COMPANY RESEARCH AND ANALYSIS REPORT

Altech Corporation
4641
Tokyo Stock Exchange First Section

16-Apr.-2019
FISCO Ltd. Analyst

Ikuo Shibata

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

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html■ Index■Summary --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Company profile.............................................................................................................................. ............

01

2. Entry-into new business fields .............. ......................................................................................................

01

3. FY12/18 consolidated results......................................................................................................................
4. Outlook for FY12/19 .............................. ................................................................................................ ......

02
02

5. Medium- to long-term growth strategy . ......................................................................................................

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

03

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

05
07

3. History .................................................. ......................................................................................................

■Business performance ----------------------------------------------------------------------------------------------------------------------------------------- 08
1. Trends in past results (consolidated) ...........................................................................................................

08

2. Overview of the FY12/18 consolidated results ............................................................................................

10
13

3. Overview of FY12/18 results .......................................................................................................................

■Major topics ------------------------------------------------------------------------------------------------------------------------------------------------------------------- 13
1. Recruitment results ............................... ......................................................................................................

13

2. Made progress for the new businesses(establishing a new company, certification as a specified organization, etc.) ..............................................

14

3. Events to commemorate the 50th anniversary of its foundation .................................................................

14

4. Selected as one of the JPX-Nikkei Mid and Small Cap Index constituent issues ........................................

14■Business outlook ------------------------------------------------------------------------------------------------------------------------------------------------------- 15
1. Outlook for FY12/19 .............................. ................................................................................................ ......

15

2. Plan for activities ................................... ........................................................................................... ...........

15
17

3. Industry trend and the Company’s position.................................................................................................

■Medium- to long-term growth strategy ----------------------------------------------------------------------------------------------- 17
1. Medium- to long-term growth vision ..... ......................................................................................................

17

2. The medium-term management plan ..........................................................................................................

19■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 20
1. Basic dividend policy .............................................................................................................................. . . . .
2. Dividend trend and plan ........................ ......................................................................................................

20
20■Information security ----------------------------------------------------------------------------------------------------------------------------------------------- 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html█ Summary
On its 50th anniversary, achieved record high results in FY12/18.
Also achieved other major results, such as entering-into new
business fields.
1. Company profile
Altech Corporation <4641> (hereafter, also “the Company”) is a comprehensive engineering outsourcer that provides
high-level technological services to major manufacturing companies in fields such as machinery, electricity andelectronics, software, IT, and chemistry. It places great importance on its “Heart to Heart” corporate philosophy
and consistently since its foundation, it has focused on human education from the idea of maintaining the highest
levels among its employees not only as engineers, but also as members of society, in addition to strengthening
their technical abilities. This can be described as its corporate organizational culture that it the source of one of its
strengths, of producing talented human resources. The Altech Corporation Group is comprised of the Company
and five subsidiaries, and since FY12/16, it has had two business segments, the Outsourcing Business and the
Global Business. The Company observed its 50th anniversary and second foundation period in July 2018, and it isundertaking initiatives to create next-generation strength, including strengthening its operational base, as well as
entry into new business fields.
2. Entry-into new business fields
Toward realizing its medium- to long-term growth vision, the Company has entered into new business fields throughestablishing a new company*. In the agriculture-related field, which is considered to have high growth potential,
and in the nursing care-related field, where the shortage of workers is conspicuous, it is aiming to create a newmodel for the worker assignment market. It is said that in these fields, the keys are introducing state-of-the-art
technologies, such as AI, IoT, and robots, and utilizing an overseas labor force, and the Company’s strategy
seems to be to aim for the first-mover advantage in fields that utilize its advanced technological capabilities andexpertise in developing human resources (including the employment of non-Japanese) that it has cultivated up to
the present time. It first launched the agriculture-related business, then became the first in Japan receive certification
as a “specified organization” for the Project to Accept Foreigners for Agricultural Support in Aichi Prefecture inAugust 2018. Subsequently, it received successive certifications from other National Strategic Special Zones (Kyoto
Prefecture, Niigata City, and Okinawa Prefecture). Alongside this, in October 2018 it recruited a total of 81 agri-tech
and agriculture human resources and global engineers from Vietnam, Myanmar, and China. It is considered that along-term perspective will be necessary for these businesses’ full-fledged contribution to results, but as they haveenormous potential, we will need to pay attention to developments in the future.
* On April 2, 2018, it established Agri & Care Corporation (Sagamihara City, Kanagawa Prefecture).

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01 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Summary

3. FY12/18 consolidated results
In the FY12/18 consolidated results, net sales increased 8.3% year-on-year (YoY) to ¥32,781mn and operating
income rose 10.7% to ¥3,586mn, and not only did sales and profits exceed the initial forecasts, profits were alsoa record high for the fifth consecutive fiscal year. Against the backdrop of the favorable ordering environment (inparticular, R&D investment in next-generation vehicles is active in the automotive-related field), sales steadily grew
because in the mainstay Outsourcing Business, the high mobilization rate was maintained, the contract unit pricerose, and the number of mobilized employees increased. In profits-loss, expenses increased due to the rise incost prices to improve employee benefits, and also from advertising expenses to improve name awareness andthe corporate image, and expenses relating to the 50th anniversary of the Company’s foundation. However, thisincrease was absorbed by the higher sales, and profits rose more than expected. Also, a donation from the founder(¥300mn) to commemorative the 50th anniversary of the foundation was recorded in extraordinary income. The
Company is making effective use of this donation to create strengths toward the next generation (strengthening themanagement foundation), such as to implement measures for new businesses and to improve name awareness.
4. Outlook for FY12/19
For the FY12/19 results, the Company is forecasting higher sales and profits, of net sales to increase 8.2% YoY to¥35,470mn and operating income to rise 5.4% to ¥3,780mn, and the outlook is once again for record-high results.
Requests for worker assignments from major manufacturing companies, which are the Company Group’s main
customers, are strong, and this trend is expected to continue. It is expected that some time will be required before
the new business (the agriculture-related business) contributes fully to results, but the policy is to work to strengthen
sales for agri-tech and agriculture human resources assuming the establishment of a new residency status.
5. Medium- to long-term growth strategy
As its medium- to long-term growth vision, the Company has set out a strategy on four axes, of 1) strengthening
existing businesses, 2) responding to state-of-the-art technologies, 3) developing globally, and 4) taking on thechallenge of new businesses. In particular, in the eleventh five-year plan (qualitative targets), its policy is to promote
the Reinvestment of Management Resources toward the New Industrial Revolution. Also, in the three-year (rolling)
medium-term management plan, it has set the targets for FY12/21 of net sales of ¥41,370mn, operating incomeof ¥4,100mn, and ROE of 20% or above (however, it seems that the contribution to results of the new company isbeing viewed conservatively).
In the situation of the declining Japanese population and economic globalization, at FISCO, we evaluate that thedirection that the Company is taking for its business development is a rational strategy that anticipates futurechanges in the industrial structure. It is aiming to respond to new technological fields in which demand is growing,
including by progressing the new businesses (in the nursing care and agriculture fields), and it would seem that the
point to focus on going forward will be how it will connect this to sustainable growth. We will also need to continue
to pay attention to M&A that utilizes its solid financial foundation.
Key Points
On the 50th anniversary of its foundation, achieved record high results (and dividend) in FY12/18, and alsoachieved major results for the strengthening of the management foundation• In particular, it entered into new business fields with growth potential (agriculture- and nursing care-related
markets) through establishing a new company• The outlook for the FY12/19 results is once again for record-high results• In the eleventh five-year plan (qualitative targets), is promoting the Reinvestment of Management Resources
toward the New Industrial Revolution•

