Quick Look

Sessa Investment Research

June 4, 2024

GEECHS｜7060

Initiation

TSE Standard

Indispensable company for solving Japan’s shortage of IT
human resources
Summary• Company Overview: Japan is expected to face a shortfall of up 790,000 IT workers in
2030. GEECHS views this shortage of IT human resources as a social issue that theGroup should solve. The Company’s current core business is its IT freelance matchingbusiness (Japan) that matches companies that want to outsource work to outside
workers with IT freelancers who want to do that work, and the Company receives amatching fee as the IT freelancer sharing agent. The business boasts three strengths:(1) knowhow to quickly make the best match, (2) high unit price of orders, and (3)ability to attract and retain highly skilled IT freelancers with generous support.
• GEECHS has used the cashflow from its IT freelance matching business (Japan) to
diversify both business risk and its effective use of human capital. The company
established an IT study abroad business and commissioned offshore development
services based in the Philippines, and acquired a human resources service company
in Australia, aiming to expand its cross-border IT freelance matching business andgenerate synergies. It appears that having completed its upfront investment phase,
the Company will start to generate profit.
• Earnings Trend: GEECHS posted its largest net loss in FY2024/3 for several reasons,such as weaker-than-expected performance of its Australian business and Gamebusiness. It is SIR’s opinion that FY2024/3 was a difficult year for the Company inwhich it needed to fully resolve various problems in order to generate future
growth—in other words, resolutely select and concentrate on particularly businesses
in anticipation of unforeseen conditions. This included making several toughmanagerial judgements, such as revising downward earnings and dividend forecasts
and withdrawing its medium-term management plan during the fiscal year andrecording impairment losses in Australia business and selling off a game business at
the end of the fiscal year. For FY2025/3, the Company expects that it will see net
sales growth of 11%, EBITDA growth of 85%, and a turnaround in net profit, due tothe steady expansion of its IT freelance matching business (Japan) and elimination of
unprofitable businesses. Having set a target dividend payout ratio of 30%, theCompany will likely continue to pay a dividend per-share of ¥10. If it is able to do that,
it is highly likely to achieve an ROE in the 10% range.
• Medium-term growth strategy: GEECHS tries to evolve into a comprehensive IT
solution provider with a growth strategy to generate greater orders for its IT
freelancers by bringing IT consulting, PMO, and development functions, which are
farther upstream than its current business domains, in-house through M&As and theproviding various IT solutions to customer companies.
¥mn, %

Sales

YoY

YoY

Operating YoY
Profit- N.M.

1,133

EBITDA

Ordinary
ProfitYoY Net profit YoY

EPS(¥) DPS(¥)

59.1

54.1

67.18

10.00

244 -65.4

23.20

10.00

-1,473 N.M. -142.75

10.00

2022/3 C

14,340 N.M.

2023/3 C

15,99711.6

651 N.M.

589 -48.0

567 -50.02024/3 C

23,73948.4

362 -44.4

90 -84.6

82 -85.52025/3 CE

26,30010.8

670

550 505.3

545 560.7

85.0

53.5

1,135

705

336 N.M.

32.54

Hiddenassets

Focus Point• Largest company in Japan that
handles only freelancers
specializing in IT engineers.
• With the structural tailwind of a
growing shortage of IT engineers
every year, the Company's
business performance can becalculated to a certain extent.
• Looking forward to the midterm management plan tofurther accelerate growth.

Key Indicators
Share price (5/22)
YH (24/4/10)
YL (24/3/11)
10YH (19/4/2)
10YL (24/3/1)
Shrs out. (1K shrs)
Mkt cap (¥ mn)
Equity ratio (23/9)
FY2024/3 P/B (act)
FY2025/3 P/E (CE)FY2024/3 ROE (act)
FY2025/3 DY (CE)

466
567
440
2,715
440
10,326
4,812
39.2%
1.71x
14.3x
-41.5%
2.15%

Daily Stock Price Chart

Source: Trading view

Kenichi Sugimoto, Analyst
research@sessapartners.co.jp

10.00

Source: Compiled by SIR from the Company IR material. *EBITDA: Operating profit + Depreciation + Amortization of goodwill +Stock-based compensation expenses

This report was prepared by Sessa Partners on behalf of the subject company. Please refer to the legal disclaimer at the end for details.
Quick Look Reports are released every other quarter to follow earnings.

1

GEECHS｜7060

Sessa Investment Research• Share price insights: Despite earnings having bottomed in the previous fiscal year andthe outlook for a firm recovery in earnings this fiscal year, GEECHS’s shares are tradedat historical lowest level. It is rare among IT-related stock to have a calculable dividend
yield, with its FY2025/3 forward PER of 14x and EV/EBITDA of less than 4x. Therefore,
from the perspective of single-year fundamental valuation, it is hard to describe it asanything other than an "unprecedented value.“ SIR thinks that if the Company’s midterm management plan, which is likely to be released during the current fiscal year,
clearly indicates the impact that a "shifting to upstream domains" would have on
earnings, this could serve as an expected catalyst for the delayed recovery in the
Company’s share price.

2

GEECHS｜7060
Company
Overview* The Company defines a“freelancer” as “a sociallyindependent sole-proprietorthat earns income byproviding their specializedskills, not being employed bya particular company ororganization.”
Therefore, IT workers who
do side jobs while working asa regular employee of acompany are not within thescope of the Company’s
services.

* “Survey on the Latest Trends
and Future Estimates of IT
Human Resources” released by
Ministry of Economy, Trade andIndustry in June 2016

https://www.meti.go.jp/shingikai/economy/daiyoji_san
gyo_skill/pdf/001_s02_00.p
df

