COMPANY RESEARCH AND ANALYSIS REPORT

gremz, Inc.
3150
Tokyo Stock Exchange First Section

16-Mar.-2021
FISCO Ltd. Analyst

Nozomu Kunishige

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

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Energy solutions company..................... ......................................................................................................

01

2. Achieved record-high profit for a 5th consecutive fiscal year in FY03/2020. ................................................

01

3. Expecting higher sales and profits again in FY03/2021 and starting the next growth strategy.....................

01■Company outline--------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company outline.................................... ......................................................................................................

03

2. Group strengths..................................... ......................................................................................................

03

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

04■Business description---------------------------------------------------------------------------------------------------------------------------------------------- 05
1. Energy Cost Solutions Business..................................................................................................................

06

2. Smart House Project Business.. ............. ......................................................................................................

07

3. Electricity Retailing Business................. ......................................................................................................

07■Business trends----------------------------------------------------------------------------------------------------------------------------------------------------------- 08
1. FY03/2020 results overview.........................................................................................................................

08

2. Financial condition and cash flow situation..................................................................................................

10■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 12
1. FY03/2021 forecasts.............................. ......................................................................................................

12

2. Strategies by business segment............ ......................................................................................................

13

3. New growth strategy....................................................................................................................................

16■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 17

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html█ Summary
Aiming for sustainable growth as an energy solutions company
driven by electricity retailing business
1. Energy solutions company
gremz, Inc. <3150> (hereinafter, also referred to as “the Company”) lists its shares on the First Section of the Tokyo
Stock Exchange (TSE-1) and provides a wide range of products and services related to energy that cover all typesof electricity, from low to high voltage, to a broad spectrum of customers from ordinary households to plants, offices,and other locations. Obtained through continuation of appropriate consulting that fits customer needs by sales
employees who possess extensive proposal capabilities related to energy since the founding, Group strengths are“sales capabilities supported by an abundant customer base,” “robust profitability achieved via differentiation fromother companies,” and “market environment and growth opportunities.” While the Company sustained sales andprofit gains from steady income in the Energy Cost Solutions Business and Smart House Project Business andgrowth in the Electricity Retailing Business up to now, it expects further income expansion driven by the Electricity
Retailing Business. Additionally, it is taking steps toward the next growth strategy, including participation in anenvironmental technology verification program of METI’s VPP (virtual power plant, a mechanism for unified control
of multiple photovoltaic systems, power storage batteries, and other facilities in distributed locations using energy
management technology and usage as a single power plant).
2. Achieved record-high profit for a 5th consecutive fiscal year in FY03/2020
The Company reported FY03/2020 consolidated results of ¥15,489mn in net sales (+27.6% year on year (YoY)) and¥2,106mn in operating income (+50.4%), increasing sales for a 15th consecutive fiscal year since its founding andposting record-high profit for a 5th consecutive fiscal year. Operating income exceeded initial forecasts by 37.1%.
At the segment level, the main driver of overall strong results was a substantially larger profit increase than plannedin the Electricity Retailing Business due to lower electricity procurement prices in the market resulting from a decline
in electric power demand related to weather factors. Thanks to this, the Company realized high profitability with an
ROE of 33.1% and is in sound financial condition with a capital ratio of 59.4%. In light of the strong performance,
the Company raised the full-year dividend for a 4th consecutive fiscal year to ¥24.0, made up of a ¥5.0 interim
dividend and ¥19.0 period-end dividend.
3. Expecting higher sales and profits again in FY03/2021 and starting the next growth strategy
The Company’s FY03/2021 forecasts target ¥16,853mn in net sales (+8.8% YoY) and ¥2,300mn in operating
income (+9.2%), expecting further sales and profit gains. In the Smart House Project Business, the outlook projects
lower profit accompanying a decline in the number of event sales opportunities due to the impact of the COVID-19
outbreak. Additionally, in the Electricity Retailing Business, it forecasts weaker profit, even with just a minor impact
from the COVID-19 outbreak, owing to an increase in electricity procurement prices related to weather factors.
Meanwhile, profit in the Energy Cost Solutions Business is likely to expand with just a minor impact from the
COVID-19 outbreak and a rebound from a decline in profit in the previous fiscal year.

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01 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Summary

In September 2020, the Company announced a 1-to-2 stock split aimed at raising the stock’s liquidity and expanding
the investment segment and a dividend hike from the initial target that was on par with the previous fiscal year to¥14.5, including the ¥12.0 ordinary dividend and a ¥2.5 commemorative dividend marking the stock’s switch fromthe TSE JASDAQ Standard market to TSE-2. We think it might even raise the dividend further if earnings exceed
the initial outlook. The Company aims to continue sales and profit increases by securing steady income in the SmartHouse Project Business and Energy Cost Solutions Business and promoting the Electricity Retailing Business withlarge latent growth potential. It is also focusing on corporate social responsibility (CSR) and could attract interest as
an ESG (environment, social, and governance) choice. The Company ascended from TSE-2 to TSE-1 on November
24, 2020.
Key Points
Provides a wide range of energy-related products and services under its Energy Cost Solutions Business, SmartHouse Project Business, and Electricity Retailing Business. Participating in the VPP environmental technology
verification program as the next growth strategy• Posted record-high profit for a 5th consecutive fiscal year in FY03/2020 with the Electricity Retailing Businessas a main driver of strong performance and raised the dividend. Reports healthy financial standing and highprofitability• FY03/2021 forecasts call for continued sales and profit increases with only minor impact from the COVID-19
outbreak outside of the Smart House Project Business. Vibrant start with operating income reaching 43.9% of
the full-year target in 1Q. Announced a dividend hike to commemorate the shift to listing on TSE-2. Focusing
on CSR too and ascended to TSE-1•