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

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Source: Prepared by FISCO from the Company’s financial results█ Company profile
From its predecessor of a design office, it has become a groupof high-level engineers that provides technologies according tocustomer requests
1. Company profile
The Company is a comprehensive engineering outsourcing company that provides advanced technological services
to major manufacturing companies in fields such as machinery, electricity and electronics, software, IT, and chemistry.
Its features include that unlike fixed-term employment based employment agencies, the Company only employs
full-time engineers,* and it is a group of highly skilled engineers specializing in upstream processes, such as
development and design.
* For example, even during recession periods such as the bankruptcy of Lehman Brothers, it has not dismissed a single
employee.

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Company profile

Based on its “Heart to Heart” corporate philosophy, consistently since its foundation the Company has focused onhuman education from the idea of maintaining the highest levels among its employees not only as engineers, butalso as members of society, in addition to strengthening their technical abilities. In particular, its strengths include
that it has a corporate organizational culture that produces high-quality human resources and an original educationand training system*, and its results are steadily growing, supported by its excellent reputation among its customers
and the favorable ordering environment.
* Broadly dividend into the abilities development education system and career development support, the Company has
established an education and training system to develop human resources to have advanced technical skills and expertise,including education according to level and needs, and follow-up from career supporters (senior engineers). Moreover,long-term education and training plans become possible when the employment period is indefinite (full-time employees).

In accordance with the Revised Worker Dispatching Act (enforced on September 30, 2015), the employment-period
limitation was ended for indefinite-term employment, while incidental work was also ended on the abolition of
specialized work classifications. Also, the acceptance of foreign workers (the establishment of a new residency
status) is to be expanded following the revision to the Immigration Control and Refugee Recognition Act (enforcedon April 1, 2019), and these and other revisions have been positive developments for the Company.
At the end of December 2018, the Company had 3,518 engineers, and of these, 3,391 were mobilized (working at
customers), and it is maintaining a high mobilization rate. Also, looking at the percentages of engineers it assigns
according to the fields of customer companies, machinery-related accounts for around 40%, while electricity andelectronics-related and software/IT related are both approximately 30%. So, it is maintaining a good balance,
centered on these three fields.
The Company has two business segments, the Outsourcing Business, which is mainly an assignment and outsourcing business in Japan, and the Global Business, which supports Japanese companies’ operations overseas. The
Outsourcing Business contributes 96% of net sales, but the policy going forward is to grow the Global Business,for which there is strong demand primarily from Japanese companies located in East Asia.
In net sales by industry, 38.3% is provided by automotive-related*, in which R&D investment is active, and a totalof 36.8% by electrical machinery, precision equipment, and semiconductor-related. So, its customer industries arediverse and structured so that the Company is not easily affected by economic fluctuations. It also has around 700
customer companies, and the extent of its reliance on the top 10 customers for sales (mainly major manufacturers,
such as Mitsubishi Electric <6503>, Toshiba Memory, and Canon <7751> is 20.0%, without relying on a single
company. (FY12/18 result).
* For example, even if the technological field is electrical machinery, if the final product is an EV (electric vehicle), it is classified
as “automotive-related.”

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Company profile

Percentages of net sales by industry (FY12/18 result)㻹㼑㼐㼕㼏㼍㼘㻙㼞㼑㼘㼍㼠㼑㼐㻢㻚㻜㻑㻭㼑㼞㼛㼟㼜㼍㼏㼑㻌㼐㼑㼒㼑㼚㼟㼑㻞㻚㻡㻑㻻㼠㼔㼑㼞㼟
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Source: Prepared by FISCO from the Company’s results briefing materials

In total, there are five consolidated subsidiaries, of ALPS BUSINESS SERVICE CORPORATION, which is a provider
of total staffing services; PANA R&D CO., LTD., which joined the Group in September 2016 and carries out theassignment of technical experts, and the two subsidiaries that conduct the Global Business, of ALPSGIKEN TAIWAN
CO., LTD. (Taiwan) and Altech Shanghai CO., LTD. (China). In addition, in April 2018 with the aim of entering-into
new business fields, the Company established Agri & Care Corporation (its business includes human-resources
services in the agriculture- and nursing care-related fields). In addition to the Head Office (Yokohama City), theAltech Corporation Building No. 1 (Sagamihara City, formerly the back office and training center), and the Altech
Corporation Building No. 2 (Sagamihara City, completed in the end of September 2018), it also has two technoparks for manufacturing and 23 sales office in Japan (the Shizuoka sales office was newly opened on September
1, 2018), and one overseas branch (Myanmar).

Specializes in the development and design fields and is compliant
with high-level and advanced technologies
2. Business overview(1) The Outsourcing BusinessThis is the Company’s core business. It specializes in the development and design fields, which are manufacturing
upstream processes, and it positions the provision of high-level technological services by design and development
engineers as the center of its business model.