Sessa Investment Research Indispensable company for solving Japan’s shortage of IT human resources
GEECHS Inc.’s current core business is its IT freelance matching business (Japan) (1),which matches companies that want to outsource work to outside workers with IT
freelancers* who want to do that work as the IT freelancer sharing agent. The Company
handles commissioned coding projects, which require the largest number of man-hours for
system development projects, from customer companies and subcontracts the work to IT
freelancers through its project search website geechs job (https://geechs-job.com/). Aftertaking a certain percentage (take rate) of the outsourcing fee paid by customer companies
as an agent fee, the Company pays the remaining amount to IT freelancers as work
compensation. This agent fee is the actual top line of the Company's profit and loss for theperiod. In January 2023, the Company acquired an Australian human resources service
provider and used that company to launch its IT freelance matching business (Overseas) (2),which is similar to the one in Japan. The Company also operates several other business. The
Seed Tech Business (3) is responsible for providing the SaaS-type DX/IT human resource
development service Sodatech and training DX/IT human resources through the IT study
abroad Seed Tech School on Cebu Island (Philippines), and offshore development. The xTech business, which is grouped in “other businesses” (4), provides digital marketing
services focused on the sports domain. In March 2024, as the Company sold G2 Studios,which operated a game business, the Company will have the above four business segmentsfrom FY2025/3.
Touting a grand vision of “Make the biggest impression in the 21st century”, the Groupaims to provide continual success to customers through the services it provides and to usethat success to create a strong impression. The Company views the shortage of IT humanresources as a social issue that the Group should solve. According to the Ministry of
Economy, Trade, and Industry’s IT demand gap forecasts,* Japan is expected to face its
largest shortage of IT human resources, 790,000 workers, in 2030, and developing andsecuring IT human resources is an issue for not only society in general but also corporate
managers who want to provide desirable services and products.
Recognizing this, the following mission is touted : “GEECHS supports the work styles ofIT freelancers, sharing their skills and experiences with companies that face a shortage ofIT human resources. GEECHS also continues to provide globally-oriented businesses byutilizing foreign IT freelancers overseas, develops IT freelancers from scratch regardlessof whether they work for a corporation or for themselves, creating IT human resourcesfrom within organizations through reskilling, and provides an environment that will
increase the number of people who wish to build a career as an IT freelancer in Japan. In
such way, GEECHS contributes greatly to the future of Japanese society.”

Source: Excerpt from the Company IR material.

3

GEECHS｜7060

Sessa Investment Research History: Developed through the determination of the well experienced CEO

Segment
Information
Segment

In the emerging Internet industry in Japan, workers began changing firms from the early
2000s as few companies offered lifetime employment. The Company’s Representative
Director and President Naruhito Sonehara quickly picked up on the trend that it is better forskilled IT engineers to accept work individually as freelancers, and in August 2007, heestablished the company Vein Carry Japan Inc., which operated an IT human resourcesbusiness. In April 2009, he acquired all the shares of the company through an MBO and thenchanged its name to the current name GEECHS Inc. in October 2013. The Company debutedon the Tokyo Stock Exchange (TSE)’s MOTHERS Market in March 2019, and then moved to
the TSE’s first section in April 2020. It subsequently moved from the Prime Market to theStandard Market in October 2023.
The Company diversified its business to diversity business risk and make effective use ofhuman assets. In February 2012, the Company merged with the game development
company BRAHMaaS Japan Inc., which Mr. Sonehara owned on his own, and launched agame business (G2 Studios Inc). With the founding of the IT human resources development
company Seed Tech, Inc., in January 2021, the Company launched an IT study abroadbusiness on Cebu Island (Philippines), and a commissioned offshore development businessbased in the same area in November of the following year. The Company then launched its
IT freelance matching business (Overseas) by acquiring the Australian human resources
service company Launch Group Holding Pty Ltd. for about ¥1.7 bn and transforming thecompany into a wholly-owned subsidiary in January 2023. However, the Company sold off
all its holdings in G2 Studios for ¥844 mn in March 2023 and withdrew from the gamebusiness, which remained unprofitable, and the G2 was removed from the scope of
consolidation starting in FY2025/3. The almost 250 employees of G2 Studios were alsotransferred, reducing the number of GEECH’s employees from 444 at the end of March2023 to 268 as of the end of March 2024.
Business(¥mn)

2021/32022/32023/32024/32025/3 CE

Sales

1,444*

10,767

12,76314,08915,800

OP
OPM

823

997
9.3%

1,060
8.3%

1,144
8.1%

1,280
8.1%

Sales

-

-

-

7,162

10,000

OP
OPM
Sales
OP

-

-

-

104
-16

116
-27

176
-32

-135
-1.9%
282
-23

0
0.0%
400
50

OPM

-15.1%-23.1%-18.0%

-8.2%

12.5%

Commissioned gamedevelopment and game title
operation business

Sales
OP

1,617
270

3,154
584

2,896
121

2,111
-357

-

OPM

16.7%

18.5%

4.2%

-16.9%

Marketing video production
for golf club manufacturers,
etc.

Sales
OP

266
-12

304
15

183
40

128
4

100
0

OPM

-4.6%

4.9%

21.6%

3.4%

0.0%

Sales
OP
OPM

3,428
738

14,3401,134
7.9%

15,998589
3.7%

23,74091
0.4%

26,300550
2.1%

IT Freelance
Matching Business(Japan)IT freelancer and customer
company matching businessin Japan

IT Freelance
Matching Business(Overseas)

IT freelancer and customer
company matching businessin Australia

Seed Techhuman resources
development tool sales, IT
study abroad program, andoffshore development

G2 Studios(Former GameBusiness until
2023/3)Other(Former x-TechBusiness until
2023/3)

Total

Source: Compiled by SIR from the Company IR material.
Note: Applied Accounting Standard for Revenue Recognition and other standards starting in FY2023/3. Figures for FY22/3 have been revised to reflect
the retroactive application of these standards. Figures for FY21/3 have not been revised to reflect the retroactive application of these standards.

4

GEECHS｜7060
GEECHS’s
Three Strength* Calculated using IT
freelancer’s average monthly
compensation (including
taxes) from projects obtained
through geechs job andassuming the freelancer isengaged for 12 months.

Select by skills

Source: the Company geechs job

Sessa Investment Research Strength 1: Knowhow to conduct quick and relevant matchingThrough its core IT freelance matching business (Japan), GEECHS helps match companies
who want to outsource work to independent IT workers with IT freelancers looking for work
via its project information search website geechs job. IT freelances can register for free withgeechs job at first. As of May 2024, there were more than 5,600 available projects throughgeechs job. Furthermore, the website states that about 3,550 companies have worked with
the Company (as of September 2023), and that the average annual income* for freelancers
working on projects through geechs jobs was more than ¥8.3 mn. When searching for
projects, freelancers can narrow down results selecting conditions, such as the skills listed to
the left, requirements, location, position, and key words.
(1) After a freelancer signs up, one of the Company’s dedicated career representatives
contacts the application. (2) Following a 90-minute individual explanation of the Company’s
services, the applicant is asked detailed questions about their previous work while theirresume and skills are checked. The applicant is also asked about such points as the work
they want to do and desired unit price of order and provided advice on how to write aresume and other points. Although this process is very time-and-effort-consuming, it can beargued that it is the most important process for creating future asset value for the Company
by establishing win-win trust between the representative and applicant. (3) Requested
projects from customer companies and IT freelancer information are recorded in the inhouse system ROOT, and then compiled into a database. After system-based matching, therepresentative informs registered freelancers of projects that meet their desires andprojects that could further develop their careers using their own judgment and thenprovides advice regarding key points when answering questions that may come up in thejob interview with each customer so that the applicant can properly communicate theirwork history. (4) On the day of the job interview, the representative accompanies theapplicant and helps communicate their work history and skills and draw out the project
details from the customer. (5) If the applicant wins the order following post-interview
contract negotiations, the representative handles the individual contract for each project.
This is when the project is official accepted. (6) On the first day that the freelancer joins the
project, the dedicated representative accompanies the person to the site, and after work
begins, a dedicated follow-up staff member will regularly monitor and support the situation.
The Company’s website boasts that after receiving a request from a customer company, ittakes as little as one business day to match an IT freelancer who can immediately makecontributions.