Results trends
Net sales (left)

（¥mn）

（¥mn）

Operating income (right)

20,000

2,300

2,500

2,106
16,000

2,000
1,400

12,000

1,500

1,018
8,000

15,489752

16,853

8,980

4,000
6,739

1,000

12,137

575

500

7,109

0

0
FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21 E

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

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02 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html█ Company outline
Comprehensive energy solutions company that provides all types ofelectricity from low to high voltage
1. Company outline
The Company has steadily grown through provision of energy solutions to customers for improvement of electric
power operational efficiency, facilities, and procurement cost with “energy creation, savings, and storage” as main
business areas. It currently operates the Energy Cost Solutions Business, Smart House Project Business, andElectricity Retailing Business. As a holding company, it formulates and promotes Group management strategies
and oversees management of business companies. Main Group companies are GR consulting, Inc., which provides
consulting on reduction of electricity costs for businesses, gremz power, Inc., which handles electricity retailing andintermediation and energy management system sales, and gremz solar, Inc., which sells household photovoltaic
systems, storage batteries, and other energy-related products and develops renewable energy.
The electricity market is likely to expand over the long term driven by full liberalization of electricity retailing. The
Group delivers a wide range of products and services related to energy that covers all areas from the low-voltage
electricity market that supplies power to ordinary households, small and mid-sized factories, and others (less than
50kW in contract power) to the high-voltage electricity market (more than 50kW) that supplies power to factories,
supermarkets, and buildings.
The Group has a management philosophy of “filling the world with inspiration and joy” and aims to realize a group ofcompanies that are always appreciated and given support in a changing environment and are capable of permanently
coexisting with society. It strives to remove information disparity, spread high value and contribute to building asociety that facilitates a prosperous and reassuring life.
2. Group strengths
Group strengths are “sales capabilities supported by an abundant customer base,” “robust profitability achieved via
differentiation from other companies,” and “market environment and growth opportunities.”
Regarding “sales capabilities supported by an abundant customer base,” the Group has a robust customer basewith approximately 49,500 low-voltage electricity customers (electronic circuit breaker), 14,000 low-voltage lighting
power customers (ordinary household solar power), and 2,300 high-voltage electricity customers (power agent) asof FY03/2020. It has an approximately 73% conversion rate from other power companies to its own Group when
making retail proposals thanks to cross-selling based on facility and procurement improvement proposals. It intends
to continue pursuing differentiation from other companies and increasing customer volume.

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03 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Company outline

Regarding “robust profitability achieved via differentiation from other companies,” the Group is capable of sustaining
stable earnings, even when electricity procurement prices rise sharply in response to seasonal factors such as in
the summer, because of its extensive retail sales to small and mid- sized factories with low load factor (percentageof average used electricity to peak contracted electricity volume). Low load factor means that the amount ofelectricity consumed versus contracted electricity volume is relatively small. With many customers in industries
and businesses that have low load factor, electricity procurement volume is curtailed even at times of upswing inelectricity procurement prices, and this makes it easier to secure profitability. In fact, the Company’s load factor
was 9.3% in FY03/2020, a considerably lower level than the 30–40% at other companies, and its operating income
margin climbed to 13.6%. The Group also participates in the VPP environmental technology verification programand hopes to harness test results to obtain new business opportunities, such as selling power storage batteries
to customers.
Regarding “market environment and growth opportunities,” the Company is capable of targeting rapid growth in theelectricity retailing business and expansion of storage battery sales by leveraging the market environment, whichboasts increasing earnings opportunities with the full liberalization of the electricity retailing and expansion in thenumber of users reaching the end of the purchasing period for FIT (a program that requires power companies topurchase electricity from solar power and other renewable energy sources at a fixed price).
3. History
Masaomi Tanaka, the Company’s current President and Chief Executive Officer, founded the Company on July 4,
2005. While the Company initially started by selling electronic circuit breakers, it began store sales of household
photovoltaic systems in April 2010, started selling LED lighting in December 2012, entered the energy intermediation
and began energy management system sales in December 2013, started solar power plant operations in March
2014, and entered the electricity retailing business in December 2016. It has steadily broadened its business scope
mainly around energy-related areas.
The Company switched to a holding company system in April 2011 accompanying the business expansion andadopted its current company name. While it initially listed on the JASDAQ Stock Exchange (now, TSE JASDAQ
Standard) in March 2009, it shifted to TSE-2 in June 2020 and ascended to TSE-1 in November 2020. The Company
had 346 consolidated employees as of March 31, 2020.