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Company profile

The Company provides services in the form of assignment engineers and outsourcing, and its engineers demonstrate high-level performance when responding to the wide variety of customer needs with applicable form.
Assignment services take the form of spot assignments (assignment of a single engineer) and team assignments(assignment of a team of engineers whose members have various high-level skills and who conduct productdesign and development work). The outsourcing services take the form of on-site (the engineer is stationed at
the customer’s site) and off-site (the engineer returns to the Company’s techno park or other site) for project
outsourcing (outsourcing of design, prototyping, manufacturing, and evaluation, either on a single or collective
contract basis).
Since it was founded as a design office, the Company has met the technical needs of its customers in the fieldof mechatronics through its concept of “machinery and electrical integrated design.” In particular, it utilizes its
strength of having a unique business form with its own manufacturing bases (own factories), and the Group as awhole has in place a structure able to handle all of the manufacturing processes, from development, prototyping,
manufacturing to evaluation. Even within this structure, the Company’s main area of technological expertise is
upstream processes, where it possesses competitive advantages in the processes requiring high-level technological capabilities, including basic research, product planning, concept design, detailed and mass production
design, prototypes and experiments, and evaluation and analysis.
The central areas of the technology field include machinery design, electricity and electronics design, softwaredevelopment, and chemistry. Alongside the transition to high-level network society, the priority items have become
the development and design of a variety of advanced technologies such as for IoT and AI, 3D-CAD for whichfurther demand is expected, CAE technologies, aerospace-related, medical-related, and robot-development
technologies. Therefore, the Company’s customer companies are spread across a wide range of industries,
including automotive, semiconductors and LSI, industrial equipment, digital precision equipment, aerospace,
space and defense, and medical and welfare equipment.
(2) Global Business
The Company currently has two overseas subsidiaries ALPSGIKEN TAIWAN CO., LTD. in Taiwan and Altech
Shanghai CO., LTD. in China. They conduct installation and maintenance work for the production facilities andequipment of Japanese companies overseas, and also provide human resources services ancillary to this work.
Within the advance of economic globalization, one strategic axis is expanding the Global Business.
(3) New businesses (agriculture- and nursing care-related fields)
The new company, Agri & Care Corporation, was established in April 2018 with the aim of entering-into new
business fields. The goal is to create a new model for the worker assignment markets for the agriculture-related
field, which is a growth industry, and the nursing care-related field, where the shortage of human resources isconspicuous. It is said that in these fields, the keys are introducing state-of-the-art technologies, such as AI, IoT,
and robots, and utilizing an overseas labor force, and the Company’s strategy seems to be to aim for the firstmover advantage in fields that utilize its advanced technological capabilities and expertise in developing humanresources (including the employment of non-Japanese) that it has cultivated up to the present time.

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Company profile

3. History
The Company’s predecessor, the Matsui Design Office, was founded in 1968 based on the concept of “mechanicaland electrical integrated design” of its founder, Toshio Matsui. At that time, electrical design and mechanical design
were conducted separately, and to solve the various problems that arose from this, he proposed “mechanical andelectrical integrated design” to customer companies as a proprietary and innovative method. The Company has
encountered various difficulties, including the oil crises, but through constant efforts it has steadily gained an excellent reputation among its customers for being a comprehensive engineering outsourcer “that provides technologies
according to customer requests.” Further, under the leadership of the current President and Representative Director
Atsushi Imamura, it is aiming to improve results and expand its business, including by focusing on training humanresources who are specialized in upstream processes, such as development and design, and the early mobilizationof new-graduate engineers.
History
Date
July 1968
January 1971

Major event
Matsui Design Office was founded in Sobudai, Sagamihara City, Kanagawa Prefecture
Started the first five-year plan, “Develop the Company”
Renamed the Matsui Design Office as Altech Inc., and established it in Sobudai, Sagamihara City, Kanagawa Prefecture

July 1973

Started the second five-year plan, “Increase Business with Prime Customers and Maintain Internal Capital”

July 1978

Started the third five-year plan, “Implement an Institutionalization of the Company and Improve Technical Capabilities”

January 1981

Moved head office to Kyowa, Sagamihara City, Kanagawa Prefecture

March 1981

Reorganized the organization and transferred it to Altech Corporation

July 1983

Started the fourth five-year plan, “To be an International company and Develop Human Resources”

April 1984

Opened the Tohoku business office in Koriyama City, Fukushima Prefecture

April 1985

Opened the Shinshu business office in Shiojiri City, Nagano Prefecture

July 1985

Constructed a building in Nishi-Hashimoto, Sagamihara City, Kanagawa Prefecture and relocation of Head Office toFebruary 1986

Established Kita Kanto business office in Fukaya City, Saitama Prefecture

April 1986

Established subsidiary Technical Training Center CO., LTD. (currently, ALPS BUSINESS SERVICE CORPORATION) from thetechnical training department

July 1988

Started the fifth five-year plan, “Restructuring of the Organization and Developing the Company’s own Technology.”

December 1989
October 1990

Established Tateshina Techno Park in Chino City, Nagano Prefecture, started production of in-house developed products and thedesign and production of precision machinery
Adopted a divisional organization structure to utilize profit center management and accounting systems.
Established six business division below the Tohoku business division

July 1993

Started the sixth five-year plan, “Nurture High-quality Human Resources for High-quality Companies”

June 1996

Altech is listed on the OTC market of the Japan Securities Dealers Association (currently, JASDAQ)
Increased capital to ¥832,619,000

July 1997

Increased capital to ¥1,502,219,000

January 1998

July 1998

The Tokyo Business Division was separated from the Kanto Division, and the West Japan Division divided into the Osaka Division,
the Nagoya Division and the Kyushu Division, and the Tateshina Techno Park was newly established from the Chubu Division. In
addition to Tohoku Division, the Company became an eight-business division structure
Started the seventh five-year plan, “Restructuring our Business Field and our Core Competencies."

September 1998

Completed the new building of Chubu business division as own property in Shiojiri City, Nagano Prefecture

December 1998

Established the Taiwanese subsidiary (currently, ALPSGIKEN TAIWAN CO., LTD.), in Taipei City, Taiwan

October 1999
July 2000
September 2000
July 2001
March 2003
July 2003
October 2004
December 2004

Utsunomiya Factory (now Utsunomiya Techno Park) opened in Yaita City, Tochigi prefecture
Tateshina Techno Park No. 2 factory completed
Listed on the second section of the Tokyo Stock Exchange (listing date September 28, 2000)
Completed a new building and the Training Center
Relocated the Head Office
Introduced a business headquarters system from the business division system (four blocks nationwide)
Started the eighth five-year plan, “Creation of New Corporate Value”
Entered-into a technical alliance with Qingdao University of Science Technology in China, opened the “Machinery Design
Education Program”
Listed on the Tokyo Stock Exchange First Section. (first section designation date, December 1, 2004)

July 2005

Introduced the central organization structure to upgrade risk management capabilities.

April 2006

Entered-into a technical alliance with China University of Petroleum, established the China University of Petroleum ALPS
International Engineer Education Center

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Company profile

Date
July 2006

Major event
Issued 1st unsecured convertible bond type bonds with stock acquisition rights of ¥2 billion

January 2007

Opened the Atsugi Sales OfficeFebruary 2007

Participated in the establishment of the Nippon Engineering Outsourcing Association

March 2007
July 2007
October, 2007
July 2008
January 2009

Established subsidiary ALTECH QINGDAO CO., LTD.) in Qingdao City, China
Opened the ALPS Qingdao Education Development Center (Qingdao City, China)
Opened the Tsukuba Sales Office (currently, the Hitachi Sales Office)Started the ninth five-year plan “Leap to be a Leading Company”
Established the subsidiary Altech Forest Corporation.

