COMPANY RESEARCH AND ANALYSIS REPORT

Altech Corporation
4641
Tokyo Stock Exchange First Section

30-May-2017
FISCO Ltd. Analyst

Hideki Yamada

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

30-May-2017
http://www.alpsgiken.co.jp/english/index.html■ Index■Summary --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Is developing the Outsourcing Business and Global Business based on its “Heart to Heart”
corporate philosophy ........................... ......................................................................................................

01

2. FY12/16 consolidated results .....................................................................................................................

01

3. Outlook for FY12/17 ............................. ................................................................................................. .....

01

4. The new medium-term management plan...................................................................................................

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

02

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

03■Business overview --------------------------------------------------------------------------------------------------------------------------------------------------- 04
1. The Outsourcing Business ..........................................................................................................................

05

2. Global Business .............................................................................................................................. ...........

05

3. Global engineers ................................... ......................................................................................................

05

4. The education and training system .............................................................................................................

06■Business performance ----------------------------------------------------------------------------------------------------------------------------------------- 07
1. Summary of the FY12/16 consolidated results ...........................................................................................

07

2. Financial condition and business indicators ................................................................................................

09■Business outlook ------------------------------------------------------------------------------------------------------------------------------------------------------- 10
1. The outlook for the FY12/17 full year results ..............................................................................................

10

2. The specific measures for FY12/17 ....... ......................................................................................................

10

3. Developments in the assignment business and the Company’s position ....................................................

12■Medium- to long-term growth strategy ----------------------------------------------------------------------------------------------- 12
1. The new medium-term management plan (2017 to 2019) ...........................................................................

12

2. Medium to long-term growth vision ...... ......................................................................................................

13■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 15
1. Basic dividend policy .............................................................................................................................. . . . .

15

2. Dividend trend and plan ........................ ......................................................................................................

15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html█ Summary
A group of high-level engineers supporting manufacturing in Japan.
Provides high-level services for major manufacturing companies infields such as machinery, electricity and electronics, software, and IT.
1. Is developing the Outsourcing Business and Global Business based on its “Heart to Heart” corporate
philosophy
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, and IT. 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 four subsidiaries, andsince FY12/16, it has had two business segments, the Outsourcing Business and the Global Business.
2. FY12/16 consolidated results
The Company announced its FY12/16 results on February 14. Net sales were ¥26,743mn, up 17.7% year on
year (YoY), operating income was ¥2,857mn, up 32.0%, ordinary income was ¥2,949mn, up 32.6%, and profit
attributable to owners of parent was ¥1,988mn, up 37.4%. Growth was accelerated by making PANA R&D CO.,LTD. a consolidated subsidiary, and the operating income margin exceeded 10%.
In the Outsourcing Business, the Company is focusing on securing excellent human resources and on sales measures, primarily improving the contract unit price, and as a result, the number of mobilized employees (employees
who are working for customers) further exceeded that of the previous year and the contract unit price also increased.
The early mobilization of new graduate recruits particularly contributed to the increase in sales. Sales and profits
increased in the Global Business from acceptance inspections for large-scale construction projects in the engineeringbusiness.
3. Outlook for FY12/17
In the consolidated results forecasts for the FY12/17 full year, the outlook is for higher sales and profits, with net
sales to increase 8.4% YoY to ¥29,000mn, operating income to rise 7.5% to ¥3,070mn, ordinary income to grow
7.5% to ¥3,170mn, and profit attributable to the owners of the parent to climb 7.1% to ¥2,130mn. Requests forthe assignment of engineers from the Company Group’s main customers of major manufacturing companies haveremained strong, and this trend is expected to continue.
4. The new medium-term management plan
Together with its results announcement, the Company announced its quantitative targets in the medium-term
management rolling plan for the three years from FY12/17 to FY12/19. The final targets in FY12/19 are for net salesof ¥33,400mn and operating income of ¥3,450mn.