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Company outline

History
Date

Main historical events

July 2005

The Company was founded with a view towards reducing energy costs as well as environmental load. Started sales of electronic
circuit breakers.

July 2007

Started sales of fully electric appliances (EcoCute and induction heating cooking heaters).

March 2009

Listed on the JASDAQ Securities Exchange (later renamed TSE JASDAQ Standard).

April 2010

Started sales of photovoltaic systems.

April 2011

Renamed the company gremz, Inc. and established it as a holding company. Founded gremzsolar, Inc. and GR consulting, Inc.

December 2012

Founded GF lightec, Inc. Started sales of LED lighting systems.

December 2013

Concluded a comprehensive contract with ENERES Co., Ltd., which handles electricity management and other services, andstarted conducting energy intermediation and sales of energy management systems.

March 2014
September 2014
May 2015
February 2016

Started operating a solar power plant as a renewable energy development business.
Formed a capital alliance with ENERES Co., Ltd.
gremzsolar, Inc. began the operation of a solar power plant in Tsumagoi.
Renamed GF lightec, Inc. as gremz power, Inc. due to business reorganization.

April 2016

Separated the energy intermediation and energy management system sales business from GR consulting, Inc. and transferred it
to gremz power, Inc.

May 2016

gremzsolar, Inc. began the operation of a solar power plant in Futokoroyama.

November 2016

Registered gremz power, Inc. as an electricity retailing company.

December 2016

gremz power, Inc. entered the electricity retailing business.

May 2018

gremz power, Inc. started electricity retailing to high-voltage electricity customers.
Participated in an environmental technology verification program centered around VPP (virtual power plant) technology, as aresource aggregator.

June 2020

Changed Stock Market listing to the Second Section of Tokyo Stock Exchange (TSE-2)

November 2020

Ascended to the First Section of Tokyo Stock Exchange (TSE-1)

Source: Prepared by FISCO from the Company’s webpage and securities report█ Business description
Conducts business focused on energy-related products andservices
The Group has developed businesses focused on energy-related products and services. gremz is a rare comprehensive energy solutions company that provides solutions to customers for improvement of electric power operational
efficiency, facilities, and procurement cost covering the full range of electricity from low to high voltage.
Business segment results in FY03/2020 show the Energy Cost Solutions Business, which sells a variety of energy-efficient appliances, had ¥4,450mn in net sales (28.7% of the Company’s total) and ¥1,042mn in operating
income (37.7%), the Smart House Project Business, which sells storage batteries and household photovoltaic
systems, had ¥3,924mn in net sales (25.3%) and ¥359mn in operating income (13.0%), and the Electricity Retailing
Business, which engages in retail sales of electricity, had ¥7,115mn in net sales (46.0%) and ¥1,362mn in operating
income (49.3%). While the Electricity Retailing Business is a new business that the Company separated into anindependent division in FY03/2018, it has already grown into an important business that accounts for about half ofoverall operating income.

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05 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Business description

Net sales and operating income for FY3/20 by segment
Energy Cost Solutions Business

Smart House Project BusinessElectricity Retailing Business

28.7%

46.0%

Net sales (external)¥15,489mn
49.3%
perating income(internal)¥2,106mn

37.7%

13.0%
25.3%
Note: Composition of operating income was calculated prior to deducting Companywide costs
Source: Prepared by FISCO from the Company’s results briefing materials

1. Energy Cost Solutions Business
Mainly proposes energy cost reductions to corporations through subsidiaries GR consulting and gremz power
GR consulting provides consulting on electricity cost reductions to small and mid-sized businesses and otherlow-voltage electricity customers. Electricity cost reductions for low-voltage customers realize operational improvement by cutting fixed monthly basic electricity charges while ensuring sufficient electricity supply via proposals tochange the electricity contract type and install electronic circuit breakers. GR consulting sells electronic circuit
breakers through lease and credit and conducts replacement sales after the leasing period finishes. There isalso a rental option for customers who want to rent. Additionally, regarding facility improvement, it sells various
energy-efficient appliances, such as LED lighting, commercial air conditioners, and freezers. It conducts sales
activities nationwide from business sites in Tokyo, Osaka, and Nagoya.
Meanwhile, gremz power provides consulting services for electricity cost savings to high-voltage electricity customers. Specifically, it proposes energy intermediation by revisions to electricity procurement partners that improve
procurement terms and arranges power sales to realize cutbacks in electricity fees. Regarding operational efficiency
improvement, it sells energy management systems (EMS) that monitor electricity usage conditions. Furthermore, in
relation to facility improvement, it conducts cross-selling of LED lighting, commercial air conditioners and compressors, and other energy-efficient appliances.