Sign upIndividual
explanation

Introduce
projects

Job interview

Successful
negotiation

After support

Source: the Company geechs job

 Strength 2: High unit price of orders attracts highly skilled IT freelancers
GEECHS’s main target customers are growing IT companies with a focus on internet
businesses (Ad tech, med tech, fin tech, real estate tech, HR tech, EC, ed tech, games,
health tech, and various types of SaaS), and IT companies (various business systems, inhouse operation systems).
The Company says that its customers are located not only in the Greater Tokyo , but also
include many IT ventures and emerging companies in regional urban areas due to the
spread of remote work.
5

GEECHS｜7060

Sessa Investment Research

GEECHS pays IT freelancers compensation that is equal to or greater than that of fulltime employees because it handles many medium-to-high-priced projects that require a
medium to high skill level (web-related projects, projects that require AI language
programming, etc.). The average unit price of orders in FY2024/3 was ¥804,000 per manmonth, which translates into an average annual income for freelancers working on
projects obtained through the Company of more than ¥8.30 mn.
With mid- to high-priced projects as an incentive, the average engagement duration forthe company's IT freelancers was 17.8 months (for FY2024/3), which is relatively long. The
contract that the Company concludes with IT freelancers is a quasi-mandate contract.
With a quasi-mandate contract, work hours are managed by the customer company.
Customer companies satisfied with the work of the freelancer place addition orders, andthe more an IT freelancer is satisfied with their treatment by the customer company, thelonger they can work. This also leads to creating asset value for the Company.
GEECHS’s business model differs from a crowd-sourcing model. First of all, the Company’s
process for matching customer companies with IT freelancers is “closed” in the sense it
does not use an “open matching platform” where customer companies and IT freelancers
directly place and receive orders between themselves, which a crowd-sourcing model isbased on. It also differs in terms of differentiating between full-time and part-timeregistered freelancers, attributes of customer companies and registered freelancers, unit
price of orders, and size of compensation. The crowd-sourcing model that competitors inthe same industry use is based on matching for relatively low-skill, low-priced projects, suchas diverse single orders for design creation, that freelancers can undertake in their free time,
whether they are working as a main job or a side job. The most common type of contract
for crowd-sourcing model is the contract for work, in which compensation is paid when thework is completed and requires strong perseverance. The Company, however, uses a quasimandate contract, in which compensation proportional to performance can be requested
even if results fall short of expectations as long as operations are properly conducted.
Therefore, IT freelancers who want a stable income avoid crowd-sourcing in which there isa single contract period and value the connection with the Company, which provides longterm continuing contracts.

Differences from Similar Businesses

Developing a platform specifically for mid- to high-spec, professional IT freelancers
GEECHS

Crowdsourcing-model

IT Engineers Dispatch-model

Registrant

IT freelancers (main job)

Freelancers (side/main job), and others

Dispatched workers

Main clients

Growth companies in IT field

Medium-sized and large companies

Major system integrationcompanies

Type of contract

Quasi contract

Service contract

Worker dispatch contract

Pay basis

Per hours worked/month

Per deliverables

Per hourContract term

From 1, 3 or 6 months and longer Based on project

Main type of work (projects)

Internet service development

Wide variety of low-cost projects,
such as design production

Employment relationship

None

None

From one month• Managing legacy systems• Developing work systems
Employment relationship withtemping agency

Source: the Company IR material

 Strength 3: Retains IT freelances with generous support
Another strength of GEECHS is that each IT freelancer has a support team that generally
consists of three people. Because freelance engineers do not belong to any organization, theywant someone to support them. For example, many freelancers do not know their fair market
value if they directly obtain work as an individual. The Company also functions as a project
mentor and provides appropriate career development advice based on perspectives formarket trends through its career advisers. This creates a system to objectively communicate
freelancer’s market value, which is known within the freelancer community.
6

GEECHS｜7060

Sessa Investment Research

GEECHS also provides IT freelancers with the benefit program Frinove to reduce theuncertainty of working as an IT freelancer. The program includes 54 services, such as seminars
on how to file tax returns, discounts on accounting software, support via various online
learning services, discounts for medical checkups and health screenings, special offers on
English study abroad programs, special benefits for marriage and other life events, discounts
on mortgage administration fees, affiliated credit cards and other benefits, and benefits to
support learning of AI technology.
By improving engagement with IT freelancers in this way, GEECHS retains IT freelancers
through strong continuing partnerships, creating a win-win-win relationship of trust
between customer companies, the Company, and IT freelancers, an asset that differentiates
the Company. This makes it possible for the Company to not only stabilize but also expand
its business.
On the other hand, it will probably be necessary for the Company to increase its support
staff proportionally to the increase in the number of IT freelancers. This is likely a necessary
labor cost as it expands its scope of business, and unless the Company can skillfully control
costs, its profitability may decline. How the company balances this will likely be important.