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01 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Summary

Key Points
Improving customer trust and employee satisfaction through its human resources based on “Heart to Heart”
relations• Positive results are improving through the high-level technological outsourcing services provided by its full-timeengineers• Plans to commemorate its 50th anniversary in July 2018 with a record-high dividend•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻔㼰㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻟㻡㻘㻜㻜㻜

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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 outsourcer that provides high-level technological services to major
manufacturing companies in fields such as machinery, electricity and electronics, and software and IT. Unlike fixedterm employment based employment agencies, the Company only employs full-time engineers, and even in therecession following the bankruptcy of Lehman Brothers, it did not dismiss a single employee. Also, in accordancewith the Revised Worker Dispatch Act (enforced September 30, 2015), the employment-period limitation wasended for indefinite-term employment, while incidental work was also ended on the abolition of specialized workclassifications, which are both positive developments for the Company.

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02 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Company profile

The consolidated subsidiaries are the 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 operates assignment of technicalexperts, and the two subsidiaries that conduct the Global Business, of ALPSGIKEN TAIWAN CO., LTD. (Taiwan)and Altech Shanghai CO., LTD. (China). In addition to the Head Office and the Back office and the training center,
the Company has 2 Techno Parks(monozukuri centers) where it conducts manufacturing, 20 sales offices within
Japan, and 1 overseas branch office (in Myanmar).
2. 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, current Chairman and Director Toshio Matsui. At that time, electricaldesign and mechanical design were conducted separately, and to solve the various problems that arose from this,he proposed “mechanical and electrical 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 byfocusing on training human resources who are specialized in upstream processes, such as development and design,and the early mobilization of 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

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)

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03 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Company profile

Date
July 2001
March 2003
July 2003
October 2004
December 2004

Major event
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

July 2006

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

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

Source: Prepared by FISCO from the Company materials█ Business overview
Specializes in the development and design fields and is compliant
with high-level and advanced technologies
The Company discloses information on two reportable segments, the Outsourcing Business, which is mainly engineer
assignment and outsourcing operations, and the Global Business, which is to support Japanese companies’ operations overseas. Looking at the percentages of engineers it assigns according to the fields of customer companies,
machinery-related accounts for around 40%, while electricity and electronics-related and software/IT related areboth approximately 30%. In the percentages of net sales by operational phase, design and development is slightly
less than 60%, analysis/evaluation/production technologies are approximately 30%, and planning/R&D are around
10%, so basically all sales are provided by upstream processes.

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

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.
The Company provides services in the form of assignment engineers and outsourcing, and its engineers demonstratehigh-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 ateam of engineers whose members have various high-level skills and who conduct product design and developmentwork). 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, the Company has meet the technical needs of its customers in the field of mechatronics
through its services characterized by “machinery and electrical integrated design.” In particular, it utilizes its strengthof having a unique business form with its own manufacturing bases (own factories), and the Group as a whole has inplace 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 which further
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 and space, and medical andwelfare equipment.
2. Global Business
The Company currently has two overseas subsidiaries ALPSGIKEN TAIWAN CO., LTD. in Taiwan and Altech ShanghaiCO., LTD. in China. They conduct installation and maintenance work for the production facilities and equipment ofJapanese companies overseas, and also provide human resources services ancillary to this work. In the percentageof net sales by segment in FY12/16, the Global Business provided only 7.4% of total net sales, but going forward
the Company’s policy is to accelerate its global growth and this percentage is expected to rise year by year.
3. Global engineers
Alongside the overseas expansion and globalization of the manufacturing industry, companies are being required
to utilize global human resources, and for over 10 years since 2005, the Company has been training and employing
more than 300 full-time global engineers who have provided high-level technological services to more than 200
customer companies.