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Business description

2. Smart House Project BusinessThis business improves facilities by selling energy-related products, such as household photovoltaic systems andstorage batteries, and develops renewable energy with subsidiary gremzsolar handling sales of a variety of products
to general consumers. For household photovoltaic systems and storage batteries, the Company handles products
from Choshu Industry Co., Ltd., Kyocera <6971>, Panasonic <6752>, and Omron <6645>, and the average sales
price per system is roughly ¥2mn. Sales activities consist of selling at event sites at Aeon Mall <8905> venues
and other large retail facilities where families gather and selling via introductions made by housing manufacturers
and other companies that are business partners. Additionally, the Company handles consignments of outsourced
projects, such as roof painting related to photovoltaic system installations. In the renewable energy development
business, it has recurring revenue sources from income generated by selling electricity from solar power plants(mainly megasolar sites owned in Gunma Prefecture and Shizuoka Prefecture). It is also a participant in the VPP
environmental technology verification program for operational improvement.
3. Electricity Retailing Businessgremz power was registered as an electricity retailing business in November 2016, and commenced operation in
December of the same year. Electricity Retailing Business involves selling electricity procured from an electric power
exchange that is operated by public interest incorporated organization Japan Electric Power Exchange (JEPX) as
an intermediary corporation, or electricity procured from power generating companies by mutual agreement to
consumers of low and high voltage electricity, and generating revenue from electricity fees obtained from customers
every month. As a means of procurement improvement, customers can purchase electricity at a price that iscomparatively cheaper than purchasing it from a general electric utility. Although gremz power initially sold exclusively
to consumers of low voltage electricity, the company has been expanding its sales targets to consumers of highvoltage electricity since May 2018.
Products and Services Handled by the Electricity Market and the Group

Source: From the Company’s results briefing materials

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07 18

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

gremz, Inc.

16-Mar.-2021

3150 Tokyo Stock Exchange First Section

https://www.gremz.co.jp/en/highlights.html█ Business trends
Reported sharply higher sales and profits in FY03/2020, 5thconsecutive fiscal year with record-high profit
1. FY03/2020 results overview
While the Japanese economy modestly recovered in FY03/2020 with improvements in employment and income
and a rebound in personal consumption, it faced difficult period-end conditions and prospects as a result of theconsumption tax hike’s impact on spending and setbacks in overall economic activity from the COVID-19 outbreak.
In this economic environment, the Group promoted improvements to customer’s operations through the Energy
Cost Solutions Business by consulting to lower base electricity fees; promoting equipment improvements for facilities through sales of energy-efficient appliances such as LED lighting, commercial air conditioners, transformers,
compressors; and promoting procurement improvements through energy intermediation aimed at lowering electricity
rates. In the Smart House Project Business, it supported facility improvement by selling household photovoltaic
systems, storage batteries, and other energy-related products. In the Electricity Retailing Business, it encouraged
procurement improvement with retail provision of electricity, from low to high voltage, to a wide range of customers.
In this way, the Group proposed electricity operation, facility, and procurement improvements to customers anddelivered various energy-related products and services.
Thanks to these activities, the Company reported sharply higher FY03/2020 consolidated results of ¥15,489mn
in net sales (+27.6% YoY), ¥2,106mn in operating income (+50.4%), ¥2,168mn in ordinary income (+49.7%), and¥1,483mn in profit attributable to owners of parent (+48.1%), increasing sales for a 15th consecutive fiscal year
since its founding and posting record-high profit for a 5th consecutive fiscal year. Operating income exceeded theinitial target announced on May 10, 2019 by 31.7%, thereby lifting the operating income margin from 11.5% in theprevious fiscal year to 13.6%.
FY3/20 consolidated income statement(¥mn)
FY3/19FY3/20

YoY

vs. targets

Results% of sales

Forecast

Results% of sales

YoYchange% change

YoYchangeNet sales

12,137100.0%

15,830

15,489100.0%

3,351

27.6%

-341

-2.2%

Operating income

1,400

11.5%

1,600

2,106

13.6%

705

50.4%

506

31.7%

Ordinary income

1,448

11.9%

1,633

2,168

14.0%

719

49.7%

534

32.7%

Profit attributable toowners of parent

1,001

8.3%

1,071

1,483

9.6%

481

48.1%

411

38.4%

% change

Note: Targets are period-start values disclosed on May 10, 2019
Source: Prepared by FISCO from the Company’s financial results

The Energy Cost Solutions Business promoted sales of commercial air conditioners, transformers, compressors,and other energy-efficient appliances. Segment FY03/2020 results were ¥4,450mn in net sales (+1.0% YoY) and¥1,042mn in profit (-18.6%). The segment income margin temporarily weakened due to shifting personnel to various
energy-efficient appliances sales in order to foster sales personnel. On the other hand, order backlog carryover
increased.

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

gremz, Inc.

