Alpha-Win Company Research Report
CUBE SYSTEM INC.
(2335 TSE Prime)● SummaryIssued: 2/16/2024

Alpha-Win Capital Inc. Research Department
https://www.awincap.com/◆ Independent, mid-tier system integrator with long-term, stable growth
Company Overview
・CUBE SYSTEM INC. (hereinafter, the “Company”) is an independent, mid-tier system integrator listed on the
TSE Prime. Its main customers include the Nomura Research Institute (NRI) and the Fujitsu Group. It develops
systems and provides services mainly for the financial, distribution, transportation, telecommunication, andmanufacturing industries.
・ Its strengths are its excellent customer base, extensive experience, high credibility, and the technology andexpertise that it has cultivated over the years. Founded in July 1972, it has 51 years of history. In April 2022, it
moved from the TSE First Section to the newly established Prime Market.
Business Performance・With the exception of one fiscal year, the Company has been continuously increasing sales YoY for the past 25
years. During this period, the annual sales growth rate (simple average of the rate of increase in sales) was +5.9%
and the annual recurring profit growth rate (simple average) was +7.1%; it has been steadily expanding its businessand keeping its business profitable over many years. Its recurring margin has stably been around 7% (simple
average of 7.3%) and the increase in sales has been contributing directly to increases in profit, dividend, and market
capitalization. In the previous fiscal year or FY2023 (note that the Company’s fiscal year is March-ending, i.e.,
FY2023 ended in March 2023), it achieved record-high sales and profits. It also increased dividend for the fourthyear in a row. This fiscal year, it plans to achieve record-high results again.
Alliance
・In December 2022, the Company formed a capital and business alliance with NRI, a top-level and major bluechip company of the industry. NRI has become the Company’s largest shareholder (categorized as “other associatedcompany”), holding 20.2% of the Company’s voting rights. The NRI Group is also the Company’s largest customer,
accounting for 53.4% of its consolidated sales (in the first half of FY2024).
Investment Plan
・Adding its own cash on hand to the capital raised through the capital alliance with NRI, the Company plans toinvest a total of approximately 2.2 billion yen over the four-year period from FY2023 to FY2026. It plans to invest
in strengthening and enhancing its development bases and production system to achieve further growth and solve
its bottleneck of human resources.

◆ Results for the first nine months of this fiscal year: Sales increased 13.3% YoY andoperating profit increased 22.1% YoY. The increase in orders in the SI Business and theconsolidation of resources to this business contributed to the growth. By industry,increased orders from the financial and the other industries contributed to the growth.
Summary of Financial Results for the First Nine Months: Achieved record-high results
・In the first nine months of FY2024 (April to December 2023; hereinafter, “the first nine months” or “Q3 YTD”),
the Company posted sales of 13,565 million yen (+13.3% YoY), operating profit of 1,161 million yen (+22.1%
YoY), recurring profit of 1,169 million yen (+22.6% YoY), and net profit attributable to owners of the parent(hereinafter, “net profit”) of 758 million yen (+20.7% YoY) (Figure 1 on page 2). Record-high Q3 YTD results
were achieved for sales and each of the profits.
・The Company’s initial plan for the first half (April to September 2023) was 8,577 million yen for sales (+8.7%
YoY), 700 million yen for operating profit (+17.0% YoY), 700 million yen for recurring profit (+17.7% YoY), and
457 million yen for net profit (+17.7% YoY). The results had exceeded this initial plan by 438 million yen for sales(+5.1%), 94 million yen for operating profit (+13.4%), and 44 million yen for net profit (+9.6%). In Q3 (October
to December 2023), too, the Company saw an increase in sales and profit as described later (page 6), maintaining
Short Report

1/13

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024

high levels of quarterly sales and profit.
・Due to inflation and the materialization of geopolitical risks, the outlook for the global economy remains uncertain.
However, with the COVID-19 outbreak settling down, in addition to the depreciation of the yen, the recovery of
inbound demand, and positive corporate earnings, Japanese companies (the Company’s clients) have been actively
investing in IT, including DX (business transformation and process reform), the shift to the cloud, and adjustments
to the new invoicing system and the revised Electronic Books Preservation Act. Under these circumstances, theCompany has been receiving more orders.
・ To meet the strong demand, the Company has been working on increasing capacity and profitability bystrengthening its production system, working on people development, optimizing and consolidating resources, andstreamlining operations. Thanks to these efforts, it achieved significant increases in sales and profits.
・The gross margin increased slightly by 0.1 percentage point, from 21.5% in the previous fiscal year’s first ninemonths to 21.6% in this fiscal year’s first nine months (the same order applies hereinafter). Meanwhile, SG&A
expenses increased by 9.6% from 1,617 million yen to 1,772 million, but since this increase was 3.7 percentage
points below the sales growth rate, the SG&A expense ratio declined by 0.4 percentage point from 13.5% to 13.1%.
・As a result, the operating margin increased by 0.7 percentage point from 7.9% to 8.6%. This was because
profitability improved due to cost control, value-adding, improved efficiency, and streamlining (consolidation of
resources).

【Figure 1】Summary of Results for the First Nine Months
Results for the First Nine Months

Consolidated
Category

Units: million yen

Consolidated Sales
Sales

1. By Service
Category

Operating Profit

Operating Margin
(%)

Sales

2. By Industry

Operating Profit

Operating Margin
(%)

Sales

3. By Business
Model

Operating Profit

Operating Margin(%)
Consolidated

Service or Industry Name

System Integration: SIS
System Outsourcing: SOS
Professional: ProS
System Integration: SIS
System Outsourcing: SOS
Professional: ProS
System Integration: SIS
System Outsourcing: SOS
Professional: ProS

Finance
Distribution
Telecommunication & Transportation
Manufacturing (other)Government (other)
Other (other)
Finance
Distribution
Telecommunication & Transportation
Manufacturing (other)Government (other)
Other (other)
Finance
Distribution
Telecommunication & Transportation
Manufacturing (other)Government (other)
Other (other)
Digital Business
SI Business
Enhancement Business
Digital Business
SI Business
Enhancement Business
Digital Business
SI Business
Enhancement Business

Gross Profit

Gross Margin (%)
SG&A Expenses

SG&A Expense Ratio (%)
Operating Profit

Operating Margin (%)
Recurring Profit

Recurring Margin (%)
Net Profit

Net Profit Margin (%)

