Products 22.2%
・ Merhandise 3.9%

・ Services 58.9%
・ Products 41.1%(Solution technology 28.9%)(Related products 12.2%)

・ Revenue from services 31.1%(general maintenance)
・ Sales from system installation
contract 63.0%(Software 35.0%)(Useware 14.3%)(Hardware 13.7%)
・ Other 5.9%

20% direct sales; 80% indirect sales
through dealers/makers

Nearly 100% indirect sales throughdealers, makers, etc.

Nearly 100% direct sales; forordinary companies, mostly direct
sales through referrals by accounting
firms

13 offices; 2,000 sales partners

13 offices with customer service
personnel; 3,000 sales partners

Approx. 30 sales/support offices
throughout Japan; accounting firms
acting as sales partners (referrals)

Number of Active Users (approx.)

200,000 companies

200,000 companies

8,400 accounting firms; 100,000
ordinary companies

Maintenance Service Contract Rate over Total
Number of Active Users

Approx. 70%

Approx. 80%

Nearly 100%
Downward revision of targets for FY 2021,

the final year of the mid-term plan, to thisRaised target for FY 2022, the final year Undisclosed mid-term targets. Focused on
FY's forecast. Mid/long-term vision: growthof the mid-term plan. Goal: sales ≥ Y13.5 profit indicators. Maintain O.P. margin andacceleration of current ERP biz; creation ofbil, consolidated O.P. ≥Y2.1 bil,
R.P. margin while increasing sales, or
highly profitable new biz; active M&A;
increase them to continue to grow as aconsolidated O.P. margin ≥15%.
pursue sustainability by accerelating
highly profitable company.
ROE ≥10%, DOE ≥2.5%
progress with BCP, BPR, and workstylereform.

Management Goals

Strengthen “core competence,” focused on
・Establish earnings base for the main biz the following:・ Enterprise operation services(strengthen & expand sales of PCA
Cloud, strengthen on-premises biz, etc.) ・ Mid-tier and small/mid-sized companies
・ Microsoft technology
・Create new business opportunities
・ Partnership strategy
・Strengthen business foundation to・ Branding strategy
become structurally highly profitable
・ Emphasis on cloud・Enhance monozukuri (creation of・Secure/train staff (HR)things)Business Strategy and Priority Measures

・Approx. 26 types(by name of product; includes options)
Main Types of Enterprise System Software (approx.)
・Originally developed with in-houseplatform

・ Maximize synergy by strategicallyinvesting in growth domains like
FinTech・ Realize continuous improvement ofcorporate value and the group’s
dramatic growth・ Expand the high-margin
finance/internet business with a focus
on developing the current ERP biz

・1 module for accounting firms
・12 types for the flagship Bugyo series
・6 modules for ordinary companies
・Approx. 60-80 types by product name,(each module contains software forincluding other software
・Development focused on Microsoft platform several operation types)
for both on-premises and cloud

13,28030,500Gross Margin (%) Actual for FY 2020

60.3

82.5

63.6

Operating Profit (million yen) Est.

2,034

12,7003,580

Sales (million yen) CE for FY 2021

36,000Operating Margin (%) Est.

15.3

41.6

9.9

EPS (CE) FY 2021, YOY (%)

-25.2

-8.0

27.2

DOE (%) Actual

6.3

2.8

3.2

Past 10 Years’ Sales Growth Rate (FY 2021’s company
plan div. by FY 2011: %)

115.4

77.2

88.4

O.P. Growth Rate (same condition as above)

196.5

58.2

347.1

Equity Ratio (%) Actual

59.3

82.8

49.6

# of Full-Time Employees for the Group Actual

524

842

1,640

Sales Per Full-Time Employee (million yen / person)

25.3

36.2

22.0

O.P. Per Full-Time Employee (million yen / person)

3.9

15.1

2.2

ROE (%) Actual for FY 2020

14.3

8.5

9.9

B

12.7

33.1

5.2

Total Asset Turnover Ratio (sales / ave. total asset) C

0.7

0.2

0.9

Financial Leverage (ave. total asset / ave. owner's
equity)
D

1.7

1.2

2.1

ROA (R.P. / total asset : %)

E=F×G

13.0

9.9

13.9

F

19.7

46.7

15.0

Total Asset Turnover Ratio (sales / ave. total asset) G

0.7

0.2

0.9

A=B×C×D

N.P. Margin (N.P. for the year / sales : %)R.P. Margin (%) Actual

Italics show each company’s estimates (CE) for FY 2021. Others are actual values for FY 2020.

(Ref) Prepared by Alpha-Win Research Dept.

40/40This 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.