16-Mar.-2021

3150 Tokyo Stock Exchange First Section

https://www.gremz.co.jp/en/highlights.html

Business trends

The Smart House Project Business aggressively promoted sales of storage batteries and household photovoltaic
systems utilizing tie-up sales methods, such as alliance sales with housing manufacturers and VPP initiatives. It
also boosted standalone sales of storage batteries by making proposals for consumption of self-generated power
at homes ahead of an anticipated increase in FIT projects reaching the end of the 10-year fixed-price purchasing
period for solar power generation. Segment FY03/2020 results were ¥3,924mn in net sales (+13.2% YoY) and¥359mn in profit (+19.9%).
The Electricity Retailing Business promoted retail sales of electricity to existing customers in the Energy Cost
Solutions Business and steadily increased sales owing to a high contract closure rate of about 73% that lifted
contract volume to about 34,000 customers by the end of March 2020. Furthermore, the segment income marginclimbed significantly in FY03/2020 on low electricity procurement prices in the market due to weaker electricity
demand related to weather factors, such as a lengthy rainy season and warm winter. Segment results were ¥7,115mn
in net sales (+66.8%) and ¥1,362mn in profit (+198.7%). The Electricity Retailing Business hence posted sharply
higher sales and profits, and its robust upside versus initial forecasts led to strong company performance.

Segment sales trends
Energy Cost Solutions

Smart House Project

Electricity Retailing（¥mn）
18,0001 5 , 489

16,00014,0001 2 , 137

12,000

7,115

10,0008 , 9 80

8,000

1,388

6,000

3,533

3,465

3,924

4,037

4,407

4,450

FY3/18

FY3/19FY3/20

4,265

4,000
2,000
0

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

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

gremz, Inc.

16-Mar.-2021

3150 Tokyo Stock Exchange First Section

https://www.gremz.co.jp/en/highlights.html

Business trends

Segment income trends
Energy Cost Solutions

Smart House Project

（¥mn）
3,000

Electricity Retailing

2 , 7 64

2,500

2 , 0 36
2,000

1 , 4 70
1,500

220

1,362

456
36

299
359

1,000
500

1,223

1,280

FY3/18

FY3/191,042

0
FY3/20Note: Segment income values are prior to deducting Companywide costs
Source: Prepared by FISCO from the Company’s financial results

Realized high profitability and sound finances
2. Financial condition and cash flow situation
Looking at the financial condition at the end of FY03/2020, current assets rose by ¥1,139mn versus the end of theprevious fiscal year on gains in cash and deposits and accounts receivable. Fixed assets increased by ¥571mn due
to improvements in investment securities along with lease and guarantee deposits. Total assets hence increased¥1,711mn to ¥8,638mn. In liabilities, current liabilities expanded by ¥422mn due to increases in income taxes
payable and accounts payable, while fixed liabilities dropped by ¥1mn. Total liabilities therefore rose by ¥421mn
to ¥3,504mn. Net assets improved by ¥1,290mn to ¥5,133mn, mainly due to an increase in profit attributable toowners of parent.
Given these trends, the Company’s capital ratio increased from 55.4% in the previous fiscal year to 59.4% at the endof FY03/2020, confirming very strong financial soundness. The results also lifted profitability with ROE improving from
27.4% to 33.1%. The Company’s results are well above averages for companies that listed on TSE-1 in FY03/2020,
a capital ratio of 30.91% and ROE of 6.57%, based on listed-company consolidated abbreviated financial statement
totals provided by Japan Exchange Group <8697>.

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Business trends

Consolidated balance sheet and management indicators(¥mn)
FY3/19FY3/20YoY change

5,277

6,417

1,139

(Cash and deposits)

3,490

4,176

685

(Accounts receivable)

1,163

1,545

381

1,649

2,221

571

Tangible fixed assets

1,127

1,081

-46

Intangible fixed assets

33

16

-16

Investments and other assets

488

1,123

634

Total assets

6,926

8,638

1,711

Current liabilities

2,237

2,660

422

Fixed liabilities

845

844

-1

1,250

1,188

-62

Total liabilities

3,083

3,504

421

Net assets

3,843

5,133

1,290

Liquidity ratio

235.9%

241.2%

Capital ratio

55.4%

59.4%

ROA (Ordinary income to total assets ratio)

22.0%

27.9%

ROE (Return on equity)

27.4%

33.1%

Current assets

Fixed assets(Interest-bearing debt)

Soundness

Profitability

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

Cash and cash equivalents increased ¥685mn YoY to ¥4,176mn at the end of FY03/2020.
Looking at cash flow trends in FY03/2020, funds obtained from operating activities totaled ¥1,600mn (comparedto ¥852mn in the previous fiscal year) mainly due to an increase of ¥2,165mn in net income before taxes and otheradjustments and ¥146mn in increase in notes and accounts payable, despite setbacks of ¥381mn in increase innotes and accounts receivable and ¥510mn in corporate tax and others.
Funds spent on investing activities totaled ¥660mn (compared to ¥113mn in the previous fiscal year). The main
outflow factors were ¥500mn in purchase of investment securities and ¥106mn in lease and guarantee deposits.
Funds spent on financing activities totaled ¥254mn (compared to ¥744mn in the previous fiscal year). This resulted
from ¥512mn in repayment of long-term loans payable and ¥191mn in dividend payouts, despite an increase of¥450mn in proceeds from long-term loans payable.
Cash flow statement(¥mn)
FY3/19FY3/20YoY change