March 2009

Opened the Takasaki Sales Office

March 2010

Established the subsidiary Altech Shanghai CO., LTD. (CHINA) in Shanghai, China

March 2011

Relocated Head Office to Minato Mirai, Nishi Ward, Yokohama City, Kanagawa Prefecture
Opened the Hitachi Sales OfficeFebruary 2012
August 2012
July 2013
December 2014
April 2015
September 2016
April 2017
September 2017

Opened the Kyoto Sales Office
Established the subsidiary Alps Career Designing Corporation in Chiyoda Ward, Tokyo
Started the tenth five-year plan “Expansion of Enterprise Scale through Innovation”~ Accelerate growth as we move toward our 50th anniversary ~Subsidiary Altech Forest Corporation removed from the scope of consolidation on the transfer of shares
Opened Yangon branch office in Myanmar (Yangon city)
Made PANA R&D CO., LTD. a consolidated subsidiary
Alps Business Services Corporation merged with Alps Career Designing Cooporation
Start of broadcasts of TV commercials
Divided the Nagoya Sales Office into the Nagoya Office I and the Nagoya Office II, and opened the Himeji Sales Office

April 2018

Established Agri & Care Corporation in order to enter-into new business fields (agriculture- and nursing care-related fields)

July 2018

Started eleventh five-year plan, the Reinvestment of Management Resources toward the New Industrial Revolution

September 2018

Opened the Shizuoka Sales Office, completed the Altech Corporation Building No. 2

Source: Prepared by FISCO from the Company’s materials█ Business performance
The growth in results is being driven by the active recruitmentof new graduates and the increase in the number of mobilized
employees through their early mobilization
1. Trends in past results (consolidated)
Looking at results up to the present time, we see that they have steadily grown alongside the increase in the numberof engineer employees. In particular, since FY12/14, despite the ongoing severe recruitment environment, theCompany has still been able to recruit around 250 new graduates a year and realize their early mobilization, andthis has driven the growth in results. It can be said that recruiting around 250 new graduates every year and around
80 (FY12/18 result) global engineers in fields with high levels of specialism, and then completing their training at
an early stage and maintaining a high mobilization rate, is a growth model that only the Company is capable of. In
addition, it is coordinating with its consolidated subsidiary ALPS BUSINESS SERVICE and expanding its overseas
business, while PANA R&D, which entered the scope of consolidation in September 2016, is also contributing to
the growth in the consolidated results.
In terms of profit and loss, profits have trended upward alongside the growth in net sales. The operating margin has
also improved, and in the last few years it has trended at the high level of above 10%.

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08 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Business performance

For the Company’s financial condition, total assets grew following the increases in cash and deposits and otheritems, and while the equity ratio is trending downward slightly, it remains at a level of above 60%. On the other
hand, ROE, which indicates capital efficiency, is rising year by year, and in FY12/18 it reached a level of above 20%.
Therefore, the Company’s financial condition can be evaluated as being extremely good. It also has plentiful liquidity
on hand (cash and deposits), which serves as a buffer against unforeseen circumstances and also expands therange of strategies it can adopt for growth, so it will be necessary to pay attention to developments in the future.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻌㻔㼏㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕䠄㼰㼙㼚䠅㻠㻜㻘㻜㻜㻜

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕
㻝㻜㻚㻣㻑

㻝㻜㻚㻣㻑

㻝㻜㻚㻥㻑

㻝㻞㻚㻜㻑

㻝㻜㻚㻣㻑

㻥㻚㻡㻑
㻤㻚㻝㻑

㻟㻜㻘㻜㻜㻜

㻥㻚㻜㻑

㻢㻚㻣㻑
㻡㻚㻥㻑
㻞㻜㻘㻜㻜㻜

㻢㻚㻜㻑㻝㻜㻘㻜㻜㻜

㻟㻚㻜㻑

㻜

㻜㻚㻜㻑
㻲㼅㻝㻞㻛㻝㻞 㻲㼅㻝㻞㻛㻝㻟 㻲㼅㻝㻞㻛㻝㻠 㻲㼅㻝㻞㻛㻝㻡 㻲㼅㻝㻞㻛㻝㻢 㻲㼅㻝㻞㻛㻝㻣 㻲㼅㻝㻞㻛㻝㻤 㻲㼅㻝㻞㻛㻝㻥㻱

Source: Prepared by FISCO from the Company’s financial results㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㼚㼡㼙㼎㼑㼞㻌㼛㼒㻌㼚㼑㼣㻙㼓㼞㼍㼐㼡㼍㼠㼑㻌㼞㼑㼏㼞㼡㼕㼠㼟㻌㼍㼚㼐㻌㼑㼚㼓㼕㼚㼑㼑㼞㼟㻌㻔 㼟 㼠㼍㼚㼐㻙㼍㼘㼛㼚㼑㻌㼎㼍㼟㼕㼟㻕䠄㼜㼑㼛㼜㼘㼑䠅

㼚㼑㼣㻙㼓㼞㼍㼐㼡㼍㼠㼑㻌㼞㼑㼏㼞㼡㼕㼠㼟㻔㼘㼑㼒㼠㻕㼑㼚㼓㼕㼚㼑㼑㼞㼟㻔㼞㼕㼓㼔㼠㻕

㻠㻜㻜

㻟㻘㻡㻝㻤

䠄㼜㼑㼛㼜㼘㼑㻕
㻠㻘㻜㻜㻜

㻟㻘㻝㻣㻡
㻞㻘㻤㻥㻣

㻟㻞㻜

㻟㻘㻞㻜㻜

㻞㻘㻡㻥㻢
㻞㻠㻜

㻞㻘㻝㻜㻞

㻞㻘㻝㻠㻟

㻞㻘㻟㻟㻜
㻞㻘㻠㻜㻜

㻝㻢㻜
㻞㻞㻥

㻤㻜

㻞㻢㻠

㻞㻡㻣

㻞㻤㻤

㻝㻘㻢㻜㻜

㻞㻠㻞

㻤㻜㻜

㻝㻠㻥
㻥㻤

㻜

㻜
㻲㼅㻝㻞㻛㻝㻞

㻲㼅㻝㻞㻛㻝㻟

㻲㼅㻝㻞㻛㻝㻠

㻲㼅㻝㻞㻛㻝㻡

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻲㼅㻝㻞㻛㻝㻤

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

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09 21

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

Altech Corporation

16-Apr.-2019

4641 Tokyo Stock Exchange First Section

http://www.alpsgiken.co.jp/english/index.html

Business performance㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼑㼝㼡㼕㼠㼥㻌㼞㼍㼠㼕㼛㻌㼍 㼚㼐㻌㻾㻻㻱㻱㼝㼡㼕㼠㼥㻌㼞㼍㼠㼕㼛
㻤㻜㻚㻜㻑