 Attributes of IT freelancers registered with the Company
GEECHS has created a database on its in-house system ROOT that scores such factors as
talent, skills, and experience as an IT freelancer, and age. The Company stresses the abilityof its ready-to-contribute IT engineers. For example, IT freelancers who have only learned a
programming language but lack practical experience do not meet the qualifications toregister.
About 70% of GEECHS’s registered IT freelancers are 30-40 years old, but there has recently
been a trend toward younger people registering, including an increase in people in their 20s.
This is probably because of the times when young people are attracted to the work style of IT
freelancers who can earn high incomes depending on their actual abilities regardless of age. A
breakdown of skills reveals that more than 60% of the Company’s registered freelancers are
Web-related engineers, and 10% are skilled in PM or architecture, which is followed byfreelancers with skills related to infrastructure, smartphone apps, and creative work.
Each year more than 1,000 people are newly registered as official IT freelancers after
completing the individual explanatory meeting (in fact, more than 2,000 apply to register
online each year). In FY2024/3, that number reached 1,449 people, surpassing the 1,325 forthe previous fiscal year. There are more than 20,000 registered IT freelancers in the database(as of March 31, 2023). However, this number includes engineers who have already stopped
working as IT engineers, and the Company estimates that about 7,000 active IT engineers
have newly registered over the past seven years.
* Introduced in April 2023,
GEECHS DIRECT is freelancer
search–type platform service
that makes it possible forcompanies to directly search
for IT freelancers on the
GEECHS database. Companies
pay IT freelancers a monthly
commissioned work fee and a
uniform lump-sum ¥500,000
as a performance fee when acontract is concluded.

 Communicating reasons GEECHS is selected to potential customer companies
In addition to proposing to potential customer companies who are looking for IT freelancers
that they not hire people when they do not have enough workers but make use of thenumber of engineers they need with the necessary skills for the necessary time, GEECHS
strongly communicates “four reasons that GEECHS (not other companies) is selected.” Thereasons are that the Company (1) can introduce ready-to-contribute engineers in as little as
one business day, (2) offers reasonable proposals based on a strong understanding of thecustomer company, (3) provides peace of mind even following the introduction of the invoicesystem, and (4) makes it possible to search IT freelancers from its database.* For companies,“when GEECHS is consulted because of a slight shortage of engineers, the company finds thenecessary number of IT engineers with the skills and experience for the project period, whichsolves the issue.”7

GEECHS｜7060

Sessa Investment Research

GEECHS boasts 1,622 customer companies as of the end of FY2024/3 an increase of 178
compared to the end of FY2023/3. This is the cumulative number of companies delt with
GEECHS from FY2017/3 onwards. The geechs job website gives the number of companies thathave conducted business with the Company as 3,550 (see page 5), which is the cumulative
number since before FY2016/3.
Recently, GEECHS has provided on average 1,500 IT freelancers with projects each month.

Direct contract with IT freelance

Agent contract with GEECHS

A monthly work outsourcing fee, which is in addition to the fee paid
to GEECHs, is paid during the contract period.
Companies

Paying a commissioned
work fee

Paying a commissioned
work fee

Semi-mandate contract

Semi-mandate contract

Companies

Direct contract (contract for work)

IT freelancers

Pay a monthly work outsourcing fee
Make database public and support sales

Success fees at signing(500,000 yen per flat rate)

Matching and contract support

Provide service

IT freelancers

A uniform lump-sum of ¥500,000 is paid as a performance fee whena contract is concluded.
* There is a separate work outsourcing fee for engineers.

Make database public
and support sales

Support sales

Provide service

Source: Compiled by SIR from the Company Web site

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GEECHS｜7060

Sessa Investment ResearchBusiness model for  Managing and disclosing profitability gained by matching one IT freelancer
GEECHS manages how well it secures IT freelancers, its source of earnings, using thethe IT freelancefollowing
KPIs and discloses that information every half year.
matching business(Japan)First, average revenue per user (ARPU) is calculated as gross sales generated from orders

from companies minus compensation paid to IT freelancers and other costs of sales of
GEECHS. This is the average monthly unit price per IT freelancer, which is equivalent to theCompany’s gross profit. Life-time value (LTV) is the product of ARPU and average
engagement duration for an IT freelancer, and is average total gross profit generated byeach IT freelancer when engaged. Customer acquisition cost (CAC) is the average cost to
attract one IT freelancer, which is the total of marketing-related labor costs and advertisingcosts. Unit economics (LTV divided by CAC) indicates return on an acquisition cost per an IT
freelancer—in other words, it represents cost effectiveness.
Overall, ARPU and average engagement duration have increased over the past four years
because of the Company’s focus on strengthening its engagement with IT freelancers aswell as strong demand for IT freelancers. As a result, LTV has increase 12% each of the past
two fiscal years, demonstrating that the Company has adopted a successful revenue model
for its IT freelance matching business (Japan). It can also be argued that this is the result ofinvestments in a branding ad-campaign between 2H FY2023/3 and 1H FY2024/3 that used acelebrity. The Company has strategically worked to increase awareness of the GEECHS
brand, primarily to strengthen employee recruiting and education. According to the
management team, staff recruiting is progressing smoothly and in line with plans. At thesame time, awareness of the Company has increased as can be seen in the increase in thenumber of inquiries from non-IT large companies, and a larger number of companies are
opening customer accounts. The number of newly registered IT freelancers has risen to
1,300–1,500 annually compared to 1,000 before the branding ad-campaign.
On the other hand, CAC has doubled in the last two fiscal years since the previous period.
As a result, unit economics went from earning a gross profit of about ¥2.00 mn, equivalent
to 4.5x the approximately ¥500,000 spent to attract each freelancer, to earning a grossprofit of ¥2.20–¥2.50 mn through one IT freelancer in the last two fiscal years, but strategic
investments have also increased, so CAC has risen to about ¥1.00 mn.
Even so, after peaking at ¥119 mn in FY2023/3 4Q, quarterly advertising expenses fell to¥50 mn in FY2024/3 4Q, which is an appropriate level according to the management team.
Advertising expense as a percentage of net sales softened to 1.4%. The management teamhas indicated that it will generally control CAC to an appropriate level of around ¥500,000
from FY2025/3 onwards by managing advertising expenses. However, the management teamalso noted that CAC may gradually increase if the Company aims to increase the number of
newly registered IT freelancer to at least 1,500 annually.