Cash flow from operating activities

852

1,600

748

Cash flow from investing activities

-113

-660

-547

Cash flow from financing activities

-744

-254

490

Ending cash & cash equivalent balance

3,490

4,176

685

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

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

11 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html█ Outlook
Expecting higher sales and profits for an 8th consecutive fiscal year
in FY03/2021 with limited impact from the COVID-19 outbreak
1. FY03/2021 forecasts
While the Company did not provide FY03/2021 forecasts at the announcement of FY03/2020 results due to difficulty
rationally calculating the impact of the COVID-19 outbreak, it disclosed consolidated forecasts on June 1, 2020 using
an assumption of stagnation in economic activities related to the Group lasting through June in light of a pick-up in
the economy following removal of the declared state of emergency.
The Company’s FY03/2021 forecasts target ¥16,853mn in net sales (+8.8% YoY), ¥2,300mn in operating income(+9.2%), ¥2,318mn in ordinary income (+6.9%), and ¥1,546mn in profit attributable to owners of parent (+4.3%).
Reaching these targets means delivering higher sales and profits for an 8th consecutive fiscal year and setting
record-high operating income for a 6th consecutive fiscal year.
At the segment level, while impact from the COVID-19 outbreak should be negligible on the Energy Cost Solutions
Business and Electricity Retailing Business, the Company expects the Smart House Project Business to confront
substantial pressure due to a decline in the number of sales events at major shopping centers through June andthen exhibit gradual recovery from July and a return to normal during 3Q. For segment profit, it projects a 42.6%
increase in Energy Cost Solutions Business, including a rebound from the previous fiscal year’s decline, while inElectricity Retailing Business, it has conservatively factored in increases in electricity procurement prices stemmingfrom weather factors, and projects a modest decrease of 10.5% YoY. It also forecasts a 21.8% decrease in the
Smart House Project Business, which relies on event sales to generate 70–80% of segment income.
FY3/21 consolidated results outlook(¥mn)
FY3/20FY3/21YoY

Results% of sales

Forecast% of sales

YoY change% change

Net sales

15,489100.0%

16,853100.0%

1,364

8.8%

Operating income

2,106

13.6%

2,300

13.6%

193

9.2%

Ordinary income

2,168

14.0%

2,318

13.8%

149

6.9%

Profit attributable toowners of parent

1,483

9.6%

1,546

9.2%

63

4.3%

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

Breaking down the Company’s consolidated operating income, recurring revenue (revenue other than non-recuring
revenue from direct sales) rose from 59.0% in FY03/2018 to 98.4% in FY03/2020 due to the expansion of theelectricity retailing business. An increase in the share of stable profits implies low risk of profits missing forecasts.

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

12 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Outlook

Composition of consolidated operating income
Direct sales (left)
Electricity sales (left)
Circuit breaker rentals (left)
Recurring revenue (right)
（¥mn）
2,500

Energy intermediation (left)
Replacement sales (left)
Electricity retailing (left)
98.4%

85.4%

2,000
59.0%
1,500

2,300

100.0%

87.8%

80.0%

2,106

1,400
60.0%

1,018

1,000

40.0%

500

20.0%

0

0.0%
FY3/18

FY3/19FY3/20FY3/21 E

Note: Direct sales generate flow profits, and other businesses provide recurring profits
Source: Prepared by FISCO from the Company’s results briefing materials

Continuing growth with the Electricity Retailing Business as thedriver and also pursuing new growth strategies
2. Strategies by business segment
The Energy Cost Solutions Business delivers total solutions for improving operations, facilities, and procurement tolow-voltage and high-voltage electricity customers. This involves sales of energy management systems and electronic
circuit breakers as operational improvement, sales of LED lighting, compressors, transformers, commercial air
conditioners, freezers, and other energy-efficient appliances as facility improvement, and energy intermediation as
procurement improvement. This business acquires new customers by consulting to lower base electricity fees andsales of LED lighting and other energy-efficient appliances, and resulting expansion of the customer base drives
gains in recurring revenue from replacement sales, energy intermediation fees, and electronic circuit breaker rental
income and contributes to cross-selling of commercial air conditioners, transformers, compressors, and otherenergy-efficient appliances.
The segment intends to continue promoting sales of energy efficient appliances and expanding sales of electronic
circuit breakers that improve operations in FY03/2021 amid firm demand for reducing electricity costs. It is also
starting sales of photo-voltaic systems to business operators as a new offering. In products and services, it plans
to focus on new customer development with operation improvement equipment and reinforcement of cross-selling
activity. Based on these efforts, it targets ¥4,657mn in net sales (+4.7% YoY) and ¥1,486mn in operating income(+42.6%) for the segment. The Company also does not anticipate much impact from the COVID-19 outbreakbecause customers exhibit strong demand for cost-saving products regardless of economic trends and it uses asales format of setting up visits by coordinating individually with customers.