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05 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Business overview

Currently, the Company is conducting operations centered on its specialized areas of design and development in thefields of machinery and electric machinery. Its global engineers are active in various countries, but mainly in China
and Vietnam. Also, in recent years, in an increasing number of cases its engineers are acting as bridges (bridging
engineers) to the local sites during a period of overseas expansion.
4. The education and training system
The Company’s greatest strength is its human resources, and its education and training is the source of this strength
as they produce its excellent human resources. This is encapsulated in the words of its corporate philosophy, “Heartto Heart.” Based on this corporate philosophy, it places great importance on “connecting people’s hearts” andcultivates a corporate culture to earn the trust of customers and to raise employee satisfaction. It has put in place
an education and training system to link this corporate culture to the future generations of employees.
The Company’s education and training system can be broadly dividend into the abilities development education
system and career development support.
(1) The abilities development education system
Abilities development education involves technical education, human management training, and functional andoccupational training. In addition to technical training, after joining the Company new recruits receive an educationfor each field and industry that is prepared for them according to their levels and needs, such as in basic
technologies, specialized technologies, and advanced technologies. In addition, there is a menu for engineers
to acquire qualifications and for self-development, while they can also study independently. Furthermore, theCompany provides them with not only a technical education, but also a complete lineup of human management
training and functional and occupational training to encourage their growth as members of society and employees.
(2) Career development support
The Company has established the “Engineer Support System” as its career development support system. Thisis a mechanism that supports its employees’ continuous career development as engineers and promotes theirdevelopment to become high-level engineers. After joining the Company, each individual engineer is designateda senior engineer within the Company, who are called career supporters, who support the new engineers on all
aspects, from technical related through to mental health related, through annual career development consultations.
Therefore, each engineer can eliminate any anxieties they have about the future or problems they are facing, andchoose from a variety of career paths. In the long term, this maintains and improves the engineers’ motivation.

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html█ Business performance
Achieved major increases in sales and profits in FY12/16 on a new
subsidiary joining the Group and the early mobilization of newgraduate recruits
1. Summary of the FY12/16 consolidated results
Net sales were ¥26,743mn, up 17.7% YoY, operating income was ¥2,857mn, up 32.0%, ordinary income was¥2,949mn, up 32.6%, and profit attributable to the owners of the parent was ¥1,988mn, up 37.4%. Growth was
accelerated by PANA R&D CO., LTD. joining the Group and the operating income margin was 10.7%, exceeding
10%. Also, although SG&A expenses increased alongside the business expansion, they are declined in comparison
to net sales and to a certain extent a suppression effect is being achieved. It is considered that this is due theeffects of the merger in September 2016 of ALPS BUSINESS SERVICE CORPORATION with Alps Career Designing
Corporation.
(1) Outsourcing BusinessIn this business, as a result of focusing on securing excellent human resources and sales measures, mainly to
improve the contract unit price, the mobilization rate was maintained at a high level, and in addition, the numberof employees mobilized exceeded the previous year (2,797 people as of the end of December 2016, up 295
people on the end of the previous fiscal year), while the contract unit price also rose (an average of ¥3,856 at
the end of December 2016, up ¥52 on the end of the previous fiscal year). In particular, all of the new-graduate
engineers recruited in April had been mobilized by the end of July, and this early mobilization contributed to thehigher sales. New-graduate engineers do not immediately take charge of an upstream process independently,
rather they are assigned to a team where they are supported by a senior engineer, which would seem to be why
they can be mobilized so quickly. This can be said to be evidence that the Company’s human resources training
based on its education and training system is functioning effectively. Also, with regard to the contract unit price,
it negotiates the contract renewal with customers, with most of the negotiations taking place in March and Aprilof each year. Its customers place great trust in the Company and highly evaluate its technological capabilities, sothey tend to allow an increase based on higher than the equivalent personnel expenses at their own company. The
average annual mobilization (working) hours per capita was 173.5H, down 0.8H YoY, but this was because of the
reduction in overtime hours based on the workstyle reforms being pursued by major companies in recent years.
In the percentages of net sales by customer industry, automotive-related accounts for around 40%; electricity,
precision equipment, and semiconductors approximately 40%; and medical-related around 6%. Automotiverelated is a promising field, mainly for areas such as automated driving equipment, and on a net sales basis it isexpected to trend around 40%. As can be seen from the industry fields, many of its customers are in the so-calledadvanced-technology and booming-industry fields. The Company’s approach is to shift to successful companies
alongside the current trends, to identify customer trends, and to open-up high-growth areas. At the current time,
it is focusing on actively opening-up the medical and semiconductor fields.