KPI of IT Freelance Matching Business (Japan)
KPI

Definition

ARPU (thousand yen)
Average engagement
duration (months)
LTV (thousand yen)*

CAC (thousand yen)
Unit Economics*

1

1

FY2021/3 FY2022/3 FY2023/3 FY2024/3

Average monthly unit price (gross profit) per IT
freelancer

119

123

130

141

Average duration of engagement for an IT freelancer*2

16.4

16.4

17.3

17.8

Average gross profit generated by one IT freelancer
during their engagement(= ARPU x Average engagement duration)

1,948

2,017

2,249

2,510

510

473

998

1,036

Average acquisition cost per IT freelancer

Return on IT freelancer acquisition cost
4.1
4.5
2.3
(= LTV / CAC)
Source: Compiled by SIR from the Company IR material.
Source: Compiled by SIR from the Company IR material.
Note: *1 Until the previous year, each KPI was calculated based on the period average, but from the FY3/24, calculations are based on ARPU, average
Note:*1 Untilthe previous
year,
each
KPI wasbased
the period
butnewfromcalculation
the FY3/24,
calculations are based on ARPU, average
duration,and CAC.
In line with
thischange,thecalculated
above figuresforon
FY3/2023
alsoaverage,
reflect themethod.
duration,
andCAC.
In line withduration
this change,
the above
figuresfor FY3/2023 also reflect the new calculation method.
*2 Average
total
engagement
including
projectchanges*2 Average total engagement duration including project changes

2.4

9

GEECHS｜7060

Sessa Investment Research Earnings driven by man-months worked* Man-month is one of theunits of work volume, thevolume of work that one
person can complete eachmonth. Man-month unit priceis the order price in terms ofprice per man-month.
Man-months worked is the
product of the number offreelancers working on a job
and the duration (months)
each freelancer is engaged in
the project.
The volume of work that
requires 1 person to work 1
month is 1 man-month, andthe volume of work that
requires 5 people to work 6
months is 30 man-months (5 x
6) .

Sales used for calculating profit is the amount earned by matching IT freelancers withwork requests from customer companies—that is price of work orders = transaction value.
The transaction value for the IT freelance matching business (Japan) is calculated as manmonths worked* x monthly unit price of orders (one man-month is the amount of work one
IT freelancer does in one month) . In FY2024/3, man-hours worked was 17,877, and theaverage monthly unit price of orders for the fiscal year was ¥804,000, which translates intoa transaction value (product of man-months worked and monthly unit price of orders) of¥14,373 mn. This is close to the ¥14,089 mn that the Company gives as its net sales.
Monthly unit price of orders is trending slightly upward because of sustained strong demandfor IT human resources, rising 3.8% YoY to ¥804,000 for FY2024/3, surpassing ¥800,000 for
the first time. Man-months worked is the product of the number of freelancers engaged in
the project and the duration (months) each freelancers is engaged in the project—that is,engaged IT freelancers x man-months/freelancer. While man-months worked has steadily
trended upward, it was difficult in 1H FY2024/3 to match companies that wanted freelancers
to work onsite as conditions normalized following the COVID-19 pandemic with freelancers
who have grown accustomed to fully-remote work. Man-months worked remained flat in 1Q(4,405 man-months) and 2Q (4,382 man-months), but conditions improved in 2H, and manhours worked totaled 17,877 (+6.6% YoY) for the full fiscal year.
Newly registered IT freelancers for the full-fiscal year reached 1,449, surpassing the 1,325
for the previous year. The growth was achieved due to a successful referral program andother factors despite the planned reduction in advertising investment in the second half.

Source: Compiled by SIR from the Company IR material.

10

GEECHS｜7060

Sessa Investment Research

GEECHS gross profit (net revenue) is the agent fee, net sales minus compensation paid to IT
freelancers, and the take rate is gross profit divided by net sales. The take rate was around
19% in 1H FY2024/3 but fell to 17.6% in 3Q and 4Q because the Company undertook forsome of the consumption tax collected by IT freelancers following the introduction of theinvoice system in October 2023. Even so, it is assumed the impact on earned profit will belimited because the take rate was revised before the system was introduced. In 4Q FY2024/3,
the Company posted net sales of ¥3,662 mn, of which ¥645 mn was retained as gross profit.
GEECHS invested ¥51 mn in advertisements in 4Q. As noted above, the Company has
generally controlled its advertising expenses to around 1.4% of net sales, an appropriate level.
Segment profit for this business, after deducting advertising expenses and labor costs(around 40% of total SG&A expenses) from the gross profit mentioned above, increased 25%
YoY to ¥330 mn in 4Q and 8% YoY to ¥1,143 mn for the full fiscal year.
The following figure breaks down the Company’s business model for the IT freelance
matching business (Japan) discussed above. The increase in man-months worked and rising
unit price of orders have driven earnings growth.

Source of Growth

Source: Excerpt from the company IR material.

* “GEECHS Project-toFreelance Ratio Report”
gives demand trends in the
IT freelance market—
Cumulative quarterly
Projects-to-Freelancer
Ratio hits 8.60x
https://geechs.com/newsrel
ease/20240509_ankenbairitsu/

GEECHS also announces its projects-to-freelancer ratio (ratio of projects that theCompany handles to number of registered IT freelancers searching for projects) in its
quarterly “GEECHS Project-to-Freelance Ratio Report”*. The ratio is not a KPI but offers asemi-macro perspective on demand in the IT freelance market. The quarterly cumulative
ratio for Jan.-Mar. 2024 was 8.60x. Because demand remains strong, it is difficult toimagine that the Company’s unit price of orders will suddenly weaken.
The report includes various useful information, including trends in posted projects, skills
and management abilities required by companies, and future trend projections, which
probably offers hints for IT freelancers career development.

11

GEECHS｜7060
IT Freelance
Matching Business(Overseas)* Managed service providers
offer comprehensive services
for a range of process, fromfinding human resources forcustomers to contracts.
Having built a firm customer
foundation, the Company
expects stable growth for thebusiness.

Seed TechBusiness

Sessa Investment Research Transitioning to strategy and organizational structure to grow the worker
dispatching business
In November 2022, GEECHS acquired 70% of the shares of Launch Group Holdings Pty Ltd.
(Launch), which operates an IT staffing service business in Australia, for ¥1,721 mn. GEECHS
also announced that it would transform Launch and its subsidiary Launch Recruitment Pty
Ltd into consolidated subsidiaries in 1Q FY2024/3. By doing so, the Company newly
established its IT freelance matching business (Overseas). Launch operates a humanresource service business that specializes in casually employed workers and freelancers andan MSP business* and has ongoing business with major companies. In FY22/6, the fiscal
year it was acquired, Launch recorded net sales of ¥10,436 mn and pre-tax profit of ¥342
mn (translated at ¥95/A$) and possessed a database with over 350,000 IT workers, and theannual number of engaged freelancers was approximately 7,000 man-months. The purposeof the acquisition was to expand the cross-border IT freelance matching business between
Japan, the Philippines and Australia and to create business synergies as a key strategy forachieving medium- to long-term growth.
At the beginning of FY2024/3, the Company assumed that Launch would record net
sales of ¥10,000 mn (assuming ¥85/A$) with no profit by considering audit costs andgoodwill amortization costs. However, the Launch recorded actual net sales of ¥7,162 mn,
EBITDA of ¥83 mn, and a segment loss of ¥135 for the fiscal year, which dramatically fell
short of forecasts at the time of the acquisition. Therefore, the Company recorded an
impairment loss of ¥1,556 mn on goodwill and book value assets and posted an
extraordinary loss on its consolidated P&L table (both translated at ¥93.35/$A).
According to management, the main reasons for the significant shortfall in segment
earnings compared to the initial plan were that customer companies restrained hiring in
response to global economic conditions, as well as GEECHS misread the time it would win
an MSP project of a certain size (although it ended up receiving the project).
Going forward, rather than focusing on building up its MSP business, the Company plansto shift to a strategy and organizational structure that will expand its dispatching businessby increasing its customer channels through actively approaching Japanese companies inAustralia from the Japan headquarters route, which was previously almost nonexistent.
The Company expects to see a recovery in net sales to ¥10,000 mn (assuming ¥99/$A) in
FY2025/3, equivalent to the initial plan, and profit contribution starting in FY2026/3.