FY2023 Q3 YTD
Apr-Dec 2022

11,973
8,781
1,314
1,876
665
89
196
7.6
6.8
10.5
3,571
2,561
2,267
1,116
637
1,817
310
194
210
45
34
154
8.7
7.6
9.3
4.1
5.4
8.5
408
2,905
8,659
14
174
761
3.4
6.0
8.8
2,568
21.5
1,617
13.5
951
7.9
953
8.0
628
5.2

FY2024 Q3 YTD
Apr-Dec 2023

13,565
10,530
1,264
1,770
908
86
166
8.6
6.9
9.4
4,484
2,804
1,923
1,205
842
2,305
391
230
181
78
97
182
8.7
8.2
9.4
6.5
11.6
7.9
398
5,054
8,111
8
493
660
2.0
9.8
8.1
2,934
21.6
1,772
13.1
1,161
8.6
1,169
8.6
758
5.6

Change in Amount / Difference% Change% of Total Amount of Change% of Total

YoY: million yen or %YOY： %

%

%

1,592
1,748
-50
-105
243
-2
-29
1.0
0.1
-1.1
912
242
-343
89
205
488
81
36
-29
33
63
28
0.0
0.6
0.1
2.4
6.2
-0.6
-9
2,149
-547
-6
318
-101
-1.4
3.8
-0.7
366
0.1
155
-0.4
210
0.7
216
0.6
130
0.4

13.3
19.9
-3.8
-5.6
36.6
-3.3
-15.2

100.0
109.8
-3.1
-6.6
115.7
-1.0
-13.8

100.0
77.6
9.3
13.0
78.2
7.4
14.3

25.6
9.5
-15.2
7.9
32.2
26.8
26.0
18.1
-14.0
71.3
183.6
18.1

57.3
15.2
-21.5
5.6
12.9
30.6
38.6
17.1
-13.8
15.7
30.0
13.3

33.1
20.7
14.2
8.9
6.2
17.0
33.7
19.8
15.6
6.7
8.4
15.7

-2.2
74.0
-6.3
-44.7
182.8
-13.3

-0.6
135.0
-34.4
-2.9
151.4
-48.1

2.9
37.3
59.8
0.7
42.5
56.8

14.2
9.6
22.1
22.6
20.7

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary and the financial results briefing’s supplemental materials.
(Note) Throughout this report, there may be differences in the figures due to the method of presentation and/or the calculation processes, such that the figures forthe same item may not match the figures announced by the Company or the data in other documents.

Short Report

2/13This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024

First Nine Months’ Results by Segment: SIS and the financial industry contributed to the results
・Overall, sales increased by 1,592 million yen YoY and operating profit grew by 210 million yen YoY.
1. Results by Service Category (three categories)
・The System Integration Services (SIS), its core business, accounted for 78% of both total sales and total operating
profit (both are rounded figures for this first nine months; the same applies hereinafter). This category’s sales
increased by 1,748 million yen (+19.9% YoY) to 10,530 million yen. Of the three service categories, this was the
only category whose sales had increased (Figure 1 on page 2).
・In the SIS, business with the financial industry was strong, with the expansion of system building projects forregional banks, online banks, a megabank, and securities firms as well as for an education company. Its operating
margin rose to 8.6% from 7.6% in the previous fiscal year’s first nine months. With sales growth as well, operating
profit in this fiscal year’s first nine months was 908 million yen, having increased significantly by 243 million yen(+36.6% YoY) from 665 million yen in the previous fiscal year’s first nine months.
・The System Outsourcing Services (SOS) accounted for 9% of total sales and 7% of total operating profit. This
category’s sales were 1,264 million yen, having decreased slightly by 50 million yen (-3.8% YoY) due to thescaling down of system building projects for a stock exchange. Its operating profit was 86 million yen, also at aslight decrease of 2 million yen (-3.3% YoY).
・The Professional Services (ProS), a category which is somewhat greater in scale than the SOS, accounted for 13%
of total sales and 14% of total operating profit. This category’s sales declined by 105 million yen (-5.6% YoY) to
1,770 million yen and its operating profit declined by 29 million yen (-15.2% YoY) to 166 million yen due to thescaling down of system building projects for telecommunication companies in the telecommunication industry.
2. Results by Industry (four categories / six categories)
・Sales and profits increased at mostly double-digit rates for the three industries excluding the transportation &telecommunication industries. The financial industry and the “other industries” category contributed to the results.
・Regarding the financial industry, which accounted for 33% of total sales and 34% of total operating profit (thelargest proportion by industry for both), sales increased by 912 million yen YoY (+25.6% YoY) to 4,484 million
yen due to the expansion of system building projects for banks as mentioned earlier.
・Its operating margin for the first nine months of this fiscal year was 8.6%, which is about the same level as theprevious fiscal year’s first nine months. With sales growth as well, operating profit increased by 80 million yen(+26.0% YoY) to 391 million yen (Figure 1 on page 2).
・Regarding the distribution industry, which accounted for 21% of total sales and 20% of total operating profit, salesrose by 242 million yen (+9.5% YoY) to 2,804 million yen due to the expansion of system building projects for anapparel company and a wholesaler. Its operating margin also improved from 7.6% to 8.2% and its operating profit
rose by 35 million yen (+18.1% YoY) to 230 million yen.
・Regarding the “other industries” category, which accounted for 32% of total sales and 31% of total operating
profit (roughly the same percentages as finance), all sub-segments (manufacturing, government, and other) saw
increased sales and profits. Although the profit margin of the “other” sub-segment declined, this was compensatedfor by sales growth. Higher sales and improved profit margins of the manufacturing and the government subsegments contributed to the profit growth.
・Sales rose by 780 million yen (+21.9% YoY) to 4,353 million yen, and operating profit increased significantly
from 235 million yen to 359 million yen (+123 million yen or +52.7% YoY). This category contributed the mostto the overall profit growth during this fiscal year’s first nine months (58.6% of total – the majority of growth).
・Regarding the transportation & telecommunication industries, which accounted for 14% of total sales and 16% of
total operating profit (the smallest proportions), system building projects for telecommunication companies werescaled down as mentioned earlier. As a result, sales fell by 343 million yen (-15.2shu% YoY) to 1,923 million yen.
The profit margin improved by 0.1 percentage point YoY to 9.4%, but operating profit declined from 210 million
yen to 181 million yen (-29 million yen or -14.0% YoY) due to lower sales.