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

Altech Corporation

30-May-20174641 Tokyo Stock Exchange First Section

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

Business performance

FY12/16 results(¥mn)
FY12/15

FY12/16

Results% of sales

Results% of sales

Net sales

22,723100.0%

26,743100.0%

YoY
17.7%

Cost of sales

16,957

74.6%

20,057

75.0%

18.3%

SG&A expenses

3,600

15.8%

3,828

14.3%

6.3%

Operating income

2,165

9.5%

2,857

10.7%

32.0%

Ordinary income

2,223

9.8%

2,949

11.0%

32.6%

Profit attributable to owners of parent

1,446

6.4%

1,988

7.4%

37.4%

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

The early mobilization of new-graduates contributed to the higher sales

Source: From the Company’s briefing materials(2) Global BusinessIn this business, both sales and profits increased significantly from the acceptance inspections for large-scaleconstruction projects in the engineering business. These were mainly overseas construction projects, particularly in
China, including for the installation and maintenance of production equipment and other machinery and equipment
at the facilities of Japanese companies, and in FY12/16, net sales increased 68.2% YoY from these acceptanceinspections of large-scale engineering projects. This business provides only around 7.4% of the Company’s total
net sales, but it is considered to be making a reasonable level of profits and is expected to expand in the future.
This is one of the two business segments that the Company reports on, from which we can sense the Company’s
intention to grow the Global Business in the future.

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08 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Business performance

Financial condition is excellent and the equity ratio is high
2. Financial condition and business indicators
The Company’s financial condition is excellent. At the end of FY12/16, the equity ratio was at the high level of 65.8%,
and borrowing and other interest bearing debt was a comparatively small amount (the interest-bearing debt ratio was6.7%). Further, the current ratio was 230.0% and it has a sufficient balance of cash and deposits on hand, meaning
there are no issues in terms of stability. With regard to profitability also, the operating income margin is above 10%,
while ROA and ROE also both further improved YoY to reach high levels.
The Company does not hold many fixed assets like companies in the manufacturing industry because it is focusedon its engineer assignment business as its core technical competence. Within its total assets, cash and deposits
account for around 45%, so it would seem able to flexibly respond to opportunities for M&A and similar, which areconsidered to be indispensable for proactive business expansion in the future.
Looking at the YoY changes in assets and liabilities, cash and deposits increased ¥754mn, notes and accounts
receivable rose ¥667mn, goodwill grew ¥462mn, accounts payable climbed ¥412mn, and retained earnings
increased ¥1,201mn. The increases in notes and accounts receivable occurred alongside the business expansion,
while the rise in goodwill was from PANA R&D CO., LTD. being made a consolidated subsidiary in September
2016 (amortization period, eight years). Accounts payable is a temporary item, and considering it is not included
in interest-bearing debt, it is not particularly a problem. Retained earnings are steadily being accumulated from theimprovement in profitability, and can be understood as indicating that the Company is able to supplement internal
reserves and secure funds for dividends.
Consolidated balance sheet and the main business indicators(¥mn)
FY12/15

FY12/16

ChangeCurrent assets

10,96012,167

1,206(cash and deposits)

6,556

7,311

754

(notes and accounts receivable - trade)

3,249

3,916

667

Non-current assets

3,596

4,290

694

0

462

462

Total assets

14,557

16,4581,900

Current assets(goodwill)

4,657

5,289

632

(accounts payable - other)

984

1,396

412

Non-current liabilities

267

325

57

(interest-bearing debt)

700

720

20

Total liabilities

4,925

5,614

689

Net assets

9,632

10,843

1,210(retained earnings)