 Aiming for first profit primarily by expanding offshore development sales
GEECHS’s Seed Tech Business provides the SaaS-type DX/IT human resource development
service Sodatech, which supports non-engineer reskilling, and operates an IT study abroadbusiness on Cebu Island (Philippines) in order to eliminate the shortage of IT humanresources and train human resources who can work throughout the world. The Company
also operates a commissioned offshore development business that supports service
development for customer companies through teams of English-speaking IT professionals in
the Philippines. The IT study abroad Seed Tech School (12-week course) on Cebu Island
boasts more than 2,400 graduates who have gone on to work in 16 countries through theworld. Thirty-one of the school’s graduates have launched their own businesses.
In FY2024/3, the Company focused on training IT human resources, and these efforts
included launching Seed Tech Camp, which provides youth who have no IT experience
with training and practical opportunities to start an IT career. The business recorded net
sales of ¥281 mn (+60% YoY) but a segment loss of ¥23 mn. However, for 4Q (Jan.–Mar.),the business posted record net sales of ¥84 mn, and a segment loss of only ¥2 mn.
According to the management team, as conditions have normalized after the COVID-19
pandemic, there has been an upward trend in the number of non-online IT study abroadcourses and offshore development has been growing in a very positive way.
12

GEECHS｜7060

Sessa Investment Research

For FY2025/3, the Company expects to post net sales of ¥400 mn (+42% YoY) andsegment profit of ¥50 mn, the first profit for the business, primarily by expanding
offshore development sales as the above conditions continue to improve.

FY2024/3
Results Review* The Company released its
medium-term
management plan “G100”(FY2022/3–FY2025/3) on
May 14, 2021. Following
revisions, the Company has
set targets of nets sales of¥26.0 bn and EBITDA of¥2.5 bn for the final year of
the plan.

 Results after resolving problems and aiming for future growth
GEECHS’s consolidated results for FY2024/3, announced on May 10, were net sales of¥23,739 mn (+48.4% YoY) and operating profit of ¥90 mn (-84.6% YoY), which exceeded therevised forecast of ¥50 mn announced on November 10, 2023. The Company posted a net lossof ¥1,473 mn as a result of impairment losses on goodwill of IT freelance matching business(Overseas). After bringing its overseas subsidiaries into the scope of consolidation, theCompany started to announce EBITDA in FY2024/3. The Company posted EBITDA of ¥362 mn
in FY2024/3, surpassing revised forecast of ¥300 mn.
As noted above, the GEECH’s IT freelance matching business (Japan) did well throughout the
fiscal year and drove earnings for the overall group. For the IT freelance matching business(Overseas), it posted earnings that fell slightly short of revised forecasts primarily because of
misread the time it would win an MSP project orders even though it has begun to receive suchorders. The most sluggish business was the game development G2 Studios, with sales
declining for the second consecutive year to ¥2,111 mn and an operating loss widening to¥356 mn. When announcing the downward revision in earnings forecasts in November, theCompany also withdrew its medium-term management plan “G100,” providing the
explanation that it was necessary to review the plan after realizing that it would be difficult toachieve targets for the final fiscal year as a result of weaker-than-expected earnings for theG2 Studios business and mistaken estimates for the IT freelance matching business (Overseas).
As a result, the Company sold off all its shares in G2 Studios as of March 29, 2024, the last dayof the fiscal year, and it will be excluded from the scope of consolidation starting fromFY2025/3.
This resulted in a decline in Launch goodwill and customer-related assets of ¥944 mn and¥675 mn, respectively, on the balance sheet. Therefore, net assets shrank by ¥1,616 mn to¥3,070 mn as the end of FY2024/3. However, proceeds from the sale of G2 Studios partiallycovered the negative operating cash flow, making it possible to maintain the same level ofcash and deposits at the end of FY2024/3 as that for FY2023/3.
In this way, the Company not only posted a record net loss but was also forced to makevarious tough managerial judgements in FY2024/3. These included revising downward
earnings and dividend forecasts and withdrawing its medium-term management plan during
the fiscal year and recording an impairment loss and selling off a subsidiary at the end of the
fiscal year. The Company needed to eliminate various problems in order to generate future
growth—in other words, resolutely select and concentrate on particularly businesses in
anticipation of unforeseen conditions, in SIR’s view.

 Establishing a makeup to restore profit while making new investments

GEECHS’s
FY2025/3 Plans

The management team expects steady growth for its core IT freelance matching business(Japan), and restrains advertising expenses to 2/3 of those for the previous fiscal year, andcontinues focus on reinforcing its organization strength. GEECHS forecasts net sales of¥15,800 (+12.1% YoY) and segment profit of ¥1,280 mn (+11.9% YoY). As for the IT freelance
matching business (Overseas), the Company is aiming for net sales to recover to ¥10,000 mn
because customer companies have recently been less averse to recruiting, and the fiscal year
started well. The Company will prioritize updating its strategy and organizational structure,and the business is expected to begin to contribute to profit next fiscal year. Turning to the
Seed Tech Business, the Company aims to generate net sales of ¥400 mn, the break-evenpoint for the business, primarily by expanding offshore development net sales, and forecasts
segment profit of ¥50 mn, the first time the business will post a profit.