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3/13This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024

3. Results by Business Model (three models)・The Enhancement Business accounted for 60% of total sales and 57% of total operating profit. Projects fortelecommunication companies, insurance companies, and a cooperative were scaled down. As a result, comparedto the first nine months of the previous fiscal year, sales fell by 547 million yen (-6.3% YoY) to 8,111 million yen.
The operating margin decreased from 8.8% to 8.1% and operating profit also declined by 101 million yen (-13.3%
YoY) to 660 million yen (Figure 1 on page 2).
・The SI Business (Lift & Shift: migration from the legacy environment to the cloud environment in “Lift” andstepwise system restructuring while optimizing for the cloud environment in “Shift”), accounted for 37% of total
sales and 43% of total operating profit. System building projects expanded for regional banks, online banks, thecentral government, an education company, and an apparel company. Its sales increased significantly by 2,149
million yen (+74.0% YoY) to 5,054 million yen, and its operating profit also rose sharply by 318 million yen(+182.8% YoY) to 493 million yen. Operating margin jumped from 6.0 % to 9.8%.
・The Digital Business has remained small in scale, accounting for 3% of total sales and 1% of total operating profit.
While DX projects for an electricity and gas retail company have expanded, projects for a home improvement
center have been scaled down. Sales fell slightly by 9 million yen (-2.2% YoY) to 398 million yen. An operating
profit was maintained, although it declined from 14 million yen to 8 million yen.

Factors that Increased or Decreased Profit in the First Nine Months: The SI business absorbed theincrease in costs
・The factors that increased or decreased operating profit in the first nine months of the current fiscal year are asshown in Figure 2.
・There was an increase in costs (impact on profit: -155 million yen YoY in total) due to the expansion of the
production system (strengthened recruitment and expansion of production bases) (-116 million yen YoY) and theimprovement of the management foundation (-39 million yen YoY). Project scale-down in the Digital Businessand the Enhancement Business also had a negative impact on profit (-20 million yen YoY). However, these weremore than offset by the large profit growth (+385 million yen YoY) brought by the increase in orders and theconcentration of resources in the SI Business.
・Overall, there were no significant unprofitable projects and the Company’s profits were strong.

【Figure 2】Factors that Increased or Decreased Operating Profit in the First Nine Months(Units of million yen YoY; Factor that Increased Profit / Factor that Decreased Profit)
1600

1400

385
-20

1200

1000

-116
951

800

600

Production system expansion(strengthening of recruitment/ people development /expansion of bases)

Greater profit due to the
expansion of projects into
the SI Business (Lift &Shift) and the consolidationof resources to this business

400

200

0

Profit decline
due to projectscale-down in
the Digital andEnhancementbusinesses

Q3 YTD
FY2023(Apr-Dec 2022)

1161
-39

Increase in
Operating Profit＋210 million yen

Management foundation
improvement(strengthening
governance and investingin IT)Q3 YTD
FY2024(Apr-Dec 2023)(Ref) Prepared by Alpha-Win Research Dept. based on the financial results briefing’s supplemental materials.

Short Report

4/13

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024

・In the medium-term investment plan covering four fiscal years (totaling 2,180 million yen), the current fiscal year
is planned to be the largest year of investment, with an investment of 845 million yen (38.8% of the total) planned.
In particular, the Company plans to strengthen its production system by focusing on the establishment, expansion,and improvement of near-shore and other development bases, as well as human resource investment to acquire
personnel for production (Figure 3).
・In August 2023 of the current fiscal year, the Company created a new office in Fukuoka as a near-shore production
base. In January 2024, it also expanded the office space of its subsidiary HOKKAIDO CUBE SYSTEM INC.
・Investments in development bases and for production expansion seem to be conducted as planned, with no majordelays or leftover budget.
【Figure 3】Medium-Term Investment Plan
Fiscal Year
Amount Used

Units: million yen or %FY2024FY2025

FY2026

Cumulative Sum% of Entire Investment

120

845

805

410

2,180

Percent of Entire Investment

5.5%

38.8%

36.9%

18.8%

100.0%

80

385

125

0

590

27.1%

80

160

0

0

240

11.0%

Nearshore (enhance existing sites)

0

100

50

0

150

6.9%

Prepare and enhance remote-work environment

0

50

0

0

50

2.3%

Enhance offshore sites / form alliances with companies

0

50

50

0

100

4.6%

Purchase software assets

0

25

25

0

50

2.3%

40

460

680

410

1,590

72.9%

Development Bases: Subtotal ②(breakdown shown below)
Nearshore (create new regional sites)

Main Use of
CapitalFY2023

Total (amount): ①＝➁+③

Production System: Subtotal ③(breakdown shown below)
Invest in recruitment (gain employees for production)

100.0%

20

320

320

320

980

45.0%

Invest in training (people development)

10

30

30

30

100

4.6%

Sophistication of production/quality management

0

60

60

60

180

8.3%

Enhance engagement (with employees)

10

50

270

0

330

15.1%

(Ref) Prepared by Alpha-Win Research Dept. based on the news release

Progress in the First Nine Months and Seasonality of Quarterly Results: Strong progress
1. Progress in the First Nine Months
・Progress during the first nine months in terms of achieving the Company’s full-year forecast was 75.4% for sales(73.3% in the same period of the previous fiscal year) and 71.7% for operating profit (similarly, previously 65.5%).
As reference, the simple average of progress in the first nine months during the past 10 years (including the previous
fiscal year) was 72.4% for sales and 66.4% for operating profit. The progress in this fiscal year’s first nine months
exceeded these averages for both sales and profit.
・Regarding the sales progress of each business model, the SI Business made strong progress at 86.4% (69.4% in
the same period of the previous fiscal year) and the Enhancement Business was also solid at 72.2% (similarly,
previously 75.0%), while the Digital Business was sluggish at 43.3% (similarly, previously 67.8%).
・Regarding the progress with sales to each industry, progress was 81.5% for the financial industry, 74.7% for thetelecommunication & transportation industries, 71.3% for the distribution industry, and 72.6% for the otherindustries. Progress has been particularly strong for the financial industry with strong orders, presumably exceeding
the Company’s expectations.
2. Quarterly Results・One of the characteristics of the Company is that its business performance and profit margins tend to fluctuate ona quarterly basis. The fourth quarter (Q4 or Jan-Mar) tends to contribute the most to the full-year results, withdelivery deadlines clustering in this period (past 10 years’ average: 27.6% of full-year sales and 33.6% of full-year
operating profit). The next largest is the second quarter (Q2 or Jul-Sep; average of 25.8% and 26.8%, respectively),
followed by the third quarter (Q3 or Oct-Dec; average of 23.7% and 23.2%, respectively). Q1 has generally been
the smallest in contribution. The operating margin also generally tends to be the largest from Q4 > Q2 > Q3 > Q1,
in the same trend as sales (Figures 4 through 6 on page 6).
・In the first quarter of this fiscal year, sales were 4,376 million yen (+12.4% YoY), operating profit was 369 million
yen (+35.9% YoY), recurring profit was 371 million yen (+37.0% YoY), and net profit was 232 million yen(+34.2% YoY).
・Q2 results continued to show double-digit growths in both sales and profit, with sales of 4,639 million yen (+16.0%
Short Report
5/13This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024