5,260

6,461

1,201

Current ratio

235.3%

230.0%-5.3

Equity ratio

66.1%

65.8%

-0.3

Interest-bearing debt ratio

7.3%

6.7%

-0.6

ROA (ratio of ordinary income to total assets)

15.9%

19.0%

3.1

ROE (ratio of profit to equity)

15.5%

19.4%

3.9

Operating margin

9.5%

10.7%

1.2

(stability)(profitability)

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

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

09 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html█ Business outlook
Aiming for further increases in sales and profits on the 50th
anniversary of its foundation
1. The outlook for the FY12/17 full year results
In the consolidated results forecasts for the FY12/17 full year, the outlook is for higher sales and profits, with net sales
to increase 8.4% YoY to ¥29,000mn, operating income to rise 7.5% to ¥3,070mn, ordinary income to grow 7.5%
to ¥3,170mn, and profit attributable to owners of parent to climb 7.1% to ¥2,130mn. Requests for assignments ofengineers from the Company Group’s main customers of major manufacturing companies have remained strong, andthis trend is expected to continue. As the Company approaches the 50th anniversary of its foundation in FY12/18,
it seems likely that the motivation within the entire Group toward expanding results will be high. Also, the same asin the FY12/16 results, in the FY12/17 forecasts it is expected that rather than individual results, the YoY growth
rates in each of the indicators of consolidated results will be greater, and expectations are high for the contribution
to results of each of the consolidated subsidiaries.

Expansion of recruitment by initiating corporate branding andimproving name recognition.
2. The specific measures for FY12/17
The Company has indicated it will implement the following measures for itself and for the Group. In the case of themeasures for itself, looking toward next year, which will be the 50th anniversary of its foundation, it has set the themeof “Taking on the challenge of…,” and it is considered that the Company strongly intends to expand its business byactively implementing measures to take on challenges as a company.
(1) Measures to take on challenges (Parent)
These are measures to promote positive activities in terms of utilizing human resources in the areas of recruitment,
education, and sales. They have been set as a measures for the Company, because it is considered that theCompany will oversee the measures to utilize human resources, and that the aim is to maintain and improve thestrength of human resources and to foster a sense of unity and governance as a group.
a) Taking on challenges for recruitment
The Company has cited the following measures for recruitment; 1) firmly establishing a Company-wide cooperative
recruitment system, 2) conducting career recruitment tailored to customer needs, and 3) expanding recruitmentof global engineers. Within the trend in the labor market in recent years for labor shortages, the competition toacquire excellent human resources has been fierce, and together with the branding activities described below,
this is one area the Company is focusing on for its measures. For the recruitment targets, it is aiming to recruit
250 new graduates (entry in 2018) and 120 mid-career recruits (entry in 2017), while it is considered that it may
further increase mid-career recruitment according to the situation.