13

GEECHS｜7060

Sessa Investment Research

In its FY2025/3 budget, GEECHS included ¥150 mn for new investments through M&As,
as an engine of growth in the medium-term growth strategy discussed below. In addition,
the Company has budgeted for an increase in overall expenses and adjustments of ¥88
mn YoY. This is due to an increase in various system-related expenses accompanying
personnel expansion (various type of license fees, etc.) and decline in outsourcing fees
because G2 Studios was sold off.
The Company’s forecasts for FY2025/3 are net sales of ¥26,300 mn (+10.8% YoY),
EBITDA of ¥670 mn (+85% YoY), operating profit of ¥550 mn (+505.3% YoY), ordinary
profit of ¥545 mn (560.7%), and net profit of ¥336. Having set a target dividend payout
ratio of 30%, the Company will likely continue to pay a dividend per-share of ¥10. If theCompany does this, SIR’s calculation indicated that the Company may record on ROE of
10%.

Medium-term Growth
Strategy in preparation
for disclosing the
Medium-termManagement Plan

*A Project Management
Office conducts suchfunctions as overall project
management, procurementof resources necessary for
projects, including funds andhuman resources, andcoordination among related
departments andstakeholders’ interest.
Entities with a PMO have thebenefit of quicker project
management–related
decision making and moreaccurate and profitableproject promotion.

 Aiming to provide comprehensive IT solutions through its own assets
GEECHS has expanded from IT freelancer sharing, domain 1 where it started, todevelopment of human resources that are in short supply and use of non-Japanese humanresources, domain 2. In domain 3, its next target, the Company plans to provide
comprehensive one-stop solutions to customer companies through activating its own IT
human resources. Specially, the Company “will possess in-house IT consulting, PMO,* anddevelopment functions and provide total support that includes support for customer
companies when they develop plans for building an IT strategy team and working withthose companies to develop new products using the assets they possess through IT.”To achieve this, GEECHS must bring DX/IT human resources and organization consulting, IT
consulting and PMO, and system development functions, in domains farther upstream, inhouse, and the management team recognizes that it would be extremely difficult to build
those from scratch. Therefore, the Company plans to do so using strategic M&As, humanresource recruiting, and similar methods to reinforce technology resources through the
supply of IT freelancers to newly acquired companies that handle IT consulting andcommissioned development, a foundation for upstream domains. Possessing in-house IT
consulting function and capturing upstream process development projects will make itpossible to increase unit price of orders and profit margins. Furthermore, by being able topropose various solutions to customer internet service companies and operation systemcompanies, the Company will be able to create projects and thus increase orders for its IT
freelancers. In this way, the management team has indicated a strategic initiative ofleveraging the ability of its core IT freelance business to provide human resources topromote medium-term growth for the whole company.
When formulating the Company’s medium-term management plan, the management
team wants to make firm preparations during the current fiscal year and has budgeted ¥150
mn for M&As and recruiting expenses. GEECHS management considers it important toassess not only the qualifications of a company’s management, but also the quality of thetechnology and human resources that the company possesses, and whether or not it hascustomers in growth areas when selecting a target company for M&A. If the Company
conducts an M&A, the source of funds would be cash on hand or borrowings, not equity
financing, which would dilute shares.

14

GEECHS｜7060

Sessa Investment ResearchPrevious Business Domain and New Domain of Expansion

Source: Excerpt from the Company IR material.

15

GEECHS｜7060
Share Price
Insights

Sessa Investment Research Expected revaluation with “shift to upstream domains”
Despite earnings having bottomed in the previous fiscal year and the outlook for a firm
recovery in earnings this fiscal year, GEECHS’s shares are traded at historical lowest level.
The Company also discloses IR information simultaneously in both Japanese and English
with high transparency. It is rare among IT-related stock to have a calculable dividend
yield, with its FY2025/3 forward PER of 14x and EV/EBITDA of less than 4x. Therefore,
from the perspective of single-year fundamental valuation, it is hard to describe it asanything other than an "unprecedented value.“ The only reason for the large discountwould be a technical one, low liquidity.
The comparable company TWOSTONE&Sons, whose core business is its Midworks
business that entails matching IT freelancers with companies and permanently placing IT
engineers at customers using quasi-mandate contracts, has adopted a strategy ofdeveloping up-stream projects through aggressive M&As. In April, TWOSTONE&Sons
issued new shares, which resulted in an approximately 3% dilution, to finance upfront
growth investments with an eye toward mid- to long-term growth, and its earnings are
expected to weaken because of this. At its recent results explanatory briefing, theTWOSTONE&Sons management was asked whether its quite high valuation was
reasonable, and commented, "I think the stock market is expecting that our company will
steadily absorb one company after in the SIer domain.“ and "companies with strong
growth, such as SHIFT Inc., are generally highly evaluated by the stock market."
SIR finds it interesting that "shifting to upstream domains" appears to be one of thecommon keywords in valuation relating, with the Company's competitor also commenting
on the equity market's assessment of SHIFT's growth strategy and earrings performance.
SIR thinks that if the Company’s mid-term management plan, which is likely to bereleased during the current fiscal year, clearly indicates the impact that a "shifting to
upstream domains" would have on earnings, this could serve as an expected catalyst forthe delayed recovery in the Company’s share price.

Valuation comparison of peers
TSE Code
Listingclassification
Company Name
Latest act. FY

Share Price
Shrs out.
Mkt Cap.
EV
PER
PBR
PSR
EV/EBITDA
EBITDA
ROE
Div. Yield
Share Price
Change Rate¥
2024/5/22CP
1,000 shrs Latest FY¥ mn
Latest FY¥ mn
Latest FY
X
Latest FY
CE (current period)X
Latest FY
X
Latest FY
CE (current period)X
Latest FY
CE (current period)¥ mnLatest FY
CE (current period)%
Latest FY
CE (current period)%
from 6 months ago%
from 1 years ago

7060

7352

3697

Standard

GrowthPrime

GEECHS

TWOSTONE
&Sons

SHIFT

2024/3466
10,326
4,812
2,567
-3.3
14.3
1.71
0.20
0.18
7.1
3.8
362
670
-41.5
2.15
-6.4
-43.3

Source: Compiled by SIR from SPEEDA data and the Companies' IR material.