YoY), operating profit of 425 million yen (+30.4% YoY), recurring profit of 417 million yen (+29.1% YoY), andnet profit of 269 million yen (+25.1% YoY). Like in Q1, the Company posted record-high quarterly sales again.
Although the Company’s plan for Q1 and Q2 is not disclosed, both sales and profits had most likely exceeded its
plan.
・Q3 results also continued to show double-digit growth for sales, with record-high Q3 sales of 4,550 million yen(+11.5% YoY). Operating profit was 367 million yen (+4.3% YoY), recurring profit was 380 million yen (+5.8%
YoY), and net profit was 257 million yen (+5.7% YoY). The growth rate of each profit slowed to around 5% due
to a lower gross margin.
【Figure 4】Quarterly Change in Sales【Figure 5】Quarterly Change in Operating Profit(Units: million yen)

(Units: million yen)

5,000

600

4,500
4,000

500

3,500

400

3,000
2,500

300

2,000

200

1,500
1,000

100

500
0
FY2014FY2015FY2016FY2017FY2018Ｑ1

FY2019Ｑ２Ｑ３

FY2020

FY2021

FY2022

FY20230

FY2024FY2014FY2015FY2016FY2017FY2018Ｑ1Ｑ４FY2019Ｑ２Ｑ３

FY2020

FY2021

FY2022

FY2023

FY2024Ｑ４(Note) Figures 4 to 7 were prepared by Alpha-Win Research Dept. based on the financial results summary and the financial results briefing’s supplemental materials.

【Figure 6】Quarterly Change in Operating Margin(Units: %)【Figure 7】Changes in Sales, Order Received, and Order
Backlog (as of the end of the period) in the First Nine Months(Units: million yen)

14.0%
12.0%

14,000

10.0%

12,0008.0%

10,000

6.0%

8,000

4.0%

6,000

2.0%

4,000

FY
20
14
FY
20
15
FY
20
16
FY
20
17
FY
20
18
FY
20
19
FY
20
20
FY
20
21
FY
20
22
FY
20
23
FY
20
24

0.0%

Ｑ1

Ｑ２

Ｑ３

Ｑ４

FY

(Note) Full-year and Q4 figures for FY2024 are from the Company’s plan.

2,000
0

Q3 YTD
FY2018Q3 YTD
FY2019Q3 YTD
FY2020Orders Received

Q3 YTD
FY2021Q3 YTD
FY2022Q3 YTD
FY2023

Sales

Order Backlog

Q3 YTD
FY2024・Since Q3 FY2023, the sales growth rate (YoY) for each quarter through this fiscal year’s Q3 has remained at ahigh level, at 2.5% ⇒ 7.3% ⇒ 12.4% ⇒ 16.0% ⇒ 11.5%. The operating margin during the same period has also
been stably around 8-9%, at 8.6% ⇒ 11.5% ⇒ 8.5% ⇒ 9.1% ⇒ 8.1%. The amount of improvement in the operating
margin (YoY: percentage-point difference) during the same period has been shrinking from +4.2% ⇒ +1.4% ⇒+1.0% ⇒ -0.5%.

s

Orders Received: Increasing orders with active IT investments and strong demand・The overall amount of orders received increased to 13,241 million yen from 11,816 million yen in the same periodof the previous fiscal year (+1,425 million yen or +12.1% YoY). However, because many projects have been
booked as sales for this fiscal year, the order backlog increased only slightly from 4,120 million yen to 4,248
million yen (+127 million yen or +3.1% YoY) (Figure 7).
Short Report
6/13
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024

Orders Received: By Industry (four categories)
・Regarding the amount of orders received from each industry in the first nine months, similar to sales, the decline
in the transportation & telecommunication industries was offset mainly by the strong performance of the businesswith the financial and other industries. The order backlog increased only for the financial industry, while itdecreased for the other three industry categories.
Orders Received: By Business Model (three models)・Orders received in the Enhancement Business declined from 8,184 million yen to 7,638 million yen (-546 million
yen or -6.7% YoY), and its order backlog also declined slightly from 2,721 million yen to 2,558 million yen (-162
million yen or -6.0% YoY).
・Similarly, orders received in the Digital Business declined from 431 million yen to 386 million yen (-45 million
yen or -10.6% YoY), and the order backlog also declined from 213 million yen to 157 million yen (-55 million
yen or -26.0% YoY).
・On the other hand, in the SI Business, the amount of orders received increased from 3,199 million yen to 5,216
million yen (+2,017 million yen or +63.0% YoY). It was also the only business whose order backlog increased
significantly from 1,186 million yen to 1,531 million yen (+345 million yen or +29.1% YoY), compensating forthe other businesses.

Number of Employees and Productivity: Increasing employees and improving productivity
・In the Company’s business model, sales growth is generally directly correlated with the number of employees.
Its capacity in terms of human resources has been expanding, with the total number of employees in Japan andoverseas increasing from 786 as of the end of December 2020 ⇒ 815 as of the end of December 2021 (+29 or+3.7% YoY) ⇒ 860 as of the end of December 2022 (+45 or +5.5% YoY) ⇒ 885 as of the end of December 2023(+25 or +2.9% YoY). However, the demand for system development has continued to increase and the Company
is still somewhat short of talents despite strengthened recruitment.
・Quarterly sales per employee in Japan, which are one of its key management indicators (KPI), have changed in
the order of Q3 FY2022 ⇒ Q3 FY2023 ⇒ Q3 FY2024 (this fiscal year) from 16,794 thousand yen/person ⇒16,223 thousand yen/person ⇒ 18,331 thousand yen/person. Similarly, operating profit per employee in Japan haschanged from 1,565 thousand yen/person ⇒ 1,288 thousand yen/person ⇒ 1,570 thousand yen/person,
significantly improving during this fiscal year. Along with the increase in personnel, productivity seems to have
improved due to measures such as the consolidation of resources.
Balance Sheet: Sound and essentially debtless
・As of the end of this Q3, there has been no significant change in the balance sheet compared to the end of last
fiscal year.
・The Company has ample liquidity on hand, with cash & deposits of 6.6 billion yen (4.4 months’ worth of theaverage monthly sales forecasted for this fiscal year; essentially debtless with a debt of 230 million yen). In
addition, it holds 2 billion yen of investment securities that are considered to be highly liquid.
・With a current ratio of 411.1%, an equity ratio of 75.3%, no goodwill, and a very small balance of intangible
fixed asset of 3 million yen, the Company’s financial standing is sound.
・Cash & deposits will most likely be used for greater shareholder returns and future growth, including investments
to expand its development bases and production system, M&A, business alliances, investments, and loans.