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10 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Business outlookb) Taking on challenges for education
The Company is also aiming to further improve its human resources education based on its philosophy of “together
with people,” the same as for recruitment. Its measures are to 1) improve the rate its engineers take qualifications
exams, in cooperation with the business divisions, 2) create an environment in which engineers work hard together
as colleagues, and 3) enhance opportunities for career-path related training. In combination with the Engineer
Support System and other systems, it will further enhance its long-term development of engineers. While theCompany does not announce specific numerical targets, it has cited “Improving the rate that engineers takequalifications, exams increasing the number of in-Company certified teachers, and promoting long-term careerformation” as the targets it is aiming to achieve.
c) Taking on sales challenge
To improve results and expand its business, the Company will actively implement the following sales measures; 1)
push forward the decisions on mobilizing new graduates, 2) establish an annual cycle for new-graduate sales, and
3) promote the rotation of career targets. In terms of the targets it is aiming to achieve, it has cited “taking early
decisions on mobilizing recruits (by June for all April new-graduate recruits), establishing an early mobilization cycle(recruitment of new graduates in both the spring and the fall), and aiming to achieve an actual unit price of ¥4,000.”
Incidentally, for the recruitment of the new graduates in the fall, it is looking to hire global engineers from overseas.
(2) Group measures for the full fiscal year
The measures by business segment and by Group company for the domestic and overseas businesses are as
follows.
a) Domestic business
ALPS BUSINESS SERVICE CORPORATION is strengthening Group cooperation and promoting business expansion and employee training. PANA R&D CO., LTD. is pursuing synergies, and advancing measures for recruitment
and sales collaboration. Through these measures, the aim is to establish an Altech Corporation Group brandfor its domestic business and to expand the corporate scale. In addition, in order to improve name recognition,
as corporate branding activities it is planning to conduct advertising, including creating posters for students
and employees and holding joint briefing meetings. The Company Group is comprised of BtoB companies,
and in the past, they have generally not conducted advertising. But amid the situation in recent years, including
the intensifying competition to recruit human resources, it has aimed to establish a brand and increase namerecognition as a corporate group, secure a competitive advantage for recruitment, and to raise awareness within
the Group. Also, the catch phrase used in the advertising posters is “People, technologies, customers - whatever
the era, you can always encounter ‘excellence’”. The meaning of this catch phrase is that as engineers, newrecruits can have a long career in the Company by encountering many excellent customers, technologies, andsenior employees, and learning and utilizing technologies suited to whatever the era. In addition to eliminating
concerns about the future among the students who are conducting job-search activities, it also seems to be amessage aimed at current employees toward improving the corporate image.
b) Global Business
The Company is making a fully-fledged start to expanding its business scale at its overseas bases in Taiwan andShanghai. As previously explained, the scale of the Global Business is not yet that large, but centered on locations
such as Taiwan and Shanghai, it is conducting installation and adjustment projects and maintenance work for the
production facilities and equipment of Japanese companies in fields including LCDs and semiconductors. Although
there will be some fluctuations, for example with the project periods, business expansion can be expected fromthe increase in customer numbers and other factors.

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11 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Business outlookc) The Yangon branch office (training of nursing human resources)
Since 2003 in Myanmar, Mr. Matsui has invested his personal funds to establish nursing and IT schools, whichhave been training local human resources. In 2015, the Altech Corporation Yangon branch office was opened, andalongside the developments in Japan’s nursing care-related legislation, it is conducting training while maintaining
cooperation between Japan and Myanmar. This initiative signifies one of the Company’s social contributions.
3. Developments in the assignment business and the Company’s position
The number of assignment workers nationwide peaked at 2.02 million people in 2008, which was around the time of
the bankruptcy of Lehman Brothers, and then trended downward after that and had fallen to 1.26 million people by
2014. 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 theguidelines on equal pay for equal work. It is considered that the situation in this business will change greatly in the
future, depending on what assignment companies expect of the assignment employees, such as their technicalcapabilities and expertise. In short, the need for new human resources with high-level technical capabilities andexpertise will remain steady, but it seems there will be major changes in the work in downstream processes, forexample 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.

█ Medium- to long-term growth strategy
Expand corporate scale through innovation~Accelerating growth as we move toward our 50th anniversary~
1. The new medium-term management plan (2017 to 2019)
Since its foundation, the Company had formulated qualitative targets for every five years and quantitative targets
for every three year. In conjunction with its recent results announcement, it announced its quantitative targets forthe new medium-term management rolling plan that will run for 3 years, from FY12/17 to FY12/19. The final targets
for FY12/19 are net sales of ¥33,400mn, operating income of ¥3,450mn, ordinary income of ¥3,550mn, and profit
attributable to owners of parent of ¥2,460mn.
The major themes for the five-year plan are “Expand the corporate scale through innovation – accelerating growth
as we move toward our 50th anniversary,” and the specific measures to achieve them are as follows.