2023/81,456
41,994
61,144
61,895
355.1
970.7
68.04
6.08
4.41
150.6
185.3
411
334
21.0
0.03
38.7
160.2

2023/817,24017,827
307,344
301,464
48.6
41.5
9.68
3.49
2.70
22.7
21.9
13,285
13,774
22.9
0.00
-49.8
-31.2
16

GEECHS｜7060¥mn, %
Total Revenue
Cost of Sales
Gross Profit
Gross Margin
Selling, General and Administrative
Expenses
Operating Profit
Operating Profit Margin
Non-Operating Income
Interest and Dividends Income
Non-Operating Expenses
Interest Expenses
Ordinary Profit
Ordinary Profit Margin
Extraordinary Gains/Losses
Extraordinary Gain
Extraordinary Loss
Pretax Profit
Pretax Profit Margin
Income Taxes
Income Taxes - Current
Income Taxes - Deferred
Net Profit Attribute to parent company
shareholders
Net Profit
Net Profit Attribute to non-controllingshareholders
Net Profit Margin (Attribute to parent
company shareholders)

Sessa Investment Research

FY2021/3 C

FY2022/3 C

FY2023/3 C

FY2024/3 C

FY2025/3 C(CE)

3,428
1,389
2,039
59.5

14,341
11,557
2,783
19.4

15,99812,9992,999
18.7

23,74019,596
4,144
17.5

26,300

1,301

1,650

2,409

4,053

738
21.5
1
0
25
0
714
20.8

1,134
7.9
4
0
2
0
1,136
7.9
(30)

589
3.7
1
0
23
2
568
3.6
-60

714
20.8
256
419
(163)

30
1,106
7.7
400
266
134

60
508
3.2
264
228
36

91
0.4
12
3
20
18
82
0.3
-1,55047
1,597-1,468
-6.2
154
374
-220

458

705

244

-1,622

550
2.1

545
2.1

-149
458

705

244

-1,473

336

13.4

4.9

1.5

-6.2

1.3

EBITDA

815

1,200

607

362

670

EBITDA Margin

23.8

8.4

3.8

1.5

2.5

10.00
43.83
365.7410.00
67.18
422.2610.00
23.20
416.9410.00(142.75)
272.09

10.00
32.54

223.5
48.6
59.05
1.69
0.00
(0.82)

394.9
57.2
76.12
1.31
0.00
(0.75)

269.6
44.4
51.67
1.94
0.42
(0.44)

242.0
52.3
40.13
2.49
0.57
(0.73)(Per share information: Yen)
Dividends per ShareEPS
BPS(liquidity, safety and leverage)
Current Ratio, %Cash/Total Assets, %Shareholders' Equity Ratio, %Financial Leverage, X
D/E Ratio, X
Net D/E Ratio, X

17

GEECHS｜7060

Sessa Investment Research¥mnTotal Assets
Current Assets
Cash Cash Equivalents And Short-term Investments
Accounts Receivables
Inventories
Allowance for Doubtful Accounts - Assets
Non-Current Assets
Property, Plant & Equipment (PPE)Intangible Assets
Goodwill
Investments and Other Assets
Investment Securities
Deferred Tax Assets - Non-Current
Total Liabilities
Current Liabilities
Trade Payables
Accounts Payable - Other and Accrued Expenses
Short-Term Debt
Current Portion of Long-term Debt
Advances Received
Non-Current Liabilities
Long-Term Borrowings
Deferred Tax Liabilities - Non-Current
Asset Retirement Obligations - Non-Current
Total Net Assets
Total Shareholders' Equity
Capital Stock
Capital Surplus
Retained Earnings
Treasury Stock
Share Warrants
Non-controlling interest

FY2021/3 C
6,486
5,915
3,150
1,519
1,118
-3
571
83
1

FY2022/3 C
5,874
5,524
3,357
2,027
6
-3
350
25
1

487
110
201
2,656
2,647
858
64
12
12
1,125
9
7

325
130
67
1,403
1,399
1,034
150
14
14
10
5
3

¥mn
Cash Flows from Operating Activities
Depreciation and Amortization - CF
Depreciation - CF
Amortization of Goodwill - CF
Gain/Loss on Valuation of Securities and Investment
Securities
Cash Flows from Investing Activities
Payments for Purchases of Stocks of Subsidiaries
Proceeds from disposal of Stocks of Subsidiaries
Purchases/Sales of PPE
Purchases/Sales of Intangible Assets
Cash Flows from Financial Activities
Proceeds from Long-Term Borrowings
Repayments of Long-Term Debt
Repayments of Long-Term Borrowings
Proceeds from Issuance of Stock
Redemption/Retirement of Stock
Cash Dividends Paid
Changes in Cash
Cash & Cash Equivalent - Beginning
Cash & Cash Equivalent - Ending
Free Cash Flow (FCF)

FY2023/3 C
8,999
6,409
3,755
2,475
4
-14
2,590
127
2,130
944
333
80
30
2,377
1,140
474
226
172
24
1,935
1,627

FY2024/3 C
7,174
6,301
3,750
2,320
1
-15
873
83
510

103
4
3,071
2,879
1,112
1,062
556

0

4,471
4,471
1,102
1,051
2,315
-21
27
0

300
4
4,688
4,367
1,110
1,060
2,454
-321
71
72

FY2021/3 C
662
77
77

FY2022/3 C
369
66
66

FY2023/3 C
688
18
18

FY2024/3 C
-4
238
162
76

30

60

40

-49
-80

-69
-50

-1,561-1,554

317

-9
-1
-23

-23

-6
-2
1,274
1,720

16
0

15
0
-105
208
3,150
3,357
300

56
3,830
3,830
1,094
1,044
1,714
-21

590
2,559
3,150
613

-91

-43
17
-300
-105
398
3,357
3,755
-873

280
35
39
2,604
1,149
462
268
172
59
1,500
1,379

69
192

336
-4
-1
-330

-172
4
-104
-5
3,755
3,750
313

Source: Compiled by SIR from SPEEDA data and the Company TANSHIN annual report.

18

Sessa Investment Research

LEGAL DISCLAIMER
This report is intended to provide information about the subject company, and it is not intended tosolicit or recommend investment. Although the data and information contained in this report havebeen determined to be reliable, we do not guarantee their authenticity or accuracy.
This report has been prepared by Sessa Partners on behalf of the concerned company for which it hasreceived compensation. Officers and employees of Sessa Partners may be engaged in transactions
such as trading in securities issued by the company, or they may have the possibility of doing so in
the future. For this reason, the forecasts and information contained in this report may lackobjectivity. Sessa Partners assumes no liability for any commercial loss based on use of this report.
The copyright of this report belongs to Sessa Partners. Modification, manipulation, distribution ortransmission of this report constitutes copyright infringement and is strictly prohibited.

Sessa Partners Inc.
#5a i-o Azabu, 2-8-14
Azabujyuban, Minato-ku, Tokyo

info@sessapartners.co.jp

19