◆Full-Year Forecast: The Company has maintained its initial full-year plan. Alpha-Win
expects results to be in line with the Company’s plan.
Full-Year Company Forecast: Maintained initial plan
・Although the first-half results had exceeded the initial forecasts announced at the beginning of the fiscal year, theCompany has maintained the same full-year forecast since then.
・For this full fiscal year, the Company expects 18,000 million yen in sales (+10.3% YoY), 1,620 million yen in
operating profit (+11.5% YoY), and 1,080 million yen in net profit (+9.1% YoY). It expects to achieve sales andprofit growths again in the current fiscal year, as well as achieving record-high sales and profits for the consecutive
fiscal year (Figure 8 on page 8).
Short Report

7/13

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024【Figure 8】The Company’s Forecast for This Fiscal Year (full-year and Q4 forecasts and Q3 YTD results )This Fiscal
Last Fiscal
Year's Company
Year's Results
Forecast
FY2023
FY2024

Units: million yen or %Sales

16,3251.9%

Progress During
Last Fiscal Year's
Q3 YTD(Apr-Dec 2022)

Progress During
This Fiscal Year's
Q3 YTD(Apr-Dec 2023)

1,593

13.3%

73.3%

75.4%

2,568

2,934

366

14.3%

71.9%

-

21.6%

0.2%

SG&A Expenses

2,118

501

1,617

1,772

155

13.5%

13.1%

-0.4%
22.1%

65.5%

71.7%

22.7%

64.4%

71.5%

20.7%

63.5%

70.2%

11.5%
1,620

168

8.9%

9.0%

0.1%

1,480

1,635

155

(Ratio to sales)

9.1%

9.1%

0.0%

989

1,080

91

(Ratio to sales)

6.1%

6.0%

-0.1%

11.5
10.4
9.1

501

459

-42

11.5%

10.3%

-1.2%

527

466

-61

12.1%

10.5%

-1.6%

361

322

-39

8.3%

7.3%

-1.0%

-8.4%
-11.6%-10.8%

13,565

YoY
Change
(%)

21.5%

1,452

11,972

YoY
Change(Amount)

1,002

Net Profit

82

Last Fiscal
This Fiscal
Year's Q3 YTD Year's Q3 YTD
Results
Results(Apr-Dec 2022) (Apr-Dec 2023)

23.0%

Recurring Profit

4,435

YoY
Change
(%)

3,570

13.0%

4,353

This Fiscal
YoY
Year's Q4
ChangeForecast(Amount)(Jan-Mar 2024)

21.9%(Ratio to sales)

10.3

Last Fiscal Year's
Q4 Results(Jan-Mar 2023)

Gross Margin(Ratio to sales)

1,675

YoY
Change(%)

Gross Profit

Operating Profit

18,000

YoY
Change(Amount)

951

1,161

210

7.9%

8.6%

0.6%

953

1,169

216

8.0%

8.6%

0.7%

628

758

130

5.2%

5.6%

0.3%

9.6%

By
Business
Model

By Industry

Sales Breakdown
Finance

4,857

5,501

644

13.3%

1,286

1,017

-269

-20.9%

3,571

4,484

912

25.5%

73.5%

81.5%

Distribution

3,554

3,931

377

10.6%

993

1,127

134

13%

2,561

2,804

242

9.4%

72.1%

71.3%

Telecommunication & Transportation

2,883

2,575

-308

-10.7%

616

652

36

6%

2,267

1,923

-343

-15.1%

78.6%

74.7%

Other

5,029

5,993

964

19.2%

1,459

1,641

182

12%

3,570

4,352

780

21.8%

71.0%

72.6%

Digital Business

602

920

318

52.8%

194

522

328

169%

408

398

-9

-2.2%

67.8%

43.3%

SI Business

4,183

5,850

1,667

39.9%

1,278

796

-482

-38%

2,905

5,054

2,149

74.0%

69.4%

86.4%

Enhancement Business

11,53911,230

-309

-2.7%

2,880

3,119

239

8%

8,659

8,111

-547

-6.3%

75.0%

72.2%

(Ref) Prepared by Alpha-Win Research Dept. based on the financial results summary and financial results briefing’s supplemental materials.

・The Company has been working on strengthening its prioritized approach toward customers who are actively
pursuing strategic IT investments (strengthening sales activities toward its major customers, expanding the existing
businesses, and developing new domains or areas of business). It is also working expanding and optimizing its
production system and resources.
・In the SI Business, the Company is focusing on expanding into cloud-related areas, as well as winning new projects
and co-creating with vendors in this area.
・In the Digital Business, it is working on developing the collaboration consultation model, utilizing AI-based
technologies, and strengthening its agile development system.
・In the Enhancement Business, it is implementing measures to improve profitability, improving its development
system, and working on its own DX.
・Through the above measures, the Company plans to improve profitability and increase shareholder returns.
・The Company has announced a plan to increase shareholder returns by raising the targeted consolidated dividend
payout ratio from 35% to 40% starting in FY2024. This fiscal year, a dividend payout ratio of 42.1% is expected,
and the Company plans to pay annual dividends of 30 yen per share as initially planned (15 yen for the first halfand 15 yen for the end of the fiscal year). Since there will be no commemorative dividend (of 24 yen/share) likethe previous fiscal year, this fiscal year’s dividend will appear to be 20 yen/share smaller. However, in terms ofordinary dividend, dividend will be increased by 4 yen per share.
Alpha-Win Research Department’s Forecast for This Fiscal Year: Expecting mostly the same amounts
as the Company’s plan
1. Full-Year Forecast
・At the time of our previous research, we had revised our forecasts for the current fiscal year upward, considering
the first-half results and the order backlog as well as the business environment. In this current report, we haverevised our forecasts to the same level as the Company’s plan. In the order of our previous to current forecast, wehave revised sales from 18,500 million yen to 18,200 million yen, operating profit from 1,700 million yen to 1,620
million yen, net profit from 1,120 million yen to 1,080 million yen, and dividend per share from 31 yen to 30 yen.
・Currently, due to its customers’ strong appetite for strategic IT investments (DX investments such as business
transformations and process reforms), there have been no signs of a slowdown in business negotiations or orders
in general. The growth of sales to the NRI Group has also been greater than expected up through the first half
(information not disclosed for Q3). Additionally, the Company has succeeded in winning orders for strategic andderivative projects from well-performing industries (mainly finance) and has been making steady progress with theshift to high-profit projects, streamlining of resources, and cost control. Therefore, we evaluate that with proper
cost control in Q4, the downside risks are limited for this fiscal year’s full-year financial plan.
・ Since inflation and the transition to a new personnel system will cause personnel expenses, subcontracting
Short Report
8/13
This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024