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12 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Medium- to long-term growth strategy(1) Anticipate changes to technologies and industries and provide a variety of high-level technologicalservices
Specifically, it has cited the following measures to achieve this;1) Change the structures of sales, recruitment,
and education, 2) promote team creation and outsourcing, 3) improve customer satisfaction, and 4) establisha brand as a group of high-level engineers. Within the engineer assignment business, to be asked by major
customer companies to carry out work in upstream processes, the Company must be able to ceaselessly readand anticipate changes in technologies and industries and acquire high-level and diverse technologies. Thesevarious structures are essential to achieve this.
(2) Accelerate the expansion in the scale of the Company Group through the independence and growth ofaffiliated companies
It has cited the following specific measures for this; 1) have affiliate companies demonstrate their individuality andprofitability, 2) create new businesses that capture trends, and 3) contribute to society through the expansion of
the Group. The Company currently has four affiliated companies in Japan and overseas, and in the previous fiscal
year, PANA R&D CO., LTD. newly joined the Group, therefore it is thought that it will increase M&A and similar
activities in the future. Fostering a sense of unity as a group while also securing the independence and growth ofeach Group company seem to be an important theme.
(3) Making a leaping forward to become a global corporate group developing businesses in Asia
Its specific measures for this are as follows; 1) strengthen the business foundation and expand the business fields,2) utilize the network in Southeast Asia, and 3) provide global outsourcing services. The Company is aiming tofurther develop its business fields and areas, mainly in Asia, which is where its existing manufacturing-industry
customers are conducting overseas expansion.
2. Medium to long-term growth vision
Together with the medium-term management plan, the Company has explained its direction for its next businessdevelopment in the process after the 50-year anniversary 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.
(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.

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13 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html

Medium- to long-term growth strategy(4) Investigating potential new businesses (new markets, new business / technologies)
The Company is currently searching for opportunities to launch a nursing business. As previously stated in thespecific measures for FY12/17, it has already started to train nursing human resources in Myanmar and it isinvestigating launching this business in line with the establishment of a legal system for nursing care in Japan.
While other potential new businesses have not yet been materialized, it is currently investigating entering-intoother fields with services that will utilize the Company’s strength of its excellent human resources.

Source: From the Company’s briefing materials

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

14 15

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

Altech Corporation
4641 Tokyo Stock Exchange First Section

30-May-2017
http://www.alpsgiken.co.jp/english/index.html█ Shareholder return policy
Plans to pay a record-high dividend in FY12/17
1. Basic dividend policy
The Company pays dividends as its policy to return profits to shareholders. It aims for a payout ratio on aconsolidated basis of 50%, and its basic policy is to pay an annual dividend of ¥20, regardless of results.
2. Dividend trend and plan
Looking at how the dividend has trended in the past 5 years, we see it has steadily and continuously increased
against the backdrop of the favorable results, with the dividend payout ratio also trending at around 50%. The
Company has announced that it plans to pay a dividend of ¥104 in FY12/17 as the total of the interim and year-end
dividends, which will be a record high for an annual dividend.

㻰㼕㼢㼕㼐㼑㼚㼐
㻻㼞㼐㼕㼚㼍㼞㼥㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕㻔㼰㻕㻝㻞㻜㻚㻜㻜

㻥㻜㻚㻜㻜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

㻣㻠㻚㻞㻑

㻡㻜㻚㻣㻑

㻤㻜㻚㻜㻑

㻡㻜㻚㻝㻑

㻡㻜㻚㻝㻑

㻡㻜㻚㻠㻑

㻠㻥㻚㻥㻑

㻥㻤㻚㻜㻜

㻝㻜㻠㻚㻜㻜

㻢㻜㻚㻜㻑

㻠㻜㻚㻜㻑

㻢㻜㻚㻜㻜

㻟㻜㻚㻜㻜

㻣㻝㻚㻜㻜

㻢㻜㻚㻜㻜

㻞㻜㻚㻜㻑

㻠㻡㻚㻜㻜
㻞㻤㻚㻜㻜
㻜㻚㻜㻑

㻜㻚㻜㻜
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

㻲㼅㻝㻞㻛㻝㻣㻌㻱

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

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

15 15

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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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
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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.
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The final selection of investments and determination of appropriate prices for investment
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FISCO Ltd.