㻣㻜㻚㻤㻑

㻢㻥㻚㻢㻑

㻣㻜㻚㻜㻑

㻢㻣㻚㻥㻑

㻢㻢㻚㻝㻑

㻾㻻㻱

㻢㻡㻚㻤㻑

㻢㻢㻚㻢㻑
㻢㻝㻚㻝㻑

㻢㻜㻚㻜㻑
㻡㻜㻚㻜㻑
㻠㻜㻚㻜㻑
㻟㻜㻚㻜㻑
㻞㻜㻚㻜㻑
㻝㻜㻚㻜㻑

㻣㻚㻝㻑

㻣㻚㻢㻑

㻲㼅㻝㻞㻛㻝㻞

㻲㼅㻝㻞㻛㻝㻟

㻝㻠㻚㻠㻑

㻝㻡㻚㻡㻑

㻲㼅㻝㻞㻛㻝㻠

㻲㼅㻝㻞㻛㻝㻡

㻝㻥㻚㻠㻑

㻞㻜㻚㻡㻑

㻲㼅㻝㻞㻛㻝㻢

㻲㼅㻝㻞㻛㻝㻣

㻞㻟㻚㻟㻑

㻜㻚㻜㻑
㻲㼅㻝㻞㻛㻝㻤

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

Achieved record-high results in FY12/18. The strong R&D
investment, including in next-generation vehicles, is proving
beneficial.
2. Overview of the FY12/18 consolidated results
For FY12/18 consolidated results, the Company exceeded its initial forecasts in sales and profits, and also achieveda record high for the fifth consecutive fiscal year. Net sales were ¥32,781mn, up 8.3% YoY, operating income was¥3,586mn, up 10.7%, ordinary income was ¥3,605mn, up 10.1%, and profit attributable to the owners of parent
was ¥2,667mn, up 12.7%.
Against the backdrop of the favorable ordering environment (in particular, R&D investment in next-generation vehicles
is active in the automotive-related field), sales steadily grew in the mainstay Outsourcing Business, because the highmobilization rate was maintained, the contract unit price rose, and the number of mobilized employees increased.
On other hand, sales declined in the Global Business, even though demand from Japanese companies grew, mainly
due to the fall in orders for large projects.
In profits-loss, expenses increased due to the rise in cost prices to improve employee benefits*1, and also fromadvertising expenses to improve name awareness and the corporate image, and expenses relating to the 50th
anniversary of the Company’s foundation. However, this increase was absorbed by the higher sales, and profits rose
more than expected. The operating margin also improved to 10.9% (10.7% in the previous fiscal year). The reason
for the significant growth in final profit (net income) was the donation from the founder to commemorative the 50th
anniversary of the foundation (extraordinary income of ¥300mn)*2.
*1 As a result, the employee retention rate improved and the number of Company engineers (the number of mobilized
employees) increased.
*2 The Company is making effective use of this donation to create strengths toward the next generation (strengthening
the management foundation), such as to implement measures for new businesses and to improve name awareness (foradvertising expenses, etc.)

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10 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Business performance

In finances, total assets were down 5.9% on the end of the previous fiscal year to ¥17,341mn, while shareholders’equity also dropped sharply, by 13.7% to ¥10,594mn, due to the acquisition of treasury shares*. Therefore, theequity ratio fell to 61.1% (66.6% at the end of the previous fiscal year). However, financial stability is being sufficiently
secured and the Company can be positively evaluated for its measures to improve capital efficiency. For the decline
in total assets, although non-current assets increased due to the construction of the Altech Corporation Building
No. 2, the impact of the decline in “cash and deposits” from the acquisition of treasury shares was significant.
* The Company was informed by its leading shareholder (the founder’s asset management company) of its intention to sellsome of its holding of Company shares. The Company decided to acquire these shares after considering factors such as
improving capital efficiency, returning profits to shareholders, and the impact on the stock market. Also, it adopted thetender offer method as the specific acquisition method from the viewpoints of equality for shareholders and transaction
transparency. In this transaction, it will purchase 1,603,300 shares (percentage of the total number of issued shares, 7.13%)
for a purchase price of ¥3,174,534,000.

Overview of FY12/18 results(¥mn)
FY12/17
results
Net sales

FY12/18% of sales

results

30,260YoY% of sales%

Initialforecast% of sales

Achievement
rate

2,521

8.3%

32,400Outsourcing Business

28,74595.0%

31,397

95.8%

2,652

9.2%

-

-

Global Business

1,515

5.0%

1,383

4.2%

-131

-8.7%

-

-

-

Cost of sales

22,73775.1%

24,406

74.5%

1,668

7.3%

-

-

-

SG&A expenses

4,283

14.2%

4,788

14.6%

504

11.8%

-

-

-

Operating income

3,238

10.7%

3,586

10.9%

347

10.7%

3,430

10.6%

104.5%

3,191

10.5%

3,460

10.6%

269

8.4%

-

-

-

43

0.1%

123

0.4%

79

181.6%---

Ordinary income

3,275

10.8%

3,605

11.0%

330

10.1%

3,510

10.8%

102.7%

Profit attributable toowners of parent

2,367

7.8%

2,667

8.1%

300

12.7%

2,370

7.3%

112.5%

Number of engineers

3,175

3,518

343

10.8%

Number of mobilized
employees

3,088

3,391

303

9.8%

Mobilization hours

171.8

169.4

-2

-1.4%

Contract unit price

3,903

3,988

85

2.2%

Outsourcing Business
Global Business

32,781

FY12/18

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

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11 21

101.2%-

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Business performance

FY12/18 financial condition(¥mn)
ChangeFY12/17

FY12/18

13,76011,808-1,951-14.2%(cash and deposits)

8,370

5,902

-2,467-29.5%(notes and accounts receivable - trade)

4,357

4,630

273

6.3%

4,675

5,532

857

18.3%

Current assets

Non-current assets%(goodwill)

394

335

-58

-14.8%

Total assets

18,435

17,341-1,094-5.9%

Current liabilities

5,722

6,420

697

12.2%

(accounts payable - trade)

1,265

1,576

311

24.6%

(short-term loans payable)

700

700

-

-

417

307

-109

-26.3%

Total liabilities

6,139

6,727

587

9.6%

Net assets

12,295

10,613-1,682-13.7%

12,276

10,594-1,682-13.7%

Current ratio

240.5%

183.9%-56.6pt-

Equity ratio

66.6%

61.1%

-5.5pt-Interest-bearing debt ratio

5.7%

6.6%

0.9pt

-

Non-current liabilities

Shareholders’ equity

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

Overview of each segment is outlined below.
(1) The Outsourcing BusinessIn the Outsourcing Business, net sales increased 9.2% YoY to ¥31,397mn and segment income rose 8.4% to¥3,460mn, for higher sales and profits. In a situation in which the ordering environment continues to be favorable,
the increase in the number of mobilized employees and the improvement in the contract unit price from thesuccess of a series of measures for recruitment, education, and sales, contributed to the results’ growth. Eachof the priority results indicators steadily increased, as the number of engineer employees was 3,518 people (up343 people on the end of the previous fiscal year), the number of mobilized employees was 3,391 people (up 303
people), and the contract unit price*1 was ¥3,988 (up ¥85). In addition, the Company was able to maintain the
average annual mobilization rate at the high level of 96.0% (96.2% in previous fiscal year) even while recruiting
more new graduates and overseas human resources than in the previous fiscal year. However, the reason for thedecrease in the average number of hours worked per employee*2 to 169.4 hours (down 2.4 hours YoY) was theimpact of the reforms to ways of working, particularly at major companies. The Company is forecasting that going
forward also, this decline in working hours will continue until it reaches a certain level, and its policy is to cover forthis mainly through increasing the number of mobilized employees and improving the contract unit price. It also
intends to identify changes in demand through an analysis of working hours at each customer and to acquire
projects in growth fields and areas.
*1 The unit price per hour based on the contract with the customer (does not include overtime fees)*2 Hours worked per month, corresponding to work as an engineer