expenses, investment, and other costs to increase, we expect profit results to be in line with the Company’s plan.
2. Forecast for Q4・The Company’s Q4 forecasts, calculated by subtracting the Q3 YTD results from the Company’s full-year
forecasts, are as follows: sales of 4,435 million yen (+82 million yen or +1.9% YoY), operating profit of 459
million yen (-42 million yen or -8.4% YoY), net profit of 322 million yen (-39 million yen or -10.8% YoY), andoperating margin of 10.3% (as reference, last Q4’s margin was 11.5%) (Figure 8 on page 8).
・In Q4, the Company plans for a nearly double-digit decline in profit despite a slight increase in sales YoY and a
decline in operating margin (-1.2 percentage points YoY). This plan had seemed somewhat conservative
considering the order backlog as of the end of Q3, the current situation, the seasonal cycle of project delivery
deadlines clustering in Q4, and the fact that the positive effects of increasing employees usually begin to be fully
seen in the second half, especially in Q4, as new employees begin their actual work. However, since costs arerecently rising due to inflation and other factors, we have analyzed that this Q4 plan is reasonable.

◆Medium-Term Forecast
Alpha-Win Research Department’s Medium-Term Forecast: No change to forecast and expecting a
growth trend of 6-10% per year for sales and profit
・We have not changed our medium-term forecasts of the Company’s financial performance for the next fiscal year
and beyond. However, we may review them again at the beginning of next fiscal year based on the businessenvironment, the staff organization, investment costs, and the next medium-term management plan to be announced(Figure 9).
・IT investments by the Company’s users (companies) are expected to keep increasing over the medium term as
they develop new business models, strengthen their competitive edge, work on solving labor shortages, streamline
and speed up operations, work on DX, and shift to the cloud. Therefore, the Company’s growth potential is large.
・With strong IT demand, the Company is expected to achieve top-line growth by utilizing its abundant cash on
hand to hire more employees and expand its development bases. We maintain our forecast that the Company will
be able to maintain a stable sales and profit growth trend of around 6-10% per year over the medium term throughthe expansion of the Digital and the SI businesses, the effect of the alliance with NRI, the development of new
customers and new areas of business, and various measures to improve productivity.

【Figure 9】Medium-Term Financial Forecast
Units: million yen or %Sales
Gross Profit
Gross Margin
SG&A Expenses(Ratio to sales)

Operating Profit(Ratio to sales)

Recurring Profit(Ratio to sales)

Net Profit(Ratio to sales)

Sales (% YoY growth)Gross Margin (% YoY diff.)
SG&A Expenses (% YoY growth)

Operating Profit (% YoY growth)
Recurring Profit (% YoY growth)
Net Profit (% YoY growth)

FY2023 Results

FY2024
Medium-Term Plan

FY2024 CE

16,325
3,570
21.9%
2,118
13.0%
1,452
8.9%
1,480
9.1%
989
6.1%

19,00018,000

1,710
9.0%

1,620
9.0%
1,635
9.1%
1,080
6.0%

1.4%
0.4%
4.2%
2.4%
3.3%
4.8%

16.4%

10.3%

17.7%

11.5%
10.4%
9.2%

FY2024 New E

FY2025 E

FY2026 E

18,200
3,980
21.9%
2,360
13.0%
1,620
8.9%
1,635
9.0%
1,080
5.9%

19,000
4,150
21.8%
2,425
12.8%
1,725
9.1%
1,755
9.2%
1,155
6.1%

20,500
4,500
22.0%
2,650
12.9%
1,850
9.0%
1,870
9.1%
1,235
6.0%

11.5%
-0.0%
11.4%
11.5%
10.4%
9.2%

4.4%
-0.0%
2.8%
6.5%
7.3%
6.9%

7.9%
0.1%
9.3%
7.2%
6.6%
6.9%

(Ref) Prepared by Alpha-Win Research Dept. (Note) CE: the Company’s forecast/estimate. E: Alpha-Win Research Dept.’s forecast/estimate.
The medium-term plan is the Company’s forecast announced on May 11, 2022.

Short Report

9/13

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024◆ Stock price and characteristics: Significantly outperforming the TOPIX over the longterm as a stable growth stock centered on domestic demand. We believe that its valuation
is currently somewhat cheap and that there is an upside potential to the stock price.
Performance: Outperforming over the long term, but underperforming over the past 12 months
・Over the past approximately 15 years, the Company’s stock price has increased by about 5.7x thanks to its stableprofit growth, significantly outperforming the TOPIX (by about +264%).
・Stocks benefiting from the weak yen and inbound demand, as well as economically sensitive stocks, large-cap
stocks, and tech stocks, have been bullish in the recent stock market. The Company’s stock, which is defensive,
domestic-demand-oriented, and small-cap, has been underperforming the TOPIX over the past 12 months (Figure
C on page 13).
・Compared to its two competitors listed on the TSE (HIMACS with securities code 4299 and Toho System Science
with securities code 4333), the Company’s stock performance has been about the same as HIMACS but
underperforming Toho System Science. Toho System Science had announced a stock split, a dividend increase,and an enhancement of its shareholder benefit program last July, which have caused its stock price to rise sharply
since then.

Valuation: Somewhat cheap stock price・Currently, the average valuation of all companies listed on the TSE Prime Market is as follows: forecasted P/E of
16.11, P/B of 1.37, and forecasted dividend yield (simple average) of 2.17% (based on the closing price on February
9, 2024).
・Compared to these averages, the Company’s valuation is high for P/B, slightly low for P/E, and slightly high fordividend yield. Considering this fiscal year’s strong financial performance and its growth potential over the medium
term, its valuation seems generally somewhat cheap and there seems to be an upside potential to its stock price.
・Compared to its two competitors mentioned above, its valuation is in the middle range (the second highest among
the three companies) in terms of the major valuation measures excluding dividend yield (which is the lowest)(Figure 10).

【Figure 10】Comparison of Valuation with Competitors
Company Name

Item

Code
Stock Price (closing price of 2/9/2024)
Market Capitalization (million yen)
P/E (price-to-earnings ratio)
P/B (price-to-book ratio)

Stock Price,
Valuation, andPerformanceThis Full Fiscal Year
(Apr. 2023 to Mar.
2024)

HIMACS(HM: consolidated)
S

Toho System Science(TS: non-consolidated)
P

2335

4299

4333

1,091
17,183
15.32
1.71

1,393
17,291
14.11
1.53

Dividend Yield (%)

2.75

3.12

EV/EBITDA
P/S (price-to-sales ratio)
Performance Since the Beginning of Last Year

6.30
0.95

5.11
0.95

(comparison with the end of Dec. 2022)

First Nine Months ofThis Fiscal Year
(Apr. to Dec. 2023)

CUBE SYSTEM(CS: consolidated)
P

Sales (million yen)YoY Sales Growth Rate (%)
Operating Profit (million yen)
YoY Operating Profit Growth Rate (%)
Operating Margin (%)
Progress with Sales (%)
Progress with Operating Profit (%)
Company Forecast: Sales (million yen)Company Forecast: YoY Sales Growth Rate (%)
Company Forecast: Operating Profit (million yen)Company Forecast: YoY Operating Profit Growth Rate (%)
Company Forecast: Operating Margin (%)

All TSE Prime Stocks

1,221
25,39620.99
2.47

1,316.34

35.2

16.11
1.37
Simple average: 2.17
3.28
Weighted average: 2.11
10.18
1.54

4.80

-3.93

83.69

13,565
13.3
1,161
22.1
8.6
75.4
71.7
18,000
10.3
1,620
11.5
9.0

13,004
-0.2
1,197
-11.7
9.2
71.6
71.3
18,150
4.7
1,680
-8.3
9.3

12,025
5.7
1,110
-5.2
9.2
72.9
71.6
16,500
6.8
1,550
2.3
9.4

(Ref) Prepared by Alpha-Win Research Dept. based on each company’s financial results summary for this first nine months andstock price data. See the next page for notes.

Short Report

10/13This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024(Note)・Market cap = number of shares outstanding x stock price (closing price on 2/9/2024).
・EPS values used in P/E calculations are based on each company’s (most recent) forecast for FY2024.
・BPS values used in P/B calculations reflect results of this fiscal year’s first nine months.
・EPS values used in dividend yield calculations are based on each company’s (most recent) forecast for FY2024.
・EV/EBITDA = (market cap + interest-bearing debt – cash & deposits) / (operating profit + depreciation + intangible fixed assets
amortization, etc.). Interest-bearing debt and cash & deposits are based on this fiscal year’s results for the first nine months. Operating
profit is based on each company’s full-year forecast for this fiscal year. Depreciation and intangible fixed assets amortization, etc.,
were estimated by Alpha-Win based on the previous fiscal year’s results and this fiscal year’s results for the first nine months.
・P/S = market cap ÷ sales (each company’s forecast for FY2024).
・Q3 YTD: results from Apr. to Dec.
・HIMACS: moved from the Prime Market to the Standard Market on October 20, 2023.
・Toho System Science: reflects the 1.5-for-1 stock split conducted on September 1, 2023.
・Progress in the first nine months is the proportion of the most recent full-year company forecast.

Stock Price Outlook
・In the short term, the Company’s stock price will likely be impacted by the full-year results (whether or not the
full-year profit forecasts will be revised upward) and the changes in stock return (whether there will be a dividend
increase, a share buyback, a stock split, or an enhancement of the shareholder benefit program).
・The contents and various numerical targets of the “VISION 2026: The Second Medium-Term Management Plan”
to be announced in the next fiscal year will be key points.
・Particularly important will be the top line (sales growth rate, hiring and retaining of employees, and the effect of
the alliance with NRI), the profit margins (gross margin, operating margin, and SG&A expense ratio), the securingof human resources especially in terms of the number of employees in Japan (the number hired, the turnover rate,
and the number of employees), the sales or operating profit per employee in Japan (KPI: key performanceindicators), and the results and outcomes of the medium-term investment plan.
・Another key point will be the business performance and IT investment trends of the Japanese companies that are
its end users (the environment surrounding orders received by the Company; changes in the volume of orders
received and the price per contract).
・Regarding the next medium-term management plan (numerical targets are undisclosed at this point), the Company
intends to make a leap forward to achieve high profitability based on its plan of “stabilizing earnings by finding
new, direct customers and enhancing technology through stronger development capabilities.”
・We believe that if the Company can stably maintain a profit growth rate that is close to a double digit, then its
stock price may rise further to adjust for the level of P/E and the increase in EPS.
・From a medium- to long-term perspective, we believe that the Company will continue to be a candidate forinvestment as a defensive and stable growth stock centered on domestic demand.

Short Report

11/13

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)【 2335 CUBE SYSTEM

Issued: 2/16/2024

Sector: Information & Communication 】

FY

Figure A

Sales

YoY

O.P.

YoY

R.P.

YoY

N.P.

YoY

EPS

BPS

Dividend(million yen)（%）(million yen)（%）(million yen)（%）(million yen)

(%)

(Y)

(Y)

(Y)