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13 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Outlook

Sales trends by products and services inthe Energy Cost Solutions Business
Operational efficiency products
Procurement efficiency products

（¥mn）
5,000

4 , 0 37

3,000

2,026

2,402

203

208

202

180

4 , 6 57

4 , 4 50

4 , 4 07

4,000

Facility efficiency products

2,821
2,948

2,000

1,000

1,785

1,771

FY3/18

FY3/19

1,265

1,608

0
FY3/20FY3/21 E

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

The Electricity Retailing Business sells electricity procured from JEPX and power generating companies at inexpensive pricing to customers and receives electricity charges from customers as the income source. The Company
aims to expand income (recurring revenue) in this business by promoting sales of low-priced electricity utilizing its
base of low-voltage electricity customers that have a low load factor (percentage of average electricity usage to
peak contract electricity) acquired in the Energy Cost Solutions Business and leverage this as the driver of future
growth by the overall Group.
The Group has a very high contract closure rate because it addresses customers that have actually realized savingsin electricity costs via consulting on electricity cost reduction. Due to targeting businesses with low load factor as
well, it seeks differentiation in profitability versus other electricity retailing businesses. Furthermore, the Company
aims to expand income opportunities by broadening the scope of electricity retail supply to all electricity users from
low to high voltage.
The segment conducts cross-selling to the existing customer base of 49,500, which mainly utilizes electronic circuit
breakers, and this aspect is fueling differentiation with other companies. Since factories use different voltages topower machinery and lighting, the segment aims to acquire 99,000 contracts, or twice the number of customers.
The Group has reached a 73% conversion rate from other energy companies to itself and only has 0.4% monthly
average cancellation rate. With a customer base that has many businesses with low load factor (9.3% in FY3/20), it
secures profitability even during upswings in electricity procurement prices driven by seasonal factors, particularly
the summer, and hence is capable of sustaining high profitability.
Segment targets in FY03/2021 are 40,000 contracts (+17.2% YoY), ¥8,523mn in net sales (+19.8%), and ¥1,219mn
in operating income (-10.5%). Forecasts project weaker profit assuming weather conditions on par with a normal
year in the earnings outlook, excluding impacts from a lengthy rainy season and warm winter that led to higher
profits in FY03/2020.

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14 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

OutlookContract volume and results trends in the Electricity Retailing BusinessNet sales (left)

Operating income (left)

Contract base (right)(Contracts)（¥mn）
10,00050,00040,0008,000

40,00034,1366,000

30,00025,056

8,523
4,000
4,265

2,000
0

1,388

1,362

1,219

10,000456

36

FY3/1820,0007,115

12,4060

FY3/19FY3/20FY3/21 E

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

The Smart House Project Business promotes bundled sales of household photovoltaic systems and storage batteries
and standalone sales of storage batteries and also conducts tie-up sales of energy-related products throughbusiness alliances with various partners. Virtual power plant (VPP) business is likely to ramp up from 2021, and thisshould drive increased use of storage batteries. The Company intends to bolster storage battery sales by promoting
telemarketing, alliance sales, and VPP utilization.
In the solar power market, the number of users reaching the end of the fixed-price purchasing period (for excess
power) of the FIT payment program is likely to increase following approximately 500,000 cases in FY03/2020. Since
expiration eliminates the ability to sell power generated by solar power facilities at high prices received up to now
and increases the appeal of consuming self-generated power, demand for storage batteries should rise. With thisequipment, users can maximize benefits from adopting an ideal combination of self-generated power consumption
and power sales depending on their own electricity demand format. The Company plans to expand storage battery
sales by participating in the VPP environmental technology verification program and also wants to realize the new
business opportunity of purchasing surplus power from users.
In FY03/2021, the Company expects ¥3,672mn in net sales (-6.4%), and ¥281mn in operating income (-21.8%),
anticipating a decline in the number of sales events due to the temporary suspension of major shopping centerscaused by the state of emergency declaration accompanying the COVID-19 outbreak through June, and assuming
the segment will exhibit gradual recovery from July and a return to normal during 3Q.

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15 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Outlook

Sales trends in the Smart House Products Business by
product and income source
Photovoltaic systems
Storage batteries

Residential appliances
Electricity sales（¥mn）
3 , 924140

4,000
3 , 533143

3,500

3 , 465140

3 , 672
141

3,000
1,374

2,500

2,551

1,867

2,000

2,521

349

1,500

198
208

1,000

1,655

500

1,247

149

999

854

FY3/20FY3/21 E

0
FY3/18

FY3/19Source: Prepared by FISCO from the Company’s results briefing materials

3. New growth strategy
Consolidated subsidiary gremzsolar announced on May 29, 2020 that it will participate in the “environmental
technology verification program for building a virtual power plant (VPP) utilizing customer-side energy resources”
implemented by METI. The project aims to build a framework to consolidate and control solar power, storage
batteries, and other energy resources distributed at customers for use in a manner comparable to a single power
plant (virtual power plant) and realize supply and adjustment capabilities related to electricity supply and demand inan era of separated power generation and transmission segments and high-volume deployment of renewable energy.
The Company’s main purpose in joining the environmental technology verification program is acquiring a storage
battery management technology base and collecting actual control data, though it intends to harness test results for
new business opportunities, such as strengthening power storage battery sales (expansion of non-recurring revenue)
and delivering storage battery management services and buying surplus power (creation of new recurring revenue).
It has participated in the environmental technology verification program since FY03/2019, and FY03/2021 will be
the project’s final fiscal year. The Company is currently considering market entry ahead of the establishment of a
supply-demand adjustment market (being launched to gain approval of broad regional procurement and operationof renewable energy across areas) in 2021.