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Business performance(2) Global BusinessIn the Global Business (which includes the design, manufacture, installation and maintenance of various plant
equipment and plant machinery, and human-resources services), net sales decreased 8.7% YoY to ¥1,383mn andsegment income increased 181.6% to ¥123mn, so profits increased substantially even while sales decreased.
Despite the growth in demand from Japanese companies, sales declined temporarily, mainly due to a decline in
the focus area of sales and order-receiving activities and a decline in orders for large projects. On the other hand,in profits, the cost-of-sales ratio, which had worsened temporarily in the previous fiscal period (due to a special
factor) normalized, which led to the major improvement in the profit-loss result.
3. Summary of FY12/18 results
To summarize the FY12/18 results from the above, it can be said that the Company achieved major results not only
for the quantitative aspect, of realizing results growth that exceeded the forecasts and setting new record high results(and dividend), but also as described below, for the qualitative aspect as well, of entering-into new businesses withgrowth potential and strengthening the management foundation. On the 50th anniversary of its foundation, this canbe evaluated as a sign that it will make strong progress on the start of its new foundation period.

█ Major topics
Entered into the agriculture- and nursing care-related fields thathave growth potential. On the 50th anniversary of its foundation in
2018, worked to strengthen the management foundation.
1. Recruitment results
For the recruitment of human resources who will drive the Company’s growth, in 2018 it recruited 288 new graduates(242 people in the previous fiscal year), 81 overseas human resources (who joined the Company in October), and 150
mid-career recruits (the plan was for 120 people), so the recruitment of each steadily increased. For the recruitmentof new graduates in 2019 as well, it plans to exceed the target of 250 people. This can be evaluated as the resultof ascertaining the needs of job seekers who are aiming at independent career formation through its success in
improving name awareness through advertising activities and communicating its appeal via various recruitment
activities. Moreover, its subsidiary, PANA R&D, would also seem to be achieving major results for recruitment throughstrengthening its collaboration with the Group.

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13 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Major topics

2. Made progress for the new businesses (establishing a new company, certification as a specified
organization, etc.)
The Company decided to enter-into new fields (the agriculture- and nursing care -related fields) toward realizing its
medium- to long-term growth vision (details provided below), so on April 2, 2018, it established a subsidiary, Agri
& Care Corporation, for assignments of agriculture- and nursing care-related human resources. It first launched
the agriculture-related business, and became the first in Japan to receive certification as a “specified organization”
in the Project to Accept Foreigners for Agricultural Support in August 2018 in Aichi Prefecture, which has beenpromoting the goal of realizing “robust agriculture.” Subsequently, it received successive certifications from other
National Strategic Special Zones (Kyoto Prefecture, Niigata City, and Okinawa Prefecture). Alongside this, it recruitedagri-tech and agriculture human resources from Vietnam, Myanmar, and China.
* In the Project to Accept Foreigners for Agricultural Support, a specified organization accepts overseas human resources
who have the skills to work immediately at agricultural sites in Japan, such as in farm and processing work, based on
employment contracts, under an appropriate management system in which participate the relevant local governments
and national organizations in the National Strategic Special Zones. At the current time, Niigata City, Aichi Prefecture, Kyoto
Prefecture, and Okinawa Prefecture has received approval for zone plans to carry out the project.

For the nursing care-related business also, the Company has already started to train nursing care human resources in
Myanmar, and it intends to progress the development of this business in line with Japan’s nursing care-related laws.
The Yangon branch in Myanmar is currently conducting preparations to build a scheme to train nursing care-related
human resources and send them to Japan.
3. Events to commemorate the 50th anniversary of its foundation
The Company set 2018, in which the 50th anniversary of its foundation was in July, as the first year of the second
foundation period, and it is working to create strengths (strengthen the management foundation) toward the next
generation, including promoting new businesses, expanding diverse recruitment activities, creating an overseas
business, and strengthening advertising. In particular, it constructed the Altech Corporation Building No.2*1, which
will be the symbol of the second foundation period, and donated wheelchairs*2, and it is also conducting various
other measures aiming at improving employee motivation and the retention rate* 3, training human resources for the
future*4, and improving name awareness (corporate image).
*1 Completed at the end of September 2018 (located in Nishihashimoto, Midori Ward, Sagamihara City, Kanagawa
Prefecture).
*2 As one part of its CSR activities, it donated approximately 450 heavy-duty wheelchairs, including to local governments
and welfare councils around the country with which it has strong relations.
*3 Promoting a movement to make all employees shareholders, holding of employee-exchange events, etc.
*4 Founding of a school to train human resources for the future, etc.

4. Selected as one of the JPX-Nikkei Mid and Small Cap Index constituent issues
On August 7, 2018, the Company’s shares were selected as one of the constituent issues in the JPX-Nikkei Mid
and Small Cap Index for FY18 (August 31, 2018, to August 29, 2019). The JPX-Nikkei Mid and Small Cap Index isa stock index that is jointly calculated by the Tokyo Stock Exchange, Inc., and Nikkei Inc. It consists of small andmedium-sized issues that use capital efficiently and that conduct management with an awareness of investors.

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14 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html█ Business outlook
For FY12/19, the outlook is for new record high results
1. Outlook for FY12/19
For the FY12/19 consolidated results, the Company is forecasting higher sales and profits, with net sales toincrease 8.2% YoY to ¥35,470mn, operating income to grow 5.4% to ¥3,780mn, ordinary income to increase 7.1%
to ¥3,860mn, and profit attributable to owners of parent to increase 0.5% to ¥2,680mn. Moreover, the forecasts
continue to experience new record highs.
Requests for worker assignments from major manufacturing companies, which are the Company Group’s main
customers, are strong, and this trend is expected to continue. The number of recruited new graduates in 2019 is
expected to be more than the target of 250 people, and in addition, the plan is to recruit more than 80 overseas
human resources and 160 mid-career recruits, while prioritizing quality. It is expected that some time will be required
before the new business (the agriculture-related business that was launched first) contributes fully to results, but
the policy is to work to strengthen sales for agri-tech and agriculture human resources assuming the establishmentof a new residency status*.
* A new “specific skills” residency status will be established in two levels as a result of the amendment to the Immigration
Control and Refugee Recognition Act (enforced on April 1, 2019) to expand the acceptance of overseas workers. In
addition to the recruitment of global engineers conducted up to the present time, the Company plans to utilize this newly
established residency status when conducting the agriculture- and nursing care-related businesses.

In profit-loss, the outlook is that although expenses will increase, including for upfront investment in the new
businesses, an increase in profits will be secured from the higher sales.
At FISCO, we think it is highly possible that the Company will achieve its results forecasts because demand forskilled engineers will remain high against the backdrop of the strong investment in R&D, and also from the steadyprogress it is making for recruitment. We will also be focusing on the progress it makes in the new business fields
toward accelerating growth from the next fiscal period onwards.
2. Plan for activities
On the fully-fledged start of the second foundation period (building a foundation), continuing on from the previous
fiscal period, the Company intends to work on the following measures.
(1) Measures to create the next generation (individual)
The Company will reform the three pillars that support its growth (recruitment, education, and sales) and realize
a virtuous circle that produces mutually positive effects. In particular, its policy is to aim to ascertain in advancechanges to technologies and industries and to respond to growth fields.

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15 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Business outlooka) Recruitment
The Company is working on measures such as 1) strengthening mutual collaboration with Group companies,
2) responding to the diverse job-search needs of students, and 3) building a recruitment system in China andthe ASEAN region. Even in the harsh recruitment environment, it plans to recruitment 280 new graduates in2020 through a quality-oriented recruitment policy (it goes without saying that the quality of the recruited humanresources needs to be within the range in which they can be sufficiently educated and developed). Also, as
mentioned above, its policy is to proactively recruit overseas human resources and mid-career recruits.
b) Education
The Company is working on measures including 1) rebuilding the education and training system for the Group
as a whole (advanced technologies, agri-tech, agriculture, nursing care, etc.) and 2) strengthening the training ofexecutive and middle-ranking human resources. In particular, it will develop human resources with backcasting
who will be responsible for the second foundation period.
c) SalesThe Company will work on measures including 1) acquiring excellent customers for the new businesses and theearly mobilization of recruits, 2) providing proposals tailored to the changing times, and 3) promoting matchingby engineer*. In particular, it intends to promote the expansion of state-of-the-art technologies (high unit pricezone), including AI, IoT, and robots, and to establish a CS (customer satisfaction) brand.
* The Company is incorporating a mechanism that enables the engineers themselves to feel their own growth through creating a database of the career plans of each individual engineer, and then matching them to the requests from customers.

(2) Measures for the Group
It is working to further advance cooperation within the Group, to strengthen recruitment and education, and to
expand the business domains together with the Group as a whole. In particular, it is striving to create synergies
with its domestic subsidiaries and overseas business, and to launch new businesses.
a) Domestic business
For ALPS BUSINESS SERVICE, the aim is to increase the number of employees through Group cooperation andto expand its business (including the provision of one-stop services in its middle and downstream processes
assignments, outsourcing, and introduction businesses). It is also working on measures including establishingan education system as the base for the education of Group human resources (such as training for interpersonal
skills) and improving benefits. For PANA R&D, it is working to further strengthen the Outsourcing Department andto establish and improve a foundation environment.
b) Overseas business
The Company is further expanding the Global Business (the installation and maintenance of production facilities
and related for Japanese companies and others, and human-resources services) through its local subsidiaries inShanghai and Taiwan. In addition, in the Yangon branch office (Myanmar), it is working to launch new businesses(agriculture and nursing care) through the education and training of human resources. It is also continuing to aim
to expand the routes for recruiting global engineers in China and Vietnam.

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

16 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Business outlook

3. Industry trend and the Company’s position
The number of assignment workers nationwide peaked at 2.02 million people in 2008, which was around the timeof the bankruptcy of Lehman Brothers, and then trended downward after that and had bottomed out in 2013
falling to 1.29 million people by 2017. Also, the environment surrounding the worker assignment business seems
to have reached a major turning point due to factors including the revisions to the Worker Dispatch Act (enforced
on September 30, 2015) and the guidelines on equal pay for equal work. It is considered that the situation in thisbusiness will change greatly in the future, depending on what assignment companies expect of the assignment
employees, such as their technical capabilities and expertise. In short, the need for new human resources withhigh-level technical capabilities and expertise will remain steady, but it seems there will be major changes in thework in downstream processes, for example due to economic trends.
In the Company, the position of engineers is stable as they are employed indefinitely (full-time employees) and theyacquire high-level technical capabilities and expertise from the education and training they receive, and therefore
they earn the trust of the customer companies. The results of the Company, which specializes in the assignment ofindefinitely employed engineers, are expected to steadily expand in the future. Of course, in order to be assigned
upstream processes, the Company will need to strive ceaselessly so that its engineers may utilize their technicalcapabilities and expertise and meet the needs of customers in industries such as electricity and machinery, automotive, and aerospace and space. Supported by its long-term education for its engineers, it is considered that theCompany will be able to continuously expand its business by earnings its customers’ trust.
Also, at the present time, due to the effects of “reforms to ways of working,” while on the one hand the number ofworking hours per employee is decreasing, on the other hand the number of engineers being requested is increasing.
This is not only to compensate for manufacturers’ labor shortages, because a characteristic trend that can be seenis that requests are also increasing in the state-of-the-art technologies field that requires specific skills. Therefore,
in this field, which the Company has positioned as a priority area, an increasingly important success factor in the
future will be how and whether it can secure (train) excellent engineers.

█ Medium- to long-term growth strategy
Aiming to expand its portfolio by developing new technologies andfor new markets
1. Medium- to long-term growth vision
The Company has explained its direction for its next business development in terms of a portfolio with 4 quadrants
divided on 2 axes, of markets and businesses / technologies, and also into existing and new areas for each axis.
(1) Provision of high-level technological services (existing markets, existing business / technologies)
These are existing services, such as for machinery design, electricity and electronics design, and development.
They are the Company’s stable source of earnings and going forward, it is aiming to strengthen the project
management structure and other structures for business expansion.

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

17 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Medium- to long-term growth strategy(2) State-of-the-art technologies’ (high unit price zone) development and design work (new markets,
existing business / technologies)
This is development and design work in various advanced-technology areas, including AI and IoT, robots, hybrid
and EV vehicles, aerospace-related, and medical-related, and the Company is responding to changes in technologies to meet societal needs to expand into the corresponding markets.
(3) Global development (existing markets, new business / technologies)
Basically, this is the provision of services like the construction and management of production facilities locallyalongside the overseas expansion of its customer companies. For the time being, the Company’s regional focus
is on China and Asia, and it is also aiming to utilize global engineers, such as to act as bridging engineers.
(4) Investigating potential new businesses (new markets, new business / technologies)
The Company intends to advance various measures, including utilizing nursing care human resources, opening-up
other fields (including the agri-business), and conducting M&A. As previously mentioned, it has decided toestablish a new company for the agriculture-related field and nursing care-related field, and it has begun specificmeasures toward the development of a new worker assignment business.
The medium- to long-term growth vision

Strengthening existing business, taking on the challenge of new businesses

Priority area

New

Promotion of new businesses① Expansion of the agri-tech andagriculture businesses② Nursing human resources③ M&A

State-of-the-art technologies’(high unit price zone)
development and design work

*State-of-the-art technologies ••• AI, IoT, robots, etc.

Global development① Overseas business② Utilize global engineers

Markets

Benefitting from being the first mover① Training and recruitment ofoverseas human resources② Expertise in utilizing overseas
human resources for technology,
agriculture, and nursing care

Provision of high-leveltechnologies and services

Existing

Existing

Business

New

Source: From the Company’s results briefing materials

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

18 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html

Medium- to long-term growth strategy

2. The medium-term management plan
Since its foundation, the Company has been formulating qualitative targets for every five years and quantitative
targets for every three years (rolling targets in the medium-term management plan). On the 50th anniversary of its
foundation in July 2018, it announced the next five-year plan (updated the qualitative targets) on the fully-fledged
start of the second foundation period. With the Reinvestment of Management Resources toward the New Industrial
Revolution as the theme, it intends to implement the three measures described below.
(1) Create sustainable competitive advantages in the outsourcing market(2) Accelerate growth and strengthen the earnings foundation by increasing investment(3) Optimize human-resources development and the organization in response to changes in the businessenvironment
Also, for the three-year quantitative (rolling) targets, as the results in the previous fiscal year (FY12/18) exceeded theforecasts and investment in R&D continues to be strong, the Company announced that it has raised the targets in theprevious plan and also set new quantitative targets for FY12/21. In FY12/21, it is targeting net sales of ¥41,370mn,
operating income of ¥4,100mn, and profit attributable to owners of parent of ¥2,820mn, while it also intends tosecure ROE of 20% or above (however, it seems to be viewing the contribution to results of the new company, Agri
& Care Corporation, conservatively).
At FISCO, within a situation of the declining Japanese population and advancing economic globalization, we evaluatethat the Company’s direction for business development is a rational strategy that has an eye to the changes to theindustrial structure in the future. Up to the present time, it has responded at high levels to the changes to technological needs, and the point to focus on going forward would seem to be how it will respond to new technologicalfields in which demand is expanding, and how these responses will connect to sustainable growth. Particularly for the
new businesses, including in the agriculture-related field (agri-business) and the nursing care-related field, becauseof their great potential from societal demands, it seems fully possible that the Company will grow these businesses
to become its profit drivers in the future, as it will be able to utilize its expertise and networks for developing humanresources that it has acquired overseas. Moreover, we will place focus on the specific path the Company shouldtake going forward in terms of initiatives to bolster its structure for development in the high unit price zones of AI
and robotics. We must also continue to pay attention to M&A that utilizes its strong financial base.

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

19 21

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

Altech Corporation

16-Apr.-2019

4641 Tokyo Stock Exchange First Section

http://www.alpsgiken.co.jp/english/index.html█ Shareholder return policy
Paid a record-high dividend in FY12/18, including a commemorative
dividend. Plans to maintain it at the same high level in FY12/19 also,
on an ordinary-dividend basis.
1. Basic dividend policy
The Company pays dividends as its policy to return profits to shareholders. It aims for a payout ratio on a consolidated basis of 50%, and its basic policy is to pay an annual dividend of ¥10, regardless of results.
2. Dividend trend and plan
On looking at how dividends have trended in the past, we see that the Company has continued to steadily increase
the dividend against the backdrop of the favorable results. It has maintained the dividend payout ratio at around 50%.
In FY12/18, after adjusting for the share split*, the Company increased the dividend ¥22 YoY for an annual dividendof ¥80 (an interim dividend of ¥39 and a period-end dividend of ¥41), which included a commemorative dividendof ¥10 on the 50th anniversary of its foundation, for a new record high dividend (dividend payout ratio, 58.6%).
Also, as explained above, in response to the intention of the leading shareholder to sell some of its holding of theCompany’s shares, the Company acquired its treasury shares (through a tender offer) and it worked to improve
capital efficiency (to improve ROE and EPS).
* It conducted a two-for-one share split on January 1, 2018, in order to expand the investor groups and to improve theliquidity of the Company’s shares.

For the FY12/19 dividend as well, the Company plans to pay an annual dividend of ¥70, which is the same as in
the previous fiscal year on an ordinary-dividend basis (an interim dividend of ¥35 and a period-end dividend of ¥35,
for a dividend payout ratio of 49.7%).

㻰㼕 㼢㼕㼐㼑㼚㼐㻯㼛㼚㼢㼑㼞㼟㼕㼛㼚㻌㼠㼛㻌㼎㼑㼒㼛㼞㼑㻌㼠㼔㼑㻌㼟㼔㼍㼞㼑㻌㼟㼜㼘㼕㼠㻌㻔㼘㼑㼒㼠㻕㻯㼛㼙㼙㼑㼙㼛㼞㼍㼠㼕㼢㼑㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕㻻㼞㼐㼕㼚㼍㼞㼥㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕

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㻔㻯㼛㼙㼙㼑㼙㼛㼞㼍㼠㼕㼢㼑㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼛㼚㻌㼠㼔㼑㻌㻡㻜㼠㼔㻌㼍㼚㼚㼕㼢㼑㼞㼟㼍㼞㼥㻌

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㻲㼅㻝㻞㻛㻝㻞 㻲㼅㻝㻞㻛㻝㻟 㻲㼅㻝㻞㻛㻝㻠 㻲㼅㻝㻞㻛㻝㻡 㻲㼅㻝㻞㻛㻝㻢 㻲㼅㻝㻞㻛㻝㻣 㻲㼅㻝㻞㻛㻝㻤 㻲㼅㻝㻞㻛㻝㻥㻌㻱Note: Implemented a two-for-one share split on January 1, 2018
Source: Prepared by FISCO from the Company’s financial results

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

20 21

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

16-Apr.-2019
http://www.alpsgiken.co.jp/english/index.html█ Information security
The Company Group works on maintaining information security as a priority, because its engineers work externallyat the places to which they are assigned. Specifically, it is constructing a system to thoroughly ensure information
security through establishing a personal information protection policy, an information security basic policy, andrelated regulations, and it is managing these policies and regulations appropriately and educating all employeeson them. It also regularly provides thorough guidance on compliance with security rules at the places to which its
engineers are assigned.

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

21 21

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