2020

14,708

2.7

959

4.1

976

1.7

525

-11.9

38.69

411.9618.0

2021

14,788

0.5

1,174

22.5

1,295

32.7

844

60.7

62.11

476.52

20.0

2022

16,099

8.9

1,417

20.7

1,432

10.6

944

11.9

69.82

531.1423.0

2023

16,325

1.4

1,452

2.4

1,480

3.3

989

4.8

70.35

634.2950.0

2024

Revised Medium-Term Plan: CE

19,000

1,710

2024

CE

18,000

10.3

1,620

11.5

1,635

10.4

1,080

9.1

71.23 Not disclosed

30.0

2024

New E

18,200

11.5

1,620

11.5

1,635

10.4

1,080

9.1

71.23

655.49

30.0

2024

Old E

18,500

13.3

1,700

17.1

1,715

15.9

1,120

13.2

68.57

658.12

31.0

2025

E

19,000

4.4

1,725

6.5

1,755

7.3

1,155

6.9

76.18

749.68

32.0

2026

E

20,500

7.9

1,850

7.2

1,870

6.6

1,235

6.9

81.46

799.13

34.0

2022

Q1

3,987

18.2

378

56.5

390

57.1

262

59.0

19.35

487.51

0.0

2023

Q1

3,892

-2.4

272

-28.1

271

-30.5

173

-34.0

12.84

543.58

0.0

2024

Q1

4,376

12.4

369

35.9

371

37.0

232

34.2

15.36

622.93

0.0

2022

Q2

4,073

9.8

368

18.7

362

2.0

239

1.7

17.65

453.20

8.0

2023

Q2

4,000

-1.8

326

-11.4

323

-10.8

215

-10.0

15.89

498.18

23.0

2024

Q2

4,639

16.0

425

30.4

417

29.1

269

25.1

17.71

638.69

15.0

2022

Q3

3,981

13.5

376

56.7

381

19.4

254

30.0

18.80

520.59

0.0

2023

Q3

4,080

2.5

353

-6.1

359

-5.8

240

-5.5

17.11

597.48

0.0

2024

Q3

4,550

11.5

367

4.0

381

6.1

257

7.1

16.96

639.730.0

2022

Q3 YTD

12,041

13.7

1,122

41.7

1,133

22.9

755

26.6

55.80

520.598.0

2023

Q3 YTD

11,972

-0.6

951

-15.3

953

-15.8

628

-16.8

45.84

597.4823.0

2024

Q3 YTD

13,565

13.3

1,161

22.1

1,169

22.6

758

20.7

50.03

639.73

15.0

2022

Q4

4,058

-3.3

295

-22.8

299

-19.8

189

-23.4

14.02

531.14

15.0

2023

Q4

4,353

7.3

501

69.8

527

76.3

361

91.0

24.51

634.2927.0

2024

Q4: CE

4,435

1.9

459

-8.4

466

-11.6

322

-10.8

21.20

-

15.0

(Ref) Prepared by Alpha-Win Research Dept.
(Note) CE: the Company’s forecast/estimate. E: Alpha-Win Research Dept.’s forecast/estimate. “Revised Medium-Term Plan: CE” is theCompany’s forecast announced on May 11, 2022. Q1: Apr-June. Q2: July-Sept. Q3: Oct.-Dec. Q4: Jan.-Mar. Q3 YTD: Apr.-Dec.

【 Stock Price and Valuation Indicators: 2335 CUBE SYSTEM 】

Figure B

Item

2/9/2024

Item

Stock Price (Y)1,091

Last FY's Results

15.5

1.7

4.6%

71.1%

Shares Outstanding (thou.)

15,750

Forecast for This FY

15.3

1.7

2.7%

42.1%

Market Capitalizatoin (million yen)

17,183

Forecast for Next FY

14.3

1.5

2.9%

42.0%

Forecast for the FY After the Next

13.4

1.4

3.1%

41.7%

8.6%

Last FY's ROE

11.8%

Dilutive Shares (thou.)Equity Ratio at the End of This FY's Q3

0
75.3%

Last FY's DOE

P/E

P/B

Dividend Yield

Dividend Payout Ratio(Ref) Prepared by Alpha-Win Research Dept.
(Note) Estimates for this fiscal year and the following two fiscal years have been made by Alpha-Win Research Department. Valuation is based on
the closing price of 1,091 yen on February 9, 2024.

Short Report

12/13

This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.

Alpha-Win Company Research Report
CUBE SYSTEM INC. (2335 TSE Prime)

Issued: 2/16/2024【 Stock Chart (end-of-week prices): 2335 CUBE SYSTEM 】 Figure C

Stock Price (left axis)
Price Relative to TOPIX (right axis)

09
/1
6
02
/1
7
07
/1
7
12
/1
7
05
/1
8
10
/1
8
03
/1
9
08
/1
9
01
/2
0
06
/2
0
11
/2
0
04
/2
1
09
/2
1
02
/2
2
07
/2
2
12
/2
2
05
/2
3
10
/2
3
(M
M
/Y
Y
)

(Y)
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400

(Note) From the first week of September 2016 to February 9, 2024

2.00
1.90
1.80
1.70
1.60
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60

【Performance】
PeriodReturn vs. TOPIX
1 month-3.8%-4.1%
3 months
-1.9%
-9.6%
6 months-6.1%-15.8%
12 months-5.4%-33.7%(Note)
・Reflects stock and index prices through the closing
price on 2/9/2024.
・“Vs. TOPIX” is the relative value after subtracting
the TOPIX’s performance from the performance of
the Company’s stock.
・Performance for the 1-month period is thecomparison between the closing price on the last dayof December and the closing price on February 9 (thesame applies to the other periods).

(Ref) Prepared by Alpha-Win Research Dept.

＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊

Disclaimer
This Alpha-Win Company Research Report (hereinafter, “this Report”) has been prepared by Alpha-Win-Capital
Inc. (hereinafter, “Alpha-Win”) on the request of the company presented in this Report.
This Report is not to be construed as a recommendation or solicitation of investment. Alpha-Win shall not beliable for any consequences including direct or indirect loss, lost profit, or damage resulting from the use ofor reliance on this Report. Investors who read this Report must make their own decisions on all investment
matters and take full responsibility regarding their investment.
This Report has been prepared with a focus on objectivity and neutrality based on the analysis of generally accessible
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and/or other persons involved in the publication of this Report may already hold, or buy and sell in the future, thestock of the company presented in this Report.
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SV2024-0216-1300

Short Report

13/13This Alpha-Win Company Research Report (hereinafter “this Report”) has been prepared by Alpha-Win-Capital Inc. (hereinafter “Alpha-Win”) on the request of the company presented in thisReport for the purpose of providing a description of the company. This Report is not to be construed as a recommendation or solicitation of investment. Contents of this Report are based on
information current as of the issue date and are subject to change without notice. We do not warrant or represent that the information in this Report is accurate, reliable, complete, appropriate,or fit for any purpose and do not accept any responsibility or liability. Alpha-Win shall not be liable for any consequences including direct or indirect loss, lost profit, or damage resulting fromthe use of or reliance on this Report. Investors who read this report must make their own decisions on all investment matters and take full responsibility regarding their investment. Intellectual
property of this Report belongs to Alpha-Win and no part of this report may be copied, photocopied, cited, or translated without our consent.