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

16 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Outlook

Virtual power plants (VPP) general overview

Transmission and distribution operator

Retail electricity supplier

Renewable energy power producer

Consumers

Power adjustment
Stable power quality

Prevent imbalances
Provide supply capacity

Avoid output limits

Reduce electricity cost
Effective use of renewables

Services offered through VPP (examples)

Aggregation
coordinator

Non-utility generation facility

Resource aggregator

Photovoltaic power generation

Resource aggregator

Lighting
Storage batteries
Resource aggregator

Electric vehicles

Air conditioners

Production facilities

Heat pumps
Water heaters

Cogeneration systems(Fuel cell, etc.)

Electricity/Information flow

Source: From METI’s Agency for Natural Resources & Energy

The Company plans to continue increasing sales and profits through stable income from the Energy Cost Solutions
Business and Smart House Project Business and expansion of Electricity Retailing Business income. While it normally
updated the medium-term management plan and announced a new medium-term management plan annually up
to now, the Company did not make this announcement in FY03/2021 due to uncertainty related to the COVID-19
outbreak. However, we think official disclosure of the medium-term management plan is meaningful as it clarifies
the Company’s management policies and enables investors and employees to share a future vision.

█ Shareholder return policy
Plans to raise the dividend in FY03/2021 as a commemoration of theTSE-2 listing
The Company pays dividends as a shareholder return measure and has a basic policy related to profit distributionof stably returning profits to shareholders after comprehensive assessment of ensuring sufficient profit retention tobolster the business foundation and enhance enterprise value and allocate earnings to shareholders in accordingwith income trends. It implements stock splits too for the purpose of increasing the liquidity of its shares andbroadening the investor segment through reduction of the value per investment unit. The Company conducted a
1-to-2 stock split on September 1, 2020 in FY03/2021. Furthermore, it has paid interim dividends since introducing
them in FY03/2018.

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

17 18

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

gremz, Inc.
3150 Tokyo Stock Exchange First Section

16-Mar.-2021
https://www.gremz.co.jp/en/highlights.html

Shareholder return policy

In FY03/2021, the Company targeted a dividend on par with the previous fiscal year at ¥12.0 (on a post-split basis)
with a ¥2.5 interim dividend and ¥9.5 period-end dividend. However, it decided to include a ¥2.5 commemorative
dividend in the interim dividend on July 31, 2020 in commemoration of switching its listing from the TSE JASDAQ
Standard market to TSE-2 on June 24, 2020. As a result, dividends are expected to rise for a 5th consecutive fiscal
year since FY03/2017. It also works out to a 21.2% dividend payout ratio that clears the Company’s 20% goal. After
that, the Company ascended from TSE-2 to TSE-1 on November 24, 2020.
Meanwhile, the Group also proactively promotes corporate social responsibility (CSR). Its fundamental policy callsfor enhancement of corporate value and provision of solutions to issues confronting society and the environmentand contribution to sustainable advances in society by constantly sustaining provision of products and services thatmeet societal needs and creating new value. Products and services handled by the Group help reduce burden on the
global environment. The Group supports Yokohama FC, a J1 professional soccer team, as an official club partner.
Its announcement on July 1, 2020 of a decision to launch Yokohama FC Denki, an electricity fee plan that assists
the club, and allocate a portion of collected electricity fees to training environment facilities is a type of CSR as well.
A growing number of institutional investments are making ESG investments (investing in stocks that emphasizes
the environment, social, and governance aspects) in Japan too in recent years. We think the Company’s stock also
deserves attention from this perspective.

Dividend per share and dividend payout ratio
Interim dividend (left)
（¥）
16.0

Period-end dividend (left)（%）

Dividend payout ratio (right)
21.2
20.7

14.0

19.0

19.6

18.3

12.0
10.0

21.0
1 4 .518.0

1 2 .0

14.3

15.0

8.5

8.0

9.5
12.0

6.3

9.5

6.0

9.0

6.0
3.8

4.0
2.0

24.0

6.0
5.0

4.2
2.5

2.5

2.5

2.5

FY3/18

FY3/19FY3/20

0.0

3.0
0.0

FY3/16

FY3/17

FY3/21 E

Note: Retroactively revised dividends on a post-split basis, taking into account the following stock splits: 1-to-1.5 sharesin October 2017, 1-to-2 shares in August 2018, and 1-to-2 shares in September 2020. The FY3/21 interim dividend
includes a ¥2.5 commemorative dividend for the move to TSE-2.
Source: Prepared by FISCO from the Company’s financial results

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

18 18

Disclaimer